ANALYSIS: Treasury faces high-stakes battle on the road to social safety net grant reform

You can’t technically call South Africa a welfare state. That traditional economic term is reserved for universal social safety nets and strong unemployment support across a citizen’s entire life.Almost all grants in Mzansi are means-tested, meaning they are reserved only for those with little to no income. And working-aged adults were historically excluded until the temporary Social Relief of Distress (SRD) grant was introduced in 2020 during the pandemic.There’s also the small matter of the actual grant amounts (read: the R370 SRD grant or Child Support Grant) falling well below official food poverty lines, acting more as emergency protection against extreme hunger rather than full income replacement.The social wage weighs heavily on the national coffers.But the wording of Section 27 of the Constitution has long been used as a weapon of expanding welfare.Specifically, Section 27(1)(c): “Everyone has the right to have access to... social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.”And Section 27(2): “The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.”Wade into the welfare watersThe Institute for Economic Justice (IEJ) was most vocal in the public outcry when Finance Minister Enoch Godongwana used his Medium-Term Budget Policy Statement (MTBPS) to crow about the savings Treasury is making with improved grant recipient verification.Even to Daily Maverick, this seemed like a largely good thing. Less fraud in social grants is a good thing.IEJ approaches social security as a fundamental human right, arguing for a Universal Basic Income Guarantee (UBIG) to establish an unalienable income floor for all individuals living in poverty.From their perspective, social grants are an essential investment in human dignity, poverty alleviation and economic activation rather than a fiscal burden.“One of the biggest ostensible ‘successes’ of the Medium-Term Budget Policy Statement (MTBPS) is R13-billion cut from social grants. Half of this comes from the long-standing grants – the child support, disability and older persons’ grants – and half from the Social Relief of Distress (SRD) grant,” Dr Kelle Howson (senior researcher and project lead at the IEJ) wrote in her critique of the government’s fiscal strategy.“National Treasury claims that this is part of its ‘targeted and responsible savings’ (Tars) programme – and social grants account for the largest share of Tars ‘savings’. While it may be targeted, it is not responsible, but arbitrary and cruel. The suggestion that these funds are being redirected to gender-based violence (GBV) and child stunting ... is a cynical PR exercise that does a gross disservice to GBV victims, impoverished children and social grant holders.”When Daily Maverick pressed the IEJ for clarity on the objection to the idea that the fiscal gains were won in the fight against fraud, this is what they wrote in an email:“The MTBPS (page 11) explicitly states that government has saved ‘R13 billion from reducing fraud in social grants’. The Universal Basic Income Coalition’s parliamentary submission, presentation and statement explain clearly, with supporting evidence, how grant cancellations have not been due to fraud nor to ‘administrative efficiencies’ but to arbitrary exclusion.”A view from inside the houseNational Treasury approaches social security through the lens of macro-fiscal sustainability, expenditure restraint and systemic efficiency.Treasury rightly argues that state resources are strictly finite and that expanding unbudgeted expenditure risks escalating public debt and undermining public finances.“We still have the constitutional obligation around a social security system,” Ulrike Britton, deputy director-general of public finances in the Treasury said in an interview with Daily Maverick during MTBPS lock-up.“But the thing about all of this is about the tremendous fraud that you have there… and how you could use those same mechanisms, and how government interfaces with people, in other parts of the broader social wage system.”When asked about the benefits of digitisation within the administrative systems, Britton took a positive tone:“There’s massive inefficiencies that you see within how programmes are being administered... So while we’re putting more money around all of that, there’s a lot of reforms around how those programmes get administered: What happens with planning? How you link the incentives or the behavioural changes that you have to make between the plan and the budget … and aligning all of those things.”Britton used the example that only 36% of housing grants is spent on actually building a house.Saying the same things, like a synonymDespite their sharply contrasting policy approaches, the IEJ and National Treasury share several fundamental starting points:Constitutional binding: Both acknowledge that the state has an unavoidable constitutional obligation under Section 27 to provide a functional social security system for South Africans.Recognition of acute distress: Both recognise that extreme poverty, unemployment and food insecurity are massive national challenges that require state intervention.Rejection of waste and corruption: Both agree that public money should not be wasted or stolen, and that genuine fraud or criminal exploitation of state funds must be stopped.Lifeline role of grants: Both accept that social grants serve as an essential lifeline for millions of impoverished households across the country.Policy questionsPerhaps the biggest point of difference in the debate around social grants is how each of the advocates views the Constitutional mandate.The IEJ grounds its argument in the substantive right of Section 27(1)(c) and the positive obligation of progressive realisation under Section 27(2). In constitutional law, once the state introduces a form of social assistance, it cannot take backward steps (“retrogressive measures”) without extraordinary justification.‘We know the challenges that face us are formidable, yet we have the Constitution and still the collective will to transform our society. But real transformation cannot be a matter of lip service. It requires a commitment from all of us and fundamental change to the structure that continues to render us such a disparate and unequal society’. — Justice Jody Kollapen, Constitutional Court of South Africa. (Photo: Leila Dougan) Their stance is that allowing grant values to erode against food inflation, capping beneficiary numbers and erecting technological barriers that exclude millions of eligible citizens violates human dignity and constitutes an unconstitutional failure to progressively realise social security.Treasury, by contrast, stands on the internal limitation (“within its available resources”) and the reasonableness standard set out in Section 27(2).Here the argument is that socioeconomic rights cannot be divorced from macro-fiscal realities. Because the state faces severe budget deficits and high debt-servicing costs, reasonable measures require strict prioritisation (read: ensuring that permanent grants for children, the elderly, and disabled people are protected first, while temporary grants for working-age adults are strictly verified) to prevent waste and maintain fiscal sustainability.Godongwana’s team attributes reduced grant spending to successful administrative verification, technology-driven auditing and curbing inefficiencies, while the IEJ rejects this narrative as misinformation.It demonstrates that 95% of cancellations stem from administrative hurdles (such as transport costs, digital divide issues, lack of smartphones, or internet access for biometric checks), which result in the arbitrary exclusion of eligible poor people.Two things can be true at the same time. But there can be a third option.“We have enormous untaxed wealth and resources in this country...” Howson stated in her Op-ed. “There is no need whatsoever to trade social grants off against support for GBV victims and the mitigation of child stunting. The resources are available to fund all of these priorities. The government has a moral and constitutional imperative to do so.”If only welfare were so easy. DM