Open Letter to Finance Minister: Budget places the poor on the altar of fiscal consolidation
1 March 2021
Dear Minister of Finance Tito Mboweni,
RE: Budget places the poor on the altar of ‘fiscal consolidation’
Minister Tito Mboweni, the 2021 Budget Speech, on Wednesday 24 February 2021, failed to address the escalating humanitarian crisis that currently threatens the livelihoods of millions of vulnerable people.
Based on years of community based monitoring in both rural and peri-urban areas, the Black Sash would like to give you a sense of the profound impact of this budget on grant recipients and their families.
Imagine you are Thandiwe, living in New Brighton. You lost your regular domestic work when your employer passed away from the coronavirus. Up until 31 October 2020, you received a Caregiver Grant, since your employer had never registered you for UIF. When the grant was terminated, you were forced to feed a family of five on your daughter Lindiwe's Child Support Grant (CSG). Lindiwe suffers from stunting, a condition affecting one in four children, caused by not receiving proper nutrition. The R10 increase to Lindiwe’s CSG won’t even buy a loaf of bread to put on her table.
Imagine you are Ma Gloria, who lives in the rural town of Makwassie. You have just heard that the Old Age Grant will only be increased by R30. You are worried that this increase does not take into account runaway food prices and your dietary needs. You worry that you may not be able to pay the rent this year from your already meagre grant. Your children are unable to offer support since they are unemployed.
Imagine you are Louise, living in Delft. You received the temporary Disability Grant until it came to an end on 31 December 2020. Your appointment for medical reassessment will only take place in April 2021. You are worried about where your next meal will come from - a meal you need in order to take your Multidrug-resistant TB (MDR TB) medication.
Imagine you are Zanele, from Welbedacht in KwaZulu Natal. You received a Covid-19 Social Relief of Distress (SRD) Grant intermittently, but have now been informed that even this will end in April 2021. You left school early to take care of your sick parents. You have been unemployed for the past two years. You are struggling to find a job because you only completed Grade 10 at school.
Minister Mboweni, in the Budget Speech, you hardly spoke about the struggles of poorer households who are predominantly dependent on social assistance. Your silence about the devastating impact of the Covid-19 pandemic on these households was disappointing. With high and runaway food prices and other ever-increasing living costs, people who are constitutionally eligible for and dependent on social assistance was waiting to hear that government is indeed caring and responsive by announcing permanent Basic Income Support for persons between the ages of 18 to 59.
South Africa has a world-renowned progressive constitution that makes provision for the right to social security “including appropriate social assistance” for those unable to support themselves. Minister Mboweni, it is the government's constitutional obligation to progressively realise the right to social security. But the budget you presented cuts social security spending. It places the poorest and most vulnerable on the altar of ‘fiscal consolidation’.
As you know, the United Nations Committee for the International Covenant on Economic, Social and Cultural Rights (ICESCR) expressed concern that South Africa’s ‘social assistance benefits are too low’ and recommended that they be increased to ensure an adequate standard of living for all. We are still waiting for the government's progress report to this committee, regarding social assistance for the 18 to 59 year cohort with no to little income.
The increase of R10 for the Child Support and Foster Care Grants and R30 for the Old Age and Disability grants is pocket change. These increases will do very little to minimise the humanitarian crisis of increasing hunger, food insecurity, structural unemployment and income inequality made far worse by the coronavirus pandemic. A third wave of infections is now seen as an inevitability. As you are aware, the Covid-19 vaccine rollout has only just begun but there is no indication how long it will take to achieve herd immunity.
The medium term budget omitted to mention the over seven million recipients of the Caregiver Grant and the over six million people that receive the R350 Covid-19 SRD Grant, which will impact negatively on social assistance spending. Instead, the social development budget has been subjected to an average annual decrease of 2,2%, from R230.8 billion in 2020/21 to R216.1 billion in 2023/24. The budget dangerously assumes that the Social Relief of Distress grants, for adults aged 18 to 59 years with no to little income, will not be necessary after April 2021. With these budget cuts, government seems to have reneged on its constitutional and international obligations. It is common knowledge that fiscal consolidation in middle income country’s often lead to social unrest.
Minister Mboweni, this budget does not fund employment opportunities nor does it offer social assistance to the millions unemployed in the 18 to 59 years’ age cohort in the medium term. Even if the government achieves its optimistic target of a 3,3% economic rebound in 2021/22, you know that it is impossible to create enough jobs for the 1,4 million lost during the Covid-19 period let alone for the 11,1 million people currently unemployed (using the broad definition). While the government made R100 billion available for employment programmes, only R12,6 billion was spent with a further undertaking of R11 billion for 2021/22. The balance of this funding has not been taken forward in the budget for the next two years. Furthermore, you know that these programmes mostly create short term, precarious jobs. Employment programmes and labour market interventions must be complemented by a more robust and expansive social security system.
Finally, Minister Mboweni, the Black Sash calls on the government to implement Basic Income Support within the Medium Term Expenditure Framework for those with no to little income between the ages of 18 to 59 years. The Covid-19 SRD Grant, including provision for adult women who receive the CSG on behalf of children, must continue beyond April 2021. This grant must be converted into permanent Basic Income Support, valued at least at the Food Poverty Line of R585, while progressively working towards the Upper Bound Poverty Line (currently R1 268). All social grants must at least be adjusted to the inflation rate to avoid further erosion of the value of the grants.
Minister Mboweni, we at the Black Sash would like very much to meet with you to discuss this letter further at your earliest convenience.
Black Sash National Director