A bit more in grants — plus a scary de­lay

The so­cial de­vel­op­ment de­part­ment doesn’t ap­pear to have made much progress to en­sure that peo­ple who de­pend on so­cial sub­si­dies re­ceive them from April. And na­tional trea­sury has lit­tle to say on the mat­ter

Financial Mail - Investors Monthly - - Budget 2017 - Ann Crotty crottya@bdfm.co.za

For those hop­ing for some in­di­ca­tion of adult over­sight of the con­tro­ver­sial so­cial grant ten­der, the bud­get was a grim dis­ap­point­ment.

Per­haps un­der­stand­ably, given the po­lit­i­cal sen­si­tiv­ity at­tached to the is­sue, fi­nance min­is­ter Pravin Gord­han brushed off the one SA So­cial Se­cu­rity Agency (Sassa)-re­lated ques­tion at the press con­fer­ence ahead of the bud­get.

“We’ve lit­tle to say on that mat­ter; we’ve en­gaged with Sassa and the so­cial de­vel­op­ment de­part­ment . . . ul­ti­mately it is the de­part­ment’s re­spon­si­bil­ity,” the min­is­ter said. “We’re ex­pect­ing them to go to the con­sti­tu­tional court at some point,” he added.

And then the very scary part: “There’s a process they’re fol­low­ing.”

At least it was scary for any­one who had, min­utes ear­lier, lis­tened to so­cial de­vel­op­ment min­is­ter Batha­bile Dlamini up­date par­lia­ment’s port­fo­lio com­mit­tee on the progress of that process to en­sure that so­cial grants con­tinue to be dis­trib­uted to peo­ple who de­pend on them. Those who sat in for the full ses­sion con­cluded there had been lit­tle progress.

It ap­pears Sassa has not started its ne­go­ti­a­tions to ex­tend Net1-UEPS’s sub­sidiary Cash Pay­mas­ter Ser­vices’ (CPS) con­tract. It now dis­trib­utes grants to 11m re­cip­i­ents (who re­ceive grants on behalf of 17m ben­e­fi­cia­ries).

And though Sassa un­der­took to ap­ply to the con­sti­tu­tional court by Fe­bru­ary 15 to ex­tend its con­tract with CPS, it has not yet done so. Once it has been back to the court, Dlamini told the com­mit­tee, it will re­turn to na­tional trea­sury for ap­proval of a plan for the dis­tri­bu­tion of so­cial grants af­ter April 1. That’s when the cur­rent CPS con­tract, which has been de­clared in­valid by the court, ex­pires.

Dlamini’s short-term plan ap­pears to be the con­tin­u­a­tion of some sort of re­la­tion­ship with CPS for up to two years. That re­la­tion­ship will re­quire a new con­tract.

Against this un­cer­tain back­drop it was prob­a­bly rea­son­able that na­tional trea­sury based its figures for the com­ing year on the as­sump­tion that lit­tle would change with Sassa’s dis­tri­bu­tion con­tract in 2017/2018.

“The agency cur­rently spends R2bn a year on con­tract­ing the full pay­ment func­tion to a ser­vice provider. This base­line is ex­pected to be main­tained over the medium term,” the Es­ti­mates of Na­tional Ex­pen­di­ture 2017 tome says.

Sassa’s to­tal bud­get for 2017/2018 is R7.2bn. The largest sin­gle item in that bud­get is R3.2bn for em­ploy­ees; the sec­ond-largest is R2.3bn for “pay­ment con­trac­tors”. This is where CPS comes in. CPS was the pay­ment con­trac­tor that

re­ceived R2.1bn in 2016/2017 and may or may not (but prob­a­bly will) be the con­trac­tor that re­ceives a bud­geted R2.3bn in 2017/2018.

If, as many sus­pect, CPS is able to ex­tract bet­ter terms for the ad­di­tional two years re­ferred to by Dlamini, then Sassa will have to find the ex­tra funds from some­where within its R7.2bn bud­get. Re­mark­ably, it had an ac­cu­mu­lated sur­plus of R625m at the end of fi­nan­cial 2016/2017. This sur­plus is ex­pected to be re­duced to R123m by the end of 2017/2018.

Trea­sury will be re­luc­tant to hand over any ad­di­tional funds to Sassa for on-pay­ment to CPS. It points out that the grants’ ad­min­is­tra­tion cost is now over 5% of the to­tal costs of the grants. This com­pares with the world best of around 3%.

Es­ti­mates of Na­tional Ex­pen­di­ture also makes ref­er­ence to ex­pec­ta­tions that Sassa will im­ple­ment a bio­met­ric au­then­ti­ca­tion sys­tem: “The sys­tem is ex­pected to re­duce fraud by pro­vid­ing se­cure, pos­i­tive iden­ti­fi­ca­tion of users, and [the link­ing of of­fi­cials] from the agency with the ben­e­fi­ciary whose grant they ap­proved. An es­ti­mated R100m over the [medium-term ex­pen­di­ture frame­work] pe­riod is al­lo­cated for the project, which is set to be im­ple­mented in 2017/2018.”

Mean­while, the 2017/2018 bud­get will re­sult in more money be­ing dis­trib­uted by who­ever se­cures the con­tract af­ter March 31. The old-age grant creeps up by R90 to R1,600/month for peo­ple over 60 and R1,620 for those over 75. The dis­abil­ity and care de­pen­dency grants also in­crease by R90, to R1,600. Foster grants are up R30 to R920 and child sup­port grants by R20 to R380/month. The to­tal so­cial wel­fare bill for the year will be R142bn, just R15bn more than the new wealth tax is ex­pected to gen­er­ate.

Batha­bile Dlamini: Up­dated par­lia­ment’s port­fo­lio com­mit­tee

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.