Put a grant in it

By Monique Senekal

Many people have called on the South African government to start a dole system like the one that operates in the UK. Their calls have not yet been answered.  The government’s report from the Committee of Inquiry into a Comprehensive System of Social Security recommended instituting the basic income grant (BIG) system for all South Africans who earn minimum wages or less. However the plan was aborted in 2002 due to insufficient funds.

This may change as the president Thabo Mbeki announced a review of the social security programme in his State of the Nation Address on 9 February 2007. The economic components of the report sparked controversial debate surrounding issues of social sustainability, economic development, and the individual self-interest of the country’s working class, their employers and the retirement fund industry.

Mbeki stated that government would “explore the introduction of an earnings-related contributory social security system that is informed by the principle of social solidarity”.

There are currently 11.7 million people in South Africa already living on social grants, or a quarter of the nation’s population. The programme aims to provide low-earning and unemployed people with a basic income over and above their already existing social welfare and pension grants.  The scheme will inevitably have tax implications for all working citizens and this is likely to be one of the key areas of controversy.

Gerald Seegers, tax expert at Price Waterhouse Coopers says that government should “clearly define its strategy of implementation” so that both high-income and low-income workers may feel somehow benefited by the scheme.
Finance Minister Trevor Manuel has said in the past that a BIG was not affordable, while the ANC remained divided on the issue with many believing such a grant would lead to dependency. The Mail & Guardian estimated that it could cost R30-billion to sustain the income substituting programme.

Goitse Mangobe, a second year Politics student said “The notion of self-interest versus social interest is a key aspect in the debate surrounding the viability of the proposed grant system”. Mongobe stated that BIG is “merely a quick fix for the now and the government is not considering the long-term implications on sustainable development”.

Investigations into modes of alleviating poverty that would be acceptable to both the income earning and unemployed are still the state’s main goal. The ANC has been exploring the social security system in Chile, a country in which there has been “great progress” in dealing with poverty.
The system in Chile is widely regarded as an example of an effective move away from a state-funded welfare system to one funded by individuals as   individual accounts are linked to a person’s contributions and to their benefits.

Much indecision and debate still surrounds the BIG issue. The government is expected to continue advancing this programme. Renewed interest in the grant appears to add to the year’s Parliamentary theme: “Masijule Ngengxoxo Mzansi”, or “Lets deepen the debate South Africa”.

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One Response to Put a grant in it

  1. Edwin Arrison says:

    My understanding is that the BIG is not meant to be over and above what grant recipients already receive. If someone already receives a state pension, the first R100 of that pension would be regarded as the basic income.

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