It didn’t take long for the cabinet to throw the fiscal framework out of the window. Two weeks after the budget, with austerity beginning to bite, the government announced that it would reinstate the budget cuts made to the National Student Financial Aid Scheme (NSFAS). This means finding at least another R18bn over the next three years: R6bn or so for this year to make up the shortfall, plus the carry-through for the next two years, at least, as students complete their degrees.
There is no doubt that tertiary education, especially university education, is the best ticket out of poverty. A Stellenbosch University research paper by Gideon du Rand and others, published in 2011, found that for the black population the marginal return to education (as measured in earnings) increases with each additional year of schooling completed. Completing the last year of primary school increases wage earnings by about 10% on average, while completing the last year of an undergraduate degree raises earnings by an average 45%.
SA was on track to have an institutionalised payback arrangement for university education for precisely this reason. The Heher Commission, which investigated the feasibility of free higher education, in 2017 recommended a contingent loan system in which students — no matter their economic status — could access loans from commercial banks via the NSFAS, which would be repaid once they started earning.
We all know what happened to those recommendations: in a blatantly opportunist and populist manoeuvre then president Jacob Zuma ditched them by unilaterally announcing free higher education for the poor at the ANC’s national congress.
Students of families earning less than R350,000 now qualify for free education as well as free living costs, provided they have been accepted by a university. There is also funding for other students whose families earn up to a ceiling of R650,000, as well as other subsidies and payments.
This arrangement is obviously hugely expensive. The government now spends R115bn a year on higher education. But it spends only R1bn a year on early childhood development. And since the introduction of free higher education, the basic education budget has been haemorrhaging, with spending declining in real terms while student enrolment increases.
This is not a feasible or fair arrangement. The government said last week it would dig out the Heher report and look at its implementation. But while the government considers the report there are several immediate problems to solve.
The first is the issue that sparked the protests in the first place, and continues to drive them: student debt and unpaid fees. This is an insoluble problem. The universities estimate that student debt stands at R10bn. The government says it will assist universities to make acknowledgment-of-debt arrangements with final year students, but the rest are the universities’ problem.
The second is the funding of first-year students. While higher education minister Blade Nzimande last week thanked the cabinet and President Cyril Ramaphosa for the funding support required, the truth is that money exists only in theory right now and it has yet to be found. While Nzimande’s statement said at first money would be reprioritised from the budget of higher education, the problem is 80% of that budget is allocated to grants and subsidies paid to institutions. The rest of that budget has already been “reprioritised” and in 2021 it was severely cut.
What this means is that a large claim — as much as R18bn — has already been made on the medium-term budget adjustment in October. As occurred with the R10.5bn SAA got last October, budgets of other departments will now be sliced and diced and shaved to the bone as political decisions that were not properly processed in the first place are brought to bear.
This makes the budget a mixture of austerity and politics: whoever is powerful enough and has an ANC resolution on their side can trump the fiscal framework of the day. SAA, by the way, will also be back for more. In the budget documentation there was a reference to the need for another R3.5bn, which Mboweni said he had received but was still considering. In an interesting coincidence, after getting zilch in the budget SAA postponed its return to the skies until October, when the department of public enterprises will have another bite at the budget cherry.
It is no surprise, then, that ratings agencies have looked upon Mboweni’s budget with scepticism. The politicians are already picking away at the seams.
• Paton is editor at large.
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