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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
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