Cecilia Machado: Efficiency versus budget

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In order to fulfill the promises made during the election campaign, a new proposal is underway for the expansion of assistance spending: a waiver of at least R$70 billion for Auxílio Brasil, which allows distributing another R$200 per family and another R$ 150 per child up to six years of age in 2023. The objective is clear: to rescue millions of Brazilians from hunger and poverty.

But if combating the deleterious effects of poverty depended only on the budget, it is strange to see that, even after Auxílio Brasil has established itself as a program three times larger (in resources) than its predecessor, more spending is still necessary.

This year, the budget foreseen for the Aid reached R$ 115 billion, distributed to 21 million families at a minimum of R$ 600. For next year, R$ 106 billion is already guaranteed. But in 2019, it was only BRL 33 billion for 15 million families, with average benefits of BRL 200. And the pandemic, which for a long time worsened the situation of poverty and food insecurity, was left behind, and, from the point of view of the economy, activity and the job market continue to recover quite vigorously.

What, then, could explain such a large increase in assistance budgets not converting into tangible benefits for the population? The sad fact remains that the creation of Auxílio Brasil was accompanied by an inefficient use of the resources that were destined for the program.

Although Auxílio Brasil is close to Bolsa Família in several respects, there is an important difference between them: the establishment of a minimum amount for transfers from the former. This new rule made Auxílio become a poorly focused program, which does not privilege families of different sizes and composition.

A focused program is one that focuses on where poverty is, taking into account the number of members and poverty in per capita terms in its transfer criteria. The establishment of a minimum amount substantially above any other Aid benefit made the receipt of R$600 (or R$400) the norm for all families in the program, ending any possibility of transferring more resources to larger families or for families with young children.

In addition, the minimum rule encourages the declaration of single-person families, composed of only one adult. This means that a poor adult receives similarly to a family with four members, such as a mother and three children. Not even a differentiated transfer for children up to six years old, as proposed by the new government, resolves the huge discrepancy in the treatment that will continue to be given to families of four members in which children are slightly over the age of six and to single-person families.

There is, however, a very simple solution that corrects the distortions that were created in the design of the Auxílio, increasing the efficiency of this income transfer program. The end of the minimum rule and the recalibration of the values ​​of each Aid benefit are two directions that give much more guaranteed returns than the fiscal juggling that expands the public budget at the expense of a new PEC.

Together, these two changes rescue much of the design of the old Bolsa Família, a program that was able to lift millions of Brazilians out of poverty and regain citizenship in recent decades and that should be at the top of the new government’s list of actions. Prioritizing the expansion of the Aid budget over the efficient use of existing resources is a huge mistake.

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