Free higher education bears huge social cost
02 March 2016
Posted by: Author: Xhanti Payi
Author: Xhanti Payi (BDlive)
In his budget speech a week ago, Finance Minister Pravin Gordhan did not spend much time discussing the funding of free higher education. He had a stopgap approach that did not so much bring new funding into higher education as manipulate existing funding.
The question of free higher education has both practical and philosophical gaps, and implications far beyond what many who support the call are willing to impute or even bear. What is uncontested is the need to provide more access and equity. What is unanswered is the how.
Specifically and pointedly; is it true that free education can be achieved in a truly democratic and free society?
The first notion to deal with is perhaps that there is no such thing as government money. The government does not have money except by taxes from citizens. Taxes represent the efforts of ordinary people, even in unequal societies such as ours.
The conversation about higher taxes is a particularly sensitive one. Rumours of higher value-added tax (VAT) and income taxes to fund this budget were a matter of concern given the economic pressures already borne by ordinary South Africans.
The simple point is that the demand for free education is not actually directed at the government, but at those who pay the taxes the government administers to satisfy various social needs.
One could argue that the calls are for the government to tax companies more, since they are rich. But in reality, we draw more taxes from individuals through income tax and VAT.
Company tax is less than half personal income tax and fell below expectations in the past year. It is likely to underperform in the coming year too. So, really we are back to the individual as the only possible source of finance for free education.
Free higher education is called for by students and their allies as they argue against the tyranny of debt. In this regard, they argue that it is unfair that at the start of their lives and even with their first step into the workplace, they are faced with the responsibility to pay back debt. Thus understood, free education would mean that the burden of the costs of education should be borne by the taxpayer so that the student is free of the high burden of education. So, not the government, but taxpayers.
Some argue, possibly legitimately, that given SA’s natural wealth, we should be able to provide free education. But our natural wealth is not taxable in its natural state. It can only be taxed when it has value or bears income. For that to happen, engineers, mine workers, farmers and administrators must expend effort.
Further, there must be an injection of capital, which would be higher tax in our context. Thus, even if the natural resources are owned by the government, they must be worked by individuals and the taxes on their profits must be handed over to the government to pay for free education.
To labour the point, why should the enterprising business owner in Soweto, or the banker in Sandton pay for free education? If students are — and should be — free to go and seek work and livelihoods in Nigeria or Brazil after they graduate, why should the South African worker pay?
As a free people, the students may choose to get the education and use it in any way or any place they choose. If they are not free to use their education in any place they choose at the time they choose, the concept of free education without burden collapses. We would have only exchanged the burden of financial debt for restrictions on freedom of movement and choice.
We need practical and credible notions of free higher education for a free society such as ours. We exercise our freedoms regularly, including the freedom to protest. Is it unimaginable that we could suddenly hand them to the state to decide where and how we work in return for free education?
We have the tax revenues we have from those who are working and earning an income, including the corporations we have such suspicions about. We have the country we have, and there are no other examples in the world that fit precisely into our own context of a burgeoning young population, a damning historical context and a multitude of competing needs.
If taxpayers are to be expected to provide free education, surely they are entitled to compensation later? But how is that different from a bank loan?
There are surely creative ways to meet the needs for fairness, access, opportunity and equity in education. There might even be a way to provide free education. But as currently proposed, free higher education "by the state" has implications for freedom that raise concerns.
- Payi is an economist and head of research at Nascence Advisory and Research
This article first appeared on bdlive.co.za.