Chairperson, Senator Eduardo Suplicy
Prof Guy Standing, Professor of Economic Security, University of Bath, United Kingdom
Members of the Executive Committee of the Basic Income Earth Network (BIEN)
Members of the International Board of BIEN
Representatives from civil society and academia
Government officials
Esteemed guests
Ladies and gentlemen

We could not have gathered here at a more opportune time to discuss the merits of "Inequality and Development in a Globalised Economy - The Basic Income Alternative." The world economy is being battered by rising fuel and food prices, sparking riots and strikes across the developing world over food and the developed world over fuel. Our globalised world has ensured that poverty has permeated all corners of the earth. Just this week the Africa Progress Panel, chaired by Kofi Annan, reported that 100 million people are being pushed back into absolute poverty because of the world food crisis.

The Panel called on the G8 nations to recommit themselves to promises made at Gleneagles in 2005 if we hope to achieve the Millennium Development Goals. One of the priority areas identified for attention was the improvement in funding shortfalls and an increase in aid quality. The Basic Income Alternative offers a viable and sustainable manner of achieving the latter as we in South Africa are witnessing - we are hard at work to create a system of comprehensive social security that will be fair and just and thus maximize the well being of our people.

We cannot talk about basic income without talking about inequality and underdevelopment in a global economy. As we have come to know it, a globalised economy reflects a single global market guided by the principles of free trade, capital mobility and global competition. It is argued that in this "borderless global economy governments are relegated to little more than transmission belts for global capitalism or catalysts for nurturing the competitive advantages of their national economies."

In their diagnosis of advancing development and equality in the global economy, the chief architects of globalisation have warned us not intervene in the management of that economy. They have prescribed and dispensed policies that are supposedly to be 'market friendly' orientated. They argue that such policies will attract much needed foreign investment which will then improve the social well being of our people. The policies that have been prescribed and the tools that have been dispensed so far have been a bitter pill to swallow for the majority of people in the developing world.

Ladies and gentlemen, what the poor people are seeing is the widening of the gap between the affluent North and the impoverished South. The poor are not happy that inequality is increasing around the world while the world appears to globalize around them. I come from a country which is characterised by deep-rooted social and economic disparities. A country where more than half of the population is poorly integrated into the mainstream economy.

I come from a country that has one the highest unequal income distribution amongst its people where only 10% of the population receives over 50% of household income from work and social grants. A country where income inequality has worsened over the past decade within all population groups with the proportion of the population living in poverty showing no material improvement.

This is partly because in the post apartheid era the African National Congress, which is the ruling party today, inherited a welfare system that was relatively good (in the South), but it also inherited considerable poverty and inequality. Andrew Simms of the New Economics Foundation strongly argues that "what undermines our sense of well-being most is not our absolute income levels, but how big the gaps are between us and our peers. Allowing the super-rich to live apart from society is as damaging in its own way as the exclusion of the poorest."

The rich and the poor are now living far apart from each other. The current global food crisis has impacted more on the poor than the rich but we continue to talk about a just and fair global nation. The rich continue to indulge in conspicuous consumption while the poor are dying of poverty and hunger.
The picture painted by the 2007 Human Development Report is very disturbing; the report confirms that "there are still around 1 billion people living at the margins of survival on less than US$1 a day, with 2,6 billion - 40 percent of the world's population - living on less than US$2 a day."

The 2007 Millennium Development Report shows that "over half a million women still die each year from treatable and preventable complications of pregnancy and childbirth. The odds that a woman will die from these causes in sub-Saharan Africa are 1 in 16 over the course of her lifetime, compared to 1 in 3 800 in the developed world."

The Report goes further and says that "half the population of the developing world lack basic sanitation. In order to meet the MDG target, an additional 1.6 billion people will need access to improved sanitation over the period 2005-2015. If trends since 1990 continue, the world is likely to miss the target by almost 600 million people."

Ladies and gentlemen, it is clear that the poor are finding it difficult if not virtually impossible to survive in this global economy. As we all know, the market has continued to allocate resources on the basis of means and not on the basis of need. We cannot therefore let the poor to suffer at the hands of free market policies. As Governments, we must intervene to protect the plight of the poor. We must protect the poor from falling below an unacceptable standard of living.

From our experience, we know that in the absence of the state intervention, these rights can increasingly becoming inaccessible. In one of his writings, Amartya Sen has argued that, "greater responsibility for the well-being of society must be given, not to the market, but to the state. A state that must be sensitive to the needs of its citizens and, at the same time, concerned with human development throughout the world"

The South African government has over the past years, taken a greater responsibility for the social well being of its citizens and has promised to continue to do so in order to push back the frontiers of poverty.

Income support measures in South Africa

Ladies and gentlemen, some of you will know that we provide targeted income support to eligible citizens. This assistance is enshrined in our Constitution which says that "everyone has the right to have access to social security, including, if they are unable to support themselves and their dependants, appropriate social assistance." It goes even further, and requires the state to take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of these rights.

Our non-contributory system is by its nature redistributive, and represents the most important pillar in achieving advances in human development and social integration. Through this system, we are able to provide income support to children and adults.

The Child Support Grant is provided to children until their 14th birthday and is means tested. Every eligible child receives about $25 US dollars per month. This grant will be extended to children until their 15th birthday from next year. We are now covering just over 8,2 million children from impoverished families. Of course, our view is that the child support grant should become universal over time to cover children until their 18th birthday with conditions such as those relating to health and education being considered.
We also provide the state old age pension for our senior citizens. This grant is currently given to women from the age of 60 and men from the age of 65 years. This grant covers just over 2,2 million senior citizens and provides a grant value of about 120 US dollars a month.

The Minister and I were in Parliament recently pushing for a law that will ensure that men can also receive the grant from the age of 60. This law, if passed, will be consistent with the International Plan of Action which was adopted at the Second World Assembly on Ageing in Madrid in 2002. It will further be in line with the United Nations Declaration on the rights of older persons which states that older persons should be treated fairly regardless of age, gender, racial or ethnic backgrounds, disability or other status and be valued independent of their economic contributions.

These are the steps that we are taking in moving towards a universal non contributory pension system. We want to ensure that in the next three years, every person from the age of 60 will have access to some for of income support during their retirement.

Ladies and gentlemen, I must point out that income support programmes have expanded significantly growing from a coverage rate of 2,5 million in 1994 to over 12,7 million in 2008 amounting to about 3,4% of the GDP and covering at least 28% of the population. The growth in expenditure on income support programmes from approximately nine billion US dollars in 2008 to 11 billion US dollars in 2010 reaffirms government commitment to continue to fight poverty and social exclusion. Some people have argued that we are creating a culture of dependency by continuously expanding the social safety net. In the context of poverty and underdevelopment in this global economy, we firmly believe that there are genuine reasons for providing income support to those who deserve it. We will continue to support the poor because we believe that they are not in these conditions as a result of their own making.

To dispute this notion of dependency, we have conducted a series of studies to look at the social and economic impact of these social grants. The studies have revealed that social grants in South Africa play a critical role in reducing poverty and promoting social development. Some studies demonstrate that children in households that receive social grants are more likely to attend school, even when controlling for the effect of income. Other studies found that social grants are effective in addressing hunger as well as basic needs in general. The finding from others indicate that spending in households that receive social grants focuses more on basics like food, fuel, housing and household operations, and less is spent on tobacco and debt.

Most interesting, social grants provide potential labour market participants with the resources and economic security necessary to invest in high-risk/high-reward job search. It was also found that living in a household receiving social grants is correlated with a higher success rate in finding employment.

Ladies and gentlemen, these findings confirm that we are supporting our people fairly well, but I am sure we can and must do better. I believe that support should be provided to those people who, through no fault of their own, are not able to support themselves. We will be proposing further income support measures for those who are currently outside of the social safety net. This is where the "BIG" issue is and by this I mean the Basic Income Grant.

The need for basic income support

Ladies and gentlemen, what the welfare state has achieved over so many years is the provision of legal entitlements to categories of citizens. These are entitlements that are designed to maintain living standards in the face of contingencies such as unemployment, disability, and old age which if not addressed, would lead to a decline in the standard of living. Recently, there has been debate to expand these legal entitlements through the introduction of a basic income grant.

Most of you will remember that we had commissioned a Committee of Inquiry into Comprehensive Social Security to evaluate policy options for addressing the severe levels of poverty afflicting our country. Amongst other things, the committee concluded that 'the Basic Income Grant has the potential, more than any other possible social protection intervention, to reduce poverty and promote human development and sustainable livelihoods.'

I have observed that this approach is also being advanced by the Basic Income Earth Network, which defines a basic income as an "income unconditionally granted to all on an individual basis without means test or work requirement." What concerns me is that this approach represents a radical departure from established welfare state principles and practice. I may be wrong, but from the definition, you can see that the Basic Income Earth Network rejects the notion of conditionality. We many need to rethink the ideal of a universal basic income grant. The standard definition of a basic income grant as an income granted by right to every individual, without means test or work requirement 'may no longer capture the diversity of policies advanced within the basic income community'.

Earlier debates on the universal basic income grant appear to have been prescribed for developed countries. We must acknowledge that the debate concerning the best possible basic income design can only succeed taking into consideration the circumstances in each particular country.

In the post war welfare states, what has emerged is the idea of conditionality. This implies the extent of conditions built into a policy that may restrict a person's eligibility for a service to ensure that the benefits associated with these entitlements are confined to people in a restricted number of predetermined circumstances. Of course, the circumstances and the generosity of the benefits will differ from one country to another.

Atkinson argued that "a major reason for opposition to BI lies in its lack of conditionality. In order to achieve political support for BI, it may be necessary for the proponents of BI to compromise - not on the principle that there is no means test, nor on the principle of individual assessment units, but on the unconditional payment."

I must point out that in our government "nobody disputes the call for a Basic Income Grant. Nobody disputes that we need a comprehensive social security system in SA." The African National Congress, which is the ruling party in South Africa, during its policy conference in December last year, recommended that "a comprehensive social security net provides a targeted and impeccable approach in eradicating poverty and unemployment."

Ladies and gentlemen, we remain committed to a universal and comprehensive coverage but we are also mindful of the resource constraints. It is our considered view that we should prioritize and target the most vulnerable groups in our society. The targeted approach is at this point most feasible and practical and a step towards universality.

In expanding basic income support in the coming years, we will be targeting children in poverty aged 14 to 18 who currently receive no income support. The support would be a far better social development investment in the future of children and ameliorate the harsh impact of child poverty. As you know, central to the full development of a child is the welfare of the caregiver. Currently, about four million caregivers are excluded from any income support. Therefore, we will be targeting caregivers of children in poverty.

Ladies and gentlemen, youth unemployment rates in South Africa are disturbingly high. Youth constituted 52 percent of the unemployed. Moreover, 1,6 million of youth are discouraged work seekers, that is, they have given up searching for work. African females have the highest unemployment rate, at 73 percent. It goes without saying that our income support must target the structurally unemployed youth (ages 19 to 25) to assist them to transit from school to the world of work.

Finally, we will be targeting structurally unemployed adults (ages 26 to 59). There is disturbingly a very high level of unemployment which is estimated at over 50% within this age cohort. Of the total population of 3,5 million discouraged work seekers, just over 2 million falls within age category and this makes up at least 58% of the total discouraged population.

We believe that our income support interventions should focus on education, job training, and skills and they should facilitate job search and job mobility. Our emphasis is now more on creating work opportunities whilst providing continued assistance to those who cannot enter the labour market. Ladies and Gentlemen, you will agree with me when I say that we cannot address poverty by giving people only income support. People need clean water and sanitation. They need health care. They need shelter, electricity and education. What we spoke about is just one part of a comprehensive package to deal with poverty - and that is income poverty.

The 'Basic Income Alternative' that will be proposed here should not only focus on income but should be widened to complement other policy objectives of dealing with poverty in its entirety. This is the approach we have taken over the past years.

Provision of free basic services

We provide free electricity to the indigent population every month. The number of beneficiaries of free basic electricity has increased to 2,9 million.

Water and sanitation

Ladies and gentlemen, just over 250 000 household still make use of the bucket sanitation system in our country. We have intensified our campaign to eradicate this system and about 200 000 households are currently not using the bucket system. We are also providing free basic water services which benefits 77% of all households in the country and the majority been the poor.

Comprehensive healthcare

In our response to the HIV and AIDS pandemic, we have developed a comprehensive plan to deal with this matter. We provide anti-retrovirals free of charge in all health facilities. We also provide free primary health care in all our facilities. Pregnant women, children under the age of six and disabled people have free access to both primary and secondary healthcare.

Human settlement

Ladies and gentlemen, we have built over 2,6 million houses for the indigent population to date. I don't know of any country in the world that provides free and decent housing for its population. In the words of the Minster of Housing, Dr. Lindiwe Sisulu, "we have housed almost the entire population of Scotland (5, 1-million)". We have further introduced a Housing Finance Linked Subsidy Programme which makes provision for assistance to persons in the income bracket of 438 US dollar to 875 US dollars who may wish to buy a house with financial sector assistance.

Improve food security

We have also developed the food security programme targeted at the poorest of the poor. As we speak, more than 33 137 households have received agricultural starter packs since 2006.

Education: broadening access and improving quality

Over five million learners at 16 000 schools benefited from the primary school nutrition programme; about three million learners in 3 000 schools, which have been identified as no fee schools, are exempted from paying school fees.

Conclusion
This year we mark the sixtieth anniversary of the Universal Declaration of Human Rights. The Declaration compels all of us to ensure that "everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services." We hope that our deliberations here will help make this a reality for the millions of our countrymen and women, citizens and fellow human beings.

Thank you.

Issued by: Department of Social Development
20 June 2008
Source: Department of Social Development (http://www.dsd.gov.za)