Gaps in Social Assistance Act: discussion

Social Development

26 April 2002
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report


26 April 2002

These minutes are provided by the committee secretary, Ms Z Adhikari

Saloojee, Mr. E (Chairperson)

Chalmers Ms J
Gandhi, Ms E
Masutha, Mr M T

Da Camara, Mr M

Van Jaarsveld, Mr A Z A

Mbadi, Prof L M

Southgate, Mrs R M

Rajbally, Ms S

Mabena, Mr D C
September, Ms C C *
Tsheole, Ms N M
Tshivhase, Mrs T J
Cupido, Ms P W
Kalyan, Ms S V
Mars, Ms I

Mr Fezile Makiwane - Deputy Director-General
Ms Lulu Siwisa-Pemba - Director: Legal Services
Mr Vusi Madonsela - Chief Director: Corporate Services

Discussions about Gaps on Social Assistance Act.

The Chairperson welcomed the members of the Committee and introduced the delegation from the Department of Social Development.

Mr Makiwane thanked the Committee for the opportunity to discuss the Social Assistance Act and said that that the submission would deal with two aspects namely, the legal aspect and what the Department is doing on the ground. As background, he noted that the social grants are the most important social relief strategy of government and that the President has urged that there be an increase in the uptake of grants. There are many problems related to grants mainly with regard to pensions and funeral cover. The people in the rural areas are affected the most especially in provinces where there are third party contractors. This is an unbanked sector with very little options. Harmful business practices become an issue and loan sharks are a big problem. There are high interest rates being charged and people are taken advantage of.

Ms Siwisa-Pemba explained the legal aspects of the issue by looking at section 11 of the Social Assistance act and the KwaZulu-Natal case (See attached submission).

Mr Makiwane pointed out that the Minister had issued a directive to MECs and private contractors in the latter part of 2001 indicating that the practice of deductions from pensions are illegal and should stop. The practice has not stopped and the Minister has asked the Department to address the issue and report back to him. The Department had three meetings with stakeholders and looked at issues such as the size of the business and who is affected. As it is a violation of the legislation, no new business is to be entered into. There are over 80 000 persons in KwaZulu-natal having loan accounts. With regard to funeral cover, he said that they needed to look into what the processes involved are in order to stop the deductions, as they did not want beneficiaries to lose money already invested. He pointed out that there should be another solution as there was an oral imperative for the cover to exist, as it was part of the African culture to prepare for proper funeral. They have involved the Financial Services Board and the Microlenders Institute in order to come up with solutions. There solution should take into account that people need to be protected especially in the rural areas. They have prepared a draft document, which they hope to complete by June 2002 that looks at three main areas:
· Regulating the environment
· Consumer protection: setting up a framework for protection
· Social policy: there is a need for guidelines to address the needs of the elderly.

Ms Gandhi felt that many of the schemes being introduced were money-making schemes and did not benefit the elderly. She said that people should be persuaded not to sign any new contracts and that existing contracts should be paid up. She suggested that urgent legislative amendments were required and that it should make provision for this practice to stop.

Mr Masutha pointed out that there were three important legal aspects dealing with this issue:
· Section 11
· Section 8
· Section 4(6) of the regulations.
He suggested a review of these measures might provide a solution. Section 4(6) of the regulations could be extended in order to assist with covering funeral expenses. There is a debate about limiting the beneficiary in terms of spending the grant. Section 8 is very difficult to administer if it is not specific enough.

Ms Rajbally wanted to know what the cost of paying up the policies would be and whether the beneficiaries were aware of this option. She felt that the nominees in funeral policies should be made aware of the problems.

Prof Mbadi raised the concern about the deep rural areas such as the Eastern Cape where CPS has been awarded the tender. He said that there were funeral organisations within the communities currently and it would help if beneficiaries did not join these other schemes. He felt that it was important to take into account where people lived and their access to services. He agreed with Mr Masutha's suggestion that the State should assist with funeral costs.
Mr Da Camara felt strongly that the option of funeral benefits should not be ended but rather that it should be regulated as there is a strong demand for it. He also agreed with Mr Masutha's suggestion about increased State assistance.

Ms Siwisa-Pemba noted that Section 11(1) prohibits any deductions from grants and said that government was not stopping people from spending their money as they pleased. Contractors should pay out the full amount and then allow beneficiaries to decide where and how to spend it.

Mr Van Jaarsveld said that it was a complicated issue as paying up would be expensive for the beneficiary. The offender was the third arty contractor who was contravening the legislation. He suggested that they should seek to have the amount being deducted reduced. He felt that the situation would be better if the amount being deducted was curbed and the policies around these issues were regulated.
The Chairperson suggested that there might be a need for a comprehensive inquiry into the situation as the people who receive pensions are the poor. There is a need for funeral benefits and the general cost of living was constantly rising.

Ms Chalmers agreed that people's needs must be met. She felt that people should get the full amount and that the response should be a community one.

Ms Southgate felt that the person contravening the Act should be held accountable and she agreed that a comprehensive enquiry was required.

Ms Gandhi noted that in her experience some companies have an advantage over others and that the payment contractors were deciding for the beneficiaries. She felt very strongly that that there should be no sale at the point of receipt of the grants so that beneficiaries don't feel pressured. This would allow them to consult with family members before making a financial commitment. Many of the beneficiaries do not have documents to prove that the policies exist.

Mr Masutha suggested that they look at controversial ideas in order to stimulate the debate. He said that the history of section 11 was that there were similar provisions in previous Acts. Legislators had thus thought this process through. Responsibility for payment rested with national government previously but has now been delegated to the provinces. He suggested that perhaps the national government should regain some of the authority. He further suggested that section 11 be retained as it was and that separate legislation is passed or current legislation be amended in order to record the norms and standards required for third part contractors. This should serve as a legal framework for provinces in order to deal with third party contractors. He suggested the consumer protection issues be dealt with by defining issues of abuse more clearly and that a regulatory framework be set up.

Mr Van Jaarsveld proposed that clear provision be set up in terms of a fund for beneficiaries.

Mr Da Camara said that in terms of the point raised by Ms Gandhi, he felt that the existing practice should be regulated so that beneficiaries have their own choices. Beneficiaries should get written statements about their transactions. He agreed that the violators of the legislation should be dealt with.

Mr Rajbally raised a concern about the practices of loan sharks, as there is no record of payments and that people pay large amounts for a long period. She felt that newspapers should be used in order to make people aware of the situation.

The Chairperson agreed with Mr Da Camara that beneficiaries should get written statements about their policies in order that they are able to monitor their finances. He felt that they needed to identify immediate solutions

Ms Southgate was concerned that that choice of the individual beneficiary should not be taken away. She also felt that the individual should be responsible for his/her own spending.
Mr van Jaarsveld requested that the Committee get a full briefing about the KwaZulu-natal case and Age Secure at a later date.

Mr Masutha said that the debate centred on what social assistance was about and what the shortcoming were. A legal framework needs to be addressed in order to determine what the norms and standards will be and on what basis deductions can occur. He suggested that an appeals body be established within the Department.

Prof Mbadi said that the Department of Social Development has an obligation toward the beneficiaries and he supported Mr van Jaarsveld's suggestion. He cited the example of Sadtu's funeral scheme and suggested that the government run something similar.

Ms Chalmers felt that people needed to be educated about their options and those sources of help that they are able to access. The Department should investigate the magnitude of the problem and get an idea of the types of problems being experienced. She suggested that there be a helpline to assist in this regard.
Mr Makiwane said that the helpline does exist but it benefiting mainly urban users rather than rural beneficiaries.

Ms Gandhi felt that the issue of loan sharks must be addressed as a priority. With regard to deductions from grants she felt that the Minister should determine condition of service for service providers. There needs to be a longer term solution for current policy holders.
Ms Rajbally agreed that loan sharks were a serious problem and felt that something needed to be done immediately.

Prof Mbadi raised the problem that arises when a beneficiary dies in a queue before reaching the paypoint of the cheque being kept and then subsequently not being traced again.

Mr Makiwane said it becomes a question of which family member would get the money. If a beneficiary dies, the family has to produce a death certificate in order to claim the money. This additional process creates further time delays.

Mr Masutha said that the regulation indicates that proof of expenses must be produced before money will be given. Some service providers (undertakers) want their money upfront. He suggested that the Department accept a quote from the undertaker in order that the Department give them a letter to indicate the amount they will get later. The suggestion of the three month payment will assist in paying these bills.

Ms Rajbally said that the process of needing to produce receipts was problematic and often there were long delays before money was refunded.

Ms Chalmers said that there was a need for a regulated microlending system and that the State may need to intervene.

The Chairperson concluded the meeting by suggesting that a full day workshop be held with the Department, the Portfolio Committee and other stakeholders to look into this issue very seriously. He felt that there was a need for continued engagement on the issue.

Ms Rajbally suggested that it would be useful if these workshops were held in the provinces.

The Chairperson noted Ms Rajbally's suggestion and said that it would be discussed with the relevant provincial committees. He congratulated Ms Gandhi on winning a peace prize in the United States with a cash prize of R200 000. She has donated all the money to worthy organisations.

The meeting adjourned at 12:58 sine die.


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