does the government budget offer for the poor?
by Samantha Flemming
N FEBRUARY of every year, the president opens parliament with
his state of the nation address, and a few days later, the minister
of finance delivers the government's national budget. These two
are inextricably linked, since policy directions outlined in the
President's speech, inform budgetary commitments that will determine
the success and achievement of government policy. While a national
budget is merely a glimpse into government revenue collection
and spending at one time, it is worthy of some interrogation since
it reveals our policy direction as a country, and the provisions
we make for the most vulnerable in our society. As Minister Manuel
said in his speech, quoting Austrian economist Joseph Schumpeter:
'a country's fiscal history is a good illustration of the spirit
of a people.'
These days, there is little surprise on the day of the budget
speech. The South African budgetary system provides a fair lead
up to the annual presentation, within the Medium Term Expenditure
Framework (MTEF). Thus, every year we can gauge the planning for
what will come in the following two years. Every November, there
is also a Medium Term Budget Policy Statement (MTBPS), giving
direction for what will appear in the upcoming national budget
This year, the government budget has been praised for its focus
on expansionary social spending (more than half of planned expenditure)
and the ANC for its increased focus on the role of the state in
economic development. In the minister's speech, there was much
less touting of the problematic Growth, Employment and Redistribution
Strategy (GEAR), espoused by the ANC since 1997, and some say,
a return to the values of the Reconstruction and Development Programme
(RDP), much more popular with civil society groupings. (For example,
see Ferial Haffejee's perspective in: 'Shades of "Che" ', Mail
& Guardian, 20 February 2004.)
Around budget time, figures are thrown around like dough in
a bakery. Provinces were given R65 billion for education; R41
billion for health and R48 billion for welfare. Infrastructure
spending will increase to R5 billion this year, and land reform
and restitution received an additional R700 million.
But what do these figures really mean?
The budget indicates that the government does care about the
poor. But the question is, is it enough, and appropriate? In general,
social expenditure has been increased with a particular focus
on education, HIV/Aids, infrastructure and job creation through
an expanding public works programme.
Particular provisions aimed at the poor were the increases
in the Old Age Pension, from R700 to R740, and a R10 increase
in the Child Support Grant to R170, with the latter also being
extended to children under 11 this year. While any increase is
welcomed, in real terms and because we live in a moderate inflation
society, these marginal increases amount to very little extra
cash in the pockets of the poor, according to Idasa's budget review
(www.idasa.org.za/bis). This is especially true when considering
that in many households, this is the only cash flow that exists,
with many more than just the one recipient of the grant living
off the money, for food, transport, education, clothing, and rent.
To HIV/Aids, a further R2.1 billion was committed, taking the
total spending on HIV/Aids to R12.4 billion over the three years
of the medium term expenditure framework, which includes specific
directives for anti-retroviral drug roll-out. This was welcomed
by HIV/Aids activist groups and opposition political parties,
whose primary remaining concern was that the money be well spent.
Other measures that were aimed at lower end benefits were:
tax cuts which went mostly to low-income earners and pensioners;
and the transfer duty threshold was raised to R150,000 to facilitate
lower end housing development.
While these measures have been welcomed, civil society groupings
have criticised the budget for gaps they had hoped to be filled.
There was disappointment by civil society interest groups that
VAT had not been removed from books. The minister noted in his
speech that "tips for Trevor", a campaign to solicit public input
on the budget, had raised this issue but he didn't bow to pressure,
preferring to use tax revisions for organisations that 'promote
literacy and reading.'
The government's response to a call from civil society, for
a comprehensive social security provision in the form of a universal
grant, was once again muted. The Basic Income Grant (BIG) Coalition,
a civil society grouping that advocates for a universal grant
to 'address the immediate effects of poverty in a developmental
way' were disappointed that government missed this opportunity
to provide a comprehensive social security net for the poor, but
they also welcomed the Minister's invitation to NGOs to discuss
the possibilities of the extension of social grants.
It is apparent that government prefers to approach poverty
alleviation through the lens of job creation and skills, using
infrastructure projects that are labour based, to expand the public
works programme and create jobs for the unemployed. Very real
concerns have been raised about how such a programme will only
create part-time or temporary jobs at a low skill level, which
doesn't provide a long-term, sustainable solution to widespread
unemployment and poverty. President Mbeki wrote in the ANC's online
publication, ANC Today, that while the budget had provided for
increased expenditure to meet the needs of the people, the government
could not allow more people to depend on social grants.
While Manuel's post-budget media relations included a plea
to NGOs 'not to bankrupt government', there is a worrying underlying
thread that runs through both the state of the nation address,
and the budget speech, which assumes that current government policy
and direction is sufficient to address the swallowing abyss of
poverty in which many South Africans live. The only concession
from government is in the lack of implementation, rather than
the direction of policy. Such an argument doesn't recognise that
not enough is yet being done to cater for the poor, or to alleviate
poverty in any meaningful way, particularly for those who fall
outside of the existing social security net. Moreover, even if
poverty is marginally alleviated, economic inequality is likely
to worsen without direct and purposeful intervention by the government.
In the short term, the catchment area of our social security net
must be widened so that the vulnerable have rights equal to those
who are not so vulnerable. And real debate about the direction
of government policy needs to occur to ensure that poverty and
inequality reduction are our nation's top priorities, and show
in our 'country's fiscal history' that the 'spirit of our people'
is to care for those in need. Surely, that's why we fought so
hard for socio-economic rights in our Constitution, to make them
just as important as political rights. In fact, that's why we
fought so hard to call ourselves a democracy.