We can fund the student fees shortfall by re-prioritising spending

This is the press statement released by the DA Shadow Minister of Finance, David Maynier MP, on the DA’s proposals to amend the adjusted budget to fund the estimated R2.7 billion shortfall in the Department of Higher Education and Training (DHET). He was joined by DA Shadow Minister of Higher Education and Training, Prof Belinda Bozzoli MP, and DA Member on the Standing Committee on Appropriations, Dr Malcolm Figg MP.

The Minister of Higher Education and Training, Dr Blade Nzimande, has no idea how to fund the estimated R2.7 billion shortfall arising from the zero-percent fees increase, announced by President Jacob Zuma, beyond raising taxes and squeezing the private sector.

We have to act now because there is a clear need for funding in the short term, with many universities being unable to meet financial commitments, particularly in the first three months of 2016, which is the beginning of the academic year for universities in South Africa. 

Dr Diane Parker, Acting Deputy Director General: University Education at the Department of Higher Education and Training, has made it clear that poorer universities have no reserves to exploit.  

Without immediate financial relief, universities without significant reserves are likely to collapse with insufficient funds to pay their expenses in the first three months of 2016.

The estimated shortfall, arising from the zero-percent increase in student fees, is R2.7 billion, including a shortfall of R700 million in 2015/16 and a further shortfall of R2 billion in 2016/17.

The fact is that the R2.7 billion shortfall can be funded by re-prioritising expenditure within the existing budget, which will require amendments to the mini-budget in terms of the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2000).

1. Shifting R720 million to the Department of Higher Education and Training to fund the fees shortfall in 2015/16

The first step would be to amend the Adjustments Appropriation Bill 2015 in order to shift R720 million to the Department of Higher Education and Training in the 2015/16 financial year.

We propose shifting R720 million from the Department of International Relations and Cooperation, allocated for the “impact of the depreciation of the Rand on foreign currency denominated expenditure” for foreign missions, to the Department of Higher Education and Training.

The National Treasury noted in the 2015 Budget Review that: 

“Government spends over R3.5 billion a year to maintain foreign missions. Rapid spending growth is largely attributable to higher property costs and rising staff costs. While the costs of locally recruited staff are too high, cost of living allowances for South African staff are more generous than those offered by other countries and international organisations – between 20 and 50 per cent higher than the United Nations, for example. The location of some of the most expensive missions is not aligned with trade relations or other economic interests.” 

The Department of International Relations and Cooperation will in our view be able to absorb the shortfall by cutting spending on foreign missions and/or closing foreign missions, which will have little or no impact on the international relations and trade relations of South Africa.

The R720 million would be shifted to the Department of Higher Education and Training to be transferred to universities in order to fund the shortfall at the beginning of the 2016 academic year.

2. Shifting R2 billion to the Department of Higher Education and Training to fund the fees shortfall in 2016/17

The second step would be to amend the National Development Bank Special Appropriations Bill 2015 in order to transfer the R2 billion from the sale of government’s stake in Vodacom, currently allocated to the Brics Bank, to the Department of Higher Education and Training, to be ring-fenced and rolled over to fund the shortfall in the 2016/17 financial year.

3. Shifting R183.9 million to the Department of Higher Education and Training to expand access to higher education in 2015/16

The third step would be to amend the Adjustments Appropriation Bill 2015 in order to shift R183.9 million in wasteful expenditure to the Department of Higher Education and Training including inter alia the following: 

- R7.48 million allocated for “increased financial support to political parties”;

- R1.25 million allocated for “vehicles for the Minister and Deputy Minister”;

- R540 000 allocated for “purchase of bulls for reproductive purposes”;

- R11.14 million allocated for “guarding services rendered to defence headquarters”;

- R200 000 allocated for “annual national beef cattle improvement awards”;

- R26.5 million allocated for “office furniture and critical security equipment for members of VIP protection”;

- R7.5 million allocated for “establishment of a South African Network for Women in Transport Summit”;

- R1.5 million allocated for “operational subsidy to the Moral Regeneration Movement”; and

- R245 000 allocated for the “refurbishment of ministers’ offices”.  

This R183.9 million would be transferred to the Department of Higher Education to expand access to higher education by funding the tuition of approximately 4 500 poor students, via the National Student Financial Aid Scheme (NSFAS).

All the proposed amendments are included in the schedule to amend the Adjustments Appropriation Bill 2015.

The proposal to fund the R2.7 billion shortfall in higher education is budget-neutral and would have no impact on the fiscal framework. 

The bottom line is that money for higher education can be found by re-prioritising expenditure within the existing budget. 

The higher education system has suffered from chronic underfunding for too long, resulting in years of exorbitant student fee increases, and ultimately the financial exclusion of many poor students.

We have to act now to provide universities and students with the funds they desperately need.

Issued by David Maynier, DA Shadow Minister of Finance, 2 November 2015