This was the opinion of economists and opposition politicians reacting to this week’s announcement that social pensioners would receive a one-off, R60 bonus in October. About 14-million black pensioners and about 765 000 white pensioners in South Africa and the ”independent” states of Transkei, Bophuthatswana, Ciskei and Venda, will benefit. The R128-million bill will be paid out of a R1-billion contingency fund which, when it was set up earlier this year, prompted criticism that it could be used for ”election sweeteners. While welcoming any relief for pensioners -black pensioners get R 150 a month, ”coloured” and Indian R200and whites R251 – critics derided the move and said they expected more vote-catching ploys to come.
The ”good news” was the amount was being applied in a nonÂ-discriminatory way, said Harry Schwarz, Democratic Party spokesman on finance. ”This shows slight progress in gov¬ernment thinking -the government has accepted the principle that everyone should be treated equally, at least as far as the bonus is concerned. The bad news is that the amount is insufficient and does nothing to address the real problem – the need for equal, improved pensions for all.”
Schwarz had warned at the time the R1-billion contingency fund would be used for election sweeteners and this was now happening. He recalled how, before the October municipal elections last year, public servants were told by how much their salaries would be increasing – ”but it was only after the election we were told the price of petrol was being raised to finance those increases”. He doubted the bonus would have any effect on the polls. . ”There is unprecedented anger about the economy and its mismanagement,” he said. ”This pay-out is not going to change that.”
Sanlam’ s chief economist, Johan Louw, said that just two months into the new financial year, government spending was already 20,6 percent up on what it had been during the same period last year. Although it was still too early to say what would happen, economists were worried about the situation. ”All the indications are that the government is going to overspend again,” Louw said. He criticised the decision to dip into the contingency fund to finance the pension bonuses: ”We understood the fund would be used for unexpect¬ed outlays. It is rather worrying that they are already spending it” South Africa needed a R4-billion surplus in its current account to finance loan repayments and strength¬ en its foreign exchange reserves, Louw said. ”To find it, we should be decreasing the rate of spending in the economy as a whole,” Louw said.
The government was trying to abide by a tight monetary policy – curbing private sector spending through keeping interests rates high and raising general sales tax. But to have any real effect it should be backed up by a restrictive fiscal policy, which meant ministers keeping spending within budgeted limits. ”The government wants the man in the street to cut back but it is over spending itself,” Louw said. ‘ The more money pumped into the economy through an expansionary fiscal policy, the more upward pressure there was on prices and the greater the likelihood of South Africa’s current inflation rate (almost 15 percent) spiralling. ”The country can’t afford it,” he said. ”There is already talk of an expected salary increase for civil servants,” Louw said. ‘The government is clearly worried about losing votes. And we are worried that it will give in and make concessions to the man in the street, to make him feel financially a little better off.” Conservative Party spokesman on pensions, Dr Willie Snyman, said the bonus was a clear election ploy to buy pensioners’ votes.
