The Treasury’s resolve to rein in spending will be put to the test after a high court judgment that set aside the government’s interpretation of “income” and “financial support” when considering social relief of distress (SRD) grant application, in a move the department said would cost R60bn a year — nearly doubling the current expenditure.
In its judgment, the court highlighted the conflict between the need for fiscal consolidation and the government’s constitutional obligations towards citizens. The court said the SRD grant, introduced in 2020 in response to Covid-19, had become a permanent feature of SA’s social assistance regime.
The Institute of Economic Justice (IEJ) and PayTheGrants, a campaign advocating for economic justice, brought the matter to court against the department of social development, the SA Social Security Agency (Sassa) and the Treasury over regulations that prevented 8-million people from receiving the grant.
Judge Leonard Twala found that the affordability, or lack thereof, of the SRD grant was not reason enough to exclude millions of South Africans who qualify to receive the assistance, agreeing with the IEJ that the government imposed a narrow and rigid definition of what constitutes income.
“It is unconscionable for the government to accept that the number of people who are with insufficient means to support themselves and their dependants is more than 18.3-million but only budgets to provide for 10.5-million,” Twala ruled.
“Given that the government is aware of the number of people living below the food poverty line and the number of people eligible to receive the SRD grant due to them being unemployed or if employed, earn a salary below the means threshold of R624 per month, and which equates to more than 18.3-million people, it is unthinkable why the government and National Treasury, in particular, should not plan and budget accordingly to fulfil its obligations in terms of the constitution.
“There is no rational basis for the government budgeting for only 10.5-million successful applicants when the estimated number of people who qualify for the SRD grant is more than 18.3-million.”
At R370 per SRD recipient, Twala’s ruling means the Treasury will need to raise about R35bn more to accommodate the people excluded. The Treasury reduced its budget for the grant from R44bn to R36bn in the 2023/24 budget.
There is no rational basis for the government budgeting for only 10.5-million successful applicants when the estimated number of people who qualify for the SRD grant is more than 18.3-million.
— Judge Leonard Twala
The department argued in vain that the fiscus was in a precarious position and could ill afford to expand social grants, as they already eat up 12.3% of the government’s main budget expenditure.
One of the reasons put forward by the Treasury was that expenditure exceeded revenue by R321.6bn in 2024/25 and the gross borrowing requirement was R559.6bn rising to R623bn in 2025/26.
It argued that the government could not expand social grants further due to drops in anticipated revenue and increasing debt service costs.
The nation’s purse keeper said the pool of social grant recipients was expanding by 200,000 recipients per year, excluding an increase in grant recipients as a result of the SRD grant.
Twala, in what will also see the Treasury looking for extra cash, agreed with the IEJ and said the R20 increase in the SRD implemented last year did not go far enough to meet the requirements of “progressive realisation for it still puts the value of the SRD grant far below the national food poverty line”.
The judge said the SRD grant was treated differently from other grants, despite him holding the view that it had the same legal status as the other social grants which were provided for by the Social Assistance Act.
No merit
“There is no merit in the respondents’ contention that there has been a progressive realisation in the SRD grant since its introduction in 2020 in that there was an increase in the means threshold amount from R595 to R624 and recently the SRD grant was increased by R20 to R370,” the judgment reads.
“According to the statistics, the food poverty line for 2023 was R760 and the SRD grant remained at R350 at the time with the means threshold being R624. Even the means threshold amount is far below the food poverty line for 2023 let alone 2024.
“Therefore, there is no meaningful progressive realisation of the SRD grant and this is in breach of the provisions of section 27 of the constitution.”
The IEJ urged the government to abide by the judgment and not seek to appeal it.
“Despite the government’s claims to the contrary, it is entirely possible to implement a system that both protects against abuse and minimises unfair exclusions.
“The 2025/26 budget also needs to ensure that the necessary resources are made available,” it said. “Some of these changes can be put in place immediately and some may need to be phased in over the next few months.”
The Treasury said the judgment was being studied and any further action would be informed by consultations with stakeholders and legal counsel.
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