ANC must ensure a basic income grant is universal and unconditional
Basic income is more than poverty alleviation — it is supposed to act as an economic stimulus
I don’t want to be a party pooper, but the ANC is not planning to introduce a basic income grant (Big). A targeted, means-tested, poverty alleviation grant with a low financial value is the very essence of what a Big is not. Financed through workers’ pockets in the form of increased taxes or cuts to service delivery budgets, its introduction will be socioeconomic suicide for the country.
While understandable, uncritical support of this initiative is dangerous and politically naive. What we need now are new, caring, competent leaders and bold new socioeconomic policy, not crumbs from what can best be described as a malevolent cabal. A basic income as part of a package of policies could be a game-changer for SA, but then we have to go about it in the right way.
Definition is important. It matters because without it we cannot have a debate that is useful or productive. According to the Basic Income Earth Network (BIEN), a basic income can be defined as a periodic cash payment delivered to all on an individual basis, without a means test or work requirement (BIEN general assembly, Seoul, 2016).
A Big therefore has the following characteristics:
- Periodic: it is paid at regular intervals (for example, every month), not as a one-off grant;
- Cash: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. Therefore, it is not paid either in kind (such as food or services) or in vouchers dedicated to a specific use;
- Individual: it is paid on an individual basis and not, for instance, to households;
- Universal: it is paid to all, without a means test; and
- Unconditional: it is paid without a requirement to work or to demonstrate willingness to work (BIEN).
In January, President Cyril Ramaphosa said the ANC government would consider introducing a “Big” to provide a social safety net for poor people in our country. This statement has been repeated by social development minister Lindiwe Zulu on various platforms since the announcement that the Covid-19 social relief of distress grant will be terminated at the end of April.
The qualifying criteria for the special Covid-19 grant included that applicants must be unemployed, must not receive any income, not receive any social grant, not qualify for or receive an unemployment benefit, not receive a stipend from the National Student Financial Aid Scheme, not receive any other government Covid-19 response support, and may not be a resident in a government-funded or subsidised institution.
Judging from the debate that has ensued, it seems likely that the grant being considered will have similar qualifying criteria. But such a payment is neither universal nor unconditional and therefore does not constitute a Big. Noble as the aim may be, basic income is about much more than poverty alleviation. Its introduction is supposed to act as an economic stimulus and facilitate inclusive growth.
An appropriate basic income scheme that meets the above criteria should set the financial value at the upper-bound poverty line, an objective measure that limits the state’s discretionary power and is high enough to allow people to spend on more than food — creating demand for local goods and services.
The grant should be rolled out according to age categories to avoid market inefficiencies and poverty traps created by targeting and means-testing. It should be financed by changing the distribution of BEE expenditure to allow big companies the option of instead transferring money to a fund that can directly distribute cash to beneficiaries, so that the companies can be 100% compliant.
Such a scorecard model meets the criteria of certainty, clarity and simplicity, all of which investors like, and is far more efficient and effective in the current circumstances. In this way, a basic income is financed through breaking the monopoly and recycling the “rents” taken by the small corrupt political and business elite under the guise of BEE.
• Jooste is founder of basic income grant lobby group RightfulShare.
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