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

The ongoing University crisis makes South Africa unsustainable. And that’s most likely what keeps the protestors going, the power they seem to wield. These ‘hooligans’ have got away with vandalism, violence, intimidation etc and so the ‘madness continues’ with no real solution in sight – destroying the very thing they seek.

Tax guru Matthew Lester looks at the private sector contribution to universities. He makes a few guesses but works the value out to around R500m annually, compared against the government contribution of R41bn.

And while Lester seeks a better partnership per se, and asks where the private sector is while the fires burn, I’m sure many will argue otherwise. – Stuart Lowman

By Matthew Lester*

South Africa’s students in higher education number about one million out the total population of 56 million. And the vast majority of students now accept that #feesmustfall-for-all is not a sustainable solution. Not without negatively impacting the lives of the other 55 million, that is.

#feesmustfall has not already achieved a great deal.

South Africa’s Universities, particularly historically black universities, have been under-funded for decades. And the situation has become progressively worse since 1994. Today only the wealthiest South African families (perhaps 100 000) can afford higher education without financial discomfort. For many this escalates to a massive family sacrifice.

#feesmustfall has exposed all this.

Read also: What makes a world class university? Money is not enough – Prof Tim Crowe

It is simply not true that National Treasury has done nothing. In the 2015/16 Medium Term Budget Framework Speech, an additional R16bn was allocated to Higher education over the MTBF period. That’s about R5bn per annum and most of it will be allocated to NSFAS. That should assist about 300 000 of SA’s poorest students by 2017.

Hopefully, despite the grim predictions for the MTBF speech on 26 September 2016, further funding will arrive.

Cartoon courtesy of Twitter @ricoschacherl

Minister of Higher Education, Blade Nzimande has passed the buck on this year’s fee increases straight back to the universities. Most have now indicated that there will be a zero fee increase where a family’s income is below R600 000 per annum. So at least the wealthy student parents won’t get the equivalent of a tax reduction.( As Nzimande achieved last year.)

Rhodes University tried to resume campus life on Wednesday. It was proceeded by addresses from the Vice Chancellor and the NEHAWU and NTESU unions. All were adamant of the dire need to get back to work to avoid the disastrous collateral damage of further postponement.

Perhaps some students forget that they are not the only stakeholders in a university. Rhodes University is by far the biggest employer in Grahamstown. The community faces ruin if Rhodes University closes. No, I am not talking about professors and the lawyers in High Street. Rhodes What about the faithful support staff who have served the university for decades? They now face an uncertain future.

The management and support staff look haggard. Despite their best intentions and considerable effort and concessions to avoid closure there remains a stubborn and solid minority who want the university closed until further notice. Whatever the collateral damage to other stakeholders may be.

So we pushed on. And the minority invaded the lecture theatres. By lunchtime stun grenades and rubber bullets were fired. And a handful of students were arrested. Thank God nobody was killed. But four are in hospital.

Last week Nzimande urged the majority of students to stand up against the minority. Thankfully nobody listened. There would be bloodshed.

Rhodes University will try again today. It is a daunting prospect.

Students cannot be expected to learn and write examinations in this tense environment. Yet there are many that want to finish their degrees and get a job and a life. This includes the repayment of their student debt. And, for many, a lifetime commitment of supporting their extended families.

Meanwhile the private sector sticks its head in the sand and withdraws further and further away from the problem. After all there are rafts of job seekers and the human resources departments can just take their pick over the internet.

National Treasury’s budget review reflects that the cost of section 18A tax deductible donations was a mere R287m the 2014 fiscal year.

Applying a tax rate of 30% that means that total tax deductible donations were less than R1bn. Unfortunately the breakdown between primary, secondary and tertiary education is not known. But one can assume that a healthy slice of the pie went to private and semi-private schools.

So let’s make an optimistic guess and say that South Africa’s universities received R500m from all donors. While government contributes R41bn. That’s hardly what we call a partnership. Is it?

In board meetings we bang off about King III, good corporate citizenship, sustainability and integrated thinking.

Come on! Unless we get this crisis fixed South Africa is not sustainable. It’s that simple. And it is high time the private sector came to the party.

  • 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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