Budget 2025: How the government is extracting more while providing less for citizens

12 Mar 2025

The stand-off over the budget may mark a significant moment in an important and sometimes under-appreciated dynamic in our society. It is now clear that the government is providing less to citizens and yet demanding more from many of them. This will have huge implications for our politics going forward.

In the period from 1994 government services for most people increased significantly.

This did not happen overnight; rather, there was a long period in which the services that were available to citizens from the government started to increase.

Perhaps the first big examples were social grants.

While there were some social grants during the apartheid era (black people received lower pensions than white people until at least 1993), the amount of money transferred directly to people in the form of grants grew dramatically.

As GroundUp explained several years ago, about 6.5% of South Africans received a grant in 1994. Now about 42% do. As a result, by 2022, social grants amounted to about 11% of the budget.

Other measures have seen the government increasing what services people receive.

In the 1990s and 2000s, there was massive infrastructure investment. Places that had never seen roads suddenly had tar, public parks were introduced to Soweto, and more and more money was transferred to ordinary people in different ways.

This included services, more homes received electricity and water, and the number of police officers increased significantly.

In particular, basic education was made both free and compulsory, and the percentage of children who attended high school shot up during this time.

As Stats SA explained: “Between 1996 and 2016, the number of the population aged 15 years and older who completed matric increased from 3.7 million in 1996 to 11.6 million in 2016. This is almost a 211% increase over the 20-year period.”

This process might have culminated in the period from 2017 to 2020.

In 2017, on the first day of the ANC’s elective conference at Nasrec, then president Jacob Zuma announced that learners from poorer homes would receive free higher education.

Then, in 2020, as the hard lockdown was imposed, the Social Relief of Distress Grant (SRD), the closest thing we have ever had to a Basic Income Grant, was announced.

More for less

Since then, the government has gone the other way, and citizens have started to receive less and less from it.

Inflation has eroded the value of many social grants (the SRD was R350 a month in 2020, it is now just R370 a month).

Many young people who have been able to get through our basic education system are finding themselves literally starving.

Read more: Starved for education — the harsh hunger crisis gripping SA university campuses

The number of police on the streets is nowhere near enough to deal with the violence in our society; in some parts of some cities, roads almost no longer exist.

Electricity and water services in many areas are not consistent, mainly because of the problems in local government. In some areas, services have gone backwards dramatically.

This even affects people in other countries who want to come here. Parliament heard last week that our missions in Asia are not able to print visas, with huge knock-on effects for tourism and travel.

At the same time, the government and those in it are demanding more from people.

The fact that Finance Minister Enoch Godongwana wanted to increase VAT by two percentage points is proof of this.

At the same time, those who pay income tax are also facing demands that they pay more, and bracket creep means that many people are paying more tax than they ever have before.

Read more: Godongwana walks a perilous path as he attempts to appease coalition partners

In some cases people are being forced to pay money, illegally, for simple government services or just for the legal right to do something.

For example, to get the legal right to drive, a driver’s licence, many people will find they have to pay a bribe. This means they are paying money for something that gives them no financial value, and that they should receive for a simple fee after passing a test.

All of this means that we are now faced with a situation that has reversed what happened previously.

In the past people expected more from the government, now the government is giving less, while taking more from the people.

Potential for social discord

The implications of this are profound. Firstly, it means the government will play less of a role in people’s lives.

Instead of enabling people to achieve their potential, through providing roads and electricity and education, the government will be something that people will try to avoid.

Basically, the government will be seen as a hindrance, not an enabler.

At the same time, because the government is so desperate for money, it will be trying to extract more. And thus people will become more likely to try to avoid or evade paying taxes where they can.

But it also means that people will try to provide for themselves.

They will do this through organising in their own communities. The fact that many informal settlements have their own self-protection groups, or vigilante organisations, is one symptom of this.

The fact that some suburban communities are now taking over the running of some government facilities, such as local swimming pools, is another.

This means that communities will be looking inward. This is entirely human, all communities will do it. And while this is good for those communities, it may be very bad for our social cohesion.

One of the great miracles of our society is that for 30 years it has been able to transfer huge amounts of money from the rich to the poor in a peaceful way. While people grumble about the amount of tax they pay, there is virtually no organised opposition to this process.

Even now the DA is not explicitly opposing the current tax regime that sees our top earners paying 45% of what they earn in income tax.

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Rather it is opposing a two percentage point VAT increase, particularly on the grounds that it would affect everyone, including the poor.

Of course, one of the reasons for this is that wealthier people fully understand that it is in their interests for this to happen, that in the most unequal society in the world, it’s completely necessary.

But as this situation continues, as the government continues to fail and provide fewer services, and as it will be seen as a tool of extraction, this mechanism may start to be in danger.

This could become incredibly serious.

While many public commentators have suggested it is a “miracle” there has been no violent revolution in South Africa, perhaps one of the reasons it has not happened is because of this massive and continuous wealth transfer, through the government.

In some ways, it doesn’t matter whether this continues or not, what matters is whether poorer people feel that it is continuing.

As the government continues to extract more while failing to provide proper services, so the potential for social discord can only grow. DM

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More for less

Potential for social discord