Basic Income grant is financially and economically sustainable and therefore can be introduced in South Africa

The much debated and controversial Social Relief Distress Grant (SRD) can be permanently introduced to assist the poorest of the poor. These findings are contrary to suggestions and speculations by conservative economists and commentators that the grant would not be fiscally sustainable.

These were the findings presented by Prof Alex van den Heever from Wits University in his presentation titled “the Expert Panel on Basic Income Support: Report into the appropriateness and feasibility of a system of Basic Income Support for South Africa”.

He was addressing the BRICS Research Network Session organised by the Department of Employment and Labour under the theme “Ensuring decent work, dignity and respect for all”. The BRICS meeting is being attended by 5 member states namely; Brazil, Russia, India, China and South Africa along with the International Labour Organisation (ILO), African Union as well as Zimbabwe, Botswana, Eswatini, Namibia and Malawi as invitees.

Van den Heever says their research indicates that it was possible to implement a grant of this nature with economic growth protected, a balanced budget approach and important redistributive affects.

The presentation by Van den Heever is the result of a research report compiled by an Expert Panel on Basic Income Support.

The modelling work produced in the research report analysed the SRD Grant on a zero-based budgeting basis, effectively assuming that the outlay must be financed from new sources of revenue.

Van Hen Heever says given South Africa’s extreme income inequality, revenue raising options for new redistributive programmes, such as the SRD Grant, should make use of progressive taxation options.

The modelling results indicated the following: “The SRD Grant can be introduced in a manner that is financially and economically sustainable while at the same time having a material impact on poverty and income inequality if implemented at the level of 13.1 million beneficiaries”.

Source: Government of South Africa