Budget 2024 | Reform of social grants system on the horizon

The government is considering significant reforms in the grants system which will be detailed in next year’s budget.

Before the medium-term budget policy statement (MTBPS) on Wednesday, the Institute of Economic Justice penned an open letter to finance minister Enoch Godongwana to provide clarity on the extension of the social relief of distress (SRD) grant beyond 2025.

The MTBPS said a wide range of financial support was provided to the unemployed , but these social relief interventions were split across various state agencies with little to no co-ordination.

“There is no linkage between the social security system and the policy goal of increasing employment. Government is considering ways to reform the grant system and consolidate public employment initiatives.

“This includes a review of the impact of the skills development funding system, where the levy collected averaged R20.9bn over the past three years. Proposals will be presented in the 2025 budget.”

The estimates of national expenditure said that by midyear the annual targets for the number of grant beneficiaries were exceeded for war veterans, foster care, care dependency and grant-in-aid grants.

“In the case of the foster care grant, a number of recipients were still at school and had the grant extended, whereas greater awareness was generated about the care dependency and in-grant aid grants through educational programmes.

“However, the number of child support grant beneficiaries was below target as beneficiaries phased out when they turned 18 and new applicants are now subjected to more stringent income testing using big data.”

Included in the MTBPS was data showing South Africa had high levels of social assistance spending as a percentage of GDP compared with Chile, Thailand, India, Argentina, China, Peru and Indonesia. In this narrow set of data, South Africa was the only country whose spending on non-contributory social pensions as a percentage of GDP passed the 3% mark and whose non-contributory health services passed the 4.5% mark. Chile and Thailand were the only other countries whose total social assistance spending breached 1.5% of GDP in the data set.

National Treasury will use bolstered insights from data to put more conditions on grant categories to ensure more efficient disbursement of grants.

TimesLIVE