The government has never clearly declared itself against the idea of a basic income grant (BIG), but all the signs are that it would like the clamour for BIG — from trade unions, churches, the NGO sector and the Democratic Alliance — to go away. The unofficial official view is that it is unsustainable, unmanageable and corruption-prone. There is also the whiff of a suggestion that it would fuel the dependency culture in South Africa, rather than the culture of sturdy self-reliance so beloved of Margaret Thatcher.
This argument is the easiest to dispose of. Poverty on the South African scale is not the result of a sense of entitlement among people who need to get off their butts. Many of the 20-million-odd South Africans who live in poverty have little opportunity to lift themselves by their bootstraps. They are poorly educated, unskilled and asset-poor. They are the victims of the dual economy bequeathed us by colonialism and apartheid rule.
The government tends to argue that it makes better sense to improve the existing welfare system. But a key problem is that so many people fall completely outside the welfare net, being entitled neither to child grants nor unemployment pay nor pensions. The Taylor report held that a BIG of R100 a month would “reduce to zero” the number of poor people excluded from the social security system and “nearly completely eliminate” extreme poverty. Arguing that the BIG is the single most effective anti-poverty intervention available to the state, the Economic Policy Research Institute found it would close the poverty gap by 66% in households with children but no pensioner. More than half the benefits would be distributed to rural households, where poverty is most grinding.
The crunch issues are how the money for a monthly grant would be raised and distributed to beneficiaries. Estimates of the net annual cost to the state range from R15-billion to R30-billion, and there are legitimate questions about the government’s capacity to service the additional millions who would be eligible for the grant. The gross cost would be about R48-billion, with the balance clawed back through tax, which is quite a hurdle. It would mean increasing the budget deficit — arguably a macroeconomic step that will in the end be worth it.
But depending on ideological bent, there are ideas about how these obstacles can be overcome. The BIG Coalition, comprising unions, churches and NGOs, favours a wealth tax on the top quintile of earners as the funding mechanism. The DA believes the money can be raised through the tax bonanza, a 2,6% budget deficit and a 4% to 6% increase in VAT. Increasing VAT would reduce the income grant by about R12 to R16 a month, say economists.
To reduce the bureaucratic costs and risk of corruption it has also been proposed that beneficiaries receive their grants as a direct transfer into their personal bank accounts. Some pension and disability grants are already paid in this way and the Post Bank, with branches at all post offices, could serve as the primary channel. The church, which has helped register child grant beneficiaries, could also play a role. Lateral thinking is needed to reduce the costs of paying grants — each one currently costs R25 a month.
The government has discouraged creative thinking on the practicalities of BIG by hinting the grant will never happen. It has even tried to stigmatise the proposal by hinting that it is “ultra-leftist”. It would do far better to accept that it could have a key role to play in easing poverty in South Africa, and to join the debate in the spirit of open-mindedness.
From tragedy to farce
In a celebrated bon mot, Karl Marx observed that history does repeat itself — occurring first as tragedy, then as farce. Marx was highlighting the contrast between the titanic upheavals surrounding Napoleon Bonaparte and the buffooneries of his nephew, Louis Napoleon. But his observation applies equally to right-wing Afrikaner nationalism — tragic in its 1948 to 1994 incarnation and farcical as the Boeremag.
The 22 Boeremag members charged with treason, sabotage and murder forgot the first rule of insurrection: set aside a nest egg for your legal costs. This week the wrangle over their defence, which has repeatedly delayed the trial, reached new comic heights when two of their lawyers flounced off because the Legal Aid Board will not pay them in full. Broke (alleged) bombers can’t be choosers. The “Pretoria 22” apparently expect the state they once (allegedly) planned to overthrow to fund the lawyers of their choice.
But then their enterprise was knockabout comedy from the start. Four thousand men in safari suits and bad shoes would drive 30-million blacks from South Africa. To fulfil the prophecies of 19th-century space cadet Siener van Rensburg, Africans from Gauteng would be forced into KwaZulu-Natal and on to boats, to be shelled from the shore. As a trade for their support, coloured “allies” would receive the Western Cape.
Marx’s point is that movements spark revolutions at particular points in history, when they inspire mass support.
But there is little chance that a bunch who can’t organise their own treason trial can inspire a revolution.