Treasury defends below inflation increases in social grants and general budget cuts

By Mayibongwe Maqhina 21m in the past

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Johannesburg – The National Treasury has defended the below inflation increases for social grants and cuts in social spending projected for the following three years.

On Thursday, MPs throughout the political divide took a swipe on the division for the 1.6% enhance in social grants in the 2021/22 monetary year.

According to the National Treasury’s budget doc, R36 billion cuts in social grants are projected in the medium time period as a result of cupboard authorized reductions.

The report stated there can be a R5.8bn discount in2021/22, R10.7bn in 2022/23 and R19.5bn in 2023/23 with all grant values elevated by lower than inflation.

DA MP Geordin Hill-Lewis was the primary to launch criticism saying the choice for the very far below inflation enhance in social grants was an indefensible determination when bailouts have been prioritised.

“It was a poor decision. I find it a bit surprising and quite inexplicable. It says much about priorities of the government,” Hill-Lewis stated.

“The result is that the poor are getting poorer in South Africa as a result of the below inflation increases,” he charged.

ANC MP Noxolo Abrahams stated it was the primary time in greater than a decade that social grant increases have been lower than inflation.

“This means people will have less in their pockets with the 1.6% increases over a three-year period. Why did the Treasury opt for the below inflation increases given many families depend on social grants to survive?” Abrahams requested.

EFF chief whip Floyd Shivambu additionally questioned the rationale of the decreases in social grant allocation, saying the quantity to be allotted to the beneficiaries would additionally lower.

“What is to happen when numbers are inevitable to increase,” Shivambu stated.

He famous the lower, which can also be in the schooling sector together with the National Student Financial Aid Scheme (NSFAS), shaped a part of the austerity budget and the fiscal consolidation.

“It means lesser numbers of students are to be allowed in the institutions of higher learning because of fiscal consolidation you are denying without scientific value,” Shivambu stated.

Responding to the MPs’ questions deputy director-general for finance Mampho Modise stated the National Treasury has since 2012 when it began to cut back progress in the budget ensured social grants have been protected.

“Even when we had to find R56bn for free higher education, we managed to protect social development,” Modise stated.

She stated what that they had picked up was that there was a necessity for consolidation and the necessity to take care of the budget deficit.

“It was difficult to fully protect social development or the grants. We did look at the implications and, of course, we understand what less than inflation means, but we try to make sure that at least we do increase social spending,” she stated.

“What will occur, we hope, that by doing good now and consolidation will give us leeway in the long run, and if that occurs, after all, social grants can be one of many first spending objects to contemplate in  phrases of the place we’re wanting on the poverty line and different traces.

“What we do is to stability between the necessity to defend the poor and the necessity to consolidate and attempt to repair our issues now so we will have some leeway in the long run,” Modise said.

On the NSFAS funding, she said they were already working with the Department of Higher Education and Training to deal with funding issues of the bursary fund.

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