President Jacob Zuma File photo: ANA
JOHANNESBURG - President Jacob Zuma would have to “rob Peter to pay Paul” if he wanted to go ahead with his ambitious plan to provide free education, a move expected to bleed the economy by R40 billion annually.

Trade unions have called for the fees commission report, on which Zuma based his decision, to be tabled at the National Economic Development and Labour Council (Nedlac), to allow the business and labour sectors the opportunity to influence where the money should come from.

They were non-committal, however, when quizzed about the prospects of cutting the wage bill and increasing tax.

Former statistician-general Dr Pali Lehohla has weighed in on the matter, saying the radical question to be asked was where the R40bn would come from.

“I certainly appreciate the question about where the R40bn will come from - the question is what are the upstream processes that will allow solutions and the downstream strategies that will lessen the impact?”

Lehohla said the R40bn needed was no longer relevant when considering the dire consequences of not having driven free tertiary education.

“A different question to be asked is this: can South Africa afford not to provide free tertiary education given the demographic disaster waiting to happen when that free education is not provided?” said Lehohla.

Federation of Unions of SA general secretary Dennis George lambasted Zuma for being “totally crazy”, saying they opposed free education for students. "Even if education becomes free, somebody is paying for it. Where is Zuma going to get the money? Is he going to increase tax? We are already overtaxed.”

However, his counterparts in Cosatu, Nactu and Saftu said that they supported free education, but that the issue should be handled better, as the country’s economy was in a precarious position.

Public sector trade unions are already at loggerheads with Finance Minister Malusi Gigaba, sticking to their wage demands of between 10 and 12percent increases, arguing that the Treasury couldn't plead poverty while wasteful expenditure was on the rise. This as Gigaba has announced a revenue under collection of more than R50bn, which is expected to balloon over the medium term.

SA Federation of Trade Unions acting spokesperson Patrick Craven said they supported free education.

“But given the state of our economy, the only way the president could find money is by robbing Peter to pay Paul. And that will involve tax increases,” he said.

Craven called on the government to recover the billions of rand being taken out of the country by business to tax havens, “in some cases illegally”.

Cosatu spokesperson Sizwe Pamla said they also supported free education, but cautioned that it should be managed with the economy in mind.

“We can't impose it in an unsustainable way. Our view is that let's take this fees commission report to Nedlac. If you are going to have a drastic education policy you have to make sure there is buy-in from the business and labour communities,” said Pamla.

National Council of Trade Unions general secretary Narius Moloto said: “The R40bn is nothing compared to what we are buying with it. We are buying a future for our kids.”

Economist Dawie Roodt said there were only three options available to Zuma to raise the R40bn. “It’s either we spend less on something else; get more money through tax increases; or borrow the money, which is the easiest. These are the three available sources and nothing else,” he said.

However, Roodt said people would get angry if the government cut on spending on other things, such as social grants and the exorbitant public sector wage bill.

“Can we get more taxes? Yes, but some people are bound to get angry. Can we borrow the money? Yes, but the interest will go up.”

Roodt said the only way the government could get more money from taxes was through value added tax (VAT).

-BUSINESS REPORT