To paraphrase Oscar Wilde, there is only one thing worse than being talked about in the Letter from the President, and that is not being talked about in the Letter from the President. The South African Institute of Race Relations is accordingly delighted that President Thabo Mbeki devoted last week’s letter to attacking us for publishing the ‘canard’ that poverty in South Africa has increased since 1996. In saying this, he implied, we had an agenda to oppose the ‘national democratic revolution’.

Yet the day before Mbeki went live with his letter, we had issued a media release headlined ‘service delivery success puts ANC on the up to 2009’. It drew attention to the millions of households that had been connected to electricity, clean water, improved sanitation, and refuse removal services since 1995. We also noted that 2.5 million more households ‘now live in formal housing, most of which was provided by the State’.

Mbeki says we could have used the recent community survey by Statistics South Africa to ‘report on improvements in the standards of living of the masses of our people’. In fact we have been reporting on such improvements since long before that survey was published. We look forward to a future presidential letter praising us for supporting the ‘national democratic revolution’ by drawing attention to these successes.

But back to poverty. Some of the data we have published is based on a definition of absolute poverty, living on the equivalent of less than a dollar a day. On this criterion, the number of poverty-stricken South Africans rose from 1.9 million in 1996 to 4.2 million in 2005. Poverty peaked at nearly 4.5 million in 2002, but it has still doubled since 1996 (at constant prices).

Mbeki finds this assertion ‘absurd’. But it is a consequence of the fact that unemployment has doubled. On the strict definition it has risen from 2.0 million in 1996 to 4.3 million last year. On the expanded definition it has risen from 4.2 million to 8.0 million, after peaking at 8.4 million in 2003.

There are various definitions of poverty. The president refers to one published by his own office in June in which the poverty line is defined as R3000 per head per year. He says that on this measure the proportion of people living in poverty has dropped from 53.1% in 1996 to 43.2% in 2006 (in constant rands). Translating the latter percentage into actual numbers means that there were nearly 21 million people living in poverty last year - a much higher figure than that of 4.2 million cited by the Institute (for 2005).

Mbeki questions ‘money-metric’ measures of poverty. He is right that the ‘social wage’ – education, health, housing, and other services provided by the State – ‘enhances people’s lives’. He is also right to emphasise his government’s extension of social grants. But these measures lessen the impact of poverty at the price of perpetuating dependency on the State.

One of the big achievements of the Clinton administration in the US was to take people off ‘welfare’ and put them on to ‘workfare’. Tory leader David Cameron in the UK looks as if he may try to follow suit should he come to power. While other countries seek to reduce the number of people dependent on the State, South Africa boasts that it now has 25% of the population on welfare.

Many governments have found it difficult to reform welfare systems when they become unaffordable, a risk South Africa faces. Welfare can also perpetuate dependency on the ruling party, for voters may fear that another party in power might try to cut it back.

Our welfare system is not as extensive as those of rich countries. The Mbeki government has rightly rejected calls from the Democratic Alliance and others for a basic income grant. But we are sliding away from seeing jobs as the primary answer to poverty. Our welfare system, instead of being a safety net for the poorest of the poor, seems to have become the main antidote to poverty. Nearly 85% of the beneficiaries of social grants are pensioners and children. Social grants are the main source of income of more than a quarter of all African households.

Making more and more households dependent on pensions and child grants may liberate them from the worst of poverty but they cannot truly be called free.