Budget: pensioners and children will be poorer

Social grant increases are below inflation

Elroy Paulus – Black Sash National Advocacy Manager

With more than one third of South Africa's population dependent on social grants, Finance Minister Pravin Gordhan's announcement that grants are not even going to keep pace with inflation is disappointing.

Social Grant                  Grant amount in rands 2016/17   Grant amount in rands      2015/16 % increase

                                                                                                                                                 (inflation is 6.2%)

Child Support Grant       350                                                      330                                       6.1

Grant-in-Aid                    350                                                     330                                        6.1

Foster Child Grant           890                                                    860                                        3.5

War Veteran's Grant      1,520                                                   1,440                                    5.6

Care Dependency Grant  1,500

                                   (1,510 from October)                             1,420                                     5.6

                                                                                                                                              (6.3 from October)

Disability Grant              1,500

                                   (1,510 from October)                             1,420                                     5.6

                                                                                                                                             (6.3 from October)

Older Person's Grant       1,500

                                   (1,510 from October)                              1,420                                     5.6

                                                                                                                                            (6.3 from October)

 In his speech yesterday the Minister described the context as a "combination of multiple demands and constrained resources".

He asked how the state should deal with such complexity and what should be prioritised.

One of the key state instruments to reduce extreme inequality and poverty remains the significant rollout of social grants and the strengthening of social security reform initiatives. We commend his stated intention to extend the social safety net. State allocations by government to those who rely on social grants in our nation, especially at this time, are utterly crucial.

We are disappointed that the increases made to these grants do not even keep pace with inflation. This was acknowledged by senior Treasury officials yesterday and we cannot endorse this decision.

Whilst we appreciate that the 2016 Budget was a fine balancing act in difficult times, we think that this decision will again affect persons in the lower income categories disproportionately.

As the table above shows, for instance, the older person's grant goes up only 4.2% this year while inflation is running at 6.2% a year. Food inflation is even higher. This means recipients of the grant are actually getting poorer in terms of what they can buy with their money.

The behaviour of some financial service providers that are responsible for predatory practices against social grant beneficiaries in particular, needs to be challenged more urgently. These predatory institutions are wreaking great harm, especially on grant beneficiaries.

We should reject with contempt the practices of these financial service companies – including some insurance, credit, and funeral companies. The judgement in the Flemix case against those seeking unlawful emolument attachment orders against farmworkers, sadly revealed that even some in the legal fraternity (involved in debt collection agencies and loan companies), are guilty of these predatory practices.

Now working class families increasingly have to assist their aged parents, our disabled sisters and brothers affected by these disputed or fraudulent social grant deductions. This is over and above those fearing extortion by loan sharks. They have to stretch their already stretched own income.

Whilst this happens to one cohort of South Africans, another cohort, the wealthy owners of businesses, enrich themselves on these deductions. This practice not only erodes the gains made by the State, but also contributes to so much social tension and fuels inequality.

We hope that the raft of legislation and regulations addressing these immoral practices by some companies and individuals will finally stop these deductions and unacceptable practices from social grants.

On the revenue generation side, we welcome the decision not to raise VAT, which is an easy way to increase revenue collections. An increase in VAT would have had a seriously adverse effect on the already strained consumption patterns of lower income earners and the working class.

Much more could have been done to cut public spending. Appointed and elected officials paid from public money could lead by example when calling for austerity measures themselves. A lot of public respect would have been gained if Ministers and the highest earning public servants took even a small cut in their salaries, as has happened in countries such as Brazil, Bolivia and Tanzania.

Three months is not enough to fix Makana's problems


On 24 August 2014 the Sunday Times exposed our municipality's chronic shortcomings ("City of Saints in a financial sinkhole" and "Save City of Grahamstown") . This is not good news at all for businesses, residents, schools, university, government departments, workers, ratepayers and particularly the organisers of the internationally acclaimed arts festival.

When a municipal administration can't manage public funds in an ethical manner and deliver public services in a sustainable manner to its citizens (i.e. water, electricity, refuse removal, etc.), serious and decisive intervention is needed from the top to clean up the mess within our municipality.When public assets and bank accounts are attached for the failure to pay contractors on time, it's not a joke. When a municipality can't pay salaries and benefits to its workers, it's a recipe for unnecessary conflict. When a municipality is slapped with four consecutive disclaimer opinions by the AGSA, it can't be business as usual. How can a municipality be trusted with public funds when maladministration, abuse of public resources and good co-operative governance is compromised?

Disappointingly and interestingly, the rapid decline of our municipality is happening under the watch of a political party which claims to stand for an open and transparent public service.

Did the ANC Councillors and Municipal Public Accounts Committee (MPAC) intervene to stop the expose of the mess? With the current state of affairs, it's clear there was no decisive intervention at all. If they have done anything good, the public deserve to know what was done to address the rot within the administration. The ANC Councillors who are in the majority must take the blame for the current state of affairs.

In the AGSA report dated 30 April 2014, it is reported that irregular, unauthorised and fruitless expenditure was understated by millions of rand. The AGSA couldn't express an opinion because no sufficient evidence justifying the financial wastage was submitted. Furthermore, the AGSA expressed an opinion that conditional grants earmarked for community projects (i.e. conditional grant liability of R45 million) was used for other expenditure which is not allowed by the grant conditions. The AGSA is also reporting that our municipality violated procurement and contract management rules.

More disturbing from the AGSA report was the appointment of staff in unfunded posts and unresolved investigations relating to the irregular appointment of consultants, irregular appointments of employees, irregular donation expenditure, irregular payments of legal fees and lost personnel files. With high levels of secrecy, I don't think that the AGSA report was ever brought to the attention of ward committees or at ANC branch meetings. If that is the case, business groupings, citizens and civil society organisations must immediately demand greater accountability through sustained pressure.

On 27 August 2014, in response to the crisis in Makana, the Minister for Local Government intervened by placing the municipality under immediate administration for a period of three months. Given the deeply rooted problems, three months is definitely not enough to fix Makana's chronic administrative problems. The Minister should have applied stricter measures for at least two years.

On 31 August 2014, the Sunday Times ("The shock report Grahamstown hid from the Minister") reported that a damning forensic report by Kabuso was not disclosed to the Minister, Councillors and the public. It can't be argued that the report is not a public interest report. It is in the public interest to make the report public. People in Makana have a right to know how much money disappeared from municipal coffers and who are the implicated officials. Another Nkandla case scenario can't be allowed in Makana.

Jonathan  Walton, Fieldworker, Black Sash Trust

Sassa's new technology fails grant beneficiary

One Billion for What?

As part of our monitoring practice, Black Sash goes into communities to witness firsthand the services government provides. Recently we monitored the Gugulethu Local SASSA office together with the Community Advice Office, and were astonished at the long queues we found.

In an ironic encounter, a distraught young woman approached me and the local assistant manager, tears running down her face, pleading for help. Through her sobs she managed to explain that she had waited for about six hours just to be told in the end that she could not be reissued with a new SASSA card without an identity document.

Her distress affected me to the point that I had to compose myself in order to maintain my independence as a monitor. She was, however, no victim, and was very articulate in stating her case. She had, that morning, presented the Cash Paymaster Services (CPS) official with an affidavit confirming that her ID and SASSA card were stolen two days before on the train. Without the card she was unable to access her Child Support Grant which had been paid into her SASSA bank account. Bizarrely, CPS insisted that she bring her hard copy ID before she can receive a new SASSA card.

She asked us how her fingerprints and her recorded voice on the CPS system were not sufficient proof of identity.

Her problem was simple and her reasoning perfectly logical but the overly complicated and cautious CPS administration could not help her.

Many people are struggling to understand and engage with the newly introduced, much talked about, biometric payment system. In a controversial decision that has landed both parties in the Constitutional Court, Cash Paymaster Services (CPS) was awarded the multi-billion Rand tender by SASSA to pay out social grants nationally. Last year over 16 million people had to re-register on the system where voice recordings and all ten fingerprints of adults and children as young as one year were taken.

It was clear that the SASSA staff were uncomfortable that they were unable to help this young woman to get her grant. They contacted the SASSA regional office where an official explained that the ID was one of the requirements agreed to with CPS in their Service Level Agreement.

Last year, Serge Bellamont, the CEO of CPS, said that he had paid over one billion rand for the development of this biometric system. I am left wondering, what is the point of a one billion rand high-tech solution if the administration still relies on hard copy identification and disregards its own biometric information?

Black Sash intends to continue to monitor the payment system and engage the decision makers to ensure system improvements for grant beneficiaries.

Ratula Beukman is the Acting Regional Manager of the Cape Town Regional Office of the Black Sash

The People's Alternative Budget Speech 2014

Honouring our duties to realise Human Rights and Social Justice

The Budget Expenditure and Monitoring Forum and Call For Budget Justice imagined, for Budget 2014/15 what we would say to the nation if we were the Minister of Finance. We canvassed the views of a team of economists, activists, social scientists and researchers. Most importantly, we listened to the needs and demands being expressed by communities the length and breadth of our country. After careful consideration, we were able to prepare a People’s Budget Speech for a People’s Finance Minister.

Click here to read the full speech