Durban - Concern has been raised by civil society organisations over the low increases in social grants that were announced by Finance Minister Enoch Godongwana in his Budget speech yesterday.
They argued that the increases were not in line with rising food inflation.
Old age and disability grants will increase by R90 by April 1 and a further R10 on October 1, taking the grant amount to R2 090.
The child support grant will increase by R30 to R510 by October 1, while the foster-care grant increases from R1 070 to R1 130 over the same period.
Godongwana also announced that expenditure on social grants would increase from R233 billion in 2022/23 to R248.4bn in 2025/26 due to increases in the number of recipients and the value of the grants.
Dr Kelle Howson, a senior research specialist at the Institute for Economic Justice (IEJ), said: “Food inflation is at 13% and the increase in the old age, disability grant and child support grant is simply not enough for the impoverished in South Africa. We can see this creating a tsunami of hunger for the impoverished.”
Howson added that the IEJ had expected to see the implementation of the basic income grant, but it was not mentioned in the speech.
“There was no indication of a basic income grant for the unemployed being implemented and this was mentioned in President Cyril Ramaphosa’s State of the Nation Address (Sona), which we find worrying. Further bad news was that the budget for the social relief of distress grant (SRD) was reduced from R44 billion to R36 billion. The number of people eligible to apply has also been reduced to 8.5 million whereas we have had reports that at least 13.5 million South Africans applied for SRD grants.”
Isobel Frye, executive director at Social Policy Initiative (SPI), said the organisation was of the view that the tax surplus could have been used to address poverty.
“There are at least 56% of South Africans in poverty. We find that the government has collected a tax surplus, but unfortunately that money is being redistributed to taxpayers and not being used to address the inequality in South Africa. This money should have been used to help increase grants and assist the poor.”
Frye added that it was worrying that there was no mention of a permanent grant for the unemployed.
“The president promised that there would be plans to implement a social grant for the unemployed and there is no indication of that in the speech.”
Meanwhile, regarding the electricity crisis, economists said the total debt-relief arrangement for Eskom of R254 billion was expected.
Godongwana said the debt arrangement would ease pressure on the company’s balance sheet, enabling it to invest in transmission and distribution infrastructure.
“It will also allow Eskom to conduct the maintenance required to improve the availability of electricity.”
He also announced two tax measures to encourage businesses and individuals to invest in renewable energy and increase electricity generation.
From March 1, 2023, businesses will be able to reduce their taxable income by 125% of the cost of an investment in renewables.
For individuals, there will be a tax incentive to install rooftop solar panels. Those who install rooftop solar panels from March 1, 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000.
Dr Sanele Gumede, an economics lecturer at the University of KwaZulu-Natal, said: “President Ramaphosa declared the energy crisis a national state of disaster so it was expected that the government would bail out Eskom and would take on their debt. The issue is that Eskom’s problems are bigger than financial; they simply don’t have enough capacity to provide electricity and it remains to be seen if this bailout will indeed help the energy crisis.”
Gumede questioned the R14bn set aside to fight crime and corruption.
“It is clear that this is to clamp down on organised crime. However, what does it say about South Africa that we need to set aside this amount of money to stop corruption?”
Professor Bonke Dumisa, an independent economist, said he welcomed the announcement that the government has collected R1.3 trillion in tax as this has helped to reduce the budget deficit.
He added that offering business tax incentives to buy into renewable energy showed that all sectors were struggling with load shedding.