Picture: Phando Jikelo/African News Agency (ANA) – Minister of Finance Enoch Godongwana at the City Hall delivers the Mid Term Budget Speech in October 26, 2022. It is hoped that the tabled Budget for 2023 will be aligned to the undertakings given by the President, and not expose his words for empty promises, the writer says.
By Isobel Frye
SONA 2023 was delivered by President Ramaphosa on February 9 against the sound and fury of a chorus that soon vacated their space, leaving the president with the space to share his strategic vision for the country in the next 12 months.
The SONA is delivered in Parliament (or, temporary Parliament). which is fitting as it is here that elected representatives of the people will use their oversight powers in these 12 months to interrogate and monitor the implementation of this vision in action. Parliamentary democracy is based on an expectation of oppositional politics – preferably not as confrontational as on the night of SONA – but it is not and should not be, a mere rubber stamping.
Opposition is expected, well, from the opposition. Not from within the ranks of your own party. But that is what it seems we should be expecting on Budget Day, a budget delivered by the Minister of Finance that is at odds with the promises of his own President.
The President promised on the night of the ninth that everybody in South Africa will have a guaranteed minimum income. He promised an extension of the Covid- 19 grant and he promised that additional measures will be taken to ensure that the poor do not face the devastation of the food and fuel price driven inflation without additional assistance.
These are the words of a leader of a country in which employment and bread on the table are a distant memory or future dream for most of the population. These are the promises that enable a mother to nurse her hungry children to sleep, knowing that tomorrow will be better than today.
But just three working days later, on Valentine’s Day, government proceeded to gazette a notice announcing its intention to extend the Covid grants by 12 months at exactly the same amount – R350 per person per month, as when it was introduced just under three years ago. The purchasing power of this insultingly small grant has fallen by 15 percent since its inception, and this will fall further still if government’s announced intention is followed through on.
There are critical design flaws with the SRoD grant, which really need to be considered.
Food Poverty Line
The amount of R350 needs to be indexed to the Food Poverty Line (the FPL). At R624 per person per month in 2022, the FPL is the lowest amount of money determined by StatsSA to afford the basic foods that the World Health Organisation has determined is sufficient to survive on. The R350 Social Relief of Distress Grant is 56 percent of this amount, and given food inflation levels of around 12 percent, the purchasing power will erode even more significantly if the 14 February draft regulations are finalised.
A social assistance grant should be enough to meet basic needs and create the spending power in the hands of the poor to stimulate bottom-up economic recovery.
More people need to be getting the grant
Despite the extreme levels of poverty in South Africa, the full allocated budget of last year’s SRoD allocation will not be spent by government in this financial year.
In 2015, the last poverty measure by StatsSA found that 25 percent of people lived below this Food Poverty Line. This was before Covid-19 and the steady rise in unemployment which means that far more people have fallen below this level. But the eligibility criteria last year for the SRoD grant were crafted to fit in the R50 billion budget allocated by Treasury to the SRoD, not according to statistically known need.
The criteria included an extremely low means test that was raised as it became clear that too few people were able to successfully negotiate the application process. By October 2022, the half-year calculations showed an underspend of the SRoD budget of around R2 billion.
According to SASSA’s recent presentation to Parliament on the 15th February 2023, in January 2023, 13.5 million people applied for the R350 amount, with SASSA approving just over half of these applications.
Civil society organisations have spent many hours engaging as intermediaries between hungry beneficiaries whose monthly grant applications are being rejected, and policy makers who see benefit in saving the state money. Civil society tactics have included personal engagements and submissions to government and litigation to get government to stop using obstacles to eligibility to save a few rands that are so desperately needed.
To change the current trajectory of poverty and hopelessness, we need to lift whole communities out of destitution, with enough money going to enough people.
Tax relief to middle classes greater than cost of SRoD
Twelve months’ successful receipt of the grant by one person costs the fiscus R4,200. In the last tax year, annual tax rebates of R14,220, R7,794 and R2,601 were handed back to income taxpayers as primary, secondary, and tertiary tax rebates respectively. While a tax rebate is not cash in hand, it is a direct reduction on tax payable, which translates into money in the pocket and out of the fiscus.
South Africa is a country of such extremes that we need to understand the impact of the burden of poverty that lies so heavily and seek to progressively reduce that, we need to see progress as promised in the Constitution.
It is hoped that the tabled Budget will be aligned to the undertakings given by the President, and not expose his words for empty promises. These are the decisions made by our leaders and representatives. Our futures are bound together inextricably. Let us hope that right and reason prevail.
Isobel Frye is Executive Director of the Social Policy Initiative