Child support grant has positive impact on economy: research
Critics of the government’s social grant system – which now reaches 15 million people in need – have argued that it is bleeding the small base of taxpayers and cultivates dependency, but research by the Financial and Fiscal Commission contradicts this view. Though it warned South Africa was facing “difficult economic times”, it recommended that the child-support grant be extended to those not covered and that the means test be relaxed. It said social spending not only improved equitable distribution of economic well-being and reduced poverty, it also promoted productive efficiency, human capital and long-term economic growth.
Some of the money was invested in productive activity, which improved the households abilities to generate income. Improved fortunes, in turn, helped prevent harmful risk-coping strategies – like distress sales of productive assets and children dropping out of school – and risky methods of earning – like commercial sex, begging and theft.
Qualifying households also tended to pass on the benefits to those that were ineligible and there were multiplier effects on income and welfare in the local economy. The commission, a fiscal advisory body to the government at all levels, said the results of the study “challenge the often held view that these grants are squandered on non-productive consumption”.... Read the full, comprehensive news article and discuss at Daily News