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Minister: Bathabile Olive Dlamini
Deputy Minister: Hendrietta Bogopane-Zulu
Deputy Minister
iconDSD Customer Care Charter iconStudy Report on Children's access to Social Insurance Benefits
KEYNOTE ADDRESS BY THE MINISTER OF SOCIAL DEVELOPMENT, MS BATHABILE DLAMINI, MP AT THE LAUNCH OF THE INAUGURAL SOCIAL BUDGET BULLETIN, ISSUE 1 OF 2017 AND THE LAUNCH OF SOCIAL DEVELOPMENT MONTH Print E-mail
Wednesday, 27 September 2017

VENUE:  WITS SCHOOL OF GOVERNANCE, DONALD GORDON AUDITORIUM, 2 ST DAVIDS PLACE, UNIVERSITY OF THE WITWATERSRAND, PARKTOWN

Programme Director, Ms Conny Nxumalo

International Labour Organisation (ILO) Social Protection Specialist for Southern and Eastern Africa - Mr Luis Frota

Director of Executive Education Unit for Wits School of Governance, Dr Johnny Matshabaphala

Chair of Social Security at Wits - Professor Alex van den Heever

Acting DG at the Department of Social Development - Ms Nelisiwe Vilakazi

Special Adviser to the Minister of Social Development - Dr Wiseman Magasela

Acting Deputy Director-General of Social Security for Social Development, Mr Brenton Van Vrede

Members of the academia, civil society

Members of the media

Ladies and gentlemen

It is a great honour and privilege for me to address you on this occasion, when we launch the very first Social Budget Bulletin for South Africa and the launch of Social Development month.

October was declared Social Development month and the Department uses this month to showcase its work and bring services closer to communities. The launch of this bulletin speaks to the work that we intend to do in the next month when President Jacob Zuma opens Social Development month with celebrating international Day for Older Persons in Garankuwa on October 1.

This year, on the instruction of the President during his State of the Nation Address, South Africa is celebrating the life and times of Oliver Reginald Tambo and the launch of the social Budget Bulletin is relevant to the work of OR in the fight against poverty and the rights of the majority of this country.

Ladies and Gentlemen,

This evening is a culmination of many years of engagement among ourselves as the Department of Social Development, the International Labour Organisation and the University of the Witwatersrand.

The idea of developing a social budget for South Africa first arose in discussions with the ILO, which has assisted various other countries in similar undertakings. Due to the insufficient capacity within the Department of Social Development, the volume and complexity of the work, we initially commissioned external consultants to develop the social budget model for the Department.

However, as the research and data collection was underway, it became evident that we would need to institutionalise social budgeting within the department, and this would require significant financial and technical resources over an extended period of time to yield the necessary long-term benefits.

We, therefore, decided to approach Wits University’s School of Governance to support the initiative. The primary reason for selecting this University stems from the fact that it is the only academic institution in the country that has established a Chair of Social Security, which also offers a Social Budgeting module as part of its curriculum.

Since the publication of the Social Budget Bulletin will be an ongoing commitment, which we hope to institutionalise in the department, Wits emerged as a natural partner to support and maintain this programme with us, while training and developing the necessary skills in the country.

As Government, the potential of social budgeting as a tool to inform and provide evidence for policymaking was compelling. The initiative arose at a time when we were conducting a lot of research into the content, functioning and impact of our social security system. The motivation for the research was the need to make a case for budget increases to our social security system, in the context of competing demands on our national fiscus.

Ladies and Gentlemen

We are still in 2017 contending with the perspective that continues to receive expression in some quarters, that expenditure on social protection is a drain and a burden on the fiscus and slows down economic growth. This narrative continues to prevail despite the overwhelming evidence from international experience to the contrary. The negative sentiment towards social expenditure remains difficult to counter in the absence of sufficient evidence.

According to the ILO, social budgeting can be used, firstly as part of social policy planning, but also as part of any medium term financial planning of the government and other major social protection institutions.

Experts have argued that it is not possible to have a rational discussion about the scope of social protection, its future direction and its impact, without using sound quantitative information about the past and possible future.

With this in mind, our Social Budget initiative aims to provide a consolidated perspective of social budgets and expenditure in the country, to enable us to review and assess the scope, coverage and performance of our social programmes over time.

This is important for us as a country, particularly because of our shared history of deliberate, state-directed policies of social and economic exclusion, which we have been working to reverse since the dawn of democracy.

Programme Director,

According to the Taylor Committee report of 2002, the ANC government of 1994 inherited a vastly unequal society, with 50% of the income in the country in the hands of the richest 6% of the population.

The racial dimension of this was reflected in the fact that Black people, who comprised 76% of the population in 1996, received only 19% of the income, compared to White people who comprised only 12.6% of the population but commanded 71% of the income.

The country was facing deep structural deficiencies in the social protection provisions, including access to health, education, water, electricity, housing, and social services and social security. It was this context that informed the development of our national Constitution, which protects access to socio-economic rights for all citizens.

Government as a whole has pursued a deliberate development agenda aimed at tackling the legacies of the past and creating a thriving and vibrant economy that provides inclusive growth for all its citizens. Within the Department of social development family, we have set ourselves the mission to “transform our society by building conscious and capable citizens through the provision of comprehensive, integrated and sustainable social development services”.

Over the years, we have taken steps to promote growth in the funding for social services and transfers, and we have strengthened our commitment to provide a comprehensive network of social development services, including income support. To assess the impact of these interventions, we have had to use different platforms and undertake specific research.

The results of these efforts show that solidarity-based social programmes, especially those associated with social protection, are central to the achievement of sustained levels of economic growth, development and societal well-being.

At the annual International Labour Conference held in June 2011 in Geneva, our country supported the International Labour Organization (ILO) recommendation to extend social protection for all, through the Social Protection Floor initiative, which aims to encourage all ILO member countries to develop minimum levels of social protection for their populations and establish steps towards the realisation of these minimum levels within their country-specific contexts.

This commitment is echoed in our National Development Plan, through which we have been tasked with coordinating the delivery of inclusive and responsive social protection services to the people of South Africa.

This objective puts us right at the coal face of dealing with the deep structural poverty, inequality and unemployment that continues to constrain our country’s development. It is therefore imperative that we clearly define what a responsive social protection system looks like, and develop tools to quantify and measure the extent to which we are achieving this mandate.

The Social Budget model can be used as an on-going statistical mechanism to systematically report, analyse and review social expenditure and revenue across time, in order to reliably assess our progress, identify gaps and develop appropriate policy interventions for our future. In developing our South African model, we collated social security data and information from different sources, including Statistics South Africa (StatsSA), South African Reserve Bank (SARB), Council for Medical Schemes, Department of Labour and various institutions in the private sector.

Ladies and Gentlemen,

I must, therefore, express my appreciation to all the different stakeholders, who provided their time and expertise during the very demanding period of data collection, verification, analysis and interpretation that went into producing the findings that we have now reflected in the report.

Of course, their continued cooperation will be essential to enable us to institutionalise and maintain the platform, so that we can continue to update the model and publish future bulletins.

The Social Budget Bulletin we are presenting today offers the first opportunity to broadly assess the quality of the social security regime in South Africa and to examine its outcomes over the period from 2001-2013. It offers a consolidated perspective on all our social security schemes, whether public or private, contributory or non-contributory, formal or informal. Due to the technical and resource constraints, this inaugural bulletin focuses primarily on social security rather than the broader social protection expenditure in the country.

We chose this period because it was a reasonable timeframe over which we were able to access the most complete and relatively reliable data for a comprehensive set of social security provisions.

Through the publication, we aim to assist in making many of the complex aspects of the social security system and its interactions more transparent and visible to both government and society at large.

In particular, the publication aims to assist in providing information on six key policy issues in our social security system.

First, the cost, affordability and sustainability of policies; Second, the completeness of coverage; Third, the adequacy of benefits; Fourth, the balance between social and other sectors and between different components of social spending, and particularly the relationship between social transfers, job creation and unemployment; Fifth the balance between social assistance, social insurance and private insurance; and Finally, the efficiency and impact of the system and the need for redesign as well as administrative reform.

For the period under review, the findings of this initial Social Budget Bulletin have been both heartening in some respects, and surprising in others. What is heartening is the finding that government’s heightened focus on poverty alleviation has led to an increase in non-contributory expenditure from 4,7% of GDP in 2001 to 7,2% by 2013, due to increased entitlements in social assistance, primarily child support grants.

Overall social assistance combined with public health care that the majority of the population depends on, represent the two largest programmes to effect the redistribution of income in South Africa.

During the period under review, there was significant growth in the population receiving subsidised public health services from 37.9 million to 44.2, and the number of beneficiaries of social assistance increased from around 5 million to 16.1 million. Despite this seeming success, our social security benefits for families and maternity protection remained below 1% of GDP, even though we had, through SASSA, identified at least 11 million children living in poor households in 2013.

On the less positive side, our country experienced limited economic growth coupled with deteriorating social outcomes over the period under review. Despite this, the top income earners increased their share of total earnings from 30% to 40%, even as levels of employment and poverty failed to improve significantly.

This seems to point to some of the structural features of our income distribution that contribute to ongoing inequality.

Although overall grant expenditure increased in relation to GDP, the level of support per beneficiary has remained roughly constant when adjusted for inflation. To the extent that food inflation has remained consistently above price inflation, this means that the actual standard of living has declined for poor households. Furthermore, our unemployment protection was at a low 0.2% of GDP, despite ample evidence of the structural nature of unemployment in the country, which at that stage was at a stubborn 25%.

A very significant finding of the Social Budget, which we are using to motivate for the universalisation of the old age grant, is the inequity between the value of the grant and the value of the subsidy provided to older persons via the tax system.

A further key finding of the Social Budget relates to the impact of administration and institutional design on the quality and efficiency of cover.

Ladies and Gentlemen,

South Africa’s social security system is highly fragmented, both institutionally and in terms of the efficiency of pooling. Coverage by informal social security, while reflecting the level of social demand for protection, leaves many with inadequate levels of protection and fails to provide complete protection for retirement, disability and loss of support.

The government policy is not always consistent across all schemes, with no adequate relationship existing between social assistance schemes, and the protection to be derived from contributory schemes. Many key societal risks are not adequately covered, leaving vulnerable households without adequate protection.

This first Bulletin has already revealed key issues that must be addressed in future policymaking. For example, it has provided factual evidence of the need to formalise some significant provisions in the private insurance arena to enhance the quality of coverage. It has also revealed the balance between social assistance, social insurance and private insurance, and provided information regarding the cost, affordability and sustainability of each, and the impact that they have poverty and inequality.

Such information can then become the basis for evidence based policymaking in government.

Of course, we expect to continue the positive working relationship with University of Witwatersrand in the future, even as we strengthen government internal government capacity. Our intention is to build from this period onwards and extend the analysis to future years and, where possible, widen the scope of analysis as the data availability grows.

We would like to hear the views and inputs from our stakeholders regarding this inaugural Bulletin, and some suggestions regarding possible additions and improvements for future publications.

Ngiyabonga!

ISSUED BY THE NATIONAL DEPARTMENT OF SOCIAL DEVELOPMENT

 -Ends-

Media Enquiries may be directed to Ms Lumka Oliphant on 083 484 8067 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it