From housing to education, this is what SAA's restructuring could buy for South Africans

18 June 2020
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On 16 June, the business rescue practitioners assigned to South African Airways (SAA) finally released their proposed business rescue plan for the ruined airline. According to the plan, the restructuring of SAA will amount to a total cost of R26.7 billion, of which R16.4 billion was already appropriated in the February budget. In other words, if the business rescue plan is adopted, government would have to allocate an extra R10.3 billion to SAA, R6.1 billion of which is to be used to pay off debts which the taxpayer should never have been asked to guarantee in the first place. It necessitates that we look at what else government could rather spend it on, assuming taxpayers weren't asked to back SAA's liabilities. For starters, let’s look at housing.

In September 2018, EFF MP Ntokozo Hlonyana asked the Minister of Human Settlements what the average cost of an RDP house is for each province. The costs between provinces differ substantially (R92 600 in Limpopo to R172 853 in KZN). Averaging the different construction costs in each province gives a value of R134 982, add to that the cost of land and the provision of water and sanitation, the number is bumped up to R148 655. Adjusting for inflation, this amounts to a total cost of R157 801 to construct an RDP house on average.

Taking the extra R10.3 billion and dividing it by the average cost of an RDP house, equals 65 272. That is, 65 272 houses can be built for the less fortunate.

Let's look at healthcare and what could be done with the extra R10.3 billion.

In March 2018, the Western Cape government announced the completion of the new "green" West Hillside Clinic in Beaufort West at a cost of R24.5 million. Adjusting for inflation, this amounts to R26 668 550. Using this cost price, government could fund the construction of about 386 similar clinics.

Another aspect of healthcare is the shortage of doctors in South Africa. At the University of Pretoria (UP), the tuition fees of a 6-year medical degree is roughly R387 000. Instead of squandering the money on SAA, government could cover the tuition fees of about 26 615 medical students.

And then there's education. The approximate tuition fees of a 4-year education degree is approximately R130 000 (costs vary depending on the type of BEd degree), also at the University of Pretoria. The tuition fees of about 79 231 education students could be covered by R10.3 billion.

Another issue at the heart of South African politics is property rights. The Free Market Foundation's Khaya Lam project is responsible for helping those less fortunate to obtain the title deeds to property they already own but have no proof of said ownership. The costs of obtaining a title deed varies by municipal jurisdiction, but it hovers around R2 500, an extreme amount for someone whose livelihood itself hovers around the poverty line. Instead of SAA, 4.12 million South Africans could be helped to obtain a title deed to their property, which would enable them to pursue a plethora of goals that require proof of ownership.

But let us be realistic and assume that the R10.3 billion would not have been spent on one thing only. Let's say government split the money and allocated it equally to housing, clinics, medical degrees, title deeds, and education degrees.

According to such an allocation, government could provide South Africans with the following:
- 13 054 RDP houses
- 77 green community clinics
- 5 323 medical degrees
- 15 846 education degrees
- 824 000 title deeds

It is time for civil society to put its foot down and ask government the hard question: would citizens benefit more from direct investments in human capital, or from a symbol of patriotism flying 10 000 meters up in the air, which most of them will never use and that is only kept aloft by milking citizens dry?

SAA has not shown a positive return on investment for years. Throwing more money at it benefits substantially fewer people than what would be the case if government opted to use the R10.3 billion in a fruitful manner.

The abovementioned things would provide substantive, tangible benefits to hard-working, tax-paying South Africans. If government chooses to ignore the possibility of delivering these benefits, it will effectively be dumping the opportunity costs of not pursuing such options on citizens, especially the poor, and the direct costs of plunging more billions into the yawning SAA abyss, yet again, will have to be borne by all taxpayers.

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