April 11, 2018
Commentary from John Lightfoot
“We have stolen the money! Now you must pay us back”.
This meme was circulating on social media when Malusi Gigupta gave his budget speech. Really funny at first blush. And then really not so much. At all.
The reality is that this blatant theft and misrule is a tragedy that is going to be with us for years and years and years – the growth, progress and social upliftment that was diverted to pay for (say) THAT wedding, which was attended by fawning politicians and business-folk has had and continues to have ongoing and profound social and monetary costs for all of South Africa.
Because the money has been stolen and, when not stolen, poorly administered, SARS has had to get money from the economy. Which isn’t there. Tax rates have increased again – now targeting everyone from the poor (VAT increase) to the middle class (no inflationary adjustment on the tax tables). This year, for the first time, the third highest income tax bracket received no relief (i.e. everyone in South Africa who earned more than R555,601 did not get any tax relief this year to account for inflation), which means that everyone in South Africa, who earns more than R555,601 has had a tax increase by the amount of inflation – say 6%.
This is a huge departure from the norm and is, in fact, an inadvertent display of desperation (in the “good” old days, only two years ago, only “the rich” were targeted and hit with a 45% tax bracket or hit with no inflationary linked tax rebate). That was fine politically speaking as it is politically acceptable to “nail the rich”.
The fact that lower income taxpayers are being targeted means is that the cupboard is bare. Now the government need the money so they are having to spread the misery more widely. Given that government, due to maladministration, incompetence, patronage and theft spend more than they collect, the money needs to come from somewhere. The very very very serious question, is where is the money going to come from next year. What is going to be targeted next year? It won’t be VAT (in an election year), personal income tax? more? company tax? take us even higher than the rest of the world? – coupled with our militant labour regime and disastrous policy flip-flops (see the mining charter), why would anyone invest, even at these levels.
So what has had to happen this year is that VAT had to be increased to pay for the gaping hole now left by the compounded (and continually compounding) effect of the loot, rape, pillage, plunder and mal-administration that has been the Zunami. And the final farewell present after almost a decade of economically catastrophic rule, from the Chief Thief, is free tertiary education (although nothing is free – someone always pays for it). Let’s think about the “free education” gift for a while. There are three points to be made here.
Firstly, there are HUGE historical injustices which have led to this point and that tertiary education is viewed as a stepping stone out of poverty. Which it can be. But the educational outcome has to be an “in demand” qualification. At this juncture the South African has critical needs for scientists, teachers, engineers, business management, doctors, entrepreneurs etc etc. From a purely business oriented standpoint, there are just not as many jobs available for “softer” degrees. (There, I’ve said it – no doubt to howls of outrage). To, my mind, the free education, now that it has been forced down the the collective South African throat, with no budgeting/ consultation/ in an economically ruinous fashion should be focused on critical skills outputs.
Secondly, there will be some (say) 100,000 students that will benefit from this – and if we use a number of (say) R120,000 per for a year at university, including books and accommodation, that is twelve billion Rand – R12,000,000,000.00. That is a helluva lot of noughts. This is subsidised by, effectively, an increase in VAT which hits (say) fifty eight million people, unequally to be sure, but all fifty eight million people are going to be carrying “their VAT spending share” of the R12,000,000,000.00, so the distribution will be unequal. BUT spread over the population, were everyone to carry this burden equally, that means that every single person in South Africa, from the aged, infirm and disabled, to new born babies, are paying for these (lucky 100,000) students. It is hardly equitable that these lucky 100,000 are put ahead of the greater population of South Africa – what about social grant beneficiaries (receiving / child grant recipients who receive R400 per month for a child grant – that is R4,800 per year per child. A huge an ill-thought through inequity baked into this cake). There is no right answer here, but “free” education as a parting gambit by a disgraced and compromised president is NOT the answer. And how are these 100,000 lucky students determined – the corruption opportunities are immense.
The final point is that the reality is that a lot of students who make it to university drop out due to the inferior quality of their primary and secondary education. The more burning and pressing issue is fixing the primary and secondary educational systems. Without a base, one cannot build and if one arrives at university being functionally and numerically illiterate, by the required university standards, this is not going to lead to the desired outcomes. To paraphrase Professor Jonathan Jansen (former UFS vice chancellor, now at Stellenbosch university), the ANC has had twenty five years to change the education system for the better. Hobbled by SADTU and incompetence, educational levels in South Africa have declined in spite of the huge amounts of money thrown at the Department of Education; Hendrik Verwoerd, who pioneered inferior education as a means of systemic segregation must be laughing from his grave.
To conclude, at least we do not have NDZ.
CR17 is doing what he can with what he has to work with (and that is a loaded comment), more next month. If we had NDZ, the current slightly upward trajectory would be more of a kamikaze plummet in slow motion (while reality dawned). Then it would be a swift plummet.
Here’s to new brooms sweeping cleaner.