Open Letter from civil society, labour organisations, and policy experts regarding the need for Treasury to align fiscal policy with its institutional obligations, and a sustainable economic and social development paradigm.
24 October 2024
Dear President Cyril Ramaphosa,
We are a group of South African civil society and labour advocates and policy experts working in the areas of social protection, fiscal and macroeconomic policy, and socio-economic rights.
We write to you today to express our concern at the disproportionate authority that has been assigned to, or appropriated by, the Minister of Finance and National Treasury (Treasury) in government policy making under the previous and current administrations, including in relation to the progressive realisation of constitutional rights. We make reference to the right to social assistance in particular, especially the development of government policy on introducing basic income. As we head towards the announcement of the Medium-Term Budget Policy Statement (MTBPS) at the end of this month, we want to raise the alarm about disturbing trends in the determination of policy by Treasury.
We believe that oversight by the executive, as well as by democratic structures designed to ensure oversight, representation and participation in budget-related decision-making, is not being adequately exercised, enabling the Minister of Finance and Treasury to wield disproportionate and defining influence in areas of policy outside its mandate. This has had the effect of undermining the realisation of constitutional rights and precluding meaningful democratic discussion over the gravest challenges facing our country.
Treasury is undermining progress on basic income support
We welcome your renewed commitment, again stated in the Opening of Parliament Address, to introducing a system of basic income support, building on the base of the Social Relief of Distress (SRD) grant. We note that this would be a celebrated and transformative legacy for the 7th Administration. However, we are concerned at the silence over the last three months around the finalisation of policy to transition the SRD grant to a permanent system of basic income, and indications that Treasury continues to oppose it.
This, at a time when desperation in the country continues to increase. The number of people applying for the SRD grant continues to grow, with over 17 million active applications—this roughly corresponds to expert estimates of need and eligibility.
Despite this widespread need, approximately half the eligible population is wrongfully and unfairly excluded from the SRD grant, with only around 8 million receiving it each month. At the same time, the design of this highly exclusionary system has ironically opened the way for fraud (with a large identity theft scheme gaining headlines in October)—underscoring that automated systems designed to facilitate narrow targeting are simply not fit for purpose.
We commend the ANC and those of its coalition partners who have recognised the many concerns that have been raised with the exclusionary management of the SRD grant and its inadequate value, and who have committed to resolving these issues. This is of critical importance in ensuring the fairness and effectiveness of a future basic income grant.
However, we note with concern that contradictory statements have been made from other parts of government, most notably the Minister of Finance and National Treasury who continue to state that basic income is not on the cards, allegedly due to fiscal constraints. A senior Treasury official suggested recently that the intention of National Treasury is to terminate the SRD grant and that severely limited options to replace it are being developed by Treasury. On the other hand, we are informed that the Department of Social Development is working to submit a full basic income policy to Cabinet in this financial year.
This divergence has endured for over four years, since the introduction of the SRD grant. It has long served to frustrate and subvert the government’s policy direction as laid out repeatedly by the President. This policy dissonance must be acknowledged and tackled head on, if the right to social assistance as enshrined in our Constitution is to be realised.
Indeed, the issues of exclusion that plague the SRD grant derive directly from the fact that the grant has not received adequate funding from Treasury to cover its target population. Because of this, it has compelled the Department of Social Development and the South African Social Security Agency to put arbitrary barriers in place to prevent otherwise eligible and in-need people from accessing the grant.
Democratic implications
On a broader level, we are concerned that fiscal and macroeconomic policy continue to be disproportionately influenced by unelected officials within the National Treasury, to the exclusion of meaningful democratic engagement within the Executive, Parliament, and the public.
We wish to emphasise that choices about fiscal and macroeconomic policy are never merely technical, mathematical, or impartial, but always reflect political priorities. Too often, the interests of the most vulnerable and economically marginalised in society are undermined to privilege the interests of the wealthy and powerful.
We submit that given the political nature of these processes, our elected representatives in Parliament and the Executive must occupy the central role in decisions about the raising and distribution of resources in our society, via democratic processes, as is intended by our Constitution.
We further submit that the decision-making process within National Treasury is not politically neutral, and that the overall posture of the Treasury over successive administrations has remained ideologically biased towards a narrow economic policy paradigm that privileges certain interests.
The evidence shows overwhelmingly that policies such as slashing government spending (austerity) and the privatisation of essential services and infrastructure, as a strategy to manage budget deficits and the debt-to-GDP ratio, alongside the financialisation of the economy at the expense of productive sectors, have enriched the few while worsening inequality and poverty. These policies have both undermined sustainable economic growth and development, and precipitated financial and debt crises all over the world.
This same policy paradigm also threatens to terminate existing income support for adults, which now benefits a significant proportion of people living in South Africa, both directly and indirectly.
Constitutional implications
The obligation on the government to actively and progressively realise socio-economic rights is enshrined in our Constitution. These Constitutional rights need to be respected and advanced, not blocked by a narrow economic ideology hiding behind a veil of technocratic neutrality.
While many point to an alleged lack of available resources as the justification for the non-advancement (or even retrogression) of rights, this is contested. The civil society sector, together with a range of experts, have made a strong case supported by evidence that resources are indeed available which can be mobilised to realise rights.
Further, it is possible to realise rights in a progressive manner even in fiscally constrained economies, as investments in these rights have positive fiscal multipliers. Evidence suggests for example that the economic multipliers of social assistance are particularly pronounced in highly unequal, developing societies.
As you are aware, there is pending litigation before the High Court regarding the retrogression of constitutional rights which has occurred in the management of the SRD grant—as the grant has been rolled back from its peak both in terms of total recipients, as well as real value. The litigation is relevant to the role of budgeting in rights-realisation and as such has implications beyond the case of the SRD grant. However, it cannot be left solely up to the courts to arbitrate the overall contestation between austerity and rights, as this would be a dereliction of the duty of our political representatives.
We note that the ANC and several of its coalition partners passionately defended the Constitution, and the fulfilment of its stipulated socio-economic rights, in their recent election campaigns—we submit that they received a mandate from the electorate accordingly.
Yet, whilst the defence of the Constitution was largely mounted against ‘populist’ political elements, the threat to the Constitution does not only come from these quarters. It also comes from a macroeconomic doctrine that claims that growth must be a precondition for rights realisation, yet actively undermines growth at the same time. This viewpoint ignores the simple fact that growth will always be stymied as long as the majority of the population lacks the ability to participate fully in our economy. As such, if it prevails the austerity paradigm will deepen both our crisis of lack of inclusive growth, and our crisis of rights realisation.
Request for urgent action
We request that the Presidency and Cabinet take steps to resolve this contradiction within government policy as a matter of urgency—whereby the Minister of Finance and Treasury are unilaterally undermining the President’s publicly stated vision for the progressive realisation of the right to social assistance. Resolving this matter is of direct and profound consequence to the welfare of millions of people in South Africa.
This will require the publication of the long overdue roadmap to basic income with clear targets and deadlines for implementation. However, it also requires Treasury to be held accountable to adequately finance, and not obstruct, official government policy on the realisation of these constitutional rights.
The Executive and Parliament need to take an active role in overseeing and interrogating fiscal and macroeconomic policymaking, using the democratic levers at their disposal, while ensuring transparency and accountability to the electorate.
In conclusion, the fiscal situation, and choices made, are not immutable, but a function of policy priorities. Rigorous analysis shows that government has more sustainable and responsible choices at its disposal, apart from austerity economics.
As you have recognised, progressing basic income is a direct and effective way of realising the Constitutional right to adequate food and social assistance. This was a point of convergence between yourself and the Basic Income Coalition in a meeting held in January 2022, and has similarly been recognised by the Presidency’s basic income Task Team.
It has also been shown in credible modelling exercises domestically and internationally to contribute positively to inclusive economic growth. South Africa is poised to be a world leader in the area of basic income support. But the way forward must be determined by the government as a whole, through appropriate democratic structures, in a manner that is transparent and accountable to the public.
Yours sincerely,
Signed by:
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ORGANISATIONS
- Congress of South African Trade Unions (COSATU)
- South African Federation of Trade Unions (SAFTU)
- National Education, Health & Allied Workers (NEHAWU)
- Institute for Economic Justice
- #Pay The Grants
- Youth Lab
- Alternative Information and Development Centre
- Black Sash
- Budget Justice Coalition
- Basic Income Earth Network
- Women on Farms Project
- Global Reformed Advocacy Platforms for Engagement
- Rural Health Advocacy Project
- Chris Hani Institute
- The Family Caregiving Programme
- Workers’ World Media Productions
- Pietermaritzburg Economic Justice & Dignity Group
- Social Policy Initiative
- Amandla.mobi
- Open Secrets
- Africa UBI Observatory
- RightfulShare
- Fight Inequality Alliance South Africa
- Equality Collective
- Alliance for Rural Democracy
- MelodiForum Afrika Borwa
- groundWork
- Economic Policy Research Institute
INDIVIDUALS
- Professor Thuli Madonsela — Director of Centre for Social Justice, University of Stellenbosch
- Dr Gilad Isaacs — Executive Director, Institute for Economic Justice
- Dr Rob Davies
- Hoodah Abrahams-Fayker — National Advocacy Manager, Black Sash
- Reverend Dr Bukelwa Hans — Retired Ordained Minister of the Uniting Presbyterian Church in Southern Africa
- Pregs Govender — Writer, Activist; Former MP & Human Rights Commissioner
- Professor Elena Moore — Professor of Sociology, University of Cape Town
- Dr Sanele Gumede — Academic Leader for High Impact Community Engagement, University of KwaZulu Natal
- Professor Rajen Govender — University of Cape Town
- Ronnie Kasrils — Former Government Minister
- Tebogo Phadu — Managing Director, Dora Tamana Co-op Agency
- Dr. Vishwas Satgar — Board Chairperson, Cooperative and Policy Alternative Center
- Raymond Suttner — Emeritus Professor, University of South Africa
- Loretta Jacobus — former MP and Deputy Minister Correctional Services
- Professor Pundy Pillay — Chair, Institute for Economic Justice
- Professor Michael Rogan — Neil Aggett Labour Studies Unit, Rhodes University
- M Khalid Sayed — Member of the Western Cape Provincial Legislature
- Russel Rensburg — Rural Health Advocacy Project
- Martin Jansen — Director Workers World Media Productions
- Professor Aslam Fataar — Stellenbosch University
- Fairuz Mullagee — CENTROW, University of the Western Cape
- Professor Michael Joseph — Retired Academic Researcher, North West University
- Professor Jill Bradbury — University of the Witwatersrand
- Malele Mogoane
- Professor Dhiru Soni — Regent Business School
- Professor Sam Ashman — School of Economics, University of Johannesburg
- Caroline Skinner — Programme Director, Women in Informal Employment: Globalizing and Organizing
- Linda Cooper — Emeritus Professor, University of Cape Town
- Matshidiso Lencoasa — Budget Analyst at SECTION27
- Ebrahim-Khalil Hassen — Senior Researcher, Gauteng City-Region Observatory
- Dr Ruth Castel-Branco — Senior Researcher, Southern Centre for Inequality Studies
- Aliya Chikte — Economic Justice Project Officer, Alternative Information and Development Centre
- Dr Courtney Hallink —- Postdoctoral Fellow, Southern Centre for Inequality Studies
- Vayda Megannon — Programme Manager and PhD Candidate, University of Cape Town
- Neil Coleman — Senior Policy Specialist, Institute for Economic Justice
- Dr Kelle Howson — Senior Researcher, Institute for Economic Justice
- Dr Andrew Bennie, Senior Researcher: Climate Policy and Food Systems, Institute for Economic Justice
- Thokozile Madonko – Researcher, Southern Centre for Inequality Studies, Wits University
- Amaarah Garda – Junior Programme Officer: Rethinking Economics for Africa, Institute for Economic Justice
- Karen Jooste — Founder and Director, RightfulShare
- Professor Omano Edigheji — University of Johannesburg
- Barry James Mitchell — Policy and Parliamentary Coordinator, NEHAWU
- Professor Esther Ramani —- Retired Contract Employee, North West University
- Dr Jeff Rudin — Research Associate, Alternative Information and Development Centre (AIDC)
- Professor Christopher Ballantine — Professor of Music Emeritus, University of KwaZulu-Natal
- Claire-Anne Lester — Lecturer in Sociology at Stellenbosch University
- Merle Favis — Development Activist
- George Kean – independent Socio-ecological Economist
- Mpho Makube — Concerned Citizen
- Mr. Zimbali Mncube — Researcher, Institute for Economic Justice
- Mr Michael Bruce Gardiner
- Cole Meintjies
- Grahame Hayes
- Gemma Paine
- Katishi Masemola- SEMO Advisory and Consulting Services
- Dr Robin Brandon Dyer — Cardiologist
- Jeremy Grest — (Retired), UKZN Political Science
- Dr Marlese von Broembsen — Associate Professor, CENTROW, University of the Western Cape
- Tabitha Paine — Attorney, Budget Justice Coalition
- Safoora Sadek
- Kabelo Kennybarel Rapholo — Executive Director, CPUT Queer Unicorns
- Michael Smith — Lecturer, University of Cape Town
- Mthokozisi Magubane — Student
- Mr Faiez Jacobs — CEO
- Peter J. Patel
- Busisiwe Nxumalo — Policy, Advocacy and Stakeholder Engagement Officer
- Dr Jane Quin — Lecturer in Education and Development; UKZN-P
- Jesse Barnes
- Ayanda Iman Sadek
- Marquin Smith
- Professor Emerita Kathy Luckett — ex-UCT
- Caroline Ashley Petersen
- Hassan Dhooma
- Mr Melisizwe Tyiso — Researcher, Labour
- David Hallowes — Researcher, groundWork
- Ms Vanessa Japtha — Advocacy Manager, Western Cape Forum for Intellectual Disability
- Nomboniso Gasa
- Qhawe Nzama
- Marcelle Simpson — Teacher, Alexander Road High School
- Mr Mogale Mafalo —Entrepreneur
- Brett Herron MPP / Member of Western Cape Provincial Parliament & Secretary General: GOOD
- Mr Andile Mangena Mchunu
- Estelle Silence — Social Worker
- Professor Michelle Williams — Wits University
- Malehlohonolo Malema — Secretary, MelodiForum Afrika-Borwa Soshanguve Zone
- Dorothy Brislin — Senior Communications Campaigner, groundWork
- Dr Michael Samson — Director of Research, EPRI
- Ms. Ingrid van Niekerk –- Executive Director, EPRI
- Ms. Preksha Golcha — Lead Social Policy Advisor, EPRI
- Rev Dr Claudia Haarmann –- Project Leader Grape, EPRI
- Rev Dr Dirk Haarmann –- Project Leader Grape, EPRI
For media inquiries:
- Dalli Weyers (IEJ) | 082 460 2093 | dalli.weyers@iej.org.za