Funding departments instead of people cheats everyone

The best that government can do

State spending, as a proportion of total economic income, is 34.2%. If anyone has control over the economy and over the services that people receive it is the state. So, in the two most important sectors of state spending – health and education - how has the public sector performed?

R 62.6 billion was budgeted for healthcare in 2007. The state has 100,147 hospital beds compared to the private sector's 27,443. The Department of Health reports 101 million patient contacts in 2007, which implies around 25 patients per professional per day. No wonder doctors and nurses are exhausted and public health infrastructure is imploding under the strain, and 31% of posts are said to be vacant.

The state has spent R 105.5 billion on education for 12 million learners in 2007; around R 8,800 per learner. And this is before the contributions required from parents to complement the subsidy. According to PSSA (Private Schools South Africa) the majority of the 2,000 private schools charge less than R 8,000 per year.

In return for our tax, only 15.1% of matriculants at public schools gained a university pass in 2007, in comparison to the 78.4% at private schools. State expenditure on education is not only more expensive than that of the private sector, but is also of a significantly lower quality. The state would achieve far more if it simply offered appropriate education vouchers to parents and allowed them to cash them in at their favourite private schools.

Government services have increased money supply without increasing economic value. Government has promised a service – quality education and health – and failed to deliver on its promise. The resulting skills shortage and illness leads to reduced economic growth, limited production capacity, and product shortages.

This mismatch between outcomes and promises is inflationary. The less the state delivers, the more we rely on the private sector to make up the difference. We pay taxes, and then we pay again to privately educate our kids, and purchase medical aid.

If there is anyone we should be angry with it is the state.

Despite this, the tone from government and unions has been unequivocal. Everyone from the minister of health, "The 2008 private hospital tariffs do not reflect a spirit of working towards a national health system that provides reasonable and affordable access to all South Africans." To union representatives who complain that hospitals profit from people's illness.

Firstly, the promises of the state are not the responsibility of private businesses. One does not whine that clothing retailers profit from our nakedness, so why the noise about hospitals charging people to get well?

Secondly, it is quite clear that, while state services may appear free, they are in reality overpriced rubbish. It is time to recognise that the state is quite incapable of running any services and that a change is necessary.

There are two ways in which government can deliver on its "developmental state" objectives: it can choose to pay for schools and hospitals, or it can support the people themselves.

Which is more important?

The government has chosen to spend its money on building and employees; services which don't come close to the ability of those same assets in private hands.

It is time for the government to place all schools and health services in private hands and then offer direct education vouchers to parents, and health insurance for all.

Or next year we will be complaining once again that state hospitals don't deliver, and public education creates a nation of unemployable illiterates.

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