Govt being BIG about social welfare

Hilary Joffe wrote a very balanced opinion on Skweyiya's basic income grant (BIG) in today's Business Day. 

She offers a few interesting stats on welfare.

• 18% of total government spending is spent on welfare,
• Nearly 11-million South Africans now receive pensions, disability, child support or foster-care grants.
• The spend amounts to R62bn, representing more than 3,5% of gross domestic product (GDP): an extraordinary ratio, even next to countries such as Brazil, which has something like a BIG.

She first tackles the positive aspects of a BIG.

Evidence shows how successful grants have been in narrowing the poverty gap, reaching deep into the poorest rural areas, where their impact has been significant. As small is the BIG is it would narrow the poverty gap and improve people’s life chances.

Her next step is to consider whether the BIG will actually solve the government's broader goal to fight poverty.  She suggests that a BIG does not address the problem but works around it.  Joffe suggests that the government's greatest responsibility is the "social wage"; a concept that takes education, sanitation and transport (et al) into account.  The BIG might direct government's attention away from the social wage and not address the root of the poverty problem. 

The next question is how is this BIG going to be paid for.  BIG proponents want the tax payer to foot the bill, and this would only be collected by raising taxes.  Raising taxes is not a popular option seeing that the tax to GDP ratio has increased 4% in the last five years (now sitting at 28%).

There must be a CSI tie in here - by creating a facility for companies to direct their spend at the poorest of the poor we will be alleviating some of the government's responsibilities.  And the benefit to the economy - new markets and consumers.

Comments

[Zainab]

The way I see this is can pretty much be summed up by the "teach a man how to fish" approach. I think we really need to plough our resources into skills development. Joffe is right, this is essentially going around the problem and not addressing it at all. BIG skirts the issue - 'oh, poor people let's give them a basic grant'. It should be 'why are these people poor to start off with'.

Of course poverty is a serious problem, but a BIG will not make it go away.