Appropriation Bill [B6-2015]: Department of Higher Education and Training briefing, with Minister in attendance

Meeting report

In the absence of the Chairperson of the Committee, Mr S Mashatile (ANC), the Committee elected Mr N Gcwabaza (ANC) as Acting Chairperson. He said that the Committee had invited the Department of Higher Education and Training to brief the Committee on certain issues pertaining to the 2015 Appropriations Bill.

Department of Higher Education and Training (DHET) briefing
The DHET briefed the Committee on the 2015 Appropriation Bill. The delegation included the Minister, Mr Blade Nzimande; Mr Gwebinkundla Qonde, Director General; Mr Theuns Tredoux, Chief Financial Officer; Dr Diane Parker, Deputy Director General: University Education; Mr Zack Joubert, Chief Director; and Mr Firoz Patel, Deputy Director General: Planning and Monitoring.

The Minister opened the proceedings by telling the Committee the DHET was six years old. Its core mandate was to provide expanded and diverse post-school education to both youths and adults. It was estimated that there were 18m South Africans who were no longer at school but required some form of adult education and training. The figure of 18m was greater than all the combined students enrolled at schools, universities and technikons. Why was this being done? The simple answer was to break the pattern of belief that if you did not go to school, then that was the end of one’s life. The DHET wished to promote a learning nation. If there were those who wanted the opportunity to learn further, then they needed a place to go to.

It was important in post-school education that there were diverse opportunities for people to do a whole range of things. The needs and wants of people varied. One person could be interested in fencing, whereas someone else might want to bake. Skilled persons in various trades were also needed. A balance was needed. New institutions were therefore needed, and one such institution was the community college. Pilots on community colleges would start in 2016. There would be no entry requirements for entry into the colleges. There would be no need to have gone to school prior to enrolling.

Regarding its equitable share of the Budget, the DHET felt that there were sometimes funds which went to other departments that should be coming to the DHET, since it did the work. He asked the Committee to look into the matter of increasing the budget of the DHET. The idea of post-school education had elevated the workplace for education and training. Training that was taking place was not enough. The DHET had to consider how it was going to use existing institutions to do this. An audit of institutions was being done to gauge how institutions were being used.
 
Mr Gwebinkundla Qonde, Director General, DHET, continued with the actual briefing. He said that in 2014 the DHET had released a White Paper for Post School Education and Training (PSET) and it had created a framework that defined the DHET’s vision for PSET, its focus and priorities. The strategic plan of the DHET was informed by the vision of the National Development Plan, the 2014 – 2019 Medium Term Strategic Framework (MTSF) and the imperatives of the White Paper.

The five programmes of the DHET comprised of Administration; Human Resource Development, Planning and Monitoring Coordination; University Education; Vocational and Continuing Education and Training; and lastly, Skills Development. The budget of the DHET also included “direct charges” which were amounts reflected that constituted a direct commitment from the National Revenue Fund in terms of specific legislative requirements and were not defined as voted funds, as were the aforementioned programmes. The “direct charge“ for the DHET was the skills levy revenue collected by the South African Revenue Service (SARS) for the Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF). The direct charges had increased at an annual average rate of 9.6%, from R13.2bn in 2014/15 to R17.4bn in 2017/18, and amounted to R14.6bn in 2015/16. For the 2015 MTEF, the DHET’s budget, excluding direct charges, had increased at an annual average rate of 5.9%, from R39bn in 2014/15 to R46.3bn in 2017/18. The amount of R41.8bn for 2015/16 was an increase of R2.9bn -- a nominal increase of 7.3% on the 2014/15 allocation. The R41.8bn allocation included a budget cut for cost containment amounting to R24.5m, and additional funding of R2.2bn had come from the provincial equitable share for the Technical and Vocational Education and Training (TVET) and Adult Education and Training (AET) function shift.

The DHET’s budget was dominated by the University Programme and in 2015/16 it represented 78.5% of the budget. As a result, transfer payments also dominated the budget in terms of economic classification of expenditure. Normal DHET services represented 18.6% of the budget, when transfers were excluded. Operations of the DHET for 2015/16 consisted of only 1.2% of the budget.

Some of the key budget pressures facing the DHET were that the DHET had to acknowledge the current fiscal constraints of government. The DHET had therefore implemented the cost containment regulations from National Treasury. A key shortfall was student financial assistance through the National Student Financial Aid Scheme (NSFAS). Institutional monitoring and evaluation had been limited to the most critical areas. An immediate pressure was the management of the TVET and the AET function shift, as well as the cost implications for examination services.
 
On the performance of its entities, the DHET had 21 SETAs and five Schedule 3A public entities. It also oversaw 26 universities, the National Institute of Human and Social Sciences, 50 TVET colleges and more than 3 500 AET colleges. The DHET had the necessary policies and procedures in place for the monitoring and evaluation of its entities and institutions, but could not do so to the full extent due to limitations on its operational funding. Monitoring and evaluation was mainly by way of desktop exercises. All SETAs and Schedule 3A public entities reported to the DHET in terms of the Public Finance Management Act (PFMA).

There were a number of earmarked grants which in many ways contributed towards improving student successes. There was the Teaching Development Grant and the Research Development Grant, but there were challenges relating to the sustainability of many of the initiatives created by these grants. The Foundation Provision Grant aimed to improve the academic performance of first-time entering undergraduate students who were at risk of dropping out due to their poor educational backgrounds.
The DHET had stepped up on rigorous monitoring and evaluation processes with respect to earmarked grants t o ensure that funds were effectively utilised. In 2014, it had undertaken site visits to identify areas where cost savings could be made. It was also actively involved in leveraging partnerships. For example the European Union would be providing €20 million between 2015/16 and 2019/20 for the strengthening of teacher education at universities.

There were also significant projects in the pipeline. Two new universities were being developed in the Mpumalanga and Northern Cape Provinces. The risk associated with the projects was that the institutions might not be in a position to support increased enrolments in line with the infrastructure development. It was reiterated that NSFAS funding fell far short of what was demanded. To fully fund all qualifying NSFAS university students and meet the goals of the National Development Plan, an amount of R36bn over the 2015 MTEF was required.

A new Historically Disadvantaged Institutions (HDIs) Development Grant had been prioritised. Eight universities would be funded. Funding over the MTEF would be R410m for 2015/16, and an indicative amount of R433.5m for 2016/17.

The total 2015/16 allocation for the TVET College Funding Framework sat at R6.1bn. Sixteen new TVET campus sites had been earmarked for rural areas. Construction at three sites had already commenced.
The DHET was in the process of developing an enhanced monitoring and evaluation framework for TVET colleges that would include amongst others, financial, governance as well as curriculum oversight processes. This would include a student support plan.  Cost containment measures by the DHET were to ensure sound procurement processes by TVET Colleges.

Discussion
The Acting Chairperson stated that if the DHET was unable to respond to all questions by Members, those outstanding could be forwarded to the Committee in writing.

Dr C Madlopha (ANC) felt that the performance of the DHET had been good, given that it was spending more than 90% of its programmes’ budgets. In the previous year, the number of skilled youths had increased. StatsSA had informed the Committee that only 2% of blacks in SA were skilled. What was the challenge that DHET was facing? She asked whether the shortfall in funding for the NSFAS had been discussed by the DHET with National Treasury and other stakeholders. Was the R36bn 2015 MTEF request of the DHET for NSFAS students based on matric pass rates? If institutional monitoring and evaluation of the DHET was limited to most critical areas, how did it affect the DHET’s ability to monitor and evaluate NSFAS? She noted that there were problems with adherence to service agreements signed by Department officials. There was a need for greater accountability. Had the Minister signed a service agreement with the Director General?

Minister Nzimande, referring to StatsSA figures on professionals, said there were signs that results were becoming positive. For the first time, most students studying accounting were black. It was emphasised that gatekeeping was still a problem. The DHET had as a result introduced an occupational teams’ programme. It placed in one room representatives from a sector who identified blockages in the sector.

Ms Parker said that the amount of R36bn was only for university students. For TVET students, a total of R22bn was required. The total amount needed when adding the two amounts was R58bn. A ministerial working group had come up with the amounts. The working group had identified deserving students. She confirmed that the DHET had engaged the National Treasury on the NSFAS shortfall. The DHET had put in a bid for increases in funds, but in the last few years National Treasury had not given in to the requests.

A DHET official responded that the Minister had signed a performance agreement with the Director General.

Mr Patel referred to the relationship between the DHET and the National Treasury, and said that the DHET had had to look at cost cutting measures. The DHET welcomed the role of Parliament in appropriating funds. He said that monitoring and evaluation was a huge challenge. 98% of the DHET’s appropriated funds went towards its entities. The DHET was hamstrung on its monitoring and evaluation capacity. The DHET required a bit more flexibility on its budgets which did not necessarily mean an increase in funds. If only 1% of the 98% appropriated to entities was given to the DHET, it would assist it greatly. The 2013/14 Auditor General’s report had recognised that the DHET was grossly under-funded on monitoring and evaluation.

Ms R Nyalungu (ANC) asked what the DHET was doing about parents who faked documents in order to secure NSFAS bursaries for their children. She asked whether the entities of the DHET were not yet reporting their financial statements to the DHET, given that monthly reporting was still under consideration. Was the Department of Agriculture or the DHET responsible for agricultural colleges?

Dr Diane Parker, Deputy Director General: University Education replied on the issue of fraud committed regarding NSFAS bursaries and said that the Minister, together with the Director General, had announced a forensic investigation of the NSFAS system. It was currently in progress. The Department of Agriculture and the provinces were responsible for agricultural colleges. Talks were taking place that the DHET should be responsible for agricultural colleges. There was a task team looking into the matter.

Ms M Manana (ANC) said that the briefing had been an eye opener for the Committee. She was convinced that more funds needed to be allocated to the DHET. She agreed that cost containment measures were good. What were the ways in which the DHET could improve upon its effectiveness? She referred to page 20, bullet 2, and said that the project had been established but no funding had been forthcoming. She asked that the report on the Higher Education Aids project be forwarded to the Committee. A great risk to the DHET was that there were insufficient operational funds and manpower to monitor, plan and evaluate projects. It seemed as if the National Treasury was not assisting in this regard. What were the problems? If 16 sites were going to be under construction and thus far there were three, what was the budget for each, their completion dates, and who were the implementing agents? This type of information should be provided to the Committee.

Dr Parker noted that the DHET did mostly desktop reports on monitoring and evaluation. Greater funding was needed in order to do more detailed monitoring and evaluation. The Higher Education Aids Report would be forwarded to the Committee. She said that the new universities’ project was a 10-15 year development plan. At present, there were 17 new buildings being put up. The DHET kept contractors close to the timeframes.  

Mr Zack Joubert, Chief Director, responded on the matter of 16 sites being constructed, and pointed out that three had been refurbished and 13 new ones had been built. The budgets per site ranged from R120m to R220m, the lower end being refurbishment costs. The Annual Performance Plan of the DHET called for six sites to be completed by December 2015.

Mr Theuns Tredoux, Chief Financial Officer, said that the DHET had implemented cost containment measures, but improvements could always be done.

Mr M Figg (DA) referred to the Minister’s comment that there were 18m people who were not schooled. He said that not everybody out there wished to be a lawyer, teacher or doctor. How many people should the DHET really cater for? He did agree that the DHET was under-funded. SA in the past had teachers’ colleges and the decision was then taken by government to close them down. Was it not realised that there might be a time when teachers would be needed? He was concerned that there would be no requirements for entry into the community colleges which the DHET had in the pipeline. If there was really one school opened every week in the Eastern Cape, then the details should be provided to the Committee. Had artisan development been handed over to the SETAs? SETAs had not operated as had been intended. The Committee needed more clarity over the issue. How could things be turned around? The intention of SETAS had been good.

He had thought that the integration of the Recognition of Prior Learning (RPL) had already taken place. What had happened? Financial pressure on the DHET was the key shortfall in student financial assistance through NSFAS. He asked what action had been taken. What was the NSFAS collection rate on loans? What plans were in place to ensure that maximum amounts were collected? He asked whether the DHET had the capacity to monitor its 21 SETAS. He also referred to the development of the two new universities in the Mpumalanga and Northern Cape provinces, and asked whether they would be completed in time. The DHET identified as a risk, that institutions would not be in a position to support increased enrolments in line with infrastructure development. What was the DHET doing to mitigate the risk? On page 44, where details of the TVET college funding framework were provided, nothing had been said about goods and services except that its allocation was R95m. Was there a policy in relation to the amounts spent? He referred to the DHET’s South African Institute of Chartered Accountants (SAICA) Chief Financial Officer and Human Resource Support Project, and asked what the cost of the project was and when it would come to an end. If it was obvious that the DHET was not able to meet all its National Development Plan goals, so would the goals be adjusted?

Minister Nzimande confirmed that there were 18m adults who required access to further education. There was a huge demand. Another issue was distance learning, which had traditionally been the domain of the University of SA (UNISA). Enrolments by youngsters at UNISA were now taking up space that was traditionally provided for adults who were studying part time. He also confirmed that there were no entrance requirements for persons to register at a community college. What was the problem with having no entrance requirements? The idea was to have accessible colleges. The intention was to explore every avenue for increased access. The DHET was expanding the opportunity to gain higher certificates. For example, those students who obtained results in the 40% - 49% range and did not pass matric would be allowed to repeat the failed courses, together with additional courses. It would be similar to attending first year of university. Some of these students were quite capable and could have failed because of factors beyond their control. The weekly opening of schools in the Eastern Cape was the responsibility of the Department of Basic Education.

Dr Parker explained that community colleges were not meant for teacher training but was for post-school education. She said that NSFAS did recover loans. Part of the loans was converted into bursaries which meant that the loan amount decreased. NSFAS interest rates kicked in one year after a student completed his studies. If the student earned more than R30 000 per annum, then NSFAS could claim repayment. The collection rate per annum sat at R700m.

Mr Joubert noted that the Chief Financial Officer Project was supposed to end in June 2015 but due to issues cropping up, it looked as if it would be extended.

Mr Qonde said that Recognition of Prior Learning was there in various packages. The DHET was working on it. SETAs were key to providing spaces for learnerships. SETAs entered into service level agreements with the DHET. On supporting students, all SETAs contributed R400m per annum. SETAs also had programmes that they ran with universities and colleges, and did a great deal of work. The DHET worked in totality towards the NDP goals. Challenges were addressed as they were encountered. He pointed out that the training of artisans was not coordinated and standardised. The DHET had tried to standardise the offering of programmes across the country via the National Artisan Moderating Body.  

Mr A McLoughlin (DA) understood that of the DHET’s total funding, part was used for learners, trainers and on the process. What were the amounts for each? He asked for an explanation on what the expanded opportunities for workplace training at universities were. On page 10, what was meant by “to integrate disability into the broader policy arena”? On page 15 in the second bullet, what was meant by “normal department services”? On page 23 which spoke about performance of public entities, he assumed that from what was contained on the page that monthly reporting by entities to the DHET was not happening. Were entities left to their own devices? On page 26, he asked how student successes were measured. He referred to page 27, and asked how students reached the level of being able to study at university level if such students had poor educational backgrounds. Reference was made to pages 32 and 33, and it was asked whether there was inter-governmental action between the Department of Health and the DHET on the need for medical graduates. Why did South Africans who studied medicine in Cuba have to be trained after they returned? He referred to page 43, and asked when the block grant for historically disadvantaged institutions would come to an end. Page 47 spoke about a policy that required a student to have an 80% attendance at university. What was the consequence if this was not achieved?

Dr Parker, on the issue of students with poor educational backgrounds being at universities, said that one had to be realistic about the quality of students coming out of basic education. Students were often under-prepared and had to enrol in foundation programmes. Regarding the relationship between the Department of Health and the DHET, there were joint Health Sciences Education Committees to deal with health sciences education. These committees had existed for only the past two years. On the issue of doctors trained in Cuba returning to SA, they were required to do clinical training in SA for one to two years. It was required training that they had to do. She explained that students were monitored annually on their performances. They were tracked throughout their studies.
 
In 2007 a process had been put in place to improve the capacity of teachers. At present, sufficient teachers were produced for the system. The DHET was aware that the right teachers with competencies were needed.

Mr Joubert added that the tracking of student attendance at classes was in relation to obtaining the NSFAS financial aid. Attendance needed to be at 80%. It was an internal control measure by universities.

Mr Tredoux added that the DHET should be allowed to reprioritise its functions. 1.2% of the budget went towards operational costs. This was for normal operations, which included normal administration expenses. He said that there were legal requirements for the reporting of entities. The Public Finance Management Act (PFMA) required entities to report to the Minister on a quarterly basis. An improvement in monitoring would require monthly financial reporting to the DHET.

Mr Qonde explained that the disability requirement came in where universities and colleges had to provide infrastructure to cater for disabled persons.

Ms S Shope-Sithole (ANC) said that community colleges in SA were long overdue. She also believed in workplace training. Workplace training simplified things and she could confirm at first hand that it did work. She felt that monitoring and evaluation needed to be stricter. The DHET needed funding to do training, and funding it would get. The Money Bills Amendment Act was legislation that could provide the funding so that the DHET could train the people of SA. It did not matter whether people were trained as teachers, nurses or even bricklayers. Members had to do their bit to give the DHET more funding. The Committee could always monitor how the funds were spent. After all, it was the Committee’s duty to track funds.

Minister Nzimande stated that some of the DHET’s programmes required workplace training. He conceded that the lack of capacity of the DHET in monitoring and evaluation was an issue which needed to be addressed. The DHET would have a fully fledged branch on adult education.

The Chairperson stressed that the DHET sought to skill and educate South Africans on a large scale. This would allow people to play a role in the economy of SA. It was important to attract and capture all types of people. Take, for example, a bush mechanic -- he had the skills, but no qualifications. Giving such an individual a certificate would make the world of difference. The Committee heeded the DHET’s plea for increased funding. He dared to say that the DHET had the Committee’s support in this regard.

Committee minutes
The Committee’s minutes dated 22 April 2015, 15 May 2015 and 19 May 2015 were adopted unamended. The minutes dated 22 May 2015 were adopted as amended. .

The meeting was adjourned.