Studies in Poverty and Inequality Institute Comments on the 2011/12 Budget

ngos Budget 2011
Friday, 25 February, 2011 - 09:43

The recently released national budget reflects a consistency with many of the main policy commitments of the State of the Nation Address 

The recently released national budget reflects a consistency with many of the main policy commitments of the State of the Nation Address.

Despite it being an election year in a country for which half the population lives in poverty, social grants did not receive a massive increase. In fact, the increase to the child support grant will only rise above projected inflation of 4,9 percent in October, although the value of the most of the other grants will increase above projected inflation in April. It is disappointing too the slight increase in the value of the Foster Care Grant, given the critical role played by this grant in providing for the basic needs of children who have lost their parents to AIDS.

Jobs cannot be created through a budget, nor, sadly, through rhetoric. The real conundrum is how to ensure that job creation is not done by subsidising older semi-skilled workers with younger workers to enable the employer to receive a wage subsidy?

The impact of social grant income on stimulating local demand was acknowledged by the Minister, which is a welcome departure from the usual calls that social grants create dependency. Boosting available income at a local level is a sure way to stimulate local economies. How this is done in future in ways that link to supporting local enterprises is perhaps one of the areas of social innovation and new thinking that the Minister calls for.

The budget is the medium by which the state determines measures of resource allocation and redistribution. Admissions by the Minister of the socially divisive impact of inequality on the fabric of our democracy suggest that perhaps in the MTBPS period we might expect to see more pro-poor allocations than we currently have, especially if the expected hikes in food and fuel prices happen.

The Minister was sufficiently bold to quote from the aspirations of a communist, Chris Hani, in his speech. We trust that we can anticipate further transformation and modes for including the poor and marginalised from this administration in the next three years to come.

Isobel Frye
Director
Studies in Poverty and Inequality Institute
www.spii.org.za 

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