“Neo-colonisation” – an unintended consequence of FMF-driven varsity unrest

There has been much written and discussed about the current #Feesmustfall (FMF) campaign and where it is all going to end. In this regard, one fears that there are confused perceptions in many instances.

Firstly, one needs to differentiate between freezing fees at current levels and abolishing university fees completely. The most recent student unrest, which was in line with predictions made by Wits University’s Vice-Chancellor Adam Habib at the ISASA (Independent Schools Association of South Africa) Conference a fortnight ago was inspired by the move to announce some university fee increases for better off university students.

According to the announcement made by Higher Education Minister Blade Nzimande, fees would be frozen for next year for all students receiving either the NSFAS (National Students Fees Assistance Scheme) subsidy, or who came from households earning less than R600 000 per annum.

The latter group are known as the “missing middle”, who are deemed to be too wealthy to receive assistance in paying fees, but on the other hand are too poor to afford university tuition. Typically, this category of households consists of ordinary government employees such as teachers, nurses and police officers, as well as others drawn from the working class.

On the other hand, students drawn from households with incomes in excess of R600 000, will indeed be subjected to a fee increase of up to 8% next year, with the magnitude of the fee increase being determined by the relevant university. In effect, it means that between 70% and 80% of university students will see their 2017 fees frozen at 2015 levels.

Read also: Is BEE #feesmustfall solution? Riaz Gardee says it can reduce fees by 66%

What is interesting is that the free education movement which is seeing an escalation of protest, disrupting normal university activities, only erupted after the announcement was made with regard to fee increases. The issue of fee increases is actually fundamentally different from that of no fees at all, which is what the students are striving for.

Massive Differences In The Orders Of Financial Magnitude

The problem is that there is a fundamental chasm in order of magnitude between a decision to freeze university fee increases as opposed to completely free education.

The freezing of fees in 2016 meant the sacrifice of R2.3bn in fee income for universities which the fiscus had to find from other sources.

The proposed fee increase freeze for most students for next year implies a further cost of R2.6bn to the fiscus. These figures amount to less than 0.1% of overall government spending, budgeted for 2016/17 at R1.46 trillion and for 2017/18 at R1.57 trillion.

However, the picture is very different when contemplating free higher education completely.

For 2016/17, the total budget for post-schools education and training expenditure is R68.72bn, or about 4% of total government spending and for 2017/18, R74.72bn. Of the R68.72bn total higher education budget, R24.57bn already incorporates university subsidies and a further R14.29bn for the allocation to NSFAS.

When talking about free education, what is unclear is the extent to which this term extends. Does it include tuition fees alone, or does it also incorporate residential accommodation and food? Depending on what the ambit of free education is, the figure could lie anywhere between R25bn and R70bn per annum, or more or less between 2% and 4% of total government spending.

Read also: Matthew Lester seeks #feesmustfall solutions: the forgotten stakeholders

Immediately, this order of magnitude poses enormous problems in terms of re-prioritising government expenditure to finance free education as opposed to the cost of the forfeiture of the fee increase, which can be accommodated far more easily and which was accommodated in the fiscus for the 2016/17 fiscal year.

Free University Education Can Only Be Introduced Gradually

Essentially, the re-prioritisation of overall budgeted expenditure called forth to accommodate an instantaneous introduction of free higher education, is virtually impossible. Alternatively, it would result in a huge increase in taxes, bringing about an instantaneous recession in the economy, or alternatively, a massive increase in public debt, which would immediately ensure that the country’s credit rating is downgraded to junk status by all ratings agencies, with concomitant implications for higher inflation and interest rates and currency depreciation.

In a speech to the Western Cape Chamber of Commerce in August, Finance Minister Pravin Gordhan suggested that if only a quarter of “state capture” (effectively manipulation of pricing of contracts awarded by state-owned enterprises and government departments to benefit a few well-connected individuals) to be eliminated, this could save government R40bn.

It is therefore seductive to argue that if success in eliminating state capture were to be achieved, this could almost immediately fund free education.

The first problem with this is that one cannot rely on eliminating state capture instantaneously to generate such savings. Secondly, even if one were to succeed in doing so, this would have to be an annual event, which is clearly unsustainable.

Read also: Universities in crisis: Runs much deeper than free tuition, decolonisation. Expert analysis.

Indeed, it is likely to have been a major challenge on the Finance Minister’s part to persuade foreign investors and ratings agencies not to downgrade the country’s credit rating during the roadshows conducted with leading businessmen and trade unionists abroad to try and convince them of Treasury’s commitment to fiscal discipline in the face of this week’s demands for free education.

Potential Damage To Longer Term Economic Prospects

Aside from the damage which might be inflicted on the economy either through higher taxes or the increased chances of credit ratings downgrades in the event of free education being contemplated, the concept can cause harm to the economy in other ways, from a longer-term viewpoint.

Three demands that Mcebo Dlamini has just put forward, on behalf of students #Wits #FeesMustFall pic.twitter.com/CbYNizSNwZ

— The Daily VOX (@thedailyvox) October 4, 2016

Anything, which is given out free, is seldom a fully appreciated. The risk is that totally free education could come to be abused by students awarded the privilege without any sacrifice on their part. Outcomes from the higher education system could suffer as a consequence.

Secondly, one fears that the turmoil currently being experienced at universities could precipitate an exodus of academics and encourage more privileged students to seek education abroad rather than domestically.

In both instances, the impact could be to compel the South African economy to become more dependent on imported know-how and technology rather than imbuing it with the ability to generate knowledge and technology domestically. In turn, this renders the country even more dependent upon reliance on the rich countries to assist it, tantamount to “neo-colonialisation”.

An exodus of academics and students of high-quality runs the risk of depriving the economy of the skills transfer necessary to promote higher economic growth in the longer term.

Read also: Five ways to fix student loans – fast. Expert insights on ending university crisis.

The events of recent days also stand to encourage greater reliance on private universities domestically to develop skills in such a way as to possibly diminish the efficacy of the traditional well respected university institutions which have developed their reputation over more than a century.

The real risk is that the onset of free education might not be accompanied by the associated quality to which many of the students pushing for free education, are aspiring. Even from a shorter term point of view, to the extent that university academic years might be extended into next year, is likely to cause substantial disruption to the lives of many South African students eager to enter the job market next year.

We are talking about 185,000 potential new university entrants into the employment market, the absence of which would exacerbate the skills shortage or worse, impair efficient service delivery, especially at public institutions.