MTBPS: Better outlook for middle-class, but shocking reduction in social grants indicated in the full MTBPS document

31 October 2024

Today’s Medium-Term Budget Policy Statement included a number of positive plans,  including narrowing the consolidated budget deficit, stabilising debt and supporting public infrastructure investment.

But it heralded no short-term relief for millions of unemployed and destitute South Africans.

The economic growth forecast of 1.8% per year was sobering. Despite media-led euphoria that the Government of National Unity (GNU) has significantly improved our economic growth prospects the actual projected growth is woefully insufficient to narrow inequality and address grinding poverty. 

We need at least 5% annual economic growth, over a sustained period, if we are to meaningfully reduce unemployment.

The objective to build a capable state is good, but as long as millions don’t have enough money to feed themselves they will regard the state as incapable.

The biggest disappointment in Minister of Finance Godongwana’s speech was the absence of an announcement on a Basic Income Grant. 

The Minister made no promises about increasing the R370 a month Social Relief of Distress Grant, either. Over the past four years this grant has increased by a total of R20, although by government’s own reckoning, as of this month, adult citizens need a minimum of R796 a month – just to eat. 

GOOD has campaigned for the past two years for the introduction of a BIG of at least R1,000 a month.

As always, the devil is in the detail and the Minister failed to share in his speech the shocking details of the plan for social assistance as contained in the full MTBPS document.

In fact, the full MTBPS document suggests that social assistance is under threat. 

In this document, National Treasury says: “The budget for social grants is sufficient for inflation linked increases in 2025/26, but reform and reprioritisation are needed to improve efficiency in subsequent years.  The sector needs to intensify efforts to improve income verification and extend big-data cross checking to all grants.”

The MTBPS then indicates a substantial reduction in the social wage, and social grants in particular, from R269 billion in the current year to R248 billion in 2025/26. 

Linked to the policy statement quoted above it seems the Minister was less than candid about the future of social assistance.  

Tabling a reduction in social assistance while at the same timetabling anaemic economic growth is shocking, and a betrayal of the millions of South Africans trapped in unemployment and poverty.

Any proposal to reduce or cap social assistance while the economy remains stuck must be rejected.

Considering the rate of inflation and cost of food, if Godongwana is planning to announce another R20 or R30 increase to the SRD grant in his February budget speech it will mean the poorest South Africans are becoming increasingly poor.

GOOD also hoped the Minister would lay down the law on provinces planning to reduce teacher posts.

The State must fulfil its Constitutional obligation to intervene – at least in the short to medium term – to educate the nation and alleviate immediate socio-economic suffering. 

The levels of inequality and poverty in the land are unsustainable, and South Africa’s greatest existential threat.

Issued by Brett Herron, GOOD: Secretary-General, 31 October 2024