Was the 2022 budget designed for the bankers, or for the people?
Despite a revenue windfall of nearly R200bn, the Treasury has shown that its priority remains pumping public money into financial markets to pay down the debt faster than required, rather than the desperate struggle of millions of South Africans to feed themselves and their households.
The finance minister must tell the 55% of the South African population who live in poverty how this stance will contribute to their wellbeing.
Civil society partners are especially dismayed that, with extra revenue in its back pocket, the Treasury has chosen not to allocate any funds to extending and expanding the social relief of distress (SRD) grant.
The grant has been arbitrarily and unjustly capped at its current level, a pitiful R350, for the existing 10.5-million beneficiaries.
It has not even been adjusted for inflation, meaning that, in real terms, the finance minister is taking money directly out of poor people’s pockets. Yet he is happy to give corporations an almost symbolic 1% tax cut, to show whose interests he gives precedence to.
Most appallingly, the SRD simply falls off a cliff in 2023. The discontinuation of the grant next March, with nothing to replace it, is a worst-case scenario.
The previous withdrawal of the grant was undoubtedly a major motivating factor in the looting witnessed in the July unrest, in which more than 300 lives were lost.
Despite the minister’s fantasies about private sector-led job growth, the unemployment crisis will not be resolved in the medium term. Action must be taken now to shore up the economy from the bottom — the demand side — while appropriate industrial policies promote a revival of various sectors.
This is not only necessary from a human rights perspective; it is also widely considered a sensible macroeconomic response to recession and crisis.
The business-first dogma that the finance minister espouses is a Global North ideological export, designed to rig the economic playing field in favour of the wealthy.
Neoliberalism has decimated economies the world over, and even the rich countries are increasingly evolving away from it.
The SRD, set at R350, is just over half the level of the food poverty line — set by Stats SA at R624 per month. As at February 1, 15.15-million people had applied for the grant. Many were denied due to system errors and faulty PAYE and Unemployment Insurance Fund databases.
According to researchers at the University of Cape Town's Southern Africa Labour and Development Research Unit, up to one third of eligible applicants may be unfairly excluded.
Those 4.6-million people who have been shut out of social protection now have no hope of assistance from their government and face the prospect of starvation.
This is a violation of the government’s constitutional obligation to realise social protection and assistance for those who need it, within available resources.
It is plain that the resources are available and the National Treasury has elected not to use them to protect and assist those in need
In the wake of this bankers’ budget, it is plain that the resources are available and the National Treasury has elected not to use them to protect and assist those in need.
The Treasury is overstepping its mandate by stymieing the policy direction that has been supported by other government departments and articulated by the president.
As the very likely lifting of the state of disaster approaches, the department of social development is required to finalise regulations to bring the SRD grant under the rubric of the Social Assistance Act (it is currently tied to the Disaster Management Act).
This process will now have to codify and justify the unequal treatment of some who, in the president’s words, “face the immediate challenge of feeding themselves and their families”.
Minister Enoch Godongwana has told us that any new social protection provision beyond March 2023 would need to be more “targeted” — policyspeak for excluding even more people for whom the SRD has been a bulwark against malnourishment.
He has also threatened departments with an ultimatum — that future social protection will likely come at the expense of public services.
His public statements since the budget, and those of Treasury officials, indicate that the Treasury intends to continue meddling in social security policy, a complex area in which they lack expertise.
The minister further signalled the necessity of tax increases to finance “additional social protection”. In this regard, civil society partners are in agreement. Carefully managed progressive contributions from the wealthiest taxpayers are needed, to finance a universal basic income guarantee (UBIG) in SA, at least to the food poverty line, and rising over time to the upper-bound poverty line.
Any tax increases must not be levied on low- and middle-income households such as through an increase in VAT.
A menu of financing instruments has been put forward by the Institute for Economic Justice and others, including a wealth tax, and a progressive social security tax. These ensure that comprehensive social protection does not come at the expense of public services.
It is essential that a framework to transition the SRD into a UBIG following its expiry in March next year is worked out in the next few months. Otherwise the government will run out of time to put the required legislation in place.
Far from being a drain on the economy, extensive international evidence shows that this intervention boosts household consumption (which is projected to decline by 5.4% in real terms next year) and stimulates local economies.
It flows back into government revenue through VAT; assists in job seeking and job creation; has positive nutrition and health outcomes; supports women’s economic participation and eases the burden of unpaid domestic and care work; and supports social cohesion and civic participation — giving disenfranchised people a renewed stake in their society, and contributing to the health of our democracy.
A UBIG is not a silver bullet, but it is a pioneering step towards an inclusive, developmental economy. It takes courage to move beyond stale, ineffective economic policy, but this is the kind of courage South Africans deserve from their leaders at this time of stagnation and crisis.
• Howson is from the Institute for Economic Justice, Mabitle from #PayTheGrants, Philander from the Black Sash, Seopa from amandla.mobi and Frye from the Studies in Poverty and Inequality Institute
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.