Picture: Itumeleng English/African News Agency (ANA) – Re-elected ANC president Cyril Ramaphosa at the 55th National Conference, Nasrec, Johannesburg on December 20, 2022. Ramaphosa should use his victory at Nasrec in his 2023 SONA this week to lay the strongest foundation needed to rebuild not just a capable, but a recovering state, by committing to passing a universal basic income grant into law, the writer says
By Isobel Frye
Having emerged victorious in the recent ANC party leadership election in December 2022, the President and his men and women may be tempted to just let the current policies run their dismal and lacklustre course as this administration winds down to the 2024 elections.
But if President Cyril Ramaphosa is indeed putting the interests of the people first, he should use this State of the Nation Address (SONA) to commit to laying the strongest foundation needed to rebuild not just a capable, but a recovering state, by committing to passing a universal basic income grant into law. And who knows, it may just win his party the next election too.
The next provincial and national elections will in all probability herald in a ragged patchwork of coalition legislatures. The current experiences of coalition government are illustrated in the ongoing power tussles, battles and ambushes in the cities of Johannesburg, Ekurhuleni and Tshwane. Exchange-of-mayor appears to be the most important business of the day, any day and every day.
The most publicised outcome of this chaos is the apparent inability of Joburg to negotiate a regular and budgeted contract for the fleet used by the JPMD traffic police, which brought great delight to those regularly fleeced by the drivers of said vehicles.
More seriously though, the water crises in all three metros also demonstrate that nowhere is the critical mandate of local government – service delivery – being prioritised. This is clearly to the extreme detriment of the good electorate who are also contending with power failures, growing joblessness and the twin reapers of high inflation and ever rising interest rates.
That interest rates are surely not the correct policy tool with which to discipline an inflationary spike, which is due in large to global trends on energy and food shortages, is not the focus of this column. Instead, the impact of these poor policy decisions on the well-being of the population of South Africa is the issue.
We have seen businesses close, and unemployment numbers soar to levels that cannot sustain a nation. Schools are reporting a large increase in unpaid fees as parents battle with rising costs and shrinking incomes. The rise of extremely viscous attacks across the country are further indications of the overall sickness of South Africa’s society and the resultant breakdown of our common humanity as daily survival becomes an increasingly brutal battle.
President Ramaphosa told residents in Botshabelo, Mangaung a month ago, that South Africa is the leading country on the African continent in terms of rolling out social grants and other aspects of the social wage including housing and education, up to tertiary levels.
This is indeed correct and commendable, but it is not just the generosity of the ANC that is behind these programmes. Instead, these are constitutional imperatives that government is bound to uphold. The question really should be: after almost 30 years of control of the state resources, have we done enough to invest in normalising a society that was built on exploitation, dispossession, and the need to have a constant surplus labour reserve?
In 2002 the Taylor Committee of Inquiry into a Comprehensive Social Security completed three years of work and published an extremely detailed report of its recommendations.
The recommendations set out a truly inclusive and comprehensive framework for social security that included reforms to the UIF (unemployment insurance fund), the RAF (road accident fund), COIDA (workmen’s compensation), national health insurance and schemes to get people into work through labour market activation programmes and public works. And at the heart of this was a universally guaranteed basic income grant that ensured bread on every table and the steady heartbeat of demand to keep a healthy economy growing through active (re-)distribution of income.
The work was epic. The Committee was made up of representatives from all sectors of society, and line departments including National Treasury. But what the Committee failed to achieve was consensus on the macro-economic reforms necessary to finance this massive policy overhaul.
Public and social policies are integrally linked, forming a truly Gordian knot. The state is the regulator that oversees and corrects the balance between supply and demand, between the amount of money that flows to private pockets as salaries, profits and dividends, and the levels of taxation paid by employees, corporations, everyday consumers, importers, and the owners of accumulated wealth.
This regulation needs to speak to the levels of social spend required in turn to feed both the nation and the economy, ensuring that there is enough money to boost demand to support the production and supply of goods.
But in South Africa we have shied away from any public debate about the principles of these calculations. We have coyly avoided unpacking the values and the workings of fiscal or tax policy and instead have swallowed the neo-liberal orthodoxies of low taxation for the corporates and the rich. The only tax increase in recent years has been an increase to consumption taxes of VAT and excise taxes. In a failing economy we have fleeced demand, not taxed profits.
After years of staring down proponents of a universal basic income grant, the ANC with clear vision committed itself to a universal basic income grant in its December conference. This belated commitment, however, suffers the same contagion as the resolution makes a BIG rollout conditional on the state being able to afford it. Under current macro-economic policies, however, this can never happen.
Leaders need to stop seeing government spend on social protection as charity or handouts. It needs to step up and get its collective head around one of its own primary functions. Alongside defence and security, government should be regulating the healthy balance of taxation and spending. It has failed to do so at all since 1994.
The Constitution makes provision for the progressive realisation of its obligations to roll out social protection subject to the state’s available resources. It does not however set the division between public and private ownership of national income and since 1994 we have seen a steady redistribution from the fiscus to building private wealth.
Before the chaos of government that will come with coalition governments, what a fitting commitment by a President committed to the recovery of this ailing state it would be for President Ramaphosa to commit in his SONA speech this week to legislating the provision of a universal basic income grant to all, taxed back from the middle class and wealthy (which immediately reduces its cost). And as all the research shows, the multiplier effect of money circulating will have a stimulatory effect on the shrinking economy and meet basic needs, fulfilling government’s basic task.
And who knows, it may not be bad for the election outcomes of the current ruling party.
Isobel Frye is Executive Director of the Social Policy Initiative