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30 Oct 2015 00:00
The fee freeze has raised questions about the ability of universities to cope with the resultant financial shortfalls and highlighted difficulties the country faces in funding higher education. (David Harrison, M&G)
To address the funding crisis in higher education, parliamentarians will test an untried law to open up the government’s budgetary processes and adjust funding allocations made by the treasury.
The move has been initiated by the Democratic Alliance, but ANC MPs are also open to using the legislation.
It has, however, reignited concerns about the extent to which parliamentarians can tinker with the nation’s finances and potentially undermine the work done by the treasury, where most of the state’s financial management expertise resides.
“Should there be a need to amend the current budget to cater for additional funds for universities, the ANC will be open to that,” said Paul Mashatile, the chairperson of Parliament’s standing committee on appropriations.
Recent student protests successfully pushed the government and tertiary institutions to agree to halt fee increases in 2016, and flagged broader frustrations over transformation and access to education.
The fee freeze has raised questions about the ability of universities to cope with the resultant financial shortfalls and has highlighted the difficulties the country faces in funding higher education.
The immediate gap created by the freeze is about R2.6-billion, according to Higher Education Minister Blade Nzimande.
In the long term, however, an additional R19.7-billion would be needed every year to ensure an “appropriately funded higher education sector”, he said.
That amount excluded the increments required by the National Student Financial Aid Scheme (NSFAS), which makes preferential loans to poor students, to cover the growth in student enrolment and inflation.
The DA has disagreed that the state does not have the resources to cover the shortfall, particularly in the short term.
The Act, passed in 2009, grants Parliament this power and is in line with the Constitution.
But the success of the move will depend on the support of the ANC as it has a parliamentary majority.
Mashatile confirmed that he had received proposals from the DA to use the Act to alter the budget, but added that the current process, including holding public hearings on the adjustments budget, had to be completed before a decision was made. It would reveal whether the funding gap should be addressed in this financial year or in the main budget to be delivered in February next year.
“But the issue of amending the budget is not a problem to us as the ANC if the process put before us clearly indicates that we need to intervene,” he said.
David Maynier, the DA’s spokesperson on finance, said the party would only make proposals to amend the adjusted budget and this would not affect Finance Minister Nhlanhla Nene’s 2016 budget.
The DA wants the immediate reallocation of R2-billion from the sale of government’s stake in Vodacom and earmarked for the new Brics (Brazil, Russia, India, China and South Africa) development bank to higher education. It also wants the additional R69.7-million granted to VIP protection services in the medium-term budget and the R67-million disbursement made for preparatory work on the nuclear build programme to be allocated to higher education.
The DA’s longer term proposal is to reduce the public sector wage bill by making cuts to what it sees as superfluous government departments.
Peter Attard Montalto, an analyst at financial services firm Nomura, said opening up the budget in this way could set a dangerous precedent and potentially undermine the treasury’s steady hand on government finances.
“We are concerned about what the ANC caucus may do, especially with tax hikes on the way as the next fiscal step, and more complaints from municipalities and provinces of employment freezes and current expenditure constraints, making patronage and tenderpreneurship more difficult, especially through next year’s local elections into the 2017 elective conference, and onwards to 2019 national elections,” he said in a research note.
The treasury’s position was fragile, he argued, and could deteriorate because of succession infighting and inner political tensions if this new route was opened by Parliament.
But, Mashatile said, the fact that Parliament had these powers was “a good thing”, and its intervention would “not disturb the system”.
Parliament should not throw out the whole budget and redo it, because it did not have the capacity, he said, but it was correct to recommend changes where there was over- or underfunding.
He added there was an acute awareness of the crisis, and what Parliament saw as a reason to intervene on this issue would “probably move in tandem” with the executive rather than be in conflict with it.
Maynier insisted that Parliament was not the treasury’s rubber stamp.
Nevertheless, the changes the DA wanted involved reprioritising expenditure in the existing budget “in a way that is budget neutral”.
Mashatile said it was not clear that the adjustments budget needed amending immediately because indications were that the 0% fee increase was more likely to affect universities in the coming financial year.
“If that’s the case, then there is really no need to amend the budget as it stands,” he said.
It was clear that the fiscal framework would have to change to accommodate higher education’s funding requirements in future years, he said, suggesting that Nene would have to factor this into February’s budget.
It remains to be seen whether the state can increase funding to higher education, given competing priorities and a wider call by students to make tertiary education free.
Attard Montalto argued that opening the budget up in this way would do little more than act as a “temporary sticking plaster” rather than addressing the much-needed larger reforms in higher education.
He also questioned whether the state should pay for universities from higher taxes, given the limited tax base, low growth and tax hikes already on the way to roll out national health insurance.
Nzimande said his department would explore all possibilities to address the problem, including greater contributions by the private sector, a wealth tax, a graduate tax, an increase in the skills levy and the introduction of a “regulatory mechanism” for fee increases.
The number of university students had increased to about one million, with African students making up 72%, he said.
Allocations to NSFAS had grown by 600% since 2004-2005 but that had not kept pace with the demands on the scheme.
According to NSFAS’s annual report, the scheme has nominal loan balances to students of R18.6-billion, but has recovered only R339-million in repayments.
Political analyst Tinyiko Maluleke said higher education was an important tool of redress.
“A lot more than NSFAS ought to be done to ensure that the talented needy are able to gain access and success in higher education,” he said. The fund was no longer adequate and was beset by allegations of mismanagement and corruption.
“There will be no redress and no fundamental transformation if the children of the poor are unable to gain access and success in higher education,” he said.
Steven Friedman, the director for the Centre for the Study of Democracy, said free tertiary education would not address the inherent inequality in the university system.
“It is not pro-poor, it is not redistributive,” he said, because students from wealthy families would also benefit from free higher education.
“In effect, you are asking manual labourers to subsidise upper-income people,” he said.
Free higher education differed from the more important concept of education for all, which was something that had to be aspired to and meant that no South African was denied a higher education simply because they couldn’t afford it.
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