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@Pensions crisis: The rot spreads
Charlene Smith
The government is scrambling to stop KwaZulu-Natal and the Northern Province from following the Eastern Cape, where a welfare crash last week deprived hundreds of thousands of pensioners, single parents and disabled of their payouts.
Minister of Welfare and Population Development Geraldine Fraser-Moleketi said this week that R801-million is being advanced to the Eastern Cape from the national Treasury and payments would be made on January 19. But she would not say where the money had come from: “I’m trying to avoid answering [that question],” she frankly admitted. Attempts to get answers from the Ministry of Finance also drew a blank.
The Eastern Cape crash alone has placed a burden of at least R1,5-billion on a fiscus that is already characterised by overspending. The figure does not include R350-million in backlogs owed to almost 100 000 individuals.
The crash has led to the collapse of some welfare organisations in the province as the provincial government has not paid subsidies since December. The province has announced that when it does begin paying again — after the new Budget in April — those grants will be cut by 10%.
Welfare organisations rely on the state for 65% of their funds, and the collapse of these organisations will mean impoverished citizens, hammered by the government’s welfare crisis, stand to face a dual blow.
Fraser-Moleketi said the only two provinces faring well are Gauteng and the Western Cape, with the Free State “holding its own”.
Knowing this, the government was initially reluctant to intervene as it knew bailing out one province would see a flotilla of sinking provinces asking for lifeboats. Last week, when the crisis broke, it seemed that pensioners, the recipients of maintenance grants and the disabled would receive no payouts until April.
The Eastern Cape department of welfare is bankrupt. Technically, 24% of the Eastern Cape budget has been set aside for welfare services, but it has been swallowed up by social-security grants.
Niresh Ramklass, national co-ordinator of the National Welfare, Social Service and Development Forum which represents 8 000 welfare and civil society organisations, said the Eastern Cape situation confirmed concerns among welfare organisations in that province that a desperate financial crisis is looming and the provincial government is not being transparent.
“The Eastern Cape is a very poor province with one of the largest populations in the country, and very high rates of unemployment and poverty. Welfare services have been the main means of support for hundreds of thousands of families. Welfare organisations in the province are being stretched as they report increasing levels of poverty leading to desperate situations.
“We have issued calls for developmental programmes to generate jobs and opportunities for people in the province. Not enough has happened. At the same time, some welfare organisations have not received subsidies from the province for months, some have closed and others are in danger of collapse. There has to be serious top-level intervention.”
The forum met Fraser-Moleketi last week. Its task team is a critical back-up to the government’s crisis-intervention task teams.
Fraser-Moleketi made dramatic strides last year in eliminating fraud and arriving at accurate tallies of how many beneficiaries should be receiving assistance. There were previously no national figures because of “homeland” divisions which skewed budgets.
She has been holding urgent discussions with the Department of Finance on ways to deal with the Eastern Cape crisis, and, after the intervention of Deputy President Thabo Mbeki, funds were released.
Eastern Cape Welfare MEC Mandisa Marasha admitted, in an interview prior to Fraser- Moleketi’s announcement of assistance, that she did not know from where she would get the money. “Our problem is not just January — it is to the end of the financial year.”
She admitted there is not even money to provide feeding services to pensioners, and payments to private welfare organisations are being staggered. “We would be pleased if welfare organisations could raise more of their own funds and rely less on the government. Although some are threatening to close down, we are trying to sustain them. We need more, not less.”
In all, 2 057 welfare programmes rely on subsidies from the provincial government.
In an interview with the Mail & Guardian, Fraser-Moleketi said there is a “a consistent underfunding of the social security component of the welfare budget because of an absence of accurate data on groups and types of beneficiaries, and the numbers of beneficiaries.
“When we amalgamated the 14 welfare systems in April 1996, we began trying to redress this. Last year we began working on re- registration [of beneficiaries] to have more accurate data. In the Eastern Cape we had 689 000 beneficiaries registered, and re-registration, which will be completed at the end of this month, has so far cut that figure by 125 000 [people receiving grants who were not entitled to them].
“However, actual monetary benefits to the overall Budget will not be felt until 1999. There is also an annual growth of 2% of new beneficiaries, which budgets have failed to take into account.
“One problem in the Eastern Cape is that people have different identification numbers. Some still use Ciskei and Transkei ID books. Home Affairs is helping us with a pilot scheme to unify ID numbers under South Africa so we can further eliminate fraud.”
However, Fraser-Moleketi admitted that there are serious management problems in the Eastern Cape and some other provinces too. She said provinces have been carrying budgetary deficits since 1994, and in the Eastern Cape pension backlogs mainly from former bantustans go back two years. Ciskei and Transkei did not reconcile their books in the past.
The government has paid lip service to poverty alleviation with little co- ordination taking place — although a poverty report due from Mbeki’s office in February is expected to address this shortfall.
“The one difficulty we will need to overcome this year is the question of backlogs. We need to look at how we are dealing with the social sector as a whole in the government and emphasise the importance of social grants in terms of poverty alleviation.”