Reactions to Finance Minister Tito Mboweni’s Budget speech on 24 February 2021 have highlighted once again the gap between the ambitious transformative human rights vision in South Africa’s Constitution and the country’s troubled financial management and economic performance.

The Constitution is our country’s supreme law and is binding on everyone, including all branches of government. What role should the Budget play in helping to achieve the transformed society envisaged by the Constitution, especially in promoting the progressive realisation of socioeconomic rights (SERs) – a requirement in terms of our Bill of Rights?

Sections 26 and 27 provide that everyone has the right of access to adequate housing, healthcare services, sufficient food and water, and social security; sections 29 and 24 provide that everyone has the right to a basic education and a healthy environment; and section 25(5) and (6) provides that everyone has the right to equitable access to land. Some of these needs must be met immediately, while others can be met within a reasonable period.

This principle of progressive realisation finds its origin in the International Covenant on Economic, Social and Cultural Rights (ICESCR), to which South Africa acceded on 18 January 2015, 49 years after its adoption.

Article 2 of the Covenant provides that “each State Party to the present Covenant undertakes to take steps… especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realisation of the rights recognised in the present Covenant by all appropriate means, including particularly the adoption of legislative measures (emphasis added).”

The wording of this principle – especially “the maximum of its available resources” – requires careful analysis of government budgets when assessing whether governments are meeting their commitments.

The United Nations’ Committee on Economic, Social and Cultural Rights (CESCR) monitors member countries’ performance and progress in meeting these obligations.

The CESCR’s General Comment 3 on the “Nature of States’ Parties Obligations” includes guidance on what governments need to do when their economic circumstances change. It also considers the meaning and implications of progressive realisation, stating that “… it thus imposes an obligation to move as expeditiously and effectively as possible towards that goal.

Moreover, any deliberately retrogressive measures in that regard would require the most careful consideration and would need to be fully justified by reference to the totality of the rights provided for in the Covenant and in the context of the full use of the maximum available resources” (emphasis added).

The committee acknowledges that equitable and sustainable development requires concerted effort. It also recognises the reality that economic growth is not a linear process and that setbacks occur.

If, for any reason, including a global pandemic, a government claims that it is unable to meet its obligation to sustain the progressive realisation of all SERs, it must “fully justify” why it cannot.

It must do so by explaining its policy choices with reference to the context and all the circumstances, and it must show that it has, in fact, prioritised efforts to use all appropriate means within the maximum of its available resources to meet the “minimum core” needs of all its people, especially the most vulnerable.

The United Nations High Commissioner for Human Rights (UNHCHR), in collaboration with the International Budget Partnership (IBP), has published detailed additional guidance on what constitutes compliance with budgeting for the progressive realisation of human rights.

Any “negative human rights impacts of whatever policies a government chooses to follow”, say the UNHCHR and IBP, “should not be considered simply unfortunate side effects of tough, but necessary, decisions.

Where a reasonable-sounding policy that may impede the advancement of human rights is chosen, a government needs to explain “when and how it plans to shift back to policies more directly beneficial to the realisation of human rights”.

In addition, a government’s budget allocations must be justifiable and non-discriminatory; spending must be efficient, not wasteful; and spending must not be illegally diverted, for example, through irregular procurement or corruption.

What did the minister say in his Budget speech?

While minister Mboweni in his Budget speech recognised the impact of the Covid-19 pandemic on human life (nearly 50,000 deaths) and livelihoods (around 1.4 million job losses), he committed to “extend[ing]… support to the economy and public health services in the short‐term, while ensuring the sustainability of our public finances in the medium term”.

As debt was reduced, the budget share available for programmatic spending could increase. The R40-billion in taxes proposed in the 2020 Medium Term Budget Policy Statement (MTBPS) would not be levied – despite cogent arguments by some for a windfall tax, a wealth tax or a tax on the super-wealthy to narrow deep socioeconomic inequalities.

R10-billion would, however, be budgeted for South Africa’s Covid-19 vaccination campaign over the next two years – the contingency reserve being increased from R5-billion to R12-billion “to make provision for the further purchase of vaccines and to cater for other emergencies”.

While this seems prudent given the reality of emerging virus variants and the uneven efficacy of existing vaccines, some of this amount will be recouped from medical aids’ reserves.

Government debt, said the minister, would be stabilised at 88.9% of GDP in 2025/26, the ratio declining thereafter. High levels of debt increased the cost of borrowing, leading to higher future taxation and uncertainty, and ultimately to a reduction in the resources available for programmatic social spending.

Public finances, concluded the minister, were “dangerously overstretched”: gross loan debt would increase from R3.95-trillion in the current fiscal year to R5.2-trillion in 2023/24.

This account by the minister provided the backdrop to the following social spending allocations:

• R6.3-billion to extend the special Covid‐19 social relief of distress (SRD) grant until the end of April 2021;
• R30 increase for old age, disability and care dependency grants to R1,890 (a 1.6% increase);
• R30 increase in the war veterans grant to R1,910 (a 1.6% increase);
• R10 increase in the child support grant to R460 (a 3.4% increase); and
• R10 increase for the foster care grant to R1,050 (a 1% increase).

These “increases” effectively cut total expenditure on social grants by R5.8-billion in 2021/22, R10.7-billion in 2022/23 and R19.5-billion in 2023/24.

Criticism of the Budget

Criticism of the Budget revolved around it effectively being, despite the minister’s protestations, an austerity Budget that contravened the country’s human rights obligations, given that it:

• Proposed increasing expenditure on social grants (see above) at rates well below inflation;
• Failed to extend the SRD grant beyond April 2021, although the economy would continue to limp along for far longer, particularly while the government’s vaccine rollout plan and timetable remain undefined and indeterminate; and
• Made no provision for predictable social security for the long-term unemployed between the ages of 18 and 59.

The Black Sash’s open letter to the finance minister following the budget speech asserted that the Budget had “failed to address the escalating humanitarian crisis that currently threaten[ed] the livelihoods of millions of vulnerable people”.

Even if the government achieved its optimistic target of a 3.3% economic rebound in 2021/22, it knew that “it [was] impossible to create enough jobs for the 1.4 million lost during the Covid-19 period, let alone for the 11.1 million people currently unemployed (using the broad definition)” – especially given that its employment programmes “mostly create[d] short term, precarious jobs”.

The government seemed, concluded the Black Sash, “to have reneged on its constitutional and international obligations”.

Similarly, the Budget Justice Coalition’s (BJC) submission to Parliament queried whether the “underlying logic of [the fiscal] framework support[ed] the kind of state envisaged in the Constitution”. The 2021 fiscal framework “further limit[ed] the scope for a humane, caring state by proposing further cuts to already pitiful public resources for social services”.

Civil society has not been alone in calling into question whether the Budget was justifiable and defensible given the government’s constitutional obligations.

Michael Sachs, previously head of Treasury’s budget office and currently the acting chairperson of the Finance and Fiscal Commission (FFC), expressed concern that the Budget “signalled the erosion of basic human rights such as basic education, healthcare and social grants enshrined in the Constitution”.

For the first time, Sachs argued, a Budget had been tabled “that unambiguously envisaged a retrogression in socioeconomic rights set out in the Bill of Rights” – a regression “likely to extend beyond the three years of the medium-term expenditure framework until debt had stabilised”.

The FFC was particularly concerned about the impact of effectively regressive social grant allocations on child hunger – with its implications for malnutrition, stunting and poor education outcomes.

Noting that citizens did not “get their rightful returns from public spending, especially as non-interest government spending [was] reduced”, the FFC recommended a comprehensive approach that included:

• A decisive and coherent strategy and… political will;
• Implementation of… fiscal consolidation, targeting cuts at areas of underspending and questionable performance;
• Eradication of duplication of functions – i.e. the merging or closing of departments and public entities where appropriate;
• Investment in the use of technology and other areas of improving the capability of public sector personnel; and
• Eradication of contract mismanagement and procurement irregularities.

In effect, the FFC submission echoed international law in the form of Article 2 of the International Covenant and the guidance by the CESCR concerning implementation of its obligations, which are echoed in our Constitution.

In particular, the question to be answered by Parliament when it scrutinises the government’s budget is whether the Budget Speech and the Budget Review meet the required standard that substantive regressions in the realisation of SERs must be “fully justified”.

Resource constraints alone cannot justify inaction or regression when the full context of the Budget is relevant. Constraints cannot justify retrogression if there are other ways of using public funds. For example, the choice to provide a further bailout for SAA must be explained in detail and “fully justified”.

The UNHCHR and the IBP have pointed out that “corruption raises problems with regard to the government’s compliance with its obligations to undertake all appropriate budgetary measures, and more evidently with regard to its ESCR obligations of [maximum available resources], since the funds have been allocated for human rights-related programmes but are not spent for their designated purposes”.

Corruption in government expenditure, says the CESCR, constitutes a failure by a government to comply with its obligation to use the maximum of available resources to realise SERs.

Failure by the government to effectively combat corruption is also a failure to comply with its obligation to use the maximum of available resources to advance SERs, because funds diverted or misused are funds wasted. MC/DM

Advocate Gary Pienaar is a Senior Research Manager in the Developmental, Capable and Ethical State research division at the Human Sciences Research Council, Prof Narnia Bohler-Muller is the Divisional Executive and Dr Michael Cosser is a Chief Research Specialist in the same division.