VAT hike may solve fees headache

Published Nov 8, 2015

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Johannesburg - As the #FeesMustFall protests receded from the streets and sight of public power, political parties reflected this week on the implications for the fiscus – staking out their claims on the students’ affections in the process.

Following the tabling of Finance Minister Nhlanhla Nene’s medium-term budget policy statement (MTBPS) last month, the Money Bills Amendment Procedure and Related Matters Act, empowers MPs to make changes to the allocations for government programmes.

It has never been done, but in theory MPs could agree that the university crisis warrants the shifting of funds from areas they feel are of lesser importance, or where there has been underspending or wastefulness, to provide more funds for university subsidies and student support.

This is precisely what the DA called for, outlining a number of expenditure items it felt could be sacrificed in favour of higher education without any extra cost to the state.

Among these were R720 million towards the costs of foreign missions, a R2bn contribution towards the establishment of the Brics bank and a number of lesser line items, including R7.48m for increased support for political parties, R26.5m for office furniture and “critical security equipment” for members of VIP protection and R1.5m for an “operational subsidy” for the moral regeneration movement, among others.

It remains to be seen whether any of these suggestions will be taken on board, but the ruling ANC didn’t share the DA’s enthusiasm for fiddling with the current budget.

Nor, according to both the Treasury and Higher Education Minister Blade Nzimande during a special hearing on the MTBPS, was there any need for this.

The minister said the shortfall in the current year arising from the scrapping of university fee increases – the costs universities face between the start of the new calendar year and April, when they will receive their, presumably increased, government subsidies – would be covered by borrowing from R2bn allocated to historically disadvantaged universities.

This the DA described as “taking from the poor to help the poor”.

The EFF accused Nzimande of having ignored the warning signs that student anger was rising.

MP Sipho Mbatha said, for example, the department was absent during protests at Tshwane University of Technology three years ago – a claim which was denied.

The EFF also claimed during question time in the National Assembly that the ANC’s conference resolutions on free university education were an “empty promise” which it had done nothing to fulfil.

Deputy President Cyril Ramaphosa endured two question sessions – one in the National Council of Provinces and one in the National Assembly – where he was challenged on the issue.

He tried to steer clear of making it a party political matter, saying the students hadn’t given their call a party label and nor should MPs.

It was an issue for the whole society, he insisted.

That much was made clear by a presentation from Nzimande’s department, spelling out the full extent of the need.

While the immediate focus was on universities, Nzimande said, the whole post-school education system was starved for funds.

“We forget that we have 1 million university students, but we have more than 3 million students sitting at home doing nothing who have finished school.”

While policy proposals were for a three-to-one ratio of Technical Vocational Education and Training (TVET) college to university students, there were currently just 700 000 TVET students compared to 1 million university students.

Explaining the need to turn this around, Nzimande said, for example, the economy required three engineering technicians and seven artisans for every qualified engineer.

“An engineer on his or her own is useless, as is the case in many other sectors,” Nzimande said.

Breaking down the numbers, the shortfall flowing from the scrapping of fee increases was R2.33bn, of which the government portion would amount to R1.94bn, which President Jacob Zuma had given the assurance would be found.

That, however, is small potatoes compared to what would be required to fund all students who qualify – according to their matric results and the income means test.

This, according to head of the Treasury’s budget office Michael Sacks, was equal to at least a 2 percent increase in VAT, for example.

There would be no easy choices, he warned MPs. “It’s easy to say we must allocate more to higher education, but then if you leave it to Treasury to decide where the money comes from, you are not taking your full responsibility.”

He even suggested the students themselves should analyse the budget – as students in Chile had done following a similar ‘free fees’ demand – and indicate where to find the money.

- The Sunday Independent

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