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
• 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
• 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
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Coordinated and comprehensive programme
Provide relief for those living in desperate need
Reasonable implementation
Work within available resources
Progressive realisation
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
• 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
• 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
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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
• 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
• 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
• 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
• “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
• “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
• “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
• 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
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Paternalistic
Means tested
Undermines self-reliance benefits of BIG
Cost of administration/ infrastructure
• “DA dole”
– Complicated; sets up perverse incentives
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
• 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
“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