There are different ways to ensure that income support grants reach those who need them. Presently, social grants in South Africa use a "means test" to target the poor. A means test is a set of conditions for deciding who is eligible for income support and who should be excluded from it. Grant applicants are required to prove that they need income support by showing that they earn less than a certain amount.

In contrast, a Basic Income Grant (BIG) would be universal - everyone would be eligible to receive it. Targeting would be achieved by reclaiming the grant, in part or in whole, from better off households. This recovery would be accomplished through adjustments to the existing tax system, which is administered by one of the most efficient state agencies. In fact, this system can more effectively reach the very poor, who are often unable to cope with the bureaucracy associated with means tested grants.

The universal nature of the BIG sets it apart from most other income support grants, such as the 'dole' schemes common in Europe. Where other policy makers have focused on excluding those who do not 'deserve' support (by using a means test), a BIG would ensure that all those who need support are included (widening the scope of the grant). By doing away with the means test, the BIG would avoid many of the problems associated with existing grants, creating a system that is cheaper to manage and easier to access.

Barriers to Effective Delivery

The current system of using means tests to target grants creates a number of significant obstacles to effective poverty relief:

Information: In order to access a means tested grant, an individual must apply. This requires that a prospective applicant have a considerable amount of accurate information about the grant, the application and the eligibility criteria in order to decide whether it is worth the effort to apply.

Stigma: Means-testing requires potential grant recipients to identify themselves as "poor". In a society that values affluence, this alone can be stigmatising. Moreover, the process of documenting one's poverty can be a difficult and demeaning process in and of itself.

Documentation: Effective means testing requires applicants to present a range of documentary evidence of their eligibility. Depending on the grant, this may include an identity document, a birth certificate, an affidavit of income, medical records, etc. It can be very difficult for poor families to establish their eligibility to the satisfaction of the state. And because of the costs involved in doing so can be substantial, the burden is most onerous for those households with the fewest resources.

Strict criteria: Means testing is associated with the imposition of strict rules about who is and who is not eligible. These rigid, "one size fits all" restrictions on access to grants can exclude a large number of people who might normally be eligible. For example, those with chronic illnesses may be excluded from receiving disability grants if they do not meet specific medical criteria - even if their illnesses prevent them from working.

Corruption and abuse: Means testing invites both official corruption and abuse by beneficiaries. One of the most problematic features of a means-tested grant is that an applicant's success is at least partially dependent on the discretion of the officials administering the system. Any discretionary system where applicants have little or no access to appeal is acutely vulnerable to corruption and bias.¹

Means tests can also allow abuse by prospective grant recipients. While it may be relatively easy to demonstrate that one earns more than a certain amount, it is far more difficult to establish conclusively that one earns less than that amount. Currently, the Department of Social Development requires an applicant to complete an affidavit attesting to one's level of income, this is a very difficult matter to police.

Perverse Incentives: Making a person's access to a grant dependent on a means test gives applicants incentives to meet the stated criteria, even where it is not socially desirable for them to do so. For example, if a particular grant is only available to households earning less than R600 a month, then a member of a household currently earning R500 could be dissuaded from accepting employment (or undertaking self-employment) if the additional income was not sufficient to offset the loss of the grant. Alternatively, if the individual did accept employment, he or she might be tempted to conceal the additional income dishonestly in an effort to avoid losing the grant.

Cost: A means tested system requires a large administrative staff to review applications and determine whether they meet the relevant eligibility criteria. This inflates personnel costs and means that a smaller proportion of the total programme cost goes where it is most needed: into the pockets of the poor to enable them to improve their lives.

Means testing is therefore a poor way of targeting social grants. It discourages those who are eligible from applying and, ironically, such grants are likely to be most inaccessible to those most in need. For these reasons, the government's expert Committee of Inquiry into a Comprehensive Social Security System (the Taylor Committee) cited the means test as a significant barrier preventing eligible people from accessing existing grants, particularly the Child Support Grant (CSG).²

Systemic deficiencies

About half of all poor South Africans live in households that receive no social assistance.³ Although the current system of means testing contributes to a lower take-up rate, the Taylor Committee concluded that despite considerable progress in some areas of service delivery, current social assistance programs aimed at alleviating poverty are simply not well targeted. Huge gaps in delivery remain.

Even if these problems with means testing could be overcome and existing grants could reach all those deemed eligible, far too many households would be left without support. The Taylor Report found that the current system of social grants closes the "poverty gap" (the total amount by which poor households fall below the poverty line) by a mere 23 per cent. If all those deemed eligible to receive existing grants were to get them, the poverty gap would still only be closed by 37 per cent⁴. Clearly, the social security system must be expanded and better targeted if we are to realise the Constitution's promise of comprehensive social security for all.

Making a BIG improvement in targeting

Some critics of universal income support grants like the BIG misunderstand "universal" to mean "untargeted". But rejecting the means test does not imply abandoning targeting. BIG advocates call for an adjustment of the tax system to recover the grant from those who are not living in poverty. By giving the grant to everyone and then taking it back, through the tax system, from those who do not need it, a BIG would reach all poor households, including those destitute families most affected by the means test.

A developmental state - incapable of offering large-scale permanent employment in the short term - needs a reliable system of income support. A universal approach based on rights, rather than 'generosity' or 'charity', will ensure that no one falls through the social security "net". Even R100 a month would free an additional 6,3 million people from poverty⁵ and make a huge contribution to eliminating destitution.

Notes

¹ M. Lipsky, Street-Level Bureaucracy: Dilemmas of the Individual in Public Services (1980)

² Report of the Committee of Inquiry into a Comprehensive Social Security System for South Africa, 58.

³ Ibid, 59.

⁴ Ibid, 59.

⁵ As opposed to the 0,8 million that would be freed if existing grants were fully accessed. (Ibid, 63.)