9 June 2003

1. Basic Income Grant Coalition Submission to thePortfolio Committee on Social Developmenton the Consolidated Report of the Committee of Inquiry into a Comprehensive System of Social Security for South Africa 9 June 2003

2. Current Situation • 22 million or 53% of our people live, on average, on less than R144 per month • 2 in 3 children live in poverty • 3.1 million workerless households (1999) • Expanded unemployment rate now tops 40% • Poverty and unemployment deep-rooted, structural legacies of apartheid • Over 13 million living below the poverty line have no access to social security. • No income support from age 9 to 59(w)/64(m) • One of the world’s most unequal societies

3. Legal Imperatives • Constitution “Everyone has the right to have access to … social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.” • Covenant on Economic, Social and Cultural Rights Guarantees the right to an adequate standard of living • Grootboom tests • Coordinated and comprehensive programme • Provide relief for those living in desperate need • Reasonable implementation • Work within available resources • Progressive realisation

4. Policy Imperatives • White Paper on Social Welfare (1997) “All South Africans [should] have a minimum income sufficient to meet basic needs and should not have to live below minimum acceptable standards” • Presidential Jobs Summit (1998) • Government commitments • Elimination of poverty and the establishment of a reasonable, widely acceptable distribution of income. • Full employment, or if this proves not possible, an adequate mechanism to deal with poverty. 2003 GDS - Recognition of role of social security measures to fight poverty • All parties commit to address take up and overcome obstacles to accessing current grants • Discuss extension of social protection framework

5. Taylor Committee Report • Structural character of poverty in SA requires holistic developmental response • Proposes a Comprehensive Social Protection package to address: • Income poverty - BIG, SOAP, extended CSG • Capability poverty - Health care, education, water and sanitation, electricity, public transport, housing, jobs and skills training • Asset poverty – Land, credit and community infrastructure • Special needs - Reformed disability, foster care, CDG • Social insurance

6. The Basic Income Grant • A core element of the CSP package proposed by Taylor Committee • Intended to address income poverty • Complements other interventions to address other forms of poverty – no “magic bullet” • Defining characteristics • Universal coverage from cradle to grave • R100 a month • Expand the net: no one receives less • Payment through public institutions • Financed through progressive taxation

7. Phased Implementation • Taylor Committee rejects • status quo as unconstitutional • immediate implementation as unrealistic • Calls for phased approach • PHASE 1: Immediate extension of CSG to 18 on a universal basis • PHASE 2: Roll out of universal BIG from 2005/06 • BIG Coalition supports phased approach (but intervening year necessitates slightly delayed timetable)

8. Preparatory Phase • Complete electronic Document Management System and Automated Fingerprint Identification System to enable introduction of HANIS • Extend Post Bank infrastructure, identify delivery agents and pilot payment mechanisms • Education and training programmes for public and civil servants • Stakeholders’ forum to identify and resolve other practical issues

9. Advantages and Impact • Eliminates destitution and alleviates poverty • Encourages self-sufficiency • Not means-tested • Enables households to take risks to move to more sustainable livelihoods • Stimulates consumption-led local economic growth and employment creation • Enhances the efficiency of social investment in other areas

10. Common Objections 1 • “A BIG will be impossible to deliver” • New technology (e.g., the HANIS smart card) opens up enormous possibilities; commitment of financial sector to increasing access to bank accounts for poor • Existing commitment to prioritising social grant delivery via HANIS • Abolition of the means test simplifies administration and slashes delivery costs • Extension of public sector and co-operative financial institutions

11. Common Objections 2 • “A BIG will be unaffordable” • Studies demonstrate the feasibility and affordability of financing BIG through progressive taxation • Taylor research put net cost at R24 billion – same as tax cuts for past 2 yrs • Increased prosperity, rising revenues and increased efficiency of social spending will decrease net costs to the state in the long term

12. Common Objections 3 • “A BIG will create dependency” • Very poor currently depend on working poor or grant beneficiaries • BIG is not a dole and does not penalise people for seeking other sources of income • Expecting people to find jobs not realistic in circumstances of long-term structural unemployment • Concerns about irresponsible use misplaced given 90% of spending by poor households is on basic goods and services

13. Proposed Alternatives • Job creation via public works • Important complement to a BIG as part of CSP • High administration costs, limited scale and structural nature of unemployment = no substitute for a BIG • “Workfare” • Experience suggests schemes drive down wages, discriminate against vulnerable groups • Food vouchers • Paternalistic • Means tested • Undermines self-reliance benefits of BIG • Cost of administration/ infrastructure • “DA dole” • Complicated; sets up perverse incentives

14. Way forward • Future prosperity and stability depend on a CSP package that can eradicate extreme poverty, reduce inequality and promote development within sustainable communities • Coherent and visionary SP policy needed to establish a legislative agenda • Taylor Report equivalent to a Green Paper • Draft White Paper now needed to catalyse participatory national debate

15. Recommendations to PC • Endorse the Taylor findings as a first step of CSP policy formation • Stakeholder forum with government to look at practical concerns • Articulate need for coherent policy statement prior to the tabling of CSP legislation • Call on government to expand national debate on CSP by preparing a draft White Paper for public comment • Facilitate broad participation by holding hearings on the draft White Paper • Urge the NCOP to assist by creating opportunities for stakeholder participation at the provincial level

16. A Question of Priorities “No political democracy can survive and flourish if the mass of our people remains in poverty, without land, without tangible prospects for a better life. Attacking poverty and deprivation must therefore be the first priority of our democratic Government.” -- RDP, para 1.2.9