Budget Impasse – Dr Mark Burke on not negotiables, why DA holding no-VAT line

This morning the DA cancelled a scheduled press conference where leader John Steenhuisen was due to share progress in the discussions over the Budget within the Government of National Unity. Social media is ride with 'insiders' sayong the DA has agreed to the 0.5% VAT agreement in return for concessions in other areas – despite Dr Frans Cronje explaining to us last week why the DA cannot afford to endorse any tax increases…….Mark Burke is the DA's spokesman on Finance. He spoke to BizNews editor Alec Hogg..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.Edited transcript of the interview ___STEADY_PAYWALL___.Alec Hogg (00:07.256):Politics in South Africa is never boring. Mark Burke was recently introduced as a member of parliament. He's the DA's spokesperson on finance and holds a PhD from Cambridge University, so he knows what he's talking about. Today, we'll get the latest from Mark on what's going on with the budget impasse..I'm really grateful, Mark. I haven't thanked you properly, but I want to thank you for coming to the business conference and speaking to our team the day after the budget that never was. Remember, there were two budgets that never materialised. The second one, on the 13th of March, you were at the event that day. You explained exactly what was going on, and there was great appreciation from the business community for that..But now we've moved on to the next level. Two weeks, nearly three weeks later, what has happened in the budget impasse? We hear that there's some agreement..Mark Burke (01:09.583):I'd just like to quickly touch on the wonderful conference you hosted—the seventh one. It was a lot of fun to be there, and what a privilege. Thank you for having me..On the budget and where it stands, we discussed some of this on the panel there, but perhaps a quick recap: We had a February attempt at a budget, which, at the last minute, was communicated to the cabinet. The cabinet voiced its disapproval, especially of the proposed 2% VAT increase. Then, there was another budget attempt..The minister made a speech in parliament, knowing that the DA wasn't in a position to support that budget, which had been revised down from a 2% VAT increase to a 1% VAT increase, split over two years—half a percent this year, and half a percent next year. But there were still a number of unresolved issues in that budget..If I were to summarize the points of contention for South Africans—especially for the business community—it might seem like we're only talking about VAT. But VAT is really just a symptom of a larger, broken system. I would describe it as a sick system. The symptom here is ever-increasing taxation to keep that system on life support..I've mentioned this before, but for context: The budget being proposed now is three times the size of the inflation-adjusted Nelson Mandela budget from 1995. And I don't think South Africans have the impression that this government is doing more for them than that government did..So, we've got a broken system. The problem isn't revenue—it's inefficient government spending. And on top of that, we've got an economy that just won't take off, despite having great people and resources that other countries can only dream of. The budget should be an enabling mechanism. In fact, it's probably the most powerful tool a government has to use its revenue to stimulate the economy and create jobs..So, there are really two things happening here: an expenditure problem—where the government is inefficient—and a broader issue where, even if the government were efficient, it should still be spending on the right things to enable economic growth. We're trying to solve both of these things in the budget process..We need to start reigning in government spending and becoming more efficient, and that's simply not going to happen by doing things the way the ANC has always done it. In fact, that's guaranteed to fail. But we also need to focus on the economy. The budget is a reflection of the economy. If the economy stagnates or regresses, government revenue will not grow, and we'll have a crisis every year we face this budget..What we've proposed is to start devolving the railways and ports. Cape Town and Richards Bay should be the first. In our negotiations, we've prioritised this issue: let's devolve the ports and potentially privatise them. Let's get the rail system running so our mines and farmers can export their products more efficiently. And, of course, let's address the electricity network..Mark Burke (04:29.221):But there are other things we've been discussing. We've mentioned to the ANC that expropriation is a deterrent for both foreign and domestic investment. It's not viable to build a business in South Africa if the government can arbitrarily define and confiscate property. That's madness..There has been some criticism that the budget shouldn't include these issues, but from our perspective, the budget is the perfect place to discuss the economy. The budget is a function of the economy. Unless we address the economy, the budget is just arguing over line items..Alec Hogg (05:10.104):But it seemed like you were almost in a situation where the DA could have been ejected from the government of national unity, and the EFF could have been brought in. It was widely reported that the ANC was looking for alternative partners. I suppose, thank goodness, that didn't happen. But it seemed like you guys took it to the wire..Mark Burke (05:41.633):There are a few things to address in that question. First, I think in any healthy relationship, it's unproductive to constantly threaten betrayal. You can't keep threatening to walk out the door every time you don't get your way, especially when there are other people waiting for you..The reality is that the ANC doesn't want to govern with the EFF. And the price of governing with the MK party would be incomprehensible to them. I don't want to invite the ANC to make a deal with the EFF—it would be bad for South Africa..There's an open question about how bad that would be, but what we're not doing is encouraging them to go down that path. We're saying to them firmly, stop threatening it. We know it's unpalatable to you, because you already did a deal with us. You've already shown us what you prefer, so stick to that arrangement. If you don't, then stop talking about it..What we've inadvertently done here is allow the ANC to get away with a lie—that maybe they'll do a deal with the EFF. They know the cost of that, and they know the public perception of their support is at 32%, and lower without Zuma. The president is an asset to them, and some of these parties would not want him involved in their equation if they were to join. So, the self-destruct button has always been at the ANC's disposal..Alec Hogg (07:14.157):Mm..Mark Burke (07:20.477):That's the situation, and they need to stop threatening us with the self-destruct button and focus on a productive partnership. The proposals we've made are politically neutral. These aren't radical free-market ideas; they're ideas aimed at getting the South African economy moving again, by liberalising areas of the economy where the government has historically held things back..I say they're neutral in the broadest sense. We're not proposing radical things—I promise you, the people they're threatening us with are proposing radical ideas. And I don't think the ANC is a radical party, so I'm not overly concerned by this constant threat. I hope they don't act on it. I would encourage them not to. But I don't think any partnership can survive constant communication that keeps reverting to the worst possible outcome. It's not good for anyone, and I think they need to stop doing it..Alec Hogg (08:14.59):Yeah..Alec Hogg (08:20.431):But like a divorce in a marriage, don't threaten it—it doesn't lay proper foundations. So, what's happening now? You guys have been negotiating for how long? Did it really go until 3 a.m.? Have you found any common ground?.Mark Burke (08:40.505):Yeah, the negotiations are ongoing, and they're happening at a couple of levels..We have a deputy minister who sits alongside an ANC minister—Ashor Sarupen from the DA and an ANC finance minister—who work together in Treasury. They discuss both technical details and ideas about where the budget should go. This is part of a confidential cabinet forum that creates a space for people to exchange ideas..There's also the bilateral negotiation between the ANC and DA, which is often led by the DA's negotiating team. When necessary, our leaders intervene to find common ground. Those conversations are ongoing, and while it's uncertain, my personal position is optimistic. The party remains constructive, and the most attractive prospect for South Africa is finding creative solutions to these impasses..But the key focus for the DA is on what will grow the economy in the long term. We can't be party to any transaction that doesn't include mechanisms to make that happen. We remain firm on that point, but the conversation is still ongoing..Alec Hogg (10:15.928):But what has been agreed so far, if anything?.Mark Burke (10:20.249):I can't speak to the specifics of any concessions or agreements at this point. Those discussions are still happening, and when there's an outcome, the DA's federal leader will be the best person to comment. However, the key proposals we've been making from the start haven't changed. I'll quickly run through them, if you're open to it..Mark Burke (10:47.556):The first is that the budget needs to focus on spending reductions. We've proposed a list of departments and areas that should be trimmed down to make sure we're focusing on strategic growth rather than bloated government. Second, we need to reform the electricity grid and get new private-sector investments to solve the energy crisis. Third, we need to rethink the NHI and return to the private model for healthcare. And lastly, we need to end wasteful state-owned enterprises. These are proposals we're pushing hard for, and we'll see where we land..Alec Hogg (11:30.421):I imagine there's a big focus on that last point—the SOEs..Mark Burke (11:32.022):Absolutely. The problem with state-owned enterprises is that they've become an anchor around our economy. The inefficiencies there are well-documented. We're still paying for those mistakes in Eskom, and we can't afford to make more. We're talking about reducing the role of government in business altogether, and that includes rethinking how we manage these companies. There's a case for privatising certain entities and focusing on investment instead of bureaucracy..Alec Hogg (12:02.822):The new government of national unity, or any future coalition government, might indeed need a very different way of operating. How does the DA see this evolving, especially if a new political alignment emerges after 2024?.Mark Burke (12:20.052):If you look at our track record, the DA has consistently pushed for a more accountable, efficient government. Our focus is on putting South Africa on a path to growth, not just on securing short-term political deals..As for a coalition government post-2024, we remain open to discussions with like-minded parties who share our vision for the country's future. The DA's priority is to secure a government that focuses on long-term solutions, not on the party interests that have dominated for too long..Alec Hogg.Mark Burke, spokesperson of the DA thank you for joining us. I'm Alec Hogg from BizNews.com.Read also:.BN Briefing: DA can force Ramaphosa to resign; Thabo Mbeki: Rasool disrespected Trump🔒 RW Johnson: The quandaries of the GNUGabriel Crouse on BEE Premiums: DA's opportunity to end R150bn annual gift to ANC-loved elites

Budget Impasse – Dr Mark Burke on not negotiables, why DA holding no-VAT line

Related Stories

Wayne Sussman - Gayton’s PA continues “weakening” the DA and the ANC (and all the mayoral dramas)

Jonathan Deal - Fight against “disarmament” of citizens as another top cop falls…

Yusuf Abramjee - How police general and kingpin plotted to “f... up” anti-crime activist

Rob Rose: The Competition Tribunal is holding South Africa back