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Social grants are on the rise

#Budget2016 / Johannesburg - Despite the limitations of a reduced expenditure ceiling, Finance Minister Pravin Gordhan has made provision for an additional R11.5 billion to social grant allocations.

According to the Treasury’s Budget Review document, the increases will provide for inflation-linked social grant increases and growth in the number of beneficiaries.

Finance Minister Pravin Gordhan (foreground) gestures as he arrives to deliver his 2016 budget address to Parliament in Cape Town on February 24, 2016. Picture: Mike Hutchings, Reuters. Credit: REUTERS

No surprises in #Budget2016

In the context of a tight fiscal environment, the government has been cutting back on expenditure. But social grants are among the areas the government is set to continue to spend more on even as the overall growth on spending slows down.

Expenditure

Gordhan said yesterday: “Taking into account projected increases in the cost of living, R11.5bn is added to social grant allocations over the next three years”.

The Treasury said expenditure on grants was expected to increase at an average annual rate of 8.5 percent over the medium term, reaching R165bn in 2018/19. Adding the R11.5bn was a move to preserve the real value of social grants, the department said.

Gordhan has allocated R167.5bn to social security, and old-age and child-support grants will get R58.9bn and R52bn of that allocation, respectively. The bulk of the allocation (R140.5bn) is earmarked for the different social grants.

The state old-age pension and disability grants increased by 6.4 percent from R1 415 to R1 505, while state old-age pensions for people over 75 years and war veterans increased by 6.3 percent, from R1 435 to R1 525. The foster-care grant rose by 3.5 percent to R890, while the child-support grant has gone up from R330 to R350.

The Treasury said the number of beneficiaries, especially those receiving old-age pensions and child-support grants, had increased by 2.1 percent and 3.6 percent, respectively.

“Beneficiary numbers in these categories are growing as the aged population increases each year and child mortality rates decline,” it said.

Along with slow gross domestic product (GDP) growth and weak balance sheets of state-owned enterprises, the government has highlighted increases in inflation-linked expenditure among the risks that the government is managing.

“The average growth in spending on education, health and social protection expenditure continues to outpace inflation by 1.4 percent”.

The increases in social grants allocations come amid rising food prices. Annual food inflation increased to 7 percent last month, up from 4.3 percent in June last year. For a number of the recipients, the grants are the only source of income.

Recipients

“The primary aims of the social protection function are to provide a social safety net to all South Africans, particularly the young, elderly and disabled and reform and standardise practices in the social welfare sector. Spending to support this priority is set to grow from R154.4bn in 2015/16 to R195bn by 2018/19, accounting for 12.9 percent of total spending over the medium-term expenditure framework period,” the Budget Review document said.

The grants take up 94.2 percent of the Department of Social Development’s budget over the medium-term expenditure framework period.

According to fact-checking website Africa Check, the number of social grants recipients has increased from 4 million in 1994 to 16.9 million by September last year.

BUSINESS REPORT

Be sure to follow #Budget2016 developments on Business Report as we bring you news, reviews, analysis and opinion regarding Finance Minister Pravin Gordhan's speech on February 24 and 25.

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