Country profile Brazil: Increasing fiscal space through social contributions

ESS-33 63 Figure 29. Brazil: Coverage of social assistance programmes thousands Source: IPEADATA, 2010. Expenditure on cash transfer programmes in 2008 was approximately 1.3 per cent of GDP, 0.4 per cent of this being implemented through Bolsa Família. Recent developments In the context of recent efforts made by Brazil to increase social protection coverage the government launched in June 2011 the ‘‘Brazil without Misery’’ Plan Plano Brasil sem Miséria. The Plan aims to promote social inclusion and productive inclusiveness of 16.2 million people living in extreme poverty. Much of this population does not participate in any social protection programme. This operation is managed by the Ministry of Social Development and Hunger Alleviation which coordinates with other federal agencies and performs partnerships with the private sector. The programme operates at federal, state and municipal levels. The Plan seeks to increase per capita household income, improve access to public services and increase productive inclusiveness, improving the economic means of Brazilians through job creation. The increase in household income is ensured by the Bolsa Família Programme and BPC pension Benefício de Prestação Continuada. The Plan expands the scope of the Bolsa Família Programme by increasing the number of eligible children per family from three to five. The government seeks to extend benefits to an additional 1.3 million children. Payments will range from USD 22 to USD 200 a month. The government hopes to reach an additional 800,000 families who qualify for but currently dont receive the benefit due to a lack of information, isolation or administrative problems. The BPC pension is a constitutional right which provides income security one minimum wage to poor elderly and disabled people. Access to public services is ensured by integrating programmes on education, social assistance, food and nutrition security, healthcare, running water and electricity. In the field of education, the Plan integrates programmes which offer literacy courses for young people and adults as well as activities in different areas in public schools. In the field of healthcare are included the Unified Health System and programmes focusing on family 64 ESS-33 health, school health, promotion and prevention of oral health and medicine delivery. Social assistance and food and nutrition security include the Social Assistance Reference Center, Specialized Social Assistance Reference Center and programmes such as food bank and food at school. The productive inclusiveness’’ is ensured in rural areas through technical assistance, support access to public and private markets, building cisterns and the Green Grant Programme Bolsa Verde which transfers USD152 per three months by Bolsa Família card to families registered in the Support for Environmental Conservation Programme. In urban areas, the government seeks productive inclusiveness’’ through vocational training and job creation. Its goal is the inclusion of Bolsa Família beneficiaries in the labour market. The target population is identified by an ‘‘Active search’’ based on poverty maps. Families’ registration is done at local level using the Unified Registry for Social Programmes of the Federal Government Cadastro Único para Programas Sociais. This mechanism collects socio-economic information about families in poverty household characteristics, education level, employment status and income level. The families which qualify for but currently don’t receive benefits from any social protection programme are indentified and included in various programmes according to their needs. Families already registered are automatically included in the Plan, and must also meet the criteria for participation. The government has budgeted about Reales 20 billion annually to finance the Plan. This budget includes Bolsa Família funds. This annual budget is covered through 2014. Although the number of families and individuals receiving conditional cash transfers is considerable, the same cannot be said of the volume of expenditure of these programmes especially when compared with the level of total investment in social protection, which reached 18 per cent of GDP in 2008. This suggests that, even though expenditure on social assistance programmes in Brazil experienced a significant increase in recent years, it is still far below the level of spending on other social protection programmes, such as health and social insurance. Social insurance programmes are currently the main beneficiaries of spending on social protection and, in terms of the revenue they generate, they have in recent years been the main creators of fiscal space in the country.

5.4. Fiscal space for social protection

As we have seen, Brazils social spending, especially its social security expenditure, has increased considerably over recent years, with a strong acceleration during the 2000s. This scenario raises two questions. What were the sources of financing that were used to cover the growth in expenditure on social protection? How was this related to the mechanisms for creating fiscal space?

5.4.1. The 1988 Constitution and fiscal space

The new Constitution introduced explicit guarantees with regard to the Brazilian peoples right to social security. This is very positive in terms of the government social protection policys compliance with the provisions of the main international instruments protecting human rights: the Declaration of Philadelphia, the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights.