The government needs to increase the SRD grant – Cosatu
By Solly Phetoe
Cosatu welcomed the government’s announcement this week of its intention to extend the Social Relief of Distress (SRD) grant for an additional year to March 2025.
This will provide welcome comfort for the up to eight million unemployed persons who have been receiving this critical poverty alleviation relief.
The SRD grant has experienced many limitations, ranging from its monetary amount to the challenges people have experienced applying for and receiving it.
While appreciating these challenges, it has provided an invaluable source of relief for eight million persons without a source of income.
It has been rolled out in spite of the very difficult financial constraints that the government has experienced due to Covid-19 and its subsequent economic lockdown, the leftovers of state capture and corruption, and declining tax revenues due to load shedding, the difficulties encountered at Transnet and a tepid economic growth rate.
In addition to these major obstacles, President Cyril Ramaphosa’s administration has forced the conversation towards the long-sought Basic Income Grant (BIG) that society has debated for decades.
With all of its limitations, the SRD grant has laid the foundations for this BIG. This is why Cosatu has continuously pushed the government to extend and increase the SRD grant.
Though the announcement of an extension until March 2025 is positive, we are disappointed the monetary amount of the SRD grant has not been adjusted once for inflation since it was introduced in 2020.
This is nothing short of scandalous and shameful, more so when the members of Cabinet and Parliament, who pass the Budget, have received increases to their very comfortable packages.
This failure to adjust the SRD grant has significantly eroded its purchasing power and thus the relief it provides to its recipients and their dependants.
It is beyond comprehension why the government and Parliament have continuously failed to adjust it at the very least for inflation since it started in 2020.
Cosatu hopes that the very positive commitment by Ramaphosa, to extend and increase the SRD grant in the recent State of the Nation Address, will be honoured by the government’s word and at the minimum, to adjust it for inflation.
Ideally, the government needs to show real solidarity with the poor and raise it to R450 by April and then set a short-term path for it to reach the food poverty line.
The Budget needs to also include a plan to link its recipients to skills and employment opportunities. In the short and medium term, the government has been bold and correct to provide some sort of social grant for 27 million South Africans out of 62 million citizens.
In the long term we need to reverse the ratio of people receiving social grants to those working, to ensure the state is able to sustain these poverty alleviation programmes.
We appreciate the fiscal constraints facing the state; however, we need to do more to cushion the poor who have been decimated by the rising cost of living and struggle to find work in an anaemic economy with a 41% unemployment rate.
The government’s Budget at R2 trillion can afford to increase the SRD grant to meet these objectives as it currently costs less than 1.5% of total expenditure yet reaches over 15% of society.
The money spent on the SRD grant is not lost as it is spent in the local economy, stimulating growth, and much of it is recovered through VAT and other taxes.
Critics would correctly ask where will the money come from to cover this and other poverty alleviation interventions and public services? The answer is fourfold.
First is to invest further in the South African Revenue Service (Sars), which has shown real progress in turning itself around over the past few years under new leadership and by investing in additional staff and IT capacity.
The Budget should simply write a blank cheque to Sars and set it a clear mandate to increase tax compliance from 64% to 70% over two years. This would bring in an additional R120 billion in taxes owed to the state.
Second, the government needs to give Eskom and Transnet all the support they require to turn themselves around. The supply of reliable and affordable electricity is key for all workplaces’ productivity levels.
Modernise ports and secured freight railways are critical for the mining, manufacturing and agricultural sectors. Fix these two critical state-owned enterprises and the economy will rebound.
Similar interventions are needed for other embattled SOEs, in particular Metrorail, as well as our worrying number of dysfunctional municipalities.
Third are interventions to stimulate the economy and create jobs. Key to these are financing our industrial and export incentives programmes, ramping up local procurement by both the public and private sectors as well as consumers, giving support to the industrial master plans and drastically expanding the intake of the Presidential Employment Stimulus to accommodate at least one million active participants by April and two million by November 2024.
Lastly, intensify the fight against crime and corruption which bleeds the state and robs the economy of billions of badly needed monies every year.
In addition to ensuring Sars is well resourced, so too must the government provide the tools and personnel the SAPS, the National Prosecuting Authority, the Special Investigating Unit and the judiciary require.
All of these cost money, but if done, they will provide the state the revenue it needs to provide solidarity to the poor.
Equally, we should not forget the dangers of leaving behind millions with no source of income or hope. The July 2021 violence, where a well-orchestrated criminal intent was able to tap into a sea of poverty and despair, is a real reminder of the dangers of thinking that the market alone can resolve society’s socio-economic challenges.
Solly Phetoe is the General Secretary of Cosatu.
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