6 June 2025
The 2025 Budget was tabled at a period when geopolitical risks are increasing, impacting economic growth projections globally, and many emerging and developed economies have to grapple with the need to have a sustainable debt trajectory. South Africa is not immune to this reality as government across the world have implemented countercyclical policies to respond to the economic crisis caused by Covid-19. This has resulted in an rapid increase of public debt globally.
In balancing the trade-offs of achieving economic growth and debt sustainability, the government has had to identify tax policy measures to increase revenue collection to protect the current bassline of spending and to increase spending.
Tax policy globally is a contested fiscal policy instrument as it has a differentiated impact on various strata’s of society. It impacts the unemployed, the poor, the working class, the middle strata and the rich. It impacts businesses and the economy broadly. It is therefore, not a strange phenomenon to have a highly contested budget due to the VAT proposal.
Recently, Kenya had a budget impasse which resulted to numerous protests and delays in the processing of the Budget due to tax proposals and budget cuts. In Italy the budget is a contested process due to its high levels of public debts and the imposition of fiscal rules from the EU. In Belgium, a 7 month deadlock delayed the adoption of the budget. These illustrates that a Budget process is a contentious process which requires optimal attention and response by Parliament and the National Executive.
In our context a robust public involvement process was undertaken with various views expressed. A second tabling of the budget is a resolution to the concerns raised by the Public and Parliament. This is a sign of a maturing democracy.
The Cabinet has developed a Medium Term Development Plan which provides the strategic direction of the seventh administration and the targets of government to build a better life and the budget is structured to support the plan.
The budget seeks to place South Africa in an economic growth trajectory through the implementation of Operation Vulindlela, which involves structural reforms to enhance the efficiency of key economic sectors such as transport, digital infrastructure, water infrastructure , energy and a focus on local government.
Without adequate measures to boost economic growth, our efforts as a country to address poverty and unemployment will not be achieved. The ANC believes a focus on infrastructure as contained in the budget will be a crucial measure to move the needle.
One of the major weaknesses of the budget of 2025, debate is a lack of adequate focus on the spending proposals which are critical to weigh when considering the revenue proposals. Government has taken bold decisions to strengthen the countries safety net , with an increases of social grants above inflation and allocations for social services which alleviate poverty and advance the development of the people. As the ANC, in our Manifesto, we committed to invest in the people and the budget does exactly that.
The education sector is allocated 19.5 billion for provincial education compensation costs for 5000 educator posts and to improve the ECD subsidy per child from R17 to R24 and expand access for an additional 700 000 children up to the age of 5 years. The budget continues to support fee-free higher education for the poor and a funding programme for the missing middle. The health sector is allocated 20.8 billion to cover compensation of employing 800 doctors who finished their community service and protect health posts and to address medical shortages.
These are aspects of the budget that are not largely focused on, deprive the public a full comprehension of different elements of the budget which protects and advances the interest of the poor and country.
As we debate the 2025 budget process and the role of Parliament , we should always bear in mind that the people are not fighting for the ideas in our heads, but for the material things. The people want to see a change in their living conditions and the protracted process undertaken by Cabinet and various stakeholders to ensure a balance is struck are not a mishandling of the budget process.
The ANC has resolved to have an enhanced approach on engaging the budget cycle to ensure critical policy decisions on the budget are well canvassed with society to ensure optimal participation and support for the budget.
What we can all agree on, is that the budget tabled on the 21st of May 2025 is different from the previously adopted fiscal framework and revenue proposal. This fact is an effect of public participation and Parliaments concerns.
As a listening government, we today have a fiscal framework and revenue proposal that was adopted by the Joint Committees of Finance and Parliament will debate it next week. The ANC is committed to further discussions with various social partners to ensure we take measures to improve revenue collection and to consider various alternative revenue proposals to grow the fiscus to respond to the challenges impacting our society.