GOOD Speech by Brett Herron,
GOOD Secretary-General & Member of Parliament
14 June 2023
Note to editor: This is the speech that was delivered by GOOD Secretary-General and Member of Parliament, Brett Herron, during today’s launch of GOOD’s Basic Income Grant Campaign
Let’s spin this question around.
Instead of asking if we can afford to have a Basic Income Grant, ask if we can afford not to have one.
Can we afford to leave 8 million unemployed South Africans in a severe state of hunger, failing in our constitutional obligations and increasing the levels of anger and desperation in our society?
In the hierarchy of priorities, this should come first: meeting the most basic human needs of South Africans. With the appropriate moral conviction and priorities, we can make it work.
GOOD’s proposal is that unemployed South Africans, between the ages of 18 and 60, will qualify for this grant.
R999, according to most recent data (which is outdated), falls between the lower bound poverty line and the upper bound poverty line.
| POVERTY LINES IN SOUTH AFRICA (2022) | |||
| POVERTY LINES | WHAT DOES IT MEAN? | AMOUNT (2022) | Est AMOUNT(2024) |
| Food poverty line | Monthly amount that individuals need to afford the minimum required daily energy intake. | R663 | R742 |
| Lower-bound poverty line | Food poverty line, plus the average amount derived from non-food items of households whose total expenditure is equal to the food poverty line. | R945 | R1077 |
| Upper-bound poverty line | Food poverty line, plus the average amount derived from non-food items of households whose food expenditure equals the food poverty line. | R1417 | R1588 |
Currently, the SRD (Social Relief of Distress / Covid-19) grant gives beneficiaries a R350 per month. This amount has not increased since it was first introduced in 2020 and is funded until 31 March 2024.
The food poverty line, in April 2022, was R663 per person per month.
Obviously the R350 per month grant does not meet about half the current estimated level of the food poverty line.
In other words, it is enough to buy less than half of the minimum food that a person requires to live on each month (excluding other items like soap, sanitation and looking for work).
GOOD has conducted extensive research as to the feasibility of funding a Basic Income Grant from the National budget. R999 is the maximum that could reasonably be funded through the current budget.
It is enough to meet the lower-bound poverty line as it was last published (in 2022), with a little extra for a small travel subsidy – mainly for the purpose of job seeking.
But, as we can see, inflation (particularly of food prices) drives up the poverty lines.
By 2024, our ambitious Basic Income Grant proposal may already dip slightly below the lower-bound line after inflation.
The Basic Income Grant will have to rise at the level of inflation – something which the government as failed to do with the SRD grant which has remained at R350 since the onset of Covid-19.
The cost to the fiscus would be roughly R100 billion. The current South African budget, for expenditure, is R2.24 trillion. Thus, this is about 2% of annual expenditure.
How Will We Pay For It?
GOOD has engaged experts in public finances to figure out how the State can afford this Basic Income Grant proposal.
The starting point is obviously prioritising this programme. There is the saying you can tell a government’s priorities by the budget allocations.
Through the research we commissioned we have discovered that the Grant can be funded through:
- Adopting an approach of zero-based budgeting and closing inefficient government programmes that don’t yield a satisfactory return on investment, including (but not limited to) reducing the number of ministers, ministries and departments. There are also several poverty alleviation programmes by government that can be substituted by this Grant;
- Reducing the cost of provincial legislatures, provincial executives and resources allocated to offices of the Premiers;
- Professionalising the public service, so that government doesn’t have to spend so much on consultants (currently R11bn per year);
- Cutting out corruption (which may be enough to fund this Grant on its own) and privatising (rather than bailing out) dysfunctional state-owned enterprises;
- Possible tax reforms, including:
- Raising corporate taxes (personal income tax will remain unchanged);
- Reducing the deductibility of retirement contributions for richer South Africans (the current retirement deduction scheme hugely benefits wealthy South Africans);
- Closing the Employment Tax Incentive;
- Increasing VAT on luxury goods (and adding to the list of essential goods that are VAT-free);
- ‘Earmarking’ and allocating revenues from the Criminal Asset Recovery Account and Mineral and Petroleum Resource Royalties towards the Basic Income Grant;
- A top-up system could be explored whereby those earning some monthly income but below the R1 000 threshold receive only the difference between the two;
- Government will also recover some this is money through tax revenue from spending of the grant funds, and enhanced levels of social stability.
An expanded transfer system may be the only realistically effective way, in the coming years, to ensure South Africa meets its Section 27 Constitutional obligations to progressively realize socio-economic rights and to avoid regressing further when it come to this state obligation, especially when it comes to the poorest decile of the population who are often still unable to access programmatic interventions and the so-called social wage.
Nothing is more frontline delivery than giving a poor person money. Any programmatic spend aimed at poverty alleviation and equity, with its risk of design failure, administrative waste, delay and the like must justify itself against this basic benchmark of delivery and impact.
Alternatively, opponents of cash transfers must explicitly state their theory of human nature, grounded in contemporary social science and neuroscience rather than discredited views of the undeserving poor, according to which poor people or society are made worse off if they are given some money to use as they see fit.
Media Enquiries:
Brett Herron, GOOD Secretary-General & Member of Parliament
Cell: 082 518 3264
Email: bretth@forgood.org.za
Janke Tolmay, GOOD Media Manager
Cell: 073 367 1223
Email: janke@forgood.org.za