EDUCATION: Finding the funds for fees
Gigaba’s self-congratulatory move to fund free higher education for students from poor families comes with sacrifices
Free higher education can best be described as something of a scramble for SA’s government.
Some had expected that free education would be a dream deferred, but President Cyril Ramaphosa, at his inaugural state of the nation address, assured the nation that this promise would be delivered on.
Since the 2015 #FeesMustFall protests, free higher education has been a hot-button issue. With marches, and disruptions to lectures and exams, the issue has come to the fore at the end of every year.
Then president Jacob Zuma’s unexpected announcement in December that government will subsidise free higher education by the 2018 academic year for poor and working-class students — referring to students from households with a combined annual income of up to R350,000 — threw a spanner in the works. Announced just ahead of the ANC elective conference, it was a political move. Few expected it, and national treasury had no plans to fund it.
So where will the money come from?
In a press briefing just before the budget speech was delivered, finance minister Malusi Gigaba and his deputy, Sfiso Buthelezi, adopted martyr-like personas. In spite of the budget’s other shortcomings, fee-free higher education would be their saving grace.
"The children of the poor and the poor are pretty much taken care of. This will break the cycle of poverty and of unemployment," said a self-congratulatory Gigaba.
Higher education & training received the largest reallocation of resources in the 2018 budget. Gigaba announced that higher education would get additional funding of R57bn over the medium term to fund free education. It’s the fastest-growing spending category, with average growth of 13.7%/year.
This year, free higher education will receive R12.4bn, which will increase to R20.3bn next year and R24.3bn the year after. The money will go to funding fees, transport and food.
"Fee-free higher education is a current transfer to households and every year ramps up with the influx of students. It’s about plugging holes in the financial aid system," says Ian Stuart, acting head of the budget office.
The National Student Financial Aid Scheme makes it possible for more people to attend university by making loans available, but poor students receive less than their fair share, he says.
Still, free higher education has seemed an impossible task for treasury to achieve.
Gigaba’s medium-term budget policy statement delivered in October painted a bleak picture of SA’s economy.
The consolidated debt-to-GDP ratio widened to 4.3% from a target of 3.1%, while the projected tax shortfall for 2017 was estimated at R50.8bn.
Adding to the strained outlook, the Heher commission, tasked with looking into the feasibility of free higher education, found that the state could not afford to provide free education for all students, while the Davis tax committee said free university education was neither affordable nor desirable.
The recent presidential shake-up put a huge question mark over the issue, but Ramaphosa stayed true to Zuma’s word.
"In addition to promoting social justice, an investment of this scale in higher education is expected to contribute to greater economic growth, reduce poverty, reduce inequality, enhance earnings and increase the competitiveness of our economy," Ramaphosa said in his state of the nation address last week.
But this promise, coupled with SA’s growing debt levels and alarming budget deficit, meant an increase in the Vat rate was inevitable, says Citadel chief economist and advisory partner Maarten Ackerman.
Worryingly, an increase in Vat is expected to hit poorer households hardest.
"You can’t think about funding this without changing one of the big tax instruments," says Ismail Momoniat, deputy director-general at treasury.
Unfortunately, it is a sacrifice that will come with other costs. Over the next three years, government expenditure will be cut by R85bn. Of this, R53bn will be cut at a national level, including from programmes and transfers to public entities; infrastructure grants at local and national level will be slashed by R28bn.
But treasury’s leaders seem glib about the effect this will have.
As Buthelezi put it: "Don’t look at having to pay extra Vat or at our cost-cutting measures. Look at the black child who will finally have an education.
"We did this for the children of 1976."