Financing, not funding, mechanism needed

THE COMMISSION of Inquiry into Higher Education and Training (the Fees Commission) was established by President Jacob Zuma in terms of the constitution to explore the feasibility of making higher education and training fee free in South Africa.

OxfamSA supports the immediate implementation of a free, decolonised, quality education, and our submission to the Fees Commission sought to explain why we believe this is possible and to clarify some of the questions which form the basis of this inquiry.

Fee-free tertiary education is a constitutional, legislative and policy imperative in South Africa with government legally obligated to guarantee and provide it.

While the government can mobilise all stakeholders in society to contribute towards achieving its constitutional mandates, the government is the primary duty-bearer. Nowhere in the text of the constitution is there a suggestion that this responsibility may be shared with either parents, business sector, students or any other stakeholder for that matter.

We call on the Fees Commission to come up with an outcome framework that does not entrench and reinforce current inequalities that forced students to go into the streets. The framework should guarantee access for all. It must also not advance the right to further education and training at the expense of other socio-economic rights, for the individuals concerned and the general populace.

As OxfamSA, we believe the current model which tries to classify households into income groups and apply positive discriminatory practices that take the form of a means test are faulty.

This because tertiary-age students have no income or wealth of their own, and administering the test on their parents or guardians, then assuming they are willing and capable of voluntarily taking the burden off the shoulders of government, is a fallacy, an abdication of duty by the government and a violation of their rights.

Because some parents and guardians of tertiary-education-age children have to do this alone for short periods, where huge outlays are required, they can slip into vulnerability, leading to high levels on indebtedness, loss of homes, reduced savings towards retirement and a compromised standard of living for the poor.

Transfers from the wealth and incomes of working-age individuals are the most efficient and effective mechanisms through which higher education can be financed in a rights-respecting manner, and in a way that does not perpetuate existing inequalities and force households to fall into financial hardship.

For example, Whitey Basson, the chief executive of Shoprite Checkers, received a whopping R50 million bonus recently. That’s on top of his roughly R50m basic pay, bringing his income for the year to a staggering R100m. An increase of 2 percent to the top marginal tax rate for financing free tertiary education will raise about R2m from this High Networth Individual’s taxable income alone.

This will go a long way in paying for the children and dependants of numerous Shoprite Checkers shop-floor workers who are paid poverty wages and are responsible for generating the bulk of Basson’s wealth.

He is not alone, he represents quite a substantial number of High Networth Individuals who can collectively and easily pull together the resources required to finance fee-free tertiary education.

OxfamSA calls for a mechanism that departs from the faulty “user pays principle” to one that favours the “ability to pay principle” to be preferred by the Fees Commission.

Such a mechanism would make it mandatory for individuals who have an income beyond a certain threshold, like an example of Basson above, to make a contribution towards the tertiary education of fellow citizens.

Because this mechanism would cast the net wider, and capture minimal amounts from all individuals who earn an income beyond a certain threshold, the burden would be spread over a much larger number of individuals and over a longer time horizon for each individual household or graduate.

On the question of sustainability of the proposed financing model, OxfamSA argues fee-free tertiary education does not require a funding mechanism, but a financing mechanism. Governments invest in the education of citizens at various levels in anticipation of a future return on investment.

We believe the return on investment in the case of education cannot be limited to financial returns for the government. There are economy-wide benefits that accrue to the nation as a result of a highly educated workforce such as health outcomes, innovation, reduction in crime levels, economic growth, higher workforce productivity, among others. It follows therefore that as long as the economy grows, and the population grows, the burden of fee-free tertiary education will be sustainable over time.

In our submission, we advance an array of measures to fund fee-free education including redirecting the surplus UIF funds beyond reasonable reserves as directed by actuaries to the provision of fee-free tertiary education, increasing the skills development levy from 1 to 3 percent, increase Corporate Income Tax rate from the current 28 percent of profits to 30 percent, and for the state to deal decisively with corruption in the public service, to stem the tide of wasteful and fruitless expenditure across the board.

The Oxfam SA submission is made against the backdrop of its “Even it Up” campaign that aims to end extreme inequality that threatens to undo much of the progress made over the past 20 years in tackling poverty as a direct consequence of the wrong political and economic choices.

We are convinced that together, we can end extreme inequality, by evening things up by ensuring that governments across the world make the right economic and political decisions such as changing the rules on tax to make sure the richest pay their fair share and demand more spending on public health and education to give poor people a fighting chance.

Government legally obligated to guarantee and provide fee-free tertiary education

Oxfam South Africa made its submission to the Commission of Inquiry into Higher Education and Training last week