Budget 2022 | No money to introduce new social grant

The National Treasury is unable to introduce a permanent social grant unless tax revenue significantly increases.

Finance minister Enoch Godongwana sounded the warning in parliament as he presented his budget for the 2022/2023 financial year.

The government remains under pressure from opposition parties, labour unions and civil society bodies to introduce a basic income grant to cushion the poor and the unemployed from a poorly performing economy.

Godongwana said the state of the public purse did not allow for huge rises in government spending programmes or the introduction of “a new social grant”.

“In combination, government's fiscal imbalances and the risk outlook limit what can be funded. Any large permanent increases in spending, such as a new social grant, cannot be accommodated without matching permanent increases in revenue.

“Over the medium term, restoring fiscal sustainability requires continued restraint in expenditure growth and reforms to raise economic growth.”

At a pre-budget briefing, Godongwana said the government would in the next 12 months conduct a comprehensive review of social grants and temporary employment schemes such as the expanded public works programme.

The review would determine if such programmes should be retained or a new grant introduced.

However, R44bn was set aside for the extension of the Covid-19 social relief of distress grant for the next 12 months or until March 2023.

The R350 a month grant was introduced at the height of Covid-19 in 2020 as a measure to mitigate the economic effects of the coronavirus lockdown on the poor.

Godongwana has also allocated R7.1bn to government-owned insurer Sasria to help settle insurance claims related to the unrest in Gauteng and KwaZulu-Natal in July last year.

“To strengthen its ability to respond to risks without relying on government, Sasria will increase premiums, review reinsurance arrangements and explore ways to increase its client base.”

Godongwana is also budgeting to spend R21.1bn on health services, including the Covid-19 vaccines roll out.

The vaccination programme was projected to cost R2.2bn per year until 2025.

A sum of R57bn will fund the basic education programme and finance the National Student Financial Aid Scheme.

The finance minister has increased the child support grant by R20 to R480 per month while the old-age grant rises from R1,890 per month to R1,985.