When figures talk loudest
The fees commission grilled Finance Minister Pravin Gordhan on Friday over a proposed R120 billion funding shortfall needed to revamp the country’s higher education system. Judge Jonathan Heher’s commission of inquiry into higher education and training wanted to know what was stopping Treasury from approving the funding to deal with higher education’s state of crisis. Higher Education Minister Blade Nzimande had told the commission in October last year about the proposal, arguing that he had submitted various bids to Treasury which were unsuccessful.
Gordhan indicated that the economy was not growing fast enough and that Treasury would not be able to fund free education unless there was a shift in government priorities.
“There will always be tensions between what is required and what is available. I think it’s good to look into the future and have the numbers,” Gordhan retorted. He added that the process of prioritising funding was a “collective government decision” and not Treasury’s alone.
Gordhan and his deputy, Mcebisi Jonas, presented their case on behalf of Treasury at the commission’s hearings at Tshwane Municipal Council Chambers in Centurion.
Among other questions, the commissioners wanted to know whether Treasury would consider paying for free education by using unclaimed government pension funds, which have been unused for more than a decade. They further asked whether Gordhan still believed that if corruption could be eradicated, money would become available for free education. They also asked Gordhan who, according to him, made “bad decisions” in government, particularly as regards funding allocations for the various pressing needs facing the state.
The commission’s questions were based on Nzimande’s prior presentation, in which he explained that he had appointed task teams who compiled comprehensive reports detailing the nature of funding required to overhaul tertiary education. But funds then never became available.
Gordhan said the ruling party indicates priorities, and education has been prioritised for funding over the years, with its share of the pie progressively growing. However, there were other government demands that Treasury was also required to consider thoroughly.
Gordhan said Treasury was open to proposals on how to fund free higher education, including the proposal of using unclaimed government pension funds if there was good evidence to support the proposal. However, he warned against the risks for the public purse should legitimate beneficiaries of unclaimed pensions suddenly surface and demand their payments. There would also be interest on paying back the debt.
He cited an example, where the department of mineral resources had announced plans to investigate mines and to check whether they were properly compensating mine workers.
Treasury further stated that in 2011 there were about 1.3 million individuals who completed a degree, and about 80 000 individuals who graduated in 2014.
Treasury estimated that if each new graduate faced a 1 percentage point increase in their marginal tax rate, the tax thus raised would be about R200 million in the first year.
If this increase applied to all graduates, it could generate only about R3 billion annually, while the 26 public universities collectively spent R59.8 billion to operate in 2015.
Gordhan said reprioritising government programmes or using funds that were unspent and then reverted to the National Revenue Fund, had consequences. Instead, the surplus still needed could be acquired by reducing government debt or reducing the estimated R15 billion weekly borrowings.
He also explained that at times a decision to roll over funds was based on contractual agreements with respective government departments which failed to spend.
Gordhan reiterated that corruption, lack of good leadership and good management remained the challenges. He cited the Auditor-General’s reports that pointed out lack of leadership in municipalities and government departments where due diligence was not exercised in spending state funds.
“We’ve got to manage what we have. Spend it better, use it better and get a better impact. The losers are the poorest of the poor. The corrupt are robbing the poor to either access water or [get] a house,” he said.
Part of Treasury’s presentation included a possible graduate tax, which has been proposed by several groups to be levied directly from all graduates. One of the commissioners asked whether all students or only those funded by government would be taxed.
Treasury’s response was that even wealthy students who were not directly funded by government through the National Student Financial Aid Scheme, benefited through subsidies paid to universities. But he added that the issue should be further discussed.
Treasury noted that such a tax was, however, still unlikely to raise the revenues needed to fund free universities.
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THE CASE FOR AND AGAINST Finance Minister Pravin Gordhan chats with his deputy, Mcebisi Jonas, at the fees commission proceedings in Centurion on Friday