Social development minister Lindiwe Zulu has pleaded that social grants be protected as the Treasury imposes austerity measures on government departments in the context of shrinking tax revenue.
Zulu was replying to a question by EFF MP Laetitia Arries in the National Assembly on Wednesday on access to the R350 social relief of distress (SRD) grant, which was created to address the challenges stemming from the Covid-19 pandemic. There is a range of other grants the government provides, such as the old age, disability and child support grants.
An amount of R35.7bn was budgeted this year for the SRD grant, which has been extended twice, and R253.8bn for all social grants.
Zulu said her department is asking for a further extension of the SRD grant, which could form the basis of a basic income grant.
“We are saying to SA and to our own government that we cannot afford hunger, we cannot afford poverty, we cannot afford to have people who cannot even have the basics,” the minister told MPs.
“While we are appreciative of the constraints on government and the constraints of budget, we know we can squeeze from other places ... where the value is not felt by our people. I am not ignorant of the other challenges that face the country.”
Zulu said she is conscious of the budget deficit, declining revenue and the austerity measures, “but the one thing I need to put in perspective and protect is the social grants. This government of the ANC has paid social grants since 1994.”
The Treasury has made it clear that the medium-term budget policy statement in October will have to clamp down on government spending. It has signalled this to government departments and provinces in recent weeks.
In a letter to provinces, the Treasury has warned it faces “unprecedented” challenges for the current fiscal year and has instructed departments and provinces to freeze the hiring of new employees. It has also frozen advertising for new procurement contracts for all infrastructure projects unless approved by the Treasury. It has instructed that drastic cuts be made to spending on travel, catering, conferences and workshops.
The Treasury said in the letter an urgent conversation is required in the government about how to restore public finances to a sustainable path for the current year and the medium term.
Commodity prices have slumped and growth has weakened, with load-shedding and Transnet’s logistics constraints the main contributing factors.
The latest monthly figures from the Treasury show corporate tax receipts have declined by more than 20% since a year ago, while the unbudgeted public sector wage settlement has driven up spending. Economists now estimate the deficit and debt ratios will be far worse than finance minister Enoch Godongwana projected in his February budget.
In an interview with Business Day last week, the head of the Treasury’s budget office, Edgar Sishi, said there is an inability within the government to prevent cyclical spending becoming semi-permanent. Once a fiscal stimulus is injected it is difficult to withdraw, as has been the case with the SRD grant.
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