Saturday, January 22

No ‘BIG’ ad in the mini budget


Despite the windfall in tax revenue and growing calls before the medium-term budget for the introduction of a new Basic Income Grant (BIG) for unemployed workers, Finance Minister Enoch Godongwana did not give much time to the idea in its debut Medium-Term Budget Policy. Statement speech (MTBPS) on Thursday.

In fact, he didn’t specifically mention the BIG proposal at all.

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Instead, Godongwana reiterated a position similar to that of his predecessor Tito Mboweni, around boosting SA’s economic growth to address the unemployment crisis in the country rather than long-term commitments to significantly increase spending on social grants.

Read:

Unexpected R120bn Tax Collection Increase May Not Be Sustainable
SA seeks to curb debt, curb the expansion of well-being

Following the July riots that rocked KwaZulu-Natal and parts of Gauteng, the government decided to reintroduce the Social Relief of Distress (SRD) grant, which first emerged last year to support the poorest South Africans affected by the impact of the financial consequences of Covid-19. . A third wave of the pandemic this year was a factor influencing the reintroduction.

The July riots that included widespread looting, mainly in the poorer areas of KZN and Gauteng, led to renewed calls for the government to introduce a basic income subsidy.

During his ‘mini budget’ speech on Thursday, Godongwana noted that SRD’s grant will end in March 2022.

While he did not say anything about the BIG proposal, the Finance Minister noted that “details” on “government interventions regarding the social safety net will be provided in the February 2022 Budget.”

Read:

A universal basic income grant is not the solution
Busa: Basic Income Grant should not jeopardize or shift spending priorities

“The [SRD] The grant has benefited some 9.5 million South Africans. This is on top of existing social security grants, ”Godongwana noted.

“Today, 27.8 million South Africans are recipients of social grants. This represents approximately 46% of our population. At the same time, the number of people working has decreased, further underscoring the critical flaws in our economy, ”he added.

He warned that the country’s total spending on “social wages” is very high.

“This amount has grown from R860 billion in 2018/19 to R1.1 billion in 2021/22. Around 60% of the total annual interest-free spending goes to housing development, free basic services, employment programs, health, education and social subsidies, among other things, ”he said.

“It is generally recognized that the South African government has one of the most comprehensive and expansive social security systems in the world.”

However, Godongwana said there are “ongoing discussions” about SA’s social safety net.

“However, let me reiterate that a permanent solution to meet these challenges is to achieve sustained high levels of economic growth.”

His tone hints at his hesitancy to commit to a new (BIG) long-term grant; however, the government may be considering a reform of the entire social security system.

It is also worth noting that one of the central messages that emerged from Godongwana’s speech was the government’s commitment to fiscal consolidation.

Read: Godongwana Commits to Fiscal Consolidation

“The MTBPS charts a course that demonstrates the government’s unwavering commitment to fiscal sustainability, enabling long-term growth by reducing the budget deficit and stabilizing debt,” he stated.

“Fundamental to the fiscal path that we have chosen is the need to be clear and unambiguous about the trade-offs we are willing to make as a nation. We can’t do everything we want to do at the same time, ”he said.

“Equally important is faster implementation of structural reforms to unlock greater private sector investment, economic growth and job creation.”


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