[DEBATE] : (Fwd) More child grants coming, belatedly

[Patrick Bond]

The Mercury

Adjusting the poverty line

June 02, 2008 Edition 1

Katharine Hall

At last, the government has done the maths and lifted the poverty line 
for child grants. The department of social development plans to adjust 
the means test in line with inflation, so that children with caregivers 
earning under R2 200 per month can receive the child support grant (CSG).

Of more than 12 million social grants being disbursed each month, the 
vast majority (8.6 million) already go to children. But the extent of 
child poverty is so great that this is not enough. And despite the 
increasing numbers of children accessing the grant, it is less than what 
was originally intended.

As the Minister of Social Development, Zola Skweyiya, acknowledged in 
his budget vote speech on Friday, "Non-adjustment of the means test over 
the years . . . has kept many poor people out of the social security system.

"This, coupled with beyond- prediction higher inflation rates, has led 
to the erosion of the value of these grants. Consequently, we have 
agreed to work towards the removal of the archaic means test on certain 
grant types."

The national treasury is acutely aware of the effects of inflation on 
the poor and agrees that an adjustment is needed. Earlier this year, the 
minister of finance in his Budget speech announced that the means test 
would be reviewed.

However, the treasury still has to approve the changes to the means test 
that have now been put down into draft regulations by the minister of 
social development.

The treasury has to juggle multiple claims on the national budget. But 
in the case of the adjustment of the CSG means test, this claim must 
surely have priority. The means test was set 10 years ago and has never 
been reviewed despite inflation eroding it every year. To continue like 
this would be discriminatory and retrogressive. And that is not allowed 
by the constitution.

The CSG, a cash transfer of R210 a month for children under 14, is 
means-tested in that applicants have to prove that they are sufficiently 
poor to qualify. But poverty, of course, is defined by where you happen 
to draw the line.

In 1998, when the grant was introduced, two lines were drawn: an income 
threshold of R800 a month was used for urban children living in formal 
housing, and a higher threshold of R1 100 for rural children or those 
living in informal dwellings.
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Quite apart from occasional confusion about which threshold to use, the 
main problem with the means test was that it remained static and was 
never adjusted, even in the context of high inflation.

This problem of non-adjustment has been specific to the CSG, while the 
income thresholds for other grants like the old-age pension and 
disability grant increase every year as the benefit amount increases.

The state's failure to adjust the poverty line for the CSG meant that 
every year, more children were cut out of the social security safety net 
as the definition of poverty was effectively contracted - until now.

Calculations by the Economic Policy Research Institute, commissioned by 
the Department of Social Development, found that the means test should 
have increased to R1 900 by 2007 in order to retain the real value of 
the poverty line. The Children's Institute at the University of Cape 
Town calculated the real value of the R1 100 threshold (set in 1998) at 
January 2008, using CPI for the poorest 20% of the population.

These calculations indicated that the threshold should have been raised 
to R2 168 by the beginning of this year - just in order to retain its 
original value.

The threshold being proposed by the minister of social development is R2 
200 and is spot on. It has also simultaneously solved the problem of the 
two income thresholds by collapsing them.

Because the new proposed means test is now linked to the grant amount, 
it will - like other grants - automatically adjust every year as the 
cash payment increases in line with inflation.

With food prices rocketing, inflation-adjusted social grants are 
essential for ensuring that the millions of poor children in South 
Africa have enough to eat. What remains is to extend this support to 
children over the age of 14 years, who also need food, clothes, 
education and good health.

# Katharine Hall is a senior researcher in the Child Poverty Programme 
of the Children's Institute, University of Cape Town.