Free varsity for all is unrealistic
SA’s economy won’t be able to shoulder the burden of what students are demanding
The idea of free education in South Africa is unviable in the short and longer term. Here are some facts about our economy gleaned from the budget report presented by the minister of finance at the beginning of this year that prove this.
The economy is heading toward recession. In 2016, gross domestic product growth is 0.9%. It’s projected to be 1.7% in 2017 and 2.4% in 2018. This may be attributed to the continued drought and its effect on agriculture as well as the global financial crisis.
The rand is trading far above its fair value of 10.95 against the US dollar.
Inflation by the end of 2016 could reach 8.0%. The South African Reserve Bank will continue to increase the repo rate in 2016 and the current repo rate sits at 7.50%.
In 2014 Standards & Poor’s downgraded SA economy to the BBB rating because of concerns about external imbalances.
Revenue income from personal income tax is 38.0%, company tax is 17.1% and indirect tax (VAT) is 25.9%.
The projected average growth of expenditure is 7.1% and the projected government debt for 2016/2017 is R154-billion or 10.7% of total government expenditure.
Despite this gloomy picture of the economy, the finance minister allocated an additional amount of R31.8-billion for higher education in response to the #FeesMustFall campaign.
Given the destruction of property at universities during this campaign, it is clear that students, or whoever is behind these violent actions, are not doing so in the best interests of quality education.
First, for something to be given freely there must be someone who has the resources and is willing to give those resources freely.
South Africa has no such resources, as is obvious from the numbers.
In some European Union countries where free education exists, they have the luxury of a much broader tax base. Given the narrow tax base in South Africa, to sustain not only the massive social development budget but at the same time offer free education for all is impossible.
Second, it is not viable to add more taxes to the wealthy because it would automatically encourage them to divest from South Africa. One must understand the mindset of the rich; they invest their money and resources only to increase their wealth.
No one, including those who came from the struggle background and made riches in recent years, is keen to just give away their wealth for someone else’s free education no matter how just such a cause may be.
At best the rich might be willing to offer donations in the form of bur- saries and grants — as long as they receive corresponding tax discounts.
Third, let’s look at it pragmatically. Why should someone give something for free? Why would a rich person or a corporation want to give away some of their wealth for the sake of other people’s development? Altruism has its limitations.
Fourth, even if free education is given while a student is at university, there is no guarantee that when they become gainfully employed they will, in turn, repay the state.
The financial aid received by students is barely repaid by those who have exited the system in the past two decades.
Universities annually write off student debts totalling millions of rands in unpaid fees.
Fifth, free education is premised on the absence of accountability.
Furthermore, there is a danger of such practice becoming habitual in our national culture and it may, in the long run, debilitate the social system and the economy.
Sixth, the demand for free education is not yet clearly defined.
Who exactly should receive free education and is there any reciprocal accountability on the part of the recipient once the education is completed?
But given that education or receiving a degree is no guarantee that those who are educated today will be tomorrow’s middle and upper middle income earners, it would be difficult to limit the cycle of free education for anyone in one generation.
If this cycle becomes perennial, (and given the nature of our economy), would we ever be capable of maintaining the burden of future free education?
Seventh, if government resources become overstretched to the point where it cannot manage to subsidise higher educational institutions, then the danger of many institutions collapsing under the burden of free education is very real.
The growing protests for future demands and the damages to institutional infrastructure will paralyse the higher education sector.
What this means is the wealthy will have their children educated elsewhere, even if it means abroad, and the poor will have nothing.
We have to become realistic about the demand for free education. We need to define it very clearly and place certain limitations on who qualifies for it and for how long.
The government, the politicians of all parties, the students bodies, the trade unions, parental bodies and the university managements and the academics must come together in a major consultation on this subject — a conference that is nothing short of the Codesa (Convention for a Democratic South Africa) conferences prior to the 1994 democratic constitution — and settle this issue once and for all so that the education sector flourishes once again.
A nation that has no education is worth nothing among nations.