Matthew Lester on #FeesMustFall and the top 1%

Matthew Lester
Matthew Lester

By Matthew Lester*

For days I have been bugged by what seems to be the almost universally accepted benchmark that R600 000 income per annum is the dividing line between rich and poor in the context of #FeesMustFall.

Just imagine how a parent with income of R600 001 pa would feel. Thresholds always result in winners and losers, and can be a bitter pill for marginal cases.

Unless you earn more than R1m you will feel the pain of children in higher education, no matter who you are! And there are only less than 100 000 South Africans who achieve that when there are over 1 million students. That’s 10 to 1. And only a fraction of those above R1m pa have children at university.

Where did the R600 000 pa come from?

Facundo Alvaredo and Anthony B Atkinson’s paper ‘COLONIAL RULE, APARTHEID AND NATURAL RESOURCES: TOP INCOMES IN SOUTH AFRICA, 1903- 2007’ is useful as their research established the top income decile (10%) of SA as follows (in 2007 terms).

Top income decile begins at R80 000 per annum – that’s the top 10%. And the top 1% is measured from R400 000.

Read also: Matthew Lester: #feesmustfall – where is the private sector?

Thus, depending on the inflation factor applied R600 000 per annum is not far off the Top 1% as estimated by Alvaredo and Atkinson in today’s terms. We can polish that peanut but it won’t make a spot of difference in the overall conclusion.

Alvaredo and Atkinson also estimated that there were 346 000 South Africans in the top 1% in 2007.

Updating these numbers per SARS stats 2015, there were 439 000 South Africans earning more than R500 000pa in the 2013 year of assessment. So again these numbers are not far off the mark.

university_Nzimande_sep16
Free education. Cartoon courtesy of Twitter @brandanrey

So, applying all this the guideline is that only 1% of adults are above the R600 000 per annum and a fraction of them will suffer a university fee increase in 2017. The remaining 9% of the top decile (about 3.5 million) will not. How this gets translated into the estimate of 30% of parents being liable for the fee increase is beyond me. Maybe at Stellenbosch or UCT, but what about the historically black universities?

What is simply depressing is the outlook for the rest of South Africa (including income deciles 1 to 9). Without the intervention of the private sector, their only hope of a university education rests with NSFAS.

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

This is all before we get to the millions of South Africans (mostly in the lower income deciles) who do not have a basic education that would ever get them near university admission.

If #feesmustfall is causing this extent of disruption in universities, what is going to happen if the schools establish a cause? I think we would be calling that a spring uprising.

Pass the Imodium, Prozac and enough booze for a delirium tremens, Maude. This is beyond a crisis, it’s a nightmare.

  • Rhodes University Professor Matthew Lester was educated at St Johns College, Wits and Rhodes universities. He is a chartered accountant who has worked at Deloitte, SARS and BDO. A member of the Davis Tax Committee investigating the structure of aspects of the RSA tax system, he is based in Grahamstown. Follow him @ProfMattLester.

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