At this moment, the basic income grant (BIG) is a matter of when and how and not if. There has been opposition to the grant from business and the lack of proper confirmation from the government. Regardless, it’s very likely the grant could be introduced in some form or the other within the next year or so. That does pose a big question: could the BIG do more harm than good if not implemented properly. This leads to the question about what are the supposed intended policy consequences of the BIG.
Before delving into the possible impacts of a badly implemented BIG, this is a short refresher around what is meant by the basic income grant. There are many different definitions of the grant. According to Isobel Frye, the executive director of the Social Policy Initiative, the BIG is a universal, unconditional grant.
“It is paid to everybody and you don’t have to prove unemployment or anything. It goes to everybody. From the rich and the middle-class it gets taxed back through SARS. This is instead of a situation where people get dropped out of the system because they can’t prove that they are poor enough. The global definition is that it is universal and it doesn’t attract the stigma of being poor,” said Frye.
This is what the proponents of the grant are basing their calls on. However, in the many statements of the government, their definition of the BIG does not align exactly. Therefore this would lead to a situation whereby the grant is implemented in a certain form but has more harms than benefits
Kelle Howson said that is a very real concern from her organisation. “There are very different ways to implement grants and some of those ways can have a negative impact,” Howson said.
That’s why Howson said it is important to have a nuanced discussion about what needs to be achieved with the BIG and what issues are being responded to. Depending on the ideological background of the group, there is no doubt to be a difference in the assumed policy consequences.
Howson said some groups might support a universal BIG alongside existing social programmes. However, others might see the BIG as replacing the services that the government provides such as health and education. They would want the BIG to be used by people to access services on the private market and remove public services.
“There are a whole number of problems with that and if the UBI was implemented in that way, there wouldn’t be any poverty or inequality reducing impacts of that UBI. It would commodify public services and do more harm to poor people,” said Howson.
Howson outlined two other ways in which the BIG might be harmful if not implemented correctly. One of those ways is if it’s at too low a level as this will further trap people in poverty. “It is not enough to enable people to build sustainable livelihoods of their own, to pay for transport to go to a job interview. If it’s too low of an amount, it just institutionalises poverty as a trap,” Howson said.
Referring back to the definition of the BIG from SPI, there is the element of universality. This means that everybody over a certain age would receive the grant regardless of your economic situation etc. This removes conditionalities and lowers the barriers to access.
“[…] These kinds of systems have always been shown to exclude the most vulnerable – the people who really should be receiving,” said Howson.
This situation can already be seen with the social relief distress grant which will be in effect until 2023. When the grant was first introduced there were minimal conditions attached to it. This allowed the people who most needed it to access the grant. However, at the moment, the government increased the regulation that people needed to meet in order to access the grant. This has resulted in a considerable decrease in the amount of people who have been able to access the grant. There have also been delays in payment due to the new regulations.
Therefore instead of having the intended policy consequence of reducing income poverty, it would actually further deepen inequality and poverty.
Aside from reducing income poverty, Howson said there are a number of other auxiliary effects from a well-implemented BIG. “Cash transfers have been shown to have profound effects on employment and labour market participation,” said Howson. The increased social spending that will occur from the BIG would flow back into income activity. In this way, there are hopes that the BIG could become sustainable and fund itself over time.
One of the final intended policy consequences which is actually not financial or economical is around social cohesion and democracy. Howson said: “The premise is that everyone in society has a right to and is entitled to have a share in the wealth created by our society.” With the BIG, there would be a redistributive effect that could start to address the really serious issues of economic exclusion that endured after the end of apartheid.
“It would really affirm that everyone has a role and part and share in our society,” she said.