THE government has dampened hopes that a basic income grant can be introduced at this stage.
Minister of Social Development Zola Skweyiya voiced support for the principle of a universal income grant to ease poverty on Thursday, but hinted he did not believe it was feasible in the short term.
Skweyiya was reacting to the long-awaited Taylor report on a comprehensive social security system in South Africa, released on Thursday for public comment.
The report throws its weight behind a universal income grant to ease poverty – but without specifying a figure or detailing how it would be financed.
It recommends an initial establishment phase, from 2002 to 2004, when beneficiaries would be identified and the size of the benefit determined, and an implementation phase between 2005 and 2015.
It estimates that a R100-a-person grant would cost an additional R47-billion annually, but cites submissions to the effect that R22-billion of this could be clawed back through the tax system. It offers no opinion on the feasibility of such claims, saying changes to the tax system lie outside its brief.
In addition to the universal income grant, the commission calls for child support grants to be extended to all children between birth and the age of 18. Children over six years of age are currently not eligible.
Trade unions, churches and NGOs involved in “The People’s Budget” have called for a R100 monthly income grant to every South African, financed by a “solidarity tax” on the top quintile of income earners.
Minister of Finance Trevor Manuel, among other Cabinet members, is known to have grave reservations about how a basic income grant (BIG) can be sustainably financed.
At a press conference in Pretoria, Skweyiya said the government supported BIG in principle, but asked whether South Africa had the resources and institutional capacity to implement it.
Skweyiya hinted that the proposals would take many months to process. The ministerial committee on the budget would not be able to consider the financing aspects of the recommendations until April next year.
“Trade unions shout for BIG, but their members who work in the public service have been unable to deliver to the people,” he said. It had been possible to extend child support grants to more than a million children only with the help of the churches.
Skweyiya suggested the government supported the Taylor commission’s recommendation that BIG be introduced in phases. The report was handed to Skweyiya in February, but was kept under wraps while a committee embracing the health, labour, finance and transport ministers deliberated on it.
It was finally discussed this week in the Cabinet, which temporarily shelved the hot potato of BIG by inviting public comments on the document before a deadline of June 15. The report is to be circulated to trade unions, political parties and other interest groups, which are invited to channel their responses through the relevant ministry. The Cabinet offered no opinion on any aspect of the 159-page document.
The report is a vitally important first look at the feasibility of a European-style comprehensive social security system, given the scale of social distress in South Africa.
It also calls for the establishment of a social security board and social security agency, under Skweyiya, which would act as an oversight authority for all social security in South Africa.
To protect the unemployed, it also recommends the extension of social insurance wherever possible, and the right of public servants to opt for unemployment insurance.
The commission finds that more than 13-million South Africans live below the poverty line and have no access to social security. At present there is no grant support for children between the ages of seven and 18, or adults between the ages of 18 and 59.
The commission remarks that the norm of full formal employment, characteristic of European economies, may never be realised in the developing world. This required a fresh look at social protection systems.
On the constitutional framework for social security, the commission warns that the state is vulnerable to court challenges based on the Constitution’s socio-economic rights, following the judgement in the Grootboom case. It calls for the social security laws to be amended to take account of the judgement.
The commission finds that the existing grant system, although inadequate, significantly reduces the poverty gap. The state pension was found to narrow the gap by 94% in January 2001, and other grants by 23%.
However, it warns that the number of people qualifying for old-age pensions will rise by 50% over the next 15 years, raising costs by R30-billion.
On job creation, the commission indicates its support for more labour-intensive methods of production. It cites evidence by civil engineers that labour-intensive construction methods would create 300 000 jobs, without loss of quality or raising costs.