Government bets on magical thinking

South Africans have good reason to be concerned that despite almost half of the national budget being allocated to education and health, these areas have delivered diminishing returns to government and the people they are supposed to benefit.

According to the Medium-Term Budget Policy Statement, “over the next three years, spending will total R6.3 trillion, with 48% of this amount going towards social grants, education and health”.

It is a fact that spending on education and health is driven by government policies aimed at tackling poverty and attempting to reduce inequality. However, since the advent of democracy, the budget allocations for these areas have outpaced those of all other departments. As is so often the case however, it seems the ‘solution’ of throwing money at a specific problem or, in this case, two problems have not miraculously fixed them.

On education

Firstly, attempts to reform the country’s basic education system – including restructuring the syllabi, introducing new governance strategies and providing funding for education – has not produced positive outcomes in the foundational phases. The average primary school child is still unable to read and continues to perform poorly in the STEM subjects (science, technology, engineering and mathematics). 

Secondly, at a higher education level, the reorientation of institutional structures and management, as well as broader education system transformation, may have tackled the historical exclusion of black academics and students – but access to higher education remains elusive for many. Most concerning is the disconnect between the qualifications graduate will come to possess and those required by the private sector. How else can we explain the high unemployment rate of university graduates?

The World Economic Forum’s 2019 Global Competitiveness Report indicates that skills for the future workforce are negatively impacted by poor education outcomes.

With a global economy that is shaped by technological innovation, the significance of a basic education that is able to produce students who can keep up cannot be overstated.

Furthermore, the 2019 ‘Education at a Glance: Indicators Report’ produced by the Organisation for Economic Co-operation and Development (OECD) observes that South Africa spends a larger share of its wealth on the public funding of primary, secondary and post-secondary non-tertiary education than most OECD and partner countries.

Despite the high spending, tertiary education attainment remains low, especially among young South Africans aged 20-24 who are neither employed nor in education or training. South Africa has the highest percentage of youth unemployment of all OECD and partner countries – a shameful 48.6%.

On health

It is indisputable that investment in public health post-1994 was essential if the system was to cater for all South Africans. Twenty-five years later, and much like education, spending on health continues to rise with each budget allocation. However, the system is still broken – and worse, many public hospitals have budget deficits and cannot service their debts. The Gauteng Health Department’s inability to pay suppliers on time illustrates one of the failings of the public health system.

For many South Africans the public health system remains their only way to access healthcare, yet despite being free, the system’s inherent operational shortcomings, budgetary shortfalls, poor infrastructure and shortage of workforce has made using public health facilities a nightmare.

I have experienced first-hand the nightmare of having a family member admitted to a public hospital.

On that particular day we arrived at 10am and my sister was only admitted at midnight. She then had to wait for another hour before a bed could be found for her. I left that hospital at 2am. And this experience pales in comparison to those of others.

The point being made here is that poor management, inefficiencies, understaffing and/or overworked staff, and deteriorating and insufficient facilities have reduced South Africa’s public health system to one that is incapable of providing a good service to the people.

Notwithstanding the high budget allocation, it seems the health sector is broken or was never really fixed.

Additionally, the future of public healthcare is uncertain in light of the uncertainty surrounding the regulatory framework of the sector as a whole, including how the National Health Insurance (NHI) will work given the government’s proven inability to manage complex systems.

According to the mid-term budget, the revised model estimates that rolling out an NHI would require an additional R33 billion annually from 2025/26. Although these figures are not actual budget commitments, questions relating to how the plan will be funded must continue to be asked.

Good questions

In the context of the mid-term budget, and against the background of the rising government budget deficit, perhaps it is time for spending on education to be reviewed.

We cannot discount the significant transformation and ability to access education that has taken place since democracy. However, one begins to wonder whether a country that is facing stunted economic growth can sustain the annually increasing education budget that has achieved what a reformed education system should do.

There are many reasons why expectations for better education outcomes exist. An education system reform such as the one South Africa has embarked on since 1994 should bear some fruit – not just for the individual, but for the country’s labour market and, by default, the economy. A skilled workforce is most likely to increase the absorption rate of the labour force including the increasing employment and earnings that are both crucial for economic growth and a country’s competitiveness.

On health, given the small tax base South Africa has, it is unthinkable that government would lay the burden of paying for the NHI on the taxpayer.

Considering the rising government debt and skyrocketing public sector wage bill, can the country afford the NHI?

In his book Wealth of Nations, Adam Smith refers to public works that are for the benefit of society and may therefore need to be financed by contributions from the whole of society.

But for the tax-paying Jane and Joe Citizen in SA, paying for social spending has produced a government that has developed a bad habit of throwing money at education and health and wishing that such actions will fix their systems.

They – we – don’t understand why government keeps repeating this.