Wed 01 October 2023:
Government has extended the COVID-19 Social Relief of Distress Grant (SRD Grant) until March 2025 while it considers social security policy reforms and a funding model.
The grant was introduced to support low-income individuals affected by the lockdowns during the COVID-19 pandemic.
Delivering the Medium Term Budget Policy Statement (MTBPS) to Parliament on Wednesday, Minister of Finance Enoch Godongwana said R34 billion has been allocated to extend the grant by another year.
“Over the medium term, a provisional allocation is retained while a comprehensive review of the entire social grant system is finalised. The 2023 Budget indicated that the COVID-19 Social Relief of Distress grant was only funded until March 2024.
“Government proposes that the fiscal framework make provision for funding for the grant for 2024/25. Beyond this, a comprehensive review of the entire social grant system by the Department of Social Development and the National Treasury is required,” Godongwana said.
Over the 2024 medium-term expenditure framework (MTEF) period, 61% of consolidated non-interest spending goes to the social wage — combined public spending on health, education, housing, social protection, transport, employment and local amenities.
“Of this amount, R945.9 billion will be spent on social protection transfers, including the old age grant, the child support grant, the disability grant and the COVID-19 social relief of distress grant. South Africa’s social protection expenditure programme, measured as a percentage of gross domestic product (GDP), is one of the largest among developing countries,” he said.
The 2019 MTBPS noted that by 2040/41, social assistance beneficiaries – excluding the temporary COVID-19 social relief of distress grant – were projected to increase to 22.5 million, necessitating spending on social grants amounting to 3 % of GDP annually.
“This is in line with current grants spending, excluding the temporary grant. If that or a similar type of new grant is made permanent, beneficiaries are projected to expand from 27.3 million in 2023/24 to 40.4 million in 2040/41, which will cost 3.8 % of GDP in 2040/41 and require a corresponding permanent source of funding, such as additional revenue measures,” he said.
Although additional funding has been provided to implement the 2023 public-service wage agreement, provincial education departments are constrained in hiring additional teachers.
The Minister warned that this could lead to larger class sizes and higher learner-teacher ratios, possibly resulting in weaker educational outcomes.
“To mitigate this, the sector will improve the approach to allocating teachers to schools, ensure that learner and teacher support materials are used cost-effectively, manage infrastructure projects more tightly and focus on plans to catch up on lost teaching time,” Godongwana said.
Institutions in the post-school education and training sector, including the National Student Financial Aid Scheme, will need to bring their student enrolment and bursary allocations in line with their budgets.
Planned infrastructure spending will be brought in line with institutions’ ability to spend.
Continued health services
The Minister said the health sector is aiming to maintain service delivery amid budgetary constraints.
“While additional funding is provided to cover wage increases, baseline reductions are being implemented as part of fiscal consolidation. To minimise negative effects, the sector will need to improve efficiency in areas such as overtime payments, medical supplies and security services, and to delay infrastructure projects.”
The South African Law Reform Commission is finalising a report on legal reform to manage medico-legal claims, which constitute a significant financial risk.
“To address funding fragmentation for oncology services, allocations will be shifted from the national health insurance grant to the national tertiary services grant.
“A single grant is also proposed to consolidate the existing personal and non-personal services components of the national health insurance indirect grant. Funding is also redirected towards the Office of Health Standards Compliance to strengthen the Health Ombud,” the Minister said.
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