Raising age for child grants could pay off for ANC
• Although the money has to come from somewhere, increasing eligibility could reduce poverty
THE GOVERNMENT COULD REALLOCATE SOME EXPENDITURE ON PUBLIC SERVANTS TO THE PAYMENT OF SOCIAL GRANTS
The ANC faces many difficult decisions at its December elective conference, but one of the least advertised will be whether it will expand social grants to include eligible people under the age of 22.
In an environment where the ANC is rapidly losing the voting fodder that has propped up successive governments over the past 22 years, keeping supporters sweet will be at the top of the list of priorities, but doing so is becoming increasingly tricky.
Aside from the scandal of the “irregularities” in the tender between the South African Social Security Agency and Cash Paymaster Services, social grants have always been the subject of debate due to their cost to the fiscus. This was especially true when it came to the expansion of coverage by introducing the child-support grant.
The number of children who qualify for the grant has risen from 22,000 in 1998 to almost 12-million today as the age limit to qualify for a grant has been increased from six years at launch to 18 in 2012.
In the past, the burden on the fiscus was less of an immediate concern and the benefits — economic, political and social — definitely outweighed the cost, but under current economic circumstances there is less wriggle room than ever before. Between a recession, a pending currency downgrade and a shrinking tax base, the Treasury has its work cut out to try to reduce public spending, let alone increase it.
It is in this context that one of the unsung sticky issues to be debated at the ANC’s elective conference will be whether that age limit should be extended to young adults up to 21, depending on whether they are enrolled in a tertiary institution.
I don’t even want to get into the perverse incentives created by a programme that penalises you and your household if you are unable to enter a tertiary learning institution, but I have to mention that in a country in which youth unemployment is almost 55%, raising the age of the child-support grant even further is a smart move politically.
About a third of all South Africans receive a social grant of some sort at present. In reality, the number of people dependent on those grants is much higher — perhaps more than double — as grant money is routinely shared within a household.
Of the 17-million social-grant beneficiaries, almost 12-million are under the age of 18. Increasing the age of eligibility to 21 could increase the total coverage by more than 1-million.
The problem is that by expanding the coverage of social grants even further, the childsupport grant is starting to look a bit like a basic income grant. Historically, the biggest objection to the basic income grant was that it was unaffordable.
For those unfamiliar with the term, a basic income grant is a small grant paid to every citizen irrespective of financial need, the idea being that under the current system in which only some categories of poor people — the elderly, disabled and children — qualify for a grant, many others who are equally deserving slip through the net.
Cost has always been a concern, but the idea that people “get something for nothing” has also been tested to be unpopular with the overwhelming majority of South Africans. Social grants as they stand don’t fit into this category because in the mind of the average South African, they are targeted at those considered to be the “deserving poor” — people who will never be able to survive without state aid.
These people exist in stark contrast to the “undeserving poor”, who despite high unemployment, poor education and few opportunities for entrepreneurship are considered by many South Africans as undeserving of government help.
In SA, where the public education system precludes the majority of school leavers from working as anything other than unskilled labour, and millions of people have stopped looking for work, it is hard to stomach that these people are “undeserving” simply because they are ablebodied, but so it is.
If adopting the basic income grant was unaffordable in the past, it definitely is today. That said, we probably could expand the social grant system further, but it would require cutting back on other items in the budget.
As my husband rather bluntly put it: “There is more than enough money to pay for the expansion of the social-grant system, they just need to fire all those useless ass **** s in government.” Although simplistic, he has a point.
Faced with a fixed budget, the government could choose to reallocate some expenditure on public servants to the payment of social grants, but this forces it to choose one group of the client electorate over the other.
I get into trouble with some readers for deferring to the opinion of foreign ratings agencies, but both SA’s expansive social grant network and the bloated public service have come under fire from them recently as both a cause and a potential solution to our budgetary woes.
The trouble is that this is somewhat misleading. The absolute value of the child-support grant is relatively small — R380 a month or R4,560 a year — so increasing the age of eligibility from 18 to 21 would only require that the Treasury find another R3bn-R5bn in the budget. This might sound like a lot, but in the bigger scheme of a projected R175bn to be spent on social grants by 2020, it is of little consequence.
I would argue that the socialgrant system has been the greatest contributor to the reduction of poverty in SA since 1994 and that the cost of the grants is a small price to pay for the material reductions in poverty we have seen in the past two decades. If I were the ANC, I would increase the eligibility for social grants — and pay for it by cracking down on corruption. Then again, I don’t have any skin in the political game.