Social grants set to increase faster than inflation as taxes rise
The South African government has committed R259.4-billion towards social development in the 2018 Budget, with social grant payments set to increase faster than inflation to offset the effect of higher taxes on poor households.
During the tabling of the Budget on Wednesday, Finance Minister Malusi Gigaba noted that government had taken deliberate steps to adjust social grant values, adding R2.6-billion since the Medium-Term Budget Policy Statement to social grants to enable these changes.
This included the old age, disability and care dependency grants, which will increase from R1 600 to R1 690 on April 1, and by a further R10 to R1 700 on October 1 – the total being R92.6-billion.
The child support grant will increase from the baseline of R380 to R400 on April 1 and to R410 on October 1. This is a 6.6% yearly increase to R60.6-billion.
These adjustments further resulted in social protection spending increasing by 7.9% a year. “Much above inflation,” Gigaba said.
As the child population grows, the number of beneficiaries who receive the child support grant is expected to increase from 12.2-million in 2017/18 to 12.8-million in 2020/21. Similarly, as the elderly population grows, the number of beneficiaries who receive the old age grant is expected to increase from 3.4-million in 2017/18 to 3.7-million in 2020/21.
The National Treasury further highlighted that the South African Post Office’s Postbank was still in discussions with the South African Social Security Agency to distribute these social grants.
“Postbank has a temporary banking licence and work to corporatise the bank is under way. An application for a full banking licence has been submitted to the Reserve Bank,” Treasury said in its Budget review statement.
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