Court bid over SRD grant ‘short-sighted’
The government has consistently failed to provide the temporary social relief of distress (SRD) grant, which was initially budgeted at R36bn, to millions of eligible people who live in poverty. This is the view of think-tank the Institute for Economic Justice (IEJ) and the #PayTheGrants (#PTG) campaign in a challenge expected to be heard in the Pretoria high court this year.
The government has denied these claims.
The IEJ and #PTG are challenging the government over “regulations and ... procedures” they say “contribute to the exclusion of [millions of] eligible beneficiaries”.
In papers recently filed on behalf of finance minister Enoch Godongwana, the government says the SRD grant regulations actually “facilitate greater access to social security” and “provide the maximum support to the poorest South Africans”.
In its initial court papers filed in July IEJ director Gilad Isaacs noted “at least half of the people who are eligible for the grant are not receiving it ... This is largely because of a range of bureaucratic obstacles and criteria.”
The grant was introduced at the beginning of the Covid-19 pandemic four years ago to cushion the poor against the economic effects of the pandemic. It was extended first into 2024 thanks to a tax windfall from mining companies that allowed Godongwana to pay down debt and provide personal tax relief in 2022. Then again into 2025 amid a strong push by civil society and labour unions for the grant to be made permanent or be elevated towards a basic income grant.
During the midterm budget speech, Godongwana said social grants, in general, will cost R945bn over the medium-term expenditure framework over the next three years.
Despite this, say the IEJ and #PTG, the government has gradually made the requirements for SRD applicants more stringent, decreasing the number of beneficiaries.
Isaacs says 16-million people should qualify for the grant, which is now available for people who have an income below R624, regardless of their unemployment status. However, many either do not qualify or are discouraged from applying because of “bureaucratic obstacles and criteria”.
“In March 2023 ... only 8.3million of [14-million applicants] were approved. At the peak of applications in March 2022 close to 16-million people applied for the grant. Many applicants have since been discouraged from applying,” Isaacs says.
The government filed its papers over the festive season. Treasury director-general Edgar Sishi said on behalf of the finance minister that the regulations governing SRD grants “are not reviewable” because they are “a reasonable ... set of measures designed to protect as many desperately poor people as possible”.
Worse still, says Sishi, if the high court were to rule in the favour of the IEJ and #PTG, this “would result in disastrous economic consequences for the country’s finances”.
The Treasury’s mid- to longterm plan is to promote economic growth for job creation to reduce poverty. Sishi notes various policy measures outlined in the 2023 medium-term budget policy statement (MTBPS). They include tackling electricity supply and improved funding for infrastructure projects.
Sishi says this shows “a range of approaches” must be adopted to deal with poverty and, therefore, the IEJ application is “shortsighted”.
SA has spent about 60% of its total budget on the “social wage”, which, he says, “includes social security” as well as other rightsfulfilling projects such as health and education.
Sishi says: “Debt has risen faster in SA than in other emerging market economies”, weakening SA’s fiscal position. Income has to come from taxation or else SA has to borrow, which is “nothing more than deferred taxation”. However, additional tax increases “would be detrimental to economic growth”.
To address the “overarching problem” is a complex task, with SRD grants being only a temporary measure. Tackling poverty in the long term requires “structural reforms”, which needs to be the priority.
Furthermore, says Sishi, the IEJ and #PTG have misconstrued the SRD grant because its focus is on assisting people with “immediate” needs “not overall poverty”, which other programmes target and which require more of the budget. These include short-term employment and school nutrition programmes.
Furthermore, says Sishi, the IEJ’s estimate of 18-million people living in poverty is too high and “not all [are] considered to be in financial distress”. The budget had been “underspent” and “no-one has been turned away”, he says.
The IEJ and #PTG are expected to file their reply to Sishi in the coming weeks, with a hearing to be set later in 2024.