Treasury emphasised that South Africa’s fiscus position was ‘extremely serious’.
The National Treasury says it would be impractical for government to pledge additional funding for the Social Relief of Distress (SRD) grant.
On Wednesday, the Gauteng High Court in Pretoria resumed arguments in a case questioning the constitutionality of the SRD grant.
The applicants, the Institute for Economic Justice (IEJ) and the advocacy group #PayTheGrants, are challenging the R370 grant.
The South African Social Security Agency (Sassa), the Minister of Social Development, and the Minister of Finance, who are named as respondents, are opposing the litigation.
National Treasury opposing SRD grant case
During the proceedings, Advocate Gilbert Marcus, representing the respondents, emphasised the National Treasury’s stance on affordability, noting that borrowing has “distinct limits lest the state fall into bankruptcy”.
Marcus also highlighted that South Africa faces a relatively small tax base along with issues of tax evasion and non-compliance.
“How to meet the needs of the population is dependent on budget constraints and sometimes beyond the control of the state as when for example the Covid pandemic resulted in the devastating economic consequences of a sudden and essentially unpredictable event,” the advocate told the court.
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He contended that it was “entirely simplistic” to suggest that raising taxes was the solution, emphasising that this was not the government’s preferred approach.
“That argument is always available whenever there is a demand on the state to spend money on anything,” Marcus continued.
“At the moment, South Africa has a higher pool of unemployed people than the number of people who are economically active and contribute to the tax base and, thus, limited resources are available to support the many programmes which are currently being undertaken across government.
“In addition, it is unrealistic and counterproductive to commit the state to providing more resources to grants as opposed to investing more in creating opportunities for people to have sustainable livelihoods.”
Watch the case below:
National Treasury argues SRD grant temporary
Marcus argued that the SRD grant was intended as “a stop-gap measure” to assist citizens while they transitioned to economic activity.
“The unfortunate truth is that the two problems were inextricable linked.
“The fewer people who are economically active, the less resources available to the fiscus and the fewer resources available to the fiscus, the less the state is able to assist the poorest of the poor with social assistance.”
The lawyer stressed that South Africa’s fiscal position was “extremely serious”.
“Expenditure exceeds revenue by R321.6 billion in 2024/2025 and the gross borrowing requirement is R559.6 billion, rising to R623.3 billion in 2025/2026.
“So government, as it is put, cannot expand social further due to drops in anticipated revenue and increasing debt services costs.”
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He further argued that government has avoided tax increases since 2020.
“At best for the applicants there are different philosophical and ideological approaches to the problem.
“But such differences, and this is the critical point, are not matters for judicial determination. They are matters which are fought out ultimately in elections.
“There’s no escaping from the fact that if the applicants were to succeed in [some] of their claims, it would require substantial expenditure and the money has to come from somewhere,” Marcus added.
Judge Leonard Twala reserved the judgment in the matter.
SRD grant process excluding millions of eligible beneficiaries
Meanwhile, Advocate Jason Brickhill, representing IEJ and #PayTheGrants, argued on Tuesday that approximately eight million people are currently receiving the SRD grant.
However, a similar number eligible for the grant were not receiving assistance due to systematic non-payment.
Brickhill explained that his clients are challenging various aspects of the regulations governing the SRD grant, including the online-only application process, which excludes individuals with limited internet access.
As a result, the applicants are seeking to have these regulations declared unconstitutional.
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