ROBERT BOTHA: Budgeting in 2025 shows there is no more fiscal rubber stamping

In 2006 a study ranked 36 countries based on their legislative budget institutions, essentially measuring legislatures’ power over the public purse. The US ranked highest, and the country’s Congress was seen as the only legislature with the institutional foundation to exercise a powerful influence over public finances.

At the bottom of the list was SA. Perhaps 2025, and the fact that we are heading to budget 3.0, has changed this substantially. This shift has positive and negative implications, and fiscal rules may guard against the downside. 

Consistent with the study, parliament has had limited direct influence on SA’s national budget since at least 1994, not for a lack of trying from opposition parties. This has rendered parliament a rubber stamp for budgets. 

The 2025 national budget cycle has exposed cracks and demonstrated that the budget process and role and functions of parliament have been misconstrued over time. This misunderstanding goes beyond the Treasury and finance minister, extending to some political parties, for example, voting in favour of the fiscal framework yet insisting on opposing a VAT increase that formed part of the framework — incompatible positions. 

The political dominance of the ANC since 1994 meant the composition of parliament enabled the rubber stamping of budgets, possibly distorting the understanding of parliament’s functions and powers. This situation has potentially developed a bureaucratic and executive culture and precedent of expecting parliament to function as a rubber stamp when it comes to budgets and fiscal policy. 

This culture or precedent was underpinned by the view that the budget is a statement of a cabinet collective decision, and so it was viewed as a distinct executive function. Furthermore, parliament’s function was seen as a retrospective function to review previous trends and for the executive to account for decisions already made.

Although the constitution allows for money bills and therefore budgets to be amended by parliament, this was only recognised in theory. In addition, in the course of debates the extent to which parliament could express an opinion or amend the budget was limited, often justified by the argument that parliament is not equipped, especially in relation to tax policy. 

2025 has disrupted this culture and precedent. Neither budget 1.0 nor 2.0 would seem to have been a “cabinet collective decision” and tabling a budget without cabinet support would seem to go against the principles of budget governance 101. Cabinet approval is, or ought to be, the first hurdle to cross before a budget goes to parliament. 

With the change in the political composition of parliament, it can no longer be viewed as an institution that merely reviews previous trends. Amendments are possible, both on the expenditure and the revenue side. 

On the one end of the spectrum, this shift democratises the budget process. From 1787 to 1788 Alexander Hamilton, James Madison and John Jay wrote a series of essays known as the Federalist Papers, promoting the ratification of the US constitution.

When it came to the topic of control over public finances, they argued that, “This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people…”.

In the SA case, the Treasury and the finance minister never had inherently full autonomy over the “public purse”, although political dynamics might have created that illusion. The recent budget developments in SA could be seen as a democracy maturing. 

On the downside, the recent developments could, at least in theory, intensify a common resource pool problem to the fiscus. This entails individual ministers, apart from the finance minister, and parliamentarians driving up expenditure, deficits and debt beyond an optimal level, as they do not bear the full risk and costs of excessive deficits and debts.  

In a clear majority government the most common remedy to this problem is to delegate significant power to the finance minister. However, in a more ideologically fragmented multiparty government like the government of national unity (GNU) it is more common to have a fiscal contract or fiscal rules in place. 

On February 19, in the media conference following the postponement of the initial budget, finance minister Enoch Godongwana alluded to the fact that in cases where there are legalised fiscal rules the budgeting process becomes easier, because “the scope for battle over budget is limited”. 

Fiscal rules, and particularly a legislative rule focused on expenditure, could perhaps have made the 2025 budget cycle smoother. With greater democratisation of the budget process, fiscal rules might be required. 

• Botha is an independent researcher and consultant.