In recent years, warnings that the levels of poverty and inequality in South Africa would lead to a social explosion have been repeatedly sounded and come from multiple sources in good faith, in particular civil society organizations (read this report child hunger, for example).
But allowing hunger, disease and illiteracy as a means of containing costs has its own costs.
In September 2021, the The South African Special Risks Association (Sasria) told Scopa that the July riots were the world’s most expensive “flash riots” in a decade. They cost over R50 billion in direct damage, caused 374 deaths and countless loss of jobs and livelihoods.
To cover these costs Sasria received 22 billion rand in the budget.
The most recent warning came from July 2021 Civil Unrest Panel whose December 2021 report informed President Cyril Ramaphosa that “what happened in July will certainly happen again” if issues of poverty and inequality are not addressed:
“It is impossible that nearly three decades after the start of our democracy, there is still such deep racial poverty and inequality in our society. Without the end or reversal of these conditions, we will only see greater insecurity, which will necessitate more diversion of resources to security.
The report suggested that “the government should pay particular attention to the problems of poverty, underdevelopment and inequality,” politely noting that “…there does not appear to be a clear plan, with budgets and a timetable, to address this problem effectively.
An ill-informed and cruel gamble
However, as Ramaphosa and his Cabinet have heeded the call to increase the police budget, adding R8.7 billion over the next three years to facilitate the employment of 12,000 more officers, they have chosen to ignore the panel’s recommendation on measures, such as a basic income grant, to reduce inequality, “to facilitate dynamic conditions and pathways for development at the local government level”.
Instead, the Cabinet opted for more “fiscal consolidation” and austerity. Basing policy on a wing and a prayer, rather than social data, evidence (generated by bodies like Stats SA and the CRSS) and their constitutional obligations, they hope that cutting taxes on the wealthy could lead to increased investment and jobs.
It is an ill-informed and cruel gamble.
It’s a wager compounded by the fact that the cost-cutting rationale has a fatal flaw: cutting public spending on basic human rights is expensive. In fact, it increases short-, medium-, and long-term costs, as well as social polarization and instability (which, as we have seen, also has off-budget costs).
Cut funding for essential services, especially to socio-economic people rights listed between Articles 24 and 29 of the Bill of Rightsis not a saving, but a creation of costs.
In this regard, they are false economies.
What do we mean?
According to SECTION27 analysis (available here) the health budget receives “a 4.3% reduction in funding in real terms on average each year for the next three years”. On the front line of health care, this means that the prevention of HIV, tuberculosis, cancer and other non-communicable diseases will be compromised. More people will be infected with preventable diseases. More people will get sick. More people will die. More legal claims will be successfully made for negligence.
Each comes with an invoice.
Sooner or later these essential and complementary the costs of care will have to be borne by someone, and if it’s not the state, that means either no care at all, or an additional cost for the poor that will be borne primarily by women whose unpaid burden care is already debilitating and the central cause of gender-based poverty and unemployment.
Similarly, with regard to basic education:
According to the Institute for Economic Justice (see their statement here):”Between 2021/22 and 2024/25, expenditure on learning and culture decreases by R13.5 billion or -2.5%”. Less money spent on more children means poorer educational outcomes and more children lacking basic skills and unable to find decent jobs. From this, says the YEI, “we can only conclude that the government has simply decided that a fundamental right, which the Constitution identifies as immediately realizable, is not as important as arbitrary macroeconomic targets which offer no benefit to people”.
In their analysis (see here) the Budget Justice Coalition, an alliance of leading civil society organisations, draws particular attention to below-inflation increases for essential social grants such as the Child Support Grant. Although the R350 Social Relief of Distress (SRD) grant has been extended for a year, its paltry amount remains the same. Failure to commit to further extensions of this grant in 2023/24 and 2024/25 means that the basic income of the most vulnerable remains uncertain and leads to an overall reduction in social protection expenditure of 3.0% in average per year against the medium-term expenditure framework.
The coalition is calling for a human rights impact assessment to be conducted on this decision and other “individual budget decisions where human rights are affected”.
Ending the SRD subsidy would be a sweeping reform (of the wrong kind) that would wrench millions out of an already inadequate safety net. The National Treasury may deny that such is their plan, but the hostility to social security rights that seems to infect the Treasury was confirmed in a comment by the Director General of the Treasury Dondo Mogajane that in his view “the R44 billion for the Distress Social Relief Grant should have gone to infrastructure instead”.
In a post-budget meeting on Twitter Space, an equally worrying signal was flagged by economist Duma Gqubule who said he was directly approached by the finance minister recently to take part in a process that “aims at an overhaul major part of the social subsidy system”. He declined his services. One only wishes that other economists who dress these decisions with their legitimacy find similar principles.
As a result, civil society almost universally condemned the budget. The list of organizations that have released statements condemning him include:
– the Assembly on the unemployed and the cry of the excluded;
– the Center for Alternative Information and Development;
– the Black belt; and
– Equal education.
In this context, the only civil society organization to receive a slightly welcome note was Outa who described “less reliance on fuel tax increases and personal and business tax relief” as “encouraging”. Outa also hosted the R18.5 billion for the Ministry of Water and Sanitation, calling it “a move in the right direction to address our serious water security issues”, but adding that “the state of our water resources and the increasing volumes of waste water in our dams and the demands of the rivers must be treated as a national disaster”.
The problem, however, is that the National Treasury is not listening.
He considers the alternatives suggested by civil society as coming from fools, utopians or left-wing ideologues who do not understand the real world, and has therefore decided on his own superior wisdom. The problem isn’t that he doesn’t have the resources available, it’s that he has discarded these many options in favor of market fundamentalism.
The best we can say is that he mistakenly believes austerity will lay the groundwork for service expansion and reinvestment from 2024.
In its defence, it can, for example, point to ongoing plans to introduce a wealth tax through its new requirement that “taxpayers with assets over ZAR 50 million report specified assets and liabilities at market value on their 2023 tax returns.”
There are two dangers in this.
The first is that even the good initiatives that the government has launched and funded, such as the school assistant program and the Social Employment Fund (called here by Kate Philip, head of the presidential jobs stimulus package), will be undermined by the general deterioration of public services.
The second is that by the time the Treasury decides to spend again, the country may have exploded – at immense social and economic cost.
What is there to do?
In one recent article in Daily Maverick Ben Cronin remind us:
“While the Minister [budget] the speech is portrayed as the final act determining the budget, this is actually not true. An appropriation, like any law, once presented to the legislature is then in the hands of parliamentarians.
Given what we have outlined above, we believe that Parliament should reject this budget with reasons and send it back to the executive demanding that it balance the books in a way that does not violate the Constitution and does not harm millions of people.
As Cronin says: “Hopefully, our National Assembly will soon rise from its ashes and embark on the difficult task of mobilizing all available resources for our democratic state.”
Doing less is a further dereliction of duty. SM/MC
For those wishing to better understand the extent and nature of socio-economic deprivation of rights in South Africa, Stats SA has just released its Marginalized Groups Indicators 2020 report, available here.