DUMA GQUBULE: Mboweni resorts to austerity denialism in the face of overwhelming evidence

Three times during his February 24 budget speech finance minister Tito Mboweni said: “This is not an austerity budget.” It is unclear why he would resort to austerity denialism by repeating such an obvious lie.

Each of the 250 pages in the Treasury’s Budget Review talks about fiscal consolidation and austerity. On page 35 it says: “Over the medium-term expenditure framework [MTEF] period, consolidated noninterest spending will contract at an annual real average rate of 5.2%.” If one adds expected population growth, real per capita noninterest spending will decline 6.6% a year over the next three years.

On March 10 South Africans witnessed a watershed moment in postapartheid history when Mthokozisi Ntumba, a 35-year old father of four, became the first person to die during protests against the government’s unconstitutional and irrational austerity policies. Police shot Ntumba, an innocent bystander who was coming out of a clinic in Braamfontein, during a protest by Wits University students who were demanding free tertiary education and for the government to write off their historical debt of R14bn.

Universities SA CEO Ahmed Bawa told radio 702 that the historic debt of current students who need to register this year is between R2bn and R3bn. This is equivalent to less than 0.2% of government spending. The constitution says: “Everyone has a right to further education, which the state, through reasonable measures, must make progressively available and accessible.” But the drafters of the budget did not care about the constitution.

The Budget Review said the cabinet had approved reductions to the department of higher education & training’s baseline budget of R24.6bn over the next three years. The cuts included R6.8bn from the National Student Financial Aid Scheme (NSFAS), R5bn from university subsidies and R947m from Technical Vocational Education and Training (TVET) infrastructure grants. TVET budgets would decline about 10% a year after taking inflation into account during the MTEF period.

The Budget Review said: “The reductions to university subsidies will likely lead to a decrease in the number of first-year enrolments at universities. Though a decrease in first-year enrolments in universities and  Technical Vocational Education & Training colleges will begin to offset the reductions to the National Students Financial Aid Scheme, they will result in fewer students who enter high education being able to access support in 2021.

“The sector may also need to consider revising its policy positions on supporting poor and working-class students in higher education and training, including  maximum allowances for accommodation, transport and food  and halting funding for second qualifications.”

The Treasury thought it would get away with the draconian cuts. But it met its match when chaos erupted on campuses throughout the country after NSFAS said it could not fund first-year students. Within days the cabinet reversed the decision to defund NSFAS. However, the department of higher education, which has a budget of about R100bn for tertiary education, will still have to cut R24.6bn. It will have to make further cuts to university and TVET subsidies. The sector will have to retrench staff to reduce compensation budgets, which are more than R10bn.

Mindless austerity will collapse the higher-education sector. These attempts to reduce tertiary enrolment and reintroduce student loans are retrogressive measures, as defined in international law, that reduce progress made towards the full realisation of socioeconomic rights, including the right to education.

Austerity is an irrational and self-defeating policy because it reduces GDP, the denominator or bottom part of a country’s debt ratio. The Treasury’s concept of progrowth fiscal consolidation is an oxymoron. Unlike a household or a company, a country cannot cut its way towards fiscal sustainability. Austerity will result in a higher debt to GDP ratio. But at the end of the MTEF period the Treasury will argue that there has been no austerity because the debt ratio has risen.

• Gqubule is founding director at the Centre for Economic Development and Transformation.