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The Basic Income Grant: Poverty, Politics and Policy-making
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1. Mass poverty is the reality in South Africa, and this reality has not receded meaningfully in the past eight years.
Scenario planners at the highest levels of government start with the baseline that poverty and inequality levels have not decreased since 1994, and are unlikely to do so with our current economic policies. Of course, official public statements don't usually acknowledge this reality. Predictably some may be heard to talk in vague terms of "life is getting better", which in some respects, mainly procedurally, it is - but it is not getting better in terms of poverty outcomes.
The impact of this state of mass poverty on South Africa is harsh. A few examples follow:
- 25% of all births in 1999 were into households in extreme destitution, and another 50% were into poor households. Such adverse circumstances experienced in early life, of course, have an enormous impact on a child's chances of future success. Children born into poverty are more likely to suffer from disability and illness, get a poor education, suffer violence and abuse, be unemployed, and so on.
- Poverty induces behaviour that increases vulnerability to HIV/AIDS, now estimated at 25% prevalence. A woman may be so financially dependent on her husband, for example, that she may feel she cannot refuse unsafe sex.
- Poverty and inequality are heavily correlated to property and violent crimes. This we know intuitively, though even a recent World Bank study of South Africa confirms this. Poverty also contributes to domestic violence and child abuse; the Ministry of Justice found that its programmes for children fail in the poorest communities, because of the effects of poverty.
- 22% of all households report hunger, and 166 children were reported to have starved to death in the Eastern Cape last month.
On the economic side an investment study done for the Office of the President found that mass poverty is a major constraint to investment. The study found that the poverty and inequality situation looks untenable to investors, who are convinced that this will backfire on South Africa, and have the view that government is not doing enough.
So it is in this context that COSATU proposed a BIG at the Presidential Job Summit in 1998.
So what is a Basic Income Grant?
A Basic Income Grant is a grant that is paid to all citizens without the psychologically damaging stigma of means testing. In other words, it is a universal grant that does not impose a judgement as to whether someone is a 'deserving' poor person or not. Rather this grant goes to everyone as a right. This does not mean that the rich actually get the benefit, since the tax system can be reworked to ensure that the better off actually pay back the cost of the grant, and then some.
The concept is quite simple, though it fundamentally turns on their heads many concepts of our current social security - concepts that we borrowed from Britain over the past century.
When the Taylor Committee studied the potential impact of a BIG in South Africa it found the following:
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Poverty Gap Reduction |
Additional People Freed From Poverty |
| Current situation |
23% |
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| Full take-up of existing grants |
37% |
0,8 million |
| BIG |
74% |
6,3 million |
If everyone were to receive a BIG of R100 per month, the BIG would cost approximately R48 billion per annum. After we claim back the taxes, however, the net cost can be brought down to approximately R15 billion (this net amount is what the grant would actually cost the State) - and this benefit would be in the hands of the poor not the rich.
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