In the debate on basic income support there appears to be broad consensus: that the level of poverty in SA is terrifying, and our economy is perilously perched.
That consensus doesn’t yield any shared conclusions though. Rather, it breaks down into two camps that seem starkly divergent: a) we as a country can’t afford to provide basic income support; b) we can’t afford not to.
For the moment at least, some form of support will be provided through the extension of the Social Relief of Distress (SRD) grant, which will see payments to recipients of R350 a month resume in mid-June. Under the new framework all applicants will have to undergo a means test and anyone earning more than R350 a month will be disqualified.
But with a cap of R44bn assigned to the grant by Treasury, not all those potentially eligible will be able to access the grant. Moreover, the amount of R350 falls fairly far from even the current food poverty line of R624 a month.
The report of the Expert Panel on Basic Income Support, commissioned by the International Labour Organisation and department of social development (now some months old), recommended that the SRD grant serve as a platform for an expanded system of basic income support that can then be improved incrementally over time.
The long-term objective of such an expanded programme of social assistance is the elimination of income poverty, as measured using the upper-bound poverty line (at R1,335 a month this is more than double the food poverty line now).
This conception of an incremental increase in the value of basic income support aligns neatly with the constitutional framing of the right to access social security and appropriate social assistance, and the requirement that the state take reasonable measures to progressively realise these rights.
Don’t be mistaken though: there is nothing neat about the expert panel’s report, which is all the more impressive for its willingness to confront the hard policy choices SA needs to make in contemplating the institutionalisation of an expanded system of social assistance, the difficult trade-offs, and the unknowns of behavioural consequences and long-term economic effects.
The panel is frank that there are no clear projections or easy comparisons to be made with other states implementing expansive social assistance programmes. SA’s “peripheral status in the world economy, its position on the southern tip of Africa and the painful history of growth based on violence and dispossession add complexity to the relationship between social provision and economic growth”.
SA’s extreme disparities in income distribution also make it an outlier, so even with a fiscal system that is largely redistributive the gap between rich and poor in SA is so large that our “post-fiscal” inequality is higher than any other country’s pre-fiscal inequality.
The report’s recommendation that government look to finance the grant via several different instruments, including potential increases in personal income tax and VAT, has sparked alarm from several quarters, including the Treasury. This notwithstanding the evident caution the panel meticulously demonstrates in crafting its recommendations, including that government sequence expenditure and tax increases so as to leverage short-term stimulus effects and macroeconomic fluctuations.
As an exercise in rich and ambitious policy formulation, particularly for a state so often devoid of such deliberative engagement, it is undeniably brave. Not only for its recommendations but for its candour in admission of uncertainty: uncertainty as to medium- and long-term fiscal sustainability and the potential effects on SA’s growth prospects.
It maintains that “the trade-off between growth and equity is ever present and needs to be negotiated by each society in the context of its sociopolitical framework”. That negotiation in the SA context requires a debate not just about how we might finance basic income support, but what we owe each other as South Africans.
In a post-pandemic world shown to be terrifyingly fragile, and with the scenes of last year’s July unrest still all too fresh, we have to ask how we condition our interdependence so we are collectively more resilient rather than frighteningly vulnerable.
• Fritz, a public interest lawyer, is director of the Helen Suzman Foundation.
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