Children and the Budget 2000
by Judith Streak, IDASA Budget Information Service February 2000

The South African government has committed itself to attacking child poverty. It has ratified the Convention on the Rights of the Child (CRC) and developed National and Provincial Plans of Action for Children. According to these plans CRC will be implemented by 'mainstreaming' children's interests in national and provincial budgets. How well does Budget 2000 reflect this commitment?

Poor children are children whose access to resources is insufficient to enable them to consume the goods and services required for a secure and healthy life and make their own choices the life they want. A 1997 study estimated the poverty rate for children age 0-5 using a poverty line of R176/month per child. It found 60% of children age 0-5 poor. If we assume that the poverty rate for all children is the same, there are 3 834 187 poor children age 0-6 and 10 285 396 age 0-18. The study produces the following provincial poverty shares:

• Eastern Cape 24%
• KwaZulu-Natal 23%
• Northern Province, 16%
• North West 10%
• Mpumalanga 8%
• Free State 7%
• Western Cape 6%
• Gauteng 4%

We see the following strengths in the Budget from a poor child's perspective.

First, the continuation of spending on the Primary School Nutrition Program (PSNP) and child support grant (CSG). R582/ year has been budgeted for the PSNP over the next three years. The nominal value of the child support grant - given to poor children aged 0 - 6 - is to remain R100/child and government plans to extend its coverage from a current 237 000 beneficiaries (7.2% of its target) to reach 3 000 000.

Second the R75 million for 2000/01, R125 million for 20001/02 and R300 million for 2002/03 that has been allocated to the Departments of Health, Welfare and Education to implement an integrated HIV/AIDS strategy focusing on children.

Third, the Public Finance Management Act. Access to quality health, education and basic services is crucial for immediate improvements in the quality of life of poor children and for giving them the means to take advantage of economic opportunities. This Act promises to bring improvements in the quality of these crucial services and result in cost savings that translate into wider coverage.

Fourth, the proposal that the tax deductibility of donations be extended to pre-primary and primary schools, children's homes, and those focused on HIV/AIDS care. If a number of the non-profit institutions that care for children are classified as 'public benefit organizations' this could alleviate the financial crisis facing these institutions allowing more to continue serving poor children.

Finally, the R20 increase pensions and allocations to the poverty relief program. Child poverty is related to parent's lack of access to economic resources, which is in turn related to the level of employment opportunities and welfare payments. By creating more jobs for household heads in poor households and raising the real value of the income of households reliant on pension payments these measures do address child poverty.

But, the budget does too little for poor children. It does not deliver on the promise to prioritize their interests. Three considerations lead to this conclusion.

First, the fact that the value of the CSG and PSNP decline in real terms. The CSG remains R100 for 2000/01 which is R94.78 in real terms. The value of the PSNP grant to Provinces declines from R82 million over the next three years.

Second, the fact that government's 3 000 000 estimate of poor children age 0-6 underestimates the number of poor children in this age category. This means that it sets aside an insufficient level of resources for provinces to fund these grants.

Third, consideration of the size of real growth in total national and provincial spending on social services in the light of the unemployment trend and strategy being relied upon to create jobs.

A 0.6% average annual real growth in total provincial and national social service expenditure is projected between 1999/2000 and 2002/2003. In the meantime, higher economic growth (driven by more private sector investment) is supposed to mop up unemployed poor people already in the economy and absorb new labour market entrants, ensuring no need to provide a safety net for growing numbers of poor people.

It is true that a reliance on private investment is the only way to poverty reduction over the long term and we already spend a lot on social services. However, the 7% contraction in employment/year between 1995 and 1999 makes it unlikely that growth will be able to deal with the extent of the unemployment in the short and medium term. This means that to deliver on its promises to poor children, government could have been more creative in its budget by extending or redesigning the social safety net provided to poor parents and children. For example, instead of spending R1.7billion on reducing the government budget deficit further - from the 2.8% deficit to GDP ratio projected in October last year to 2.4% - government could have provided poverty relief for more poor children. More particularly, the CSG only covers children age 0-6. This leaves 6 451 209 poor children (age 7-18) out of the safety net. R 645 120 900 of the R1.7 billion could have been used to give each of these children R100.

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