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Basic Income Grant Coalition Submission to the Portfolio Committee on Social Development on the Consolidated Report of the Committee of Inquiry into a Comprehensive System of Social Security for South Africa. 9 June 2003. Current Situation.

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9 June 2003

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9 june 2003

Basic Income Grant Coalition Submission to thePortfolio Committee on Social Developmenton the Consolidated Report of the Committee of Inquiry into a Comprehensive System of Social Security for South Africa

9 June 2003


Current situation

Current Situation

  • 22 million or 53% of our people live, on average, on less than R144 per month

  • 2 in 3 children live in poverty

  • 3.1 million workerless households (1999)

  • Expanded unemployment rate now tops 40%

  • Poverty and unemployment deep-rooted, structural legacies of apartheid

  • Over 13 million living below the poverty line have no access to social security.

  • No income support from age 9 to 59(w)/64(m)

  • One of the world’s most unequal societies


Legal imperatives

Legal Imperatives

  • Constitution

    “Everyone has the right to have access to … social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.”

  • Covenant on Economic, Social and Cultural Rights

    Guarantees the right to an adequate standard of living

  • Grootboom tests

    • Coordinated and comprehensive programme

    • Provide relief for those living in desperate need

    • Reasonable implementation

    • Work within available resources

    • Progressive realisation


Policy imperatives

Policy Imperatives

  • White Paper on Social Welfare (1997)

    “All South Africans [should] have a minimum income sufficient to meet basic needs and should not have to live below minimum acceptable standards”

  • Presidential Jobs Summit (1998)

  • Government commitments

    • Elimination of poverty and the establishment of a reasonable, widely acceptable distribution of income.

    • Full employment, or if this proves not possible, an adequate mechanism to deal with poverty.

      2003 GDS

      - Recognition of role of social security measures to fight poverty

  • All parties commit to address take up and overcome obstacles to accessing current grants

  • Discuss extension of social protection framework


Taylor committee report

Taylor Committee Report

  • Structural character of poverty in SA requires holistic developmental response

  • Proposes a Comprehensive Social Protection package to address:

    • Income poverty - BIG, SOAP, extended CSG

    • Capability poverty - Health care, education, water and sanitation, electricity, public transport, housing, jobs and skills training

    • Asset poverty – Land, credit and community infrastructure

    • Special needs - Reformed disability, foster care, CDG

    • Social insurance


The basic income grant

The Basic Income Grant

  • A core element of the CSP package proposed by Taylor Committee

  • Intended to address income poverty

  • Complements other interventions to address other forms of poverty – no “magic bullet”

  • Defining characteristics

    • Universal coverage from cradle to grave

    • R100 a month

    • Expand the net: no one receives less

    • Payment through public institutions

    • Financed through progressive taxation


Phased implementation

Phased Implementation

  • Taylor Committee rejects

    • status quo as unconstitutional

    • immediate implementation as unrealistic

  • Calls for phased approach

    • PHASE 1: Immediate extension of CSG to 18 on a universal basis

    • PHASE 2: Roll out of universal BIG from 2005/06

  • BIG Coalition supports phased approach (but intervening year necessitates slightly delayed timetable)


Preparatory phase

Preparatory Phase

  • Complete electronic Document Management System and Automated Fingerprint Identification System to enable introduction of HANIS

  • Extend Post Bank infrastructure, identify delivery agents and pilot payment mechanisms

  • Education and training programmes for public and civil servants

  • Stakeholders’ forum to identify and resolve other practical issues


Advantages and impact

Advantages and Impact

  • Eliminates destitution and alleviates poverty

  • Encourages self-sufficiency

    • Not means-tested

    • Enables households to take risks to move to more sustainable livelihoods

  • Stimulates consumption-led local economic growth and employment creation

  • Enhances the efficiency of social investment in other areas


Common objections 1

Common Objections 1

  • “A BIG will be impossible to deliver”

    • New technology (e.g., the HANIS smart card) opens up enormous possibilities; commitment of financial sector to increasing access to bank accounts for poor

    • Existing commitment to prioritising social grant delivery via HANIS

    • Abolition of the means test simplifies administration and slashes delivery costs

    • Extension of public sector and co-operative financial institutions


Common objections 2

Common Objections 2

  • “A BIG will be unaffordable”

    • Studies demonstrate the feasibility and affordability of financing BIG through progressive taxation

    • Taylor research put net cost at R24 billion – same as tax cuts for past 2 yrs

    • Increased prosperity, rising revenues and increased efficiency of social spending will decrease net costs to the state in the long term


Common objections 3

Common Objections 3

  • “A BIG will create dependency”

    • Very poor currently depend on working poor or grant beneficiaries

    • BIG is not a dole and does not penalise people for seeking other sources of income

    • Expecting people to find jobs not realistic in circumstances of long-term structural unemployment

    • Concerns about irresponsible use misplaced given 90% of spending by poor households is on basic goods and services


Proposed alternatives

Proposed Alternatives

  • Job creation via public works

    • Important complement to a BIG as part of CSP

    • High administration costs, limited scale and structural nature of unemployment = no substitute for a BIG

  • “Workfare”

    • Experience suggests schemes drive down wages, discriminate against vulnerable groups

  • Food vouchers

    • Paternalistic

    • Means tested

    • Undermines self-reliance benefits of BIG

    • Cost of administration/ infrastructure

  • “DA dole”

    • Complicated; sets up perverse incentives


Way forward

Way forward

  • Future prosperity and stability depend on a CSP package that can eradicate extreme poverty, reduce inequality and promote development within sustainable communities

  • Coherent and visionary SP policy needed to establish a legislative agenda

  • Taylor Report equivalent to a Green Paper

  • Draft White Paper now needed to catalyse participatory national debate


Recommendations to pc

Recommendations to PC

  • Endorse the Taylor findings as a first step of CSP policy formation

  • Stakeholder forum with government to look at practical concerns

  • Articulate need for coherent policy statement prior to the tabling of CSP legislation

  • Call on government to expand national debate on CSP by preparing a draft White Paper for public comment

  • Facilitate broad participation by holding hearings on the draft White Paper

  • Urge the NCOP to assist by creating opportunities for stakeholder participation at the provincial level


A question of priorities

A Question of Priorities

“No political democracy can survive and flourish if the mass of our people remains in poverty, without land, without tangible prospects for a better life. Attacking poverty and deprivation must therefore be the first priority of our democratic Government.”

-- RDP, para 1.2.9


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