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President Cyril Ramaphosa told a Mandela Day webinar: “We must be bold enough to think about interventions such as a basic income grant.”
Bold, or frightened into action?
Certainly the need to help the poor has become more urgent after the looting, which ruined many businesses and livelihoods this month.
Ramaphosa on Sunday announced the reinstatement of the social relief of distress grant (not BIG) of R350 monthly until the end of March 2022.
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It’s unclear how that, or PAYE relief for employers, will be funded.
Ramaphosa said the extension of the R350 grant had been made possible by a slight improvement in revenue.
Even if that were true, which is debatable, revenue overruns cannot be relied upon to pay for much higher grants to a greater number of people in perpetuity.
Once introduced, BIG cannot be seamlessly taken away.
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Recent extra revenue is derived from a China-led commodities mini-boom which is not expected to continue into next year.
Economists and writers are touting a range of figures for how much BIG would cost annually.
Financial journalist Duma Qubule says Social Development Minister Lindiwe Zulu is looking at providing income support to about 33 million people aged 18 to 59, costing between R192 billion and R415 billion a year.
We don’t have that kind of money to spare after being mugged by the Zuptas.
In contrast to the way Ramaphosa is now leaning, the ANC’s most famous representative, Nelson Mandela, once criticised what he called “the culture of entitlement”.
As Tony Leon reminded readers in a weekend column, Mandela told people to rid themselves “of the wrong notion that government has a big bag full of money. The government does not have such riches.”
In socialist dreamland, some believe that BIGs are “budget-neutral”, that governments get back in taxes what they spend on grants.
Modern monetary theory economist Pavlina Tcherneva, quoted by Qubule, thinks “governments that control their currencies are not like households. They do not have to tax or borrow before they can spend or balance their budgets. They create the money they spend.”
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Sounds like Nomvula Mokonyane’s idea that if the rand falls you can simply pick it up.
Even before punitive lockdowns, South Africa was junk-rated.
Massive corruption by officials during lockdown has not helped our credit reputation, which was further battered by what seems to have been attempted insurrection.
The only way South Africa could afford a BIG would be if there were policy changes that could generate economic growth.
We need an environment more conducive to the creation of wealth and jobs.
Business Maverick editor Tim Cohen puts it thus: “If SA wants a pro-growth agenda, we will have to look at government policies such as black economic empowerment and SA’s interventionist industrial policy.”
Yes, BEE and the ANC’s obsession with control inhibit economic growth.
Get rid of BEE. There’s a BIG idea.