John Matisonn – GNU furore unveils a ‘silver lining’ for SA’s economic revival

Key topics.GNU's collapse sparks a rare focus on shifting spending priorities, a chance to revive SA's economy.DA's budget fight with ANC showcases policy debate, potentially boosting voter awareness.The crisis opens a window for new reforms as ActionSA and others push for alternatives to tax hikes..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 for the BizNews channel here..By John Matisonn ___STEADY_PAYWALL___.There is a faint hint of a silver lining in the explosive breakdown in party talks that many predict spells the end of the DA in the GNU. For the very first time, shifting spending priorities and policies is front and centre in South African politics, which is the only way to end the country's 15-year economic coma..For 30 years, the ANC government resisted cutting any programmes because behind every programme was funding for ANC cadres' salaries or contracts for black empowerment firms. Other parties in the GNU, led by the DA, have been frustrated in attempts to move budgets around so far..The opportunity came when Finance Minister Enoch Godongwana announced a two percent VAT tax increase, which most parties opposed. After a delayed budget speech, the minister's proposal for a reduced .5% VAT increase was also rejected by most parties. .This time, the ANC stuck to the increase, and the DA voted against the budget, applying to the courts to block this increase, too. In the negotiations, the DA developed a much longer list of reforms and shifted priorities as the price of its vote, and the ANC sought alternative small parties..The vote of most other GNU members, bolstered by ActionSA, which is not currently in the GNU, carried the budget through, and ANC leaders said it made no sense for DA ministers to remain in cabinet, where they would have to execute on a budget they had opposed in parliament..The GNU ended the week on a knife-edge after the DA opted not to resign from the government. The ANC NEC will take responsibility for the GNU's fate when it meets on Monday..There will be time to debate whether a break could have been avoided if the DA or the ANC had played their hands differently, but the GNU isn't dead yet. As the GNU crisis and Washington's rising hostility pushed the rand over 19 to the US dollar and the JSE Alsi down to 83,000 from this week's peak at a shade below 90,000, a delegation of South African business leaders just returned from meeting Trump administration officials pleaded for the DA and ANC to save the GNU..In a letter to President Cyril Ramaphosa and DA leader John Steenhuisen, the business leaders, including Adrian Enthoven, Adrian Gore, Busi Mavuso, Martin Kingston, Mike Teke and Nolitha Fakude, argued that there is a lot to lose if the core parties — the ANC, DA and IFP – fall out..Though the conflict came over the government's attempt to raise taxes on VAT and allow bracket creep to eat into take-home pay, there was rising tension among the parties as they realized how they position themselves now would have long-term consequences. In particular, it will determine the outcome of the municipal elections less than two years away and their roles in national government after the 2029 national election..Each party faced the question: how have these nine months of the GNU changed their party's prospects in the upcoming elections?.In the DA, leaders were frustrated that the growth rate hasn't moved materially while four DA ministers have been in power for the first time. They were not showing a "DA difference.".For the ANC, there was rising fear that the DA had outmanoeuvred them in the first round of the fight over VAT, letting the public see the DA as the party that fought successfully to protect them from higher taxes. The DA threatened to erode the ANC's mantle as the party of the poor..Other opposition leaders were irritated because they felt the DA unfairly claimed the credit when most of them had taken the same position. ActionSA's position outside the GNU has given them little to campaign on in 2027 and 2029..Being outside the GNU has its costs. Ministers have a chance to shine and multiple platforms to showcase their talents to voters. ActionSA flung the dice, replacing the DA's votes with enough to allow the ANC finance minister to keep his 0.5% VAT..It remains a risky move for ActionSA. If the DA is out of the GNU, ActionSA will likely come in. They extracted a promise from the government to spend 30 days seeking an alternative to the VAT increase. .If Godongwana returns at the end of the month and says he tried but couldn't find an alternative, ActionSA could win a few places in the cabinet, but its promise to stop the tax hike in 30 days will be in shreds..But the most important battle has just begun – can any GNU member finally get the ANC to cut a budget item and replace it with higher priorities? Can a minister finally implement even existing policies by timely commissioning private rail operators to run certain freight lines or fix our ports?.Read also:.🔒 GNU on shaky ground after parliament passes budget despite DA objectionGNU on rocks – Action SA hits "arrogant" DA, supports ANC in Budget🔒 RW Johnson: The quandaries of the GNU

John Matisonn – GNU furore unveils a ‘silver lining’ for SA’s economic revival

Key topics

Related Stories