Treasury on the defensive
THE National Treasury has defended the below-inflation increases for social grants and cuts in social spending projected for the next three years.
Yesterday, MPs across the political divide took a swipe at the department for the 1.6% increase in social grants in the 2021/22 financial year.
According to the National Treasury’s budget document, R36 billion of cuts in social grants are projected in the medium term due to Cabinetapproved reductions.
The report said there will be a R5.8bn reduction in 2021/22, R10.7bn in 2022/23 and R19.5bn in 2023/24, with all grant values increasing by less than inflation.
DA MP Geordin Hill-Lewis was the first to launch criticism, saying the decision for the below-inflation increase to social grants was indefensible when bailouts of SOEs were prioritised.
“It was a poor decision. I find it a bit surprising and quite inexplicable. It says much about the priorities of the government,” Hill-Lewis said.
“The result is that the poor are getting poorer in South Africa as a result of the below-inflation increases,” he charged.
ANC MP Noxolo Abrahams said it was the first time in more than a decade that social grant increases were less than inflation. “This means people will have less in their pockets with the 1.6% increases over a threeyear period. Why did the Treasury opt for the below inflation increases, given that many families depend on social grants to survive?” Abrahams asked.
EFF chief whip Floyd Shivambu also questioned the rationale of the decreases in social grant allocation, saying the amount to be allocated to the beneficiaries would also decrease.
“What is going to happen when numbers are inevitably going to increase?” Shivambu asked.
He noted that the decrease, which was also applied in the education sector, including the National Student Financial Aid Scheme (NSFAS), formed part of the austerity budget and fiscal consolidation.
“It means that fewer students are to be allowed into the institutions of higher learning. Because of fiscal consolidation you are denying access without scientific value,” Shivambu said.
Responding to the MPs’ questions, Deputy Director-General for Finance Mampho Modise said the National Treasury has – since 2012, when it started to reduce growth in the budget – ensured social grants were protected.
“Even when we had to find R56bn for free higher education, we managed to protect social development,” Modise said.
She said what they had picked up was that there was a need for consolidation, and the need to deal with the budget deficit.
“It was difficult to fully protect social development or the grants. We did look at the implications and, of course, we understand what less than inflation means, but we try to make sure that at least we do increase social spending,” she said.
“What will happen, we hope, is that by doing good now and consolidating, it will give us leeway in the future, and if that happens, of course social grants will be one of the first spending items to consider in terms of where we are looking at the poverty line and other lines.
“What we do is to balance between the need to protect the poor and the need to consolidate and try to fix our problems now, so we can have some leeway in the future,” Modise said.
Concerning NSFAS funding, she said the Finance ministry was already working with the Department of Higher Education and Training to deal with the funding issues of the bursary fund.