Cape Town - The R350 social relief of distress (SRD) grants will be extended until March 2024 while the government is pondering a possible replacement grant.
Tabling the medium-term budget policy statement (MTBPS) on Wednesday, Finance Minister Enoch Godongwana said the budget over the next three years was focused on restoring service delivery and laying the foundation for higher growth.
“Medium-term changes to spending plans are driven mainly by government’s decision to extend the special Covid-19 SRD grant by one year, until 31 March 2024,” Godongwana said.
The grant, introduced in May 2020 as a temporary measure to low-income households during Covid-19 lockdown, has been extended several times, and the one which 7.4 million beneficiaries receive was to expire in March 2023.
Godongwana said the discussions on the future of the grant were on-going and involved very difficult trade-offs and financing decisions.
“Despite the provision made in this budget, I want to reiterate that any permanent extension or replacement will require permanent increases in revenue, reductions in spending elsewhere, or combination of the two.
“This is what is meant by trade-offs: balancing the need to address one priority over another,” he said.
The MTBS document concurred with Godongwana that the introduction of a new grant in the fiscal framework was a permanent spending increase.
“To be sustainable, it needs to be financed with permanent increases in revenue, spending reprioritisation.”
The National Treasury said discussions are still under way to consider options for a replacement for the temporary grant.
“No final decision has been made about a replacement or how it would be financed,” the document read.
However, the MTBPS document warned that given the large cost of extending the R350 SRD grant, increases to other social grants in 2023-24 will be slightly below inflation and other social welfare priorities may remain unaddressed.
Black Sash maintained that government needed to commit to permanent social assistance for those who earn little or no income, working towards a universal basic income.
“Ahead of the MTBPS, Black Sash expected the minister to address the ongoing electricity crisis and its impact on society, especially the most vulnerable. This is because there is evidence to show that grants are spent on electricity.”
“We also expected the introduction or plans to implement a permanent solution to the SRD grant post March 2023. The minister has indicated the grant will be extended to March 2024, citing Medium-term changes to spending plans are driven mainly by government’s decision to extend the special Covid-19 SRD grant by one year another 12-month extension that reflect a diversion from engaging with the pressing need for a discussion and decision on permanent social assistance through a basic income grant.
“With the rising cost of living and food insecurity, a long term and sustainable plan for social assistance needs to be made which the budget unfortunately did not address.”
The 2022 Adjusted Estimates of National Expenditure (AENE) document meanwhile noted that the Social Development has underspent on the R44bn for the R350 SRD grant allocated in the budget earlier this year.
The department declared R1.77bn in unsent funds on social assistance due to lower than anticipated uptake of the social relief of distress grant following the implementation of the lower income threshold and the bank verification of applicants’ income.
*Additional reporting Siphokazi Vuso
Cape Times