DA does not support permanent expansion of grants, for now

The official opposition party, the Democratic Alliance (DA), said it does not support a permanent expansion of the grant system at this stage. 

The DA presented its “alternative medium term budget policy statement” on Tuesday, 9 November ahead of Finance Minister Enoch Godongwana’s inaugural medium-term budget policy statement on Thursday, 11 November. 

Ashor Sarupen, who serves on the DA’s appropriations committee, said due to increased revenue from the commodity boom there may be space in the fiscus to extend the social relief of distress grant temporarily.

However, “in the medium to long term South Africa’s approach should focus on reforms, which will boost growth. In an environment of strong growth, and reduced corruption and wasteful expenditure, expansion of social support as a dividend on growth and good governance could be possible,” said Sarupen.  

Economists have projected that Godongwana will have social protection in his budget review, especially after the violence and looting of July.  

The unrest led then-finance minister Tito Mboweni to announce a raft of fiscal relief measures to support the country’s bruised economy. These included the extension of the R350 social relief of distress grant to March next year. The riots reignited calls for a basic income grant

“Given how much focus there has been on social protection and a basic income grant, any sort of commentary in the review on that or whether the social relief or distress grant will be extended will be quite important,” Hugo Pienaar, chief economist at the Bureau for Economic Research previously told the Mail & Guardian

Sarupen said the medium-term budget should make provision to cushion the poor and vulnerable against inflationary pressures. “Within the current fiscal framework, the DA model budgets for social grant increases of R30.1-billion over three years to keep in line with inflation.”

The DA said it expects the finance minister to accelerate the post-pandemic economic recovery; reduce gross national debt and manage expenditure; support the vulnerable; commit to no tax increases and leverage pension fund assets. 

Dion George, the DA spokesperson for finance, said Godongwana’s medium-term budget will be a key determinant of the pace at which South Africa’s postpandemic economic recovery will unfold.

George said the government has demonstrated, over and over again, that an incapable state at the centre of the economy is unable to generate growth. He said the greatest barrier to economic growth is the government’s inability to provide a reliable power supply. 

“Power failures are costing our economy in excess of R100-billion per annum.”

With continuous rolling blackouts over the past two weeks, Eskom implemented stage four load-shedding on Monday until Friday morning. The utility on Tuesday moved this to stage three for the rest of the week because seven units had not returned to service as anticipated and unplanned breakdowns persisted.

“While Eskom regrets the escalation in load-shedding, it is necessary to ration the remaining emergency generation reserves,” said the utility

George said it is time for the treasury to enable South Africans to become independent of Eskom through a 100% solar power rebate. 

“Eskom’s debt must be paid off to the extent that it has at least a 2:1 asset-to-liability ratio, after which it must be split up into three separate entities – generation, transmission, and distribution – and privatised as much as is reasonably possible,” he said. 

Further the DA said the medium-term budget should provide a clear fiscal departure away from emergency budgeting, implemented to address the short-term effects of the pandemic, towards a resilient fiscal framework that is focused on a balanced budget, economic growth and job creation.

“While the recent cyclical commodities boom has provided a temporary reprieve to the fiscus, in the form of improved revenue, it is imperative that Minister Godongwana sets the country on a path of continued fiscal consolidation, sustainable public debt management and accelerated structural economic reform,” Sarupen said. 

“In order to ensure that this resilience-building focus is sustainable, it is important that South Africa urgently addresses its twin challenges of a high debt burden and stubbornly low economic growth rates.”

Anathi Madubela is an Adamela Trust business reporter at the Mail & Guardian.

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Anathi Madubela
Anathi Madubela is a business journalist with a keen interest in the retail sector.

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