FINANCE Minister Enoch Godongwana has ruled out the extension of the R350 Covid-19 social grant to become a Basic Income Grant (BIG) anytime soon, although the country has recorded an improvement in revenue collections.
Delivering his budget speech on Wednesday, Godongwana said tax collections since the time of the medium term budget policy statement (MTBPS) have been much stronger than expected with new estimated tax revenue for 20211-22 set to be R1.55 trillion.
“The improved revenue performance is not a reflection of an improvement in the capacity of our economy. As such, we cannot plan permanent expenditure on the basis of short-term increases in commodity prices,” he said.
“To be clear, any permanent increases in spending should be financed in a way that does worsen the fiscal deficit,” the minister added.
Responding to questions at a media briefing earlier, Godongwana said it was the view of the National Treasury that they could not fund permanent programmes using temporary revenue collections.
“Over time you are to hit the problem,” he said.
The minister also said his department was looking at a totality of support measures geared towards uplifting the poor.
He also said they would do a review on how to maximise the way to utilise the grants.
His sentiments were echoed by the budget review document, which said the Presidency, the National Treasury, the Department of Social Development and interested parties were working in a sustainable long-term approach to social protection consistent with the government's broad development mandate and the need to ensure affordability.
“Policy discussion in this regard will continue and these matters will receive attention in the 2022 MTBPS,” the document said.
During his budget speech address in the National Assembly, Godongwana announced that the Social Development Department would receive the largest allocation of R58.6 billion over the medium term.
He said R44 billion has been allocated for a 12-month extension of the R350 social relief of distress grant.
“The social relief of distress grant was introduced in 2020-21 as a temporary relief measure in view of the plight of those who have lost economic opportunities and were adversely affected during the worst periods of the pandemic.
“This emergency grant added to the country’s already extensive social safety net,” he said, adding that South Africa now paid grants to more than 46% of the population.
Godongwana also announced that R1.6 billion has been allocated to initiate a new extended child support grant for double orphans.
“This is to encourage the care of orphans within the families rather than foster care.”
A further R13.1 billion has been allocated for inflation-related increases in social grants.
“For the 2022-23 fiscal year, the old age, war veterans, disability and care dependency grants will increase by R90 in April and a further R10 in October.
“The foster care and child support grants will increase by a once off r20 in April,” the minister said.
Political Bureau