Department Looking At Making SRD Grant Permanent
In March 2023, millions of people are set to receive their final R350 grant payments. However, the social development department is looking at how the grant could be made permanent.
The Department of Social Development (DSD) is investigating possible ways to make the Social Relief of Distress (SRD) grant, commonly referred to as the R350 grant, permanent.
Consultations with experts and financial models are all part of the department’s work to extend the crucial relief mechanism.
The SRD grant was introduced in 2020 during the Covid-19 related lockdowns. It was a crucial relief mechanism for millions of people who were unemployed and were barred from leaving their homes to find work.
Since its introduction in 2020, the SRD grant has been extended on several occasions. However, it’s important to note that the SRD grant is temporary and its implementation is set to conclude in March 2023.
The DSD is yet to announce if the grant will be extended beyond March 2022. However, the department is looking at ways to ensure people who benefit from the SRD grant still receive support from the government.
In their efforts to find a permanent solution for providing support to unemployed individuals between the age of 18 and 59-years old, the DSD recently launched the Expert Panel Report on Basic Income Support.
In 2021, the DSD appointed an expert panel to investigate the social and economic implications of introducing Basic Income Support at scale. The panel recently looked at ways the SRD grant could be continued in the form of Basic Income Support.
The panel investigated several funding models for the continuation of the SRD grant. These funding models included sourcing the funding from an increase to Value Added Tax or funding an SRD grant through an increase of Personal Income Tax for the top three deciles.
This iteration of the Expert Panel therefore focuses exclusively on the SRD Grant as implemented to understand the economic, fiscal and social implications of making it permanent
They found that the SRD arrangement posed limited economic and fiscal risks and should be made permanent.
To minimise behavioural impacts on the tax system, it was proposed that a phased approach be adopted for the progressive enhancement of the SRD benefit over time with the objective, together with the overall social assistance framework, of eliminating poverty at the upper bound poverty level (UBPL).
The modelling results show that, depending upon how it is financed, the SRD Grant can be introduced in a manner that is fiscally and economically sustainable while at the same having a material impact on poverty and income inequality if implemented at the level of 13.1 million beneficiaries.