7 MARCH 2022

GOVERNMENT’s SOCIAL GRANT SYSTEM

The road to hell is paved with good intentions

Opinion Piece

by Rona Bekker

It is time for South Africans to realise the truth; we will never become a self-reliant, independent people; not with our Government’s askew priorities and imbalance between true job creation and constant, debilitating social assistance.

The concept of social assistance is a longstanding and widely accepted socio-economic tool for assisting those in dire need within every country’s society. However, South Africa, instead of using it as the temporary crutch it is intended to be, uses it as a permanent wheelchair for its unemployed, yet able citizens.

As stated in both the State of the Nation Address (SONA) and the Budget Speech of the Minister of Finance, the State aims to once again expand the financial injection allocated for social assistance in South Africa. Ironically enough, the President also stated, “if there is one thing we all agree on, it is that the present situation – of deep poverty, unemployment and inequality – is unacceptable and unsustainable”, yet he seems intent on ever increasingly, sustaining this unsustainable method of assistance.

No one can argue with the rationality, necessity and validity of the social grants aimed at assisting the elderly, who can no longer earn a sustaining income, due to their inability to perform work. Valid grounds support the disability grant, care dependency grant, foster child grant, grant-in-aid and even, to some extent, in exceptional circumstances, the child support grant.

Where the State truly starts its fiscal downfall, is on the slippery slope of Social Relief of Distress grants (SRD).

Government’s reliance on the fall-out of Covid-19, cannot remain the motivation for crippling a nation by ensuring their constant and never-ending dependency on the State.  If the President was sincere in his statement during SONA “that the State must create…an environment in which South Africans can live a better life and unleash the energy of their capabilities”, then he cannot in the same breath justify increasing the State spend on social assistance for able bodied, unemployed people.

The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees, who are actually willing to work and not to nurse the slack citizens unwilling to fend for themselves, despite being able to do so.

In contradiction with the above, the Minister of Social Development, Lindiwe Sisulu, on 22 February 2022, published the amended Regulations to the Social Assistance Act for public comment.

In essence, these amendments aim to ease, or lower, the requirements of eligibility for social assistance, as well as ensuring that the extension of SRD grants, can be effected without authoritative oversight, based merely on the apparent ‘need’ therefore.

Bearing in mind that 10 million people receive the SRD grant in South Africa, the possible fiscal drainage these amendments will cause can only be imagined. The President himself declared that “as much as it has had a substantial impact, we must recognise that we face extreme fiscal constraints”. If the statement from the top is that “any future support must pass the test of affordability, and must not come at the expense of basic services, or at the risk of unsustainable spending”, how does the Government justify the R3.33 trillion allocation, over three years, of the budget to social assistance? This is approximately 60% of the State’s non-interest spend.

The Department of Social Development will receive the largest allocation of R58.6 billion over the medium term, of which R44 billion is allocated for a 12-month extension of the R350 SRD grant.

The SRD grant was introduced in 2020/21, as a temporary relief measure in view of the plight of those who have lost economic opportunities and were adversely affected during the worst periods of the State-induced disaster. This emergency grant added to the country’s already insanely costly social safety net.

South Africa now pays grants to more than 46% of the population.

Minister Godongwana announced, in his budget speech on 23 February 2022, that Treasury estimates tax revenue for 2021/22 to be R1.55 trillion, which is R62 billion higher than their estimates from four months ago, and R182 billion higher than their estimates from last year’s budget.

This follows a shortfall of R176 billion for 2020/21 when compared to the 2020 budget forecasts.

This ‘windfall’ has come mainly from the mining sector due to higher commodity prices. But, as the Minister himself said, “one swallow does not a summer make”.

Allocating these enormous amounts of money to social relief from distress grants, now, due to the amendments of the Regulations, in an easy to come by manner, with eased extension, even in circumstances where ‘your disaster’ has not been declared a disaster by the State, is exactly planning permanent expenditure on the basis of short-term increases in commodity prices – something Minister Godongwana warned will ensure a definite worsening in our already disastrous fiscal deficit.

Rona Bekker is the Senior Policy Advisor at the National Employers’ Association of South Africa (NEASA). 

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