Treasury Defends SRD Grant Regulations

• The second day of argument was heard on Wednesday in a case brought by the Institute of Economic Justice (IEJ) challenging regulations for the Social Relief Distress grant it says are unconstitutional.
• The IEJ wants a structured interdict to compel the social development department and Treasury to report back on a plan for the grant within six months.
• The IEJ also wants the grant increased.
• But, in argument on Wednesday, Treasury said increasing grants was just not affordable – and that it was pursuing a job creation plan to eliminate poverty.

Should a court order that the state has breached its constitutional obligation by not increasing the Social Relief of Distress (SRD) grant to keep pace with annual inflation, it would have a knock-on effect on all of the seven social assistance grants in South Africa. “And that money has to come from somewhere,” advocate Gilbert Marcus, for the national Treasury, submitted in the Pretoria High Court on Wednesday.

Judge Leonard Twala is hearing argument in a matter brought by the Institute of Economic Justice (IEJ) which says the SRD system is broken and the regulations governing it are creating barriers that exclude as many as eight million people.

The IEJ wants several of the regulations to be declared unconstitutional and set aside. It also seeks a supervisory interdict giving those responsible in government a period of time to come up with a proper plan to increase the R370 a month grant and also increase the R624 income cutoff for eligibility for the grant.

Treasury, the Department of Social Development and the South African Social Security Agency (SASA), are opposing the application.

Marcus cautioned the judge that should he grant the supervisory interdict, he was treading on dangerous territory. He said the order would have to be based on a ruling that the state had breached its constitutional obligations in that the SRD grant had not kept pace with inflation.

This would then impact on all other grants, and the court would be intruding into the executive authority function “to determine priorities when it comes to social assistance”.

It also made nonsense of the constitutional requirement that imposes an obligation on the state to progressively realise rights “in terms of available resources”.

He said it was a fact that the grant had not kept pace with inflation. But, he said, the state had complied with its obligations in, firstly, introducing the grant during the Covid pandemic, and then increasing the value and the threshold to widen the pool of eligible people.

Marcus said the state already had a plan to eliminate poverty – through economic growth and job creation – and did not need to be told to devise another one.

“The measures include improving electricity supply, logistics, sale of goods and commodities, and injecting more money into infrastructure projects … the grant is a stop-gap measure and it is a temporary grant.”

He said it was entirely simplistic to argue that the solution lies in raising the level of taxes and it was unrealistic and counterproductive to commit the state to provide more resources for grants instead of investing more into creating job opportunities.

“At the moment we have a higher pool of unemployed people than those who are economically active and paying taxes.

“The fiscal position is extremely serious. Expenditure exceeds revenue by R321.6-billion. Government revenue is expected to drop, debt service costs are expected to increase, economic growth remains subdued. Government cannot spend more money on social grants than it currently does.

“At best for the applicants, and out of respect, there are different philosophical and ideological approaches to the problem. Such differences are not matters for judicial determination. They are fought out in elections,” he said.

The regulations were necessary, reasonable safeguards to ensure that only those due the benefit accessed it and protect public money.

However, he conceded that a “wider” appeal process was necessary giving those rejected a proper opportunity to be heard, possibly with new evidence, which would then cure any perceived defects in the regulations which were creating unnecessary barriers.

“No system is perfect. And people will fall through the cracks.

“In matters of this kind, choices have to be made. The standard is not one of perfection but reasonableness. The state is frequently confronted with agonising choices, some literally life and death choices.”

Advocate Thembi Ntoane, for the department and SASSA, made remarkably short submissions, aligning with Treasury’s submissions.

She claimed there had been “glitches” with grant payments; reportedly about a million people a month were not getting paid, but these had been resolved.

Imperial Treasury

In reply, advocate Jason Brickhill, for IEJ, said the department and SASSA had “abdicated” its constitutional obligations and Treasury was overstepping its role “raising the spectre of imperial treasury and replacing our system of constitutional supremacy with fiscal supremacy”.

He said the budget implications were not “ruinous” as had been suggested.

Regarding the regulations, he said they resulted in 40% of applications being rejected every month, the large majority wrongly, and a wider appeal process would not cure this, it would only clog the system.

Brickhill said IEJ was not seeking inflation linked increases every year for all grants.

“We have been very clear, there has been a retrogression and that is unconstitutional.”

He said the structural interdict was entirely appropriate, and that the department in consultation with the finance minister must be directed to develop a plan on proposed increases in both the grant and the threshold.

Judgment was reserved.

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