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ANC social transformation subcommittee chair Lindiwe Sisulu has confirmed that a basic income grant is on the cards, saying finance minister Enoch Godongwana will give the final verdict.
Speaking at the ANC’s sixth policy conference at the weekend, Sisulu said the introduction of a basic income grant was possible.
“We were the committee that made it possible to provide our people during lockdown with R350 as an interim measure for their sustainability. We realised it was possible to deal beyond that and deal with basic income grants.
“We had several meetings with Treasury to see whether it is possible, within the limited resources we have, to introduce this now, or whether we might want to continue with the R350 for a particular period of time,” she said.
Sisulu said discussions are on the table and the final decision lies with Godongwana.
“It is something that will have to be effected into the budget. He’s trying to work out how we get around it, making sure we can have this as an ongoing and sustainable method of ensuring those people who have no access to any resources whatsoever or any other means will be supported by the state,” she said.
Speaking on eNCA, Godongwana said the government could afford a basic income grant but that it would come at a cost. According to him, social grants cost government about R400bn every year and over the next three years they will cost about R1-trillion.
“The government can afford to do so [introduce a basic income grant] at a cost. What that means is we’ll have to cut a number of social spending issues to fund it,” said Godongwana.
He said if the government were to increase corporate tax to 28% and VAT to 16%, it would bring in about R60bn but that would be insufficient to fund the basic income grant.
In 2020, SACP leader Blade Nzimande called on the government to convert the R350 grant into a “universal basic income guarantee”.
Nzimande said the R350 grant was a lifeline and without it many households would fall into deeper distress.
“Without a basic income guarantee, without each adult in a household being able to contribute to the household income, the impact of all the ‘triple H’ (health, housing and hunger) and water campaigns will be severely limited,” he said.
Earlier in 2022, former finance minister Tito Mboweni said basic income grants would not fix the economy. Speaking at the PSG Konsult annual conference, Mboweni said economic growth would remain stagnant if the government did not focus more on investment instead of social grants.
“A challenge for fiscal policy is that it needs to shift into investment and not public-sector wages and social grants. Let us not waste the opportunity of the commodity tax windfall,” he said.
Mboweni said that although there was a huge poverty issue, basic income grants were not the way to go.
“As people go around talking about basic income, they have to be careful about where we want to take the country to. Yes, there is huge poverty and we must make interventions, but I’m not sure a basic income grant is where we should go.”
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.