Therefore, the generic definition of social security is taken to include: contributory (social insurance) benefits; non-contributory cash benefits; social assistance (means-tested) benefits; and tax credits (Walker, 2005:6). unemployed. The Unemployment Insurance Fund (UIF) only caters for cyclical unemployment.
A brief background of the apartheid system of social assistance is necessary to contextualise the current corruption tensions in the present system. It is also important to note how apartheid’s pejorative ideology was manufactured into a fully operationalised system of exclusion and discrimination. This, in itself, was a form of corruption and was buttressed by other more traditional forms of corruption, as outlined below.
The earliest period following the Union of South Africa in 1910 was the toughest and most discriminatory for the ‘non-white’ population. The provision of welfare in the form of childcare grants, unemployment and old-age pensions included whites and coloureds only. The apartheid system was also characterised by prejudicing women; thus only white women over 60 qualified for old-age pensions. Blacks and Indians were deliberately excluded under the pretext that customary extended familial support would suffice as a community safety net (Liebenberg & Tilley 1998).5
The construction of a basic social safety net was introduced in 1937 with means-tested pensions and disability grants. Pensions were finally paid to all race groups but with stark discriminatory undertones. For instance, when the country became a republic in 1961, the highest white pensions were five times larger than black pensions (Liebenberg & Tilley 1998). This trend was to worsen progressively until 1961 and was marked by ‘administrative delays, corruption and inefficiency, particularly in rural areas, [which] were a form of covert discrimination for disenfranchised communities’ (Liebenberg & Tilley 1998).
As stagnation crept into the capitalist economy in the 1970s, the apartheid state started accepting the need to incorporate black people into the system. Thus reforms were attempted in the provision of social assistance, though reluctantly. Regulatory rules were relaxed and more people were incorporated. As more people entered the system, white pensions were indirectly reduced by being left at the same level or were increased at a lower rate than pensions for other groups, because of fiscal strain on the system. Indeed, economists at the time warned that ‘improved coverage of Black people may put the fiscal viability of the system in jeopardy’ (van der Berg 1994).
A new era dawns
Improved rights and legislation and increased provision
Jubilation at the end of structural oppression in 1994 was quickly tempered by the realisation that a strategy to deal with the past had to occur in tandem with future plans. For social assistance this meant that rights issues and policy and administrative reforms were necessary. In practice this meant three fundamental reforms:
- Recognising access to social assistance as a constitutional right
- Adopting the developmental social welfare approach (DSW)
- Implementing the Child Support Grant
The South African Constitution of 1996, touted as the most progressive in the world, includes social security6 as one of the socio-economic rights enshrined in the Bill of Rights. Section 27(1)(c) of the Constitution reads:
Everyone has the right to have access to social security, including, if they are unable to support themselves and their dependents, appropriate social security.
Furthermore, according to the Constitution, the state is required to ensure the progressive realisation of those rights by employing ‘legislative and other measures, within its available resources’ (Liebenberg & Tilley 1998). Liebenberg and Tilley (1998) and Vorster (2006) argue that this requires the state to draw up a clear plan of action on how to execute this dictate and avoid regressive measures. Although the courts have proven in the Constitutional Court cases of Grootboom7 and Khosa (Swart 2006) that socio-economic rights to social security are to be restituted, to some extent the discretion is left up to the state, unless tested. In particular, according to the Grootboom decision, ‘the measures instituted must consider the plight and conditions of people in desperate circumstances and those who are living in conditions of poverty’ (South African Human Rights Commission (SAHRC) 2000/01). This is disturbing when one considers that the destitute are not equipped either financially or educationally to contest their exclusion from the system.8 It is particularly relevant for the structurally unemployed. In an era of a neo-liberal macro-economic policy, the underscoring of fiscal discipline means that this group of people may be excluded from the safety net provided.
The role of poverty and unemployment
Furthermore, the broader questions of poverty and unemployment, which continue to be instrumental in perpetrating social grant fraud, seem to have been given very little consideration. As Jehoma notes:
poverty and unemployment is real out there and people lack options. And â€¦ that exacerbates the extent to which one has fraud in the grant system â€¦ People will attempt to alter their behaviour because of unemployment (Jehoma 2006).
It may be reasonably argued that among those charged with benefiting ‘illegally’ from the system are some faced with desperate poverty, coupled with the inaccessibility of the security system in which they seek refuge. In an increasing number of cases, doctors and social workers, because they are understanding and sympathetic of cases of chronic poverty and unemployment, are certifying technically ineligible individuals for social grants. In these cases fraud occurs without the intention to defraud. It would seem that prosecuting or pursuing cases like these on an Acknowledgment of Debt (AOD) basis is a case of not seeing the wood for the trees. In his quantitative study on incentive structures of social assistance grants in South Africa, Vorster argues:
Given the high levels of unemployment and poverty, the impact of AIDS and the growing awareness of citizens’ right to social security, the disability grant and foster child grant are under pressure to cater more widely than was originally intended when the systems were designed. Most of the concerns about perverse incentives are related to impoverished people requiring income support within a system that does not provide universal coverage. It appears that within these limitations, local officials were, for years, already responsive to this need (Vorster 2006:x).
As stated above, the fundamental shift to a flexible, market-related macro-economic policy that curtails government spending affects the nature and quality of the response to corruption by various state actors. Narrow confines are thus created in which to deliver on mandates and deal with corruption. The neo-liberal macro-economic policy rudely imposed in 1996 set up contradictions in the system, in which structural unemployment was created and fostered with no recourse to a social security safety net.
The response – or rather non-response – of the state to recommendations by the Taylor Commission9 to introduce a Basic Income Grant (BIG) as a way to stave off corruption and reduce poverty is an example of the limits imposed by this system. The effort to use the baseline as fiscal restraint also meant that even though grants were increased over the years, they were not always inflation-rated. Fundamentally, the pragmatics of the system caused deep tensions with the constitutional right to social security and its progressive realisation. It also meant, as the current case perhaps exhibits, that tackling corruption involved a technocratic, number-crunching exercise that would deny the root causes and results of poverty.
Reducing corruption in the context of social security is not simply a technocratic exercise that involves weeding out fraudulent beneficiaries, no matter how sophisticated the techniques are for doing so. Thus assessments of anti-corruption measures in progress sit alongside critiques of the institutional system and policies in place.
The first policy mechanism was the 1997 White Paper for Social Welfare, in which developmental aspects of social security were evoked. This also remains the most significant policy discussion paper, which paved the way for widespread legislative reforms governing the delivery of social assistance. In a country newly emergent from an insular approach, the international trend of developmental social welfare was quick to catch on. As part of the United Nations Development Programme’s (UNDP) approach, it favoured ensuring that social policies contribute to development rather than transference of resources from the productive economy to social welfare services (Midgely 2004). It also included a differentiation between social security and social assistance (Swart 2006) that did not exist before. Box 1 below defines and differentiates the concepts of social security, social protection and social assistance.
|Box 1 Unpacking concepts: Social security, social protection and social assistance|
Social security as defined by the White Paper is the widest form of a safety net that includes both contributory forms of social insurance and the needs-based assistance received from public funds (i.e. social assistance).10
Social protection is usually used interchangeably with social security. However, the former is a much broader concept. It encompasses both the welfare functions of the state and developmental strategies and programmes to ensure at least the minimum acceptable living standards of all citizens. The purpose of it is thus emancipatory.
State-funded social assistance in South Africa is termed ‘social grants’ and is entirely supported by the state. Social grants are key to the survival of people and are considered to be the safety net in the event of an incapacity/inability to work. The state approach is a targeted one and grants are thus delivered to those identified as ‘vulnerable’, including the old, disabled and children.
However, it was recorded in the Social Development Portfolio Committee of May 31 2003 that then-Chief Director: Grant Systems and Administration (now the Deputy Director-General [DDG] of Social Security), Selwyn Jehoma, refuted the reference to social security. He felt rather that in the South African context ‘social assistance’ was a more appropriate term than ‘social security’ as the system was too fragmented and as, at that point, the government could only offer social assistance (Social Development Portfolio Committee 2003). In an interview he conceded that the means-test approach to the provision of grants had its weaknesses. Most significantly this meant that, ‘sometimes the poorest don’t get [grants]’ (Jehoma 2006). Moreover, the levels within the means test are arbitrary without an official poverty line. In spite of this the department chose to take a ‘targeted approach as opposed to something that reaches all [people]’ (Jehoma 2006). However, even with this approach the means test has not been corrected for inflation for many years.
In spite of these apparently contradictory declarations it is imperative to note that the scope and functions of the DSD have certainly transformed. To start with, the name of the department changed from the Department of Welfare to the Department of Social Development to indicate an expansion in mandate and a change in philosophy. Unlike the welfarist approach, which helps people in the traditional way with handouts, the social development perspective views people as ‘masters of their own destiny’ thereby moving on to the ‘development and empowerment of individuals, groups and communities, teaching them to be self-reliant’ (Skweyiya 2006a). The department now also delivers on social security and community development. It has also taken on an HIV/Aids focus and oversees the beleaguered National Development Agency (NDA)11 responsible for the disbursement of NGO funds (Government Communications and Information Systems (GCIS) 2005/06). Box 2 outlines the core functions of the Department as described by its Strategic Plan 2006–2010. However, in spite of taking on these functions there is ‘widespread consensus amongst welfare commentators’ that developmental social welfare still needs to be properly operationalised.12
|Box 2 Core functions of the DSD 2006–2010|
The transformation of the apartheid system is more varied. After all, it is recognised that it was no easy feat to unify the 14 separate systems that existed under the apartheid dispensation. Each of these systems had its own management and information systems, rules and procedures, allowing for easily exploitable, profitable loopholes for the unscrupulous. The administrative difficulties alone in grant administration due to the outdated and inadequate Social Pension (SOCPEN) system were a massive hurdle. Problems related to the re-registration process and dealing with suspensions were especially evident when the government decided to freeze out beneficiaries it believed were defrauding the system. Budget constraints, the lack of capacity in provinces, infrastructure limitations, poor customer service and backlogs all dogged the system (Welfare and Population Development Portfolio Commmittee 2000).
The current forms of social assistance in South Africa are listed in the box below:
|Box 3 Forms of social assistance in South Africa as at 2007|
The number of recipients of social assistance was increased from 3,1 million in 2001 to 11 million in 2006 and equity in the distribution of grants is being addressed (GCIS, 2005/06). The bulk of these recipients are children under 14 who, as at the end of October 2006, exceeded 7,6 million (Skweyiya 2006b).
Spending on the social grant recipients, including old-age pensioners, the disabled and children, has increased over the years. Old-age pensions had, from 1995 to 2000, constituted over 60 per cent of the total budget for social security (SAHRC 1998/99). The SAHRC comments, ‘[u]nderstandably, pension grants are an effective vehicle for redistributing wealth.’ However, reports suggest that increases in the budget since 1995 were below the inflation rate, and represented a real decline (SAHRC 1998/99). Table 1 shows the various grants with a partial breakdown of amount provided per type and number of beneficiaries by year.14
Table 1 Partial breakdown of amount and number of beneficiaries per grant type15
|Old age||Disability||Child support||Care Dependency||Foster Care||Grant in Aid|
|No of beneficiaries||2 131 820||1 312 726||6 961 046||91 604||300 119||Â|
|No of beneficiaries||2 000 041||897 059||2 513 693||56 150||133 309||12 279|
|Amount p/m 2002/2003||R640||R620||R140||R130||R460||R640|
|No of beneficiaries 2002||1 903 042||694 232||1 907 774||34 978||95 216||10 332|
Sources: 2003 Inter Governmental Fiscal Review: figures for March 2003; and SAHRC reports from 1998 to 2006.
The SAHRC noted that the budget for social assistance grants was not adequate, which resulted in overspending by the Department on the allocated budget for the programme. The funds for the social grant payments have been far below what is required. Furthermore, indicators of fraud and/or maladministration in 2002/03 present a reason why 953 965 people received disability grants when, according to departmental figures, 943 676 people were eligible for them (SAHRC 1998/99). Approximately 12 000 people were thus not eligible for the grant they received. It has been argued that the exponential increase in child support grants and disability grants could provide a perverse incentive and thus create more pressure on already overstretched systems.
Early anti-corruption interventions (1996–2002)
There is a history in the Department of identifying corruption and administrative problems. The Mouton Committee of Investigation into a Retirement Provision System in South Africa began in the late 1980s, for example, and concluded its task in 1992. The most aggressive efforts were, however, understandably recorded in the post-apartheid era. Four committees were set up and operated in a period of four years, from 1996 to 2000. The progress on recommendations from these various committees is somewhat circumspect and requires careful evaluation.
Due to the high level of ‘abnormalities’ in the system, the Committee for the Restructuring of Social Security (the ‘Chikane Commission’) was appointed in 1996 to review the entire social security system – also regarding fraud and corruption – and to provide recommendations. The Commission characterised the system as being in crisis and made the recommendations below:
|Box 4 Recommendations of the Chikane Commission|
Liebenberg & Tilley 1998.
These recommendations were supported by revelations in a Mail & Guardian report of February 1997 (released by the department) that R1 billion was being lost to pension fraud per annum. This was a sizable chunk of the R14,3 billion social security budget at that time. In fact, as Table 2 shows, when compared with the losses of R1,5 billion of the R57 billion budget in 2006 it is a staggeringly higher percentage of the budget.
Table 2 Amount lost to social security through corruption
|Estimated corruption losses in rand||Total social security budget||Percentage of total social security budget ‘lost’ to corruption|
Source: Mail & Guardian 1997.
If the department was aware of these losses, why did they take almost five years to implement the recommended reforms? In response Jehoma (2006) argues that it took a while for the National Treasury to believe that the Department was in fact experiencing such acute losses and they were convinced only after the department had presented concrete evidence in the form of two baseline studies in 2002 and 2003.
A reflection over the years of losses to corruption, as displayed in table 2 above, actually poses a critical challenge to the department, as it reveals that corruption has actually decreased in relation to the budget. This also runs against current perceptions created by the massive anti-fraud campaign, which seems to suggest that losses due to corruption have present dimensions and significance.
It is instructive to reflect on the challenges raised by the then-Social Welfare Minister, Geraldine Fraser-Moleketi, in implementing the bulk of the Chikane Commission’s recommendations indicated by the department so that there may be comparisons drawn with current actions. These challenges include the following:
- A national social security system would incur a high cost, running into millions of rands
- There would be constitutional difficulties in forcing provinces to fall into line behind the national minister
- There is ineffective punishment of corrupt officials
- The complexity of departmental disciplinary rules and lack of communication between provincial departments are serious complications
The one recommendation of the Chikane Commission that was actually implemented, and with disastrous consequences, was the outsourcing of the distribution of social grant payments (SAHRC 2002/03). Government contracted two private companies, Cash Paymaster Service (CPS) and Allpay, to undertake this function. A report from the DSD in SAHRC stated that, ‘The privatisation did not bring improvements to the grant recipients, because services were still not accessible and conditions at pay points were still appalling’ (DSD 2002/03). Furthermore:
In the Eastern Cape, CPS and Allpay were granted a R180 million contract to pay out grants in the former Transkei. Despite the privatisation of services, problems still persisted â€¦ There were still long queues, and lack of shelter, water and toilet facilities at some pay points. Staffs at pay points insulted Grant recipients, and paymasters arrived late with machines breaking down. The problems were, inter alia, the long queues at pay points; venues that lack shelter, chairs, toilet facilities and water; and attitudes of paying staff (SAHRC 2002/03:30).
Lund Committee on Child and Family Support
Cost projections of R20 billion in 1996 to reduce racial inequity in the delivery of the state maintenance grant led the government to appoint a technical committee of enquiry, the Lund Committee on Child and Family Support, to investigate the problem. Makino records that the influence of fiscal restraint on the Lund Committee’s outcomes was severe and transparent (SAHRC 2000/01). In fact, the Committee itself reported that it started its work ‘knowing that whatever recommendations are made, there will be losers â€¦ no win-win situation is possible’ (SAHRC 2000/01). Although this did not point to corruption per se, it did indicate more generally that reform measures would not necessarily contribute to an immediate narrowing of the gaps in the safety net. Arguably, this could also have meant that the gaps would begin defining the parameters of the social security net, which is a significant indicator of the approach of government to inherent problems in the system.
|Box 5 Recommendations of the Lund Committee|
: RSA 1996.
Public Service Commission Investigation into Social Security Services
In 1998 the department announced another task team, the Public Service Commission’s (PSC) Investigation into Social Security Services. The team’s findings were delivered to the welfare portfolio committee task group. The recommendations in the box below were proposed to improve delivery and root out corruption:
|Box 6 Recommendations proposed by the PSC|
Kobus van der Merwe, from the PSC, who was centrally involved in the drafting of the report, commented in an interview that the recommendations were implemented but the success of implementation ‘cannot be determined’ (Van der Merwe and Simpson 2006). To this end, some provincial departments have placed on record their establishment of anti-corruption and anti-fraud units, which they report to be successful, however tenuous that success is, given current evidence (Welfare Portfolio Committee on Social Security 1998).
The Taylor Commission on Comprehensive Social Security for South Africa
The ‘Taylor Commission’ of 2000 is the latest committee response to dealing with inadequacies in the system. It also remains the most controversial because it did not take the financial parameters of the macro-economic orthodoxy for granted, as did the Lund Committee (Liebenberg & Tilley 1998). It was different from other committees because it included more members from civil society and the unions. The Committee’s main recommendation was the introduction of a Basic Income Grant (BIG) for all citizens as a means to address poverty issues and temper corruption universally.16 This meant the abolition of the means test for identifying those in need, as it was regarded as being too discriminatory and as it allowed those who were structurally unemployed or in the informal economy to fall outside of the ambit of state protection. The means test was also regarded as an inadequate measure of poverty because of its strictly quantitative basis. This is buttressed by the fact that South Africa has no real indicators for poverty.
|Box 7 The definition of poverty|
Although statistics about poverty abound, South Africa does not have a definition of the concept (Mafongosi 2006). In arguing for the importance of such a definition, Sarel van der Walt (2004:2) states:
Two years later the DSD’s Strategic Plan 2006–2010 outlined its comprehensive definition of the ‘poorest of the poor’, which includes both an individual and a community perspective. The following items are included:
The department has in fact, gone as far as defining the vulnerable as:
However, when it comes to determining the recipients of social security, the department only considers ‘income poverty’ and in so doing measures the income or expenditure level of the household by using the means test. As Van der Walt (2004:3) argues, ‘The result of the mismatch could be that government is not having a direct impact on reducing poverty, but “hoping” that measured poverty would be reduced indirectly through higher income and/or lower unemployment.’ From a corruption perspective, it means that those who are slipping through the system because they do not qualify for the means test (the income measurement for eligibility) may fraudulently try to access a grant
Gaps abound in the current system. In its comments on the Taylor Commission, Idasa (2003) points out that:
- There is no income support for poor children between the ages of nine and 18 including street children and child-headed households
- There is no income support for poor adults between the ages of 18 and 59 to 64 years including those living with HIV/Aids
- There is no general social assistance for households where no-one is employed
- The unemployment insurance fund (UIF) covers less than 40% of the labour force at any given point in time and offers benefits to less than 6% of the unemployed
In reality this means that those who are most vulnerable are unable to access social assistance (Idasa 2003).
The adoption of a BIG, which at R100 per person per month would cost the state billions of rands a year,17 is not the greatest issue of contention. Perhaps the most startling outcome of the Taylor Commission was not in its recommendations but rather in the response to them. Idasa (2003) reports that apart from Minister Skweyiya’s rhetoric of approval, the report was sidelined and repressed within government circles: the interpretation by conservative forces, particularly within government, of BIG as a threat to macro-economic strategy, helps to explain their reluctance to engage in meaningful discussion on the merits of the matter, as well as the ideological character of the debate. The lack of an official response makes it difficult to analyse the wider governmental position on Taylor’s proposals.It can be argued, then, that the real anti-corruption agenda that the Taylor Commission links to broader concerns, one that ultimately looks at institutions and policies, would be marginalised in favour of narrow limits set by an even narrower macro policy. Addressing journalists at a recent press conference the minister, however, emphasised that ‘the debate was continuing on the issueof a basic income grant, which he said in his “personal view” should be looked into, given the country’s unemployment and poverty levels’ (Sakoana 2006).
Additional effortsNational Action PlanIn December 1998 the then-Department of Welfare (DOW) was allocated R100 million for improving social security delivery and financial systems (SAHRC 2001/02). The SAHRC comments that the National Action Plan for the Promotion and Protection of Human Rights ‘identified the development of mechanisms to discourage corruption and improve efficiency in service delivery as one of the challenges facing the Department of Welfare in its attempt to fulfil the right to access to Social Security and Social Assistance’. To this end, the SAHRC notes that the then-DOW’s annual report failed to provide satisfactory information on the effectiveness of the measures instituted to contribute to the progressive realisation of social security rights. By the reporting period of 2000–2001 the DOW had still not provided any information regarding the outcomes of the plan (SAHRC 2001/02).
Task team to review social assistance legislation and regulations
In light of the fact that the Social Assistance Act 59 of 1992 had not been amended, the department appointed a task team in 2000 to review the policy. A general overview of the Act indicated further that social assistance was not comprehensive and integrated. Box 8 outlines the areas which were identified for review:
|Box 8 Areas identified for review by the task team|
There are no reports indicating whether these areas have been reviewed.