The Committee continued to hear submissions on the 2016 Appropriations Bill. The Human Sciences Research Council (HSRC) commented on higher education, noting that while formal access had been broadened sufficiently, the real problem lay with throughput of black students, who, despite having access, were unable to complete their studies for a variety of reasons. Tuition fees had risen because of drops in state subsidies and third stream funding. Partnerships should be encouraged to build community benefit. Commenting on health issues, the HSRC commented that the balance was wrong since the greater portion of funding was going to compensation of employees. Non-communicable diseases needed more focus and more funding and investment was needed for the National Health insurance, particularly to develop health professionals to staff the “ideal clinics”. New proposals were formulated for HIV and Aids and TB anti-retrovirals, which could double the numbers of people on ARVs, as it was considered better to address treatment earlier rather than later. There was some question whether the additional R1 billion would be adequate. TB rates of infection had declined and cure rates in general had increased to 75%, but there were more multi-drug resistant cases and the fatality rate was still too high at 8.4%. The third focus area for the HSRC was with governance and population satisfaction and the statistics and perceptions of different groupings were outlined in relation to social grants, electricity supply, education, water and sanitation, refuse and health care. Consistent concerns since 2003 had included job creation, crime reduction and low cost housing. HSRC then commented on the low rate of growth in the economy, although at least it was not contracting. Slow growth meant a less reliable inflow of tax revenue and this would constrain government's spending power. High levels of government debt, now at 45% of GDP, were of great concern, with a deficit currently at 4.2% of GDP, and a shift in approach from counter-cyclical spending to a rise in specific categories of taxes and slowing of areas of expenditure. The HSRC also commented on human settlement infrastructure spending, and how spatial patterns in the past resulted in additional taxation of the poor who had to travel long distances to work. Consideration was being given to whether centralisation of human settlements decision making or localised flexibility would lead to better efficiency, whilst private investments in major infrastructure should be encouraged
Members asked whether it would be wise to try to limit enrolment at universities, given the increased costs with increased student numbers, but the HSRC thought that massification of the sector was appropriate. They questioned the rationale for removing the criterion around the CD 4 count before providing ARVs and the new approach was explained. They asked why different sectors of the population had different perceptions and satisfaction levels.
The Department of Higher Education and Training (DHET) described its six programmes, with their purpose and specifics on the funding. The funding pressures faced by the Department in order to satisfy student movements, the National Development Plan and strategic planning documents were outlined. The DHET would need around R60 billion to address all issues. A fairly extensive discussion on the National Student Financial Aid Scheme and the attempts to address the “missing middle” was held. An explanation of the Technical and Vocational Education and Training Colleges, and the new Community Education and Training incentives, was given, with an indication of what each aimed to achieve and how this would be done. The particular funding pressures were explained and enumerated and the DHET described its take on the student unrest. Members noted the “subtle request” for more funding for higher education and training and would support it. They asked for an explanation on the underspending and the DHET put this in perspective. More explanations were given on the roles of the provinces and the shift in functions in the colleges from the provinces to the national department as well as the attempts to standardise. DHET conceded that it would not be able to meet the NDP and strategic planning document targets, but was unable to revise them, and Members agreed that it would be best to focus on achievable strategic framework targets, and attempt to get the private sector more involved. The DHET also explained how internally its finance division was stretched with relatively few staff attempting to cater for all employees in other institutions. Members wanted to know the main drivers for university fees and increases, and the host of factors involved was indicated. Members also queried the progress on the Higher Education Bill, backlogs in issuing certificates from the colleges, whether this presentation was directed to issues in 2016/17, whether the Department was likely to under-spend, and its attitude to property damage and student unrest. One Member urged that more attention should be given to promoting artisan training, and others questioned the disparity in approaches in the different provinces. Members stressed that before agreeing to free or reduced funding the main cost drivers would have to be established and agreed that “free university education” would be for the poorest of the poor, with payment expected from those who could afford to pay. They asked if the DHET was likely to reach the targets of training one million people by 2030, and the developmental aspects of the CET programmes were explained.
2016 Appropriations Bill: Human Sciences Research Council submission
The Human Sciences Research Council (HSRC or the Council) made submissions directed to a number of areas in the 2016 Appropriations Bill (the Bill).
Dr Glenda Kruss, Director: Education and Skills Development, HSRC, said she would share her perspective on engaged universities and inclusive developments, which would raise some questions for higher education funding in 2016. In 2016 there were renewed calls for transformation, engagement and inclusive development in the higher education space. In the 1990s it was generally accepted that there needed to be a radical policy shift and transformation of unequal higher education structures. In the 2000s new policy and funding frameworks were developed, alongside a national process of institutional restructuring and massification of the higher education system, whilst trying also to address the challenges of an underprepared student cohort. In the late 2000s the system settled and many policy makers thought they were doing everything they could to ensure equality. There was a fair amount of surprise when the campuses erupted in riots in 2015. In 2016 South Africa faces growing inequality, unemployment, poverty and a surfacing of racial tension, in the context of global financial crises, with consequently strong calls for more fundamental transformation of the universities. Transformation could be directed at who is taught, what is taught, or how and in what ways people would benefit from universities’ research and innovation activities.
Dr Kruss said over the last two decades South Africa has largely achieved formal access, widening participation in the higher education system, and had shifted the racial composition of the student population. However, there are poor outcomes from the system and especially around “epistemological access” - which means that students need to come in with sufficient foundational learning and the skills to be able to learn and take advantage of the universities. Low total numbers were graduating annually, particularly in key areas, and there was mismatch between the proportions of African students enrolling, and those who graduated. HSRC studies of the first cohort showed that of the students who enrolled in 2008, 23% African and 41% white students had graduated by 2010 – and this pattern was apparent across different qualifications and fields.
Speaking to funding, Dr Kruss noted the overall trend of a decline in state funding and a decline in third stream funding such as research funding. This led to a rise in tuition fees. A major cause of the high attrition and low graduation rates is the inadequacy of funding. In real terms, the amounts allocated to higher education has declined, whether it is measured as a proportion of GDP, public spending or total education spending. The national average higher education spend for South Africa was at 0.68% of GDP in 2009, which is below the average of developed countries, and also below the international average of 0.82% and even below the average in sub-Saharan Africa of 0.69%. There is also concern that the public funding formula introduced in 2004 was based on government priorities, rather than on the actual costs of providing education. The real decline in the public subsidy per student and the variability of third steam sources substantially increase institutional pressures to raise fee income annually. Rapidly rising tuition and full costs, such as residence fees, lead to high levels of student debt, which in turn, lead to high drop-out and ‘churn’ rates. Lastly, not all universities rely on tuition fees and state subsidies to the same extent. Some have larger proportions of third stream income and those figures ought to be scrutinised to determine what is possible and perhaps provide a basis for a differentiated funding strategy.
Dr Kruss concluded that access to higher education has been extended, but the goals of inclusive development have not been achieved. High attrition and low graduation rates may be said to neutralise some of the gains made through equitable access. Attrition was found more amongst black, working class students with white and middle class most likely to graduate. This general trend shows that inequality is being reproduced constantly. The current contestation around fees is also likely to influence the call for transformation of what is taught and who teaches. However, the universities have not been idle and there have been strategies to try and improve the quality of teaching and learning for a number of years. Interventions have included foundation programmes, extended degree programmes and a national quality enhancement project run by the Council on Higher Education (CHE). It must be asked whether the current allocation was sufficient for institutions to be able to grapple with the complex question of epistemological and institutional transformation.
Dr Kruss turned to who benefits from higher education research. Academics were asked how they extend their research to the benefit of external social partners. She tabled a diagram which showed how academics at several kinds of universities (research universities, universities of technology, comprehensive universities and rural universities) would be most likely to benefit and tried also to look at partnering patterns across the higher education system. Most academics are committed to interaction with external partners to ensure their knowledge contributes to socio-economic development. The universities include this in mission statements but in practice it was seen that most academics are most likely to partner with other academics, followed by community partners, government, welfare organisations, industry and lastly with civil society. Most partnerships and collaboration are education or services related and they may work with community organisation or government towards the professional education of doctors or teachers. Less activity is geared towards research, and very little to technology transfer or innovation. The interaction between universities and their partners tends to be very informal and unstructured. The outcomes are of limited direct benefit to marginalised communities. Even where academics are conducting important scientific research which could be used to improve the quality of life of these communities, this tends to be very indirect, with little technology transfer or commercialisation to diffuse the new knowledge to those who could benefit.
Dr Kruss said this raises a new problem for higher education, which is how it extends its knowledge for inclusive development. HSRC believes it is necessary to strengthen linkages across the system, to allow communities to be part of research processes and directly access from university research and innovation. The universities have again not been idle and have found innovative ways for communities to be part of university processes. For example, many universities have developed service learning programmes, where students go out and do part of their coursework in communities. Many universities are promoting student volunteering in order for students to understand the diversity of South Africa. Some universities have set up satellite campuses where they offer tuition and community education or other services such as legal clinics. There has also been funding from the Department of Science and Technology and other departments towards funding efforts like technology platforms and agri-parks. However, such interventions are costly and not currently catered for in higher education budgets.
Dr Kruss also mentioned concerns around how the state prioritises its higher education funding to promote economic growth and inclusive development. Some questioned whether the state could afford to increase the low percentage of GDP allocated to higher education, and if not, where the priorities lay. Others would question whether more should not be allocated to early child development, in order to establish a solid foundation for learning. Higher education would require more funding to ensure success and positive outcomes, and to build external interfaces and mechanisms. Reiterating that universities differed, she said that their differentiating roles would need to be exploited and differentiated funding supporting it, with the state encouraging the private sector to partner with the higher education sector.
Prof Demetre Labadarios, Executive Director: Population Health Systems and Information, HSRC, said he would concentrate on the broader aspects of health excluding HIV/AIDS and TB. The HSRC believed that it was time to review the budget for health and the way it was put together. In 2015/16 the total budget for health was R157.3 billion, and in 2016/17 it was R168.4 billion, merely a 7% increase largely accounted for by inflation. The four main drivers are AIDS, maternal mortality and child health, non-communicable diseases, and injuries and trauma. It was vital to re-think the budget because in both 2015/16 and 2016/17 the larger part of the budget, around 63% was allocated to compensation of employees, with goods and services at about 29%. This left too little space to deal with emerging non-communicable disease and broad spectrum of chronic diseases, despite the fact that they were likely to be more common.
The public funding priorities, according to the National Development Plan (NDP), are increasing life expectancy to 70 years by 2030; having a generation of under 20’s free of HIV and AIDS, reducing maternal and child mortality, significantly reducing the burden of non- communicable diseases and implementing the National Health Insurance (NHI) in phases. The NHI needs strengthening to make it more efficient, both in the present and future.
Maternal and child mortality was an area of prime importance in the millennium development goals and sustainable development goals, and it was vital, in order to get proper measurements, to put more investment into statistics and infrastructure, so that births and deaths would be properly recorded, particularly in the rural areas.
The efforts to address non-communicable diseases tended to be focused on diabetes, obesity and heart disease, all of which were problematic elsewhere in the world. The South African National Health and Nutrition Examination Survey presented some worrying statistics, including a large proportion of undiagnosed blood sugar abnormalities, 4% diagnosed but untreated diabetes, and 25% treated but uncontrolled, resulting in a low number of only one out of 6 people with diabetes that was treated and controlled. This led to huge costs, and complications from untreated diabetes, with more investment needed into treatment of young black men, particularly in rural or informal areas. Obesity was another problem, with over 80% of South Africans not recognising a “normal weight”, which suggested that more investment was required into the social determinants of health as diet and basic services.
The NHI needed to be strengthened and to then strengthen the health systems. Training schools were needed to produce professionals but even more important was retention strategies for professionals, especially in rural areas. Clinics must be measured for their performance, against clinical care practice standards. Medical schemes required further work and more personnel. There were chronic difficulties with the NHI pilots, particularly with the community clinical care specialist teams. Greater investment is required in M&E activities. Further, the ward based outreach teams must be strengthened to improve the structures of the primary healthcare clinics.
HIV/AIDs and TB
Prof Leickness Simbayi, Acting CEO: Research, HSRC, said this would focus on TB, as the HSRC has made several earlier presentations on HIV/AIDS. HSRC estimates that there are 6.4 million people living with HIV and AIDS, or about 18.8% (one in five of the population). There was particular concern, as the Minister had expressed, with adults of 25 and older, and although the progress was shown in the decline in HIV prevalence, especially among young people, although there were still new infections, particularly in the 15-24 female population, with the new project called “Dreams” that would be implemented from June 2016. The HSRC statistics came from a 2012 survey that it conducted, with another to follow shortly.
The Minister had also spoken to HIV treatment on the previous day. South Africa has made tremendous progress in making antiretrovirals (ARVs) available to the public, achieving around 80% coverage of those with a CD4 cell count of 200 or less, although the World Health Organisation (WHO) has consistently changed the recommended eligibility criteria, but from September 2016 any person has tested positive would be treated. If all infected people are found, around 6 million, South Africa would probably double the numbers of those currently being treated. This has serious implications for the appropriations process and HSRC thus questioned whether the additional R1 billion allocated to extending the HIV treatment programme is adequate.
Prof Simbayi added that South Africa also had one of the world’s worst TB epidemics. Although the rate of infection had declined over the past few years, there was an increase in multi-drug-resistant (MDR) strains. TB was a leading cause of death in South Africa, particularly amongst those living with Aids, although it was preventable. Despite a drop in the number of deaths, the fatality rate was still too high, at 8.4% in 2012. The cure and treatment success rates had improved (see attached presentation for full details) but it was vital that those diagnosed must complete the entire course of treatment. The defaulter rate had also decreased from 10% to 6% over the period. Additional allocations in 2015/16 meant that more cases were being identified, with a successful programme also launched by the Deputy President the previous year. Whilst government was doing well it may still need further resources.
Improving Governance and Benefits
Dr Yul Derek Davids, Chief Research Specialist: Democracy and Governance and Service Delivery Programme, HSRC, said he would speak to government performance over a range of policy areas and public satisfaction with service delivery. HSRC had conducted a Public Attitudes Survey to know how South Africans feel. The results of this would flesh out what was presented by his colleagues. The HSRC asked about satisfaction with a range of policy areas. Social grants have, from 2003 to 2015, received the highest satisfaction rating. International studies have found that this is a good mechanism to tackle poverty and inequality. There have also been high levels of satisfaction with electricity and education, although the satisfaction level with education is at 62%, 6% down from 2010. Satisfaction levels for access to electricity have gone up 8%, and the absence of load shedding is indicative of good work being done. On HIV/AIDS, the citizenry also rates the performance quite high. Water and sanitation has received steady ratings in the past, but there has been a decrease of satisfaction around refuse removal. Satisfaction with health care increased by 7% from 2011 to 2015. Areas of consistent concern, since 2003, have been job creation, crime reduction and low cost housing.
Dr Davids said satisfaction is also determined through the Service Delivery Index which includes the areas already mentioned. Data was disaggregated and it was found that those living in Mpumalanga and Gauteng are more satisfied with access to basic services than those in North West, Eastern Cape and Limpopo. Those living in formal urban areas are more satisfied than those living on rural farms and in urban informal settlements, and there was also a difference by demographics and gender. There was more satisfaction by males than females, and black Africans more than white and Indian/Asian people, in regard to access to basic services and service delivery, since 2003, and this shows that the poor, unemployed, those living in informal settlements and less educated continue to be dissatisfied with access to basic services. White and Indian respondents offered higher satisfaction scores on water and sanitation and access to health care, but lower scores on crime reduction, job creation, social grants and education.
Dr Davids said it has been found that there is an association between government priorities and public satisfaction. On HIV/AIDS, as it became less of a priority, satisfaction with government performance has been increasing. Job creation is consistently a high priority and the public opinion has remained low. This shows that the public is sensitive to the performance by government.
He concluded that the poor and marginalised consistently lack basic services. Whilst the R11.5 billion additional allocation to social grants is welcome, much more needs to be done. The additional R4 billion reprioritised to local government is also welcome. Spending programmes on education, especially in the higher education space and the National Student Financial Aid Scheme (NSFAS), is also welcome. Money alone is not sufficient as there are capacity constraints and the implementation needs to be brought to the fore. Monitoring and evaluation of service delivery heads is key.
Economy and Spending Priorities
Dr Peter Jacobs, Chief Research Specialist: Economic Performance and Development Research Programme, HSRC, spoke broadly to the economy and the spending priorities linked to the macroeconomic picture. The context of the economy over the past couple of years has not been good and there have been warning signs which were flagged in previous meetings. The economy seems to be growing, but at a very low rate whilst it was not yet contracting. The implications on the budget were that there would be a less reliable inflow of tax revenue, which would constrain government's spending power, unless it makes use of other measures to fill the gap. The high levels of government debt are a concern. In 2009 it was at 24% of GDP, but now it stands at 45% of GDP. At the same time government is increasingly compelled to have increasingly larger budget deficits, which is the difference between revenue and spending. The deficit stands at 4.2% of GDP presently. All these pressures will lead to an increase in debt servicing cost. Growth of the public sector wage bill is a concern for most economists, and this plays out in a context where there is weak business and consumer confidence and growing concerns about the ability to meet the energy demands of the economy, which leaves little room for manoevre.
Dr Jacobs said there has been a shift in approach from counter-cyclical spending to a rise in specific categories of taxes and slowing certain areas of expenditure. Minor tax increases have been in three areas of direct income tax, the fuel levy and new tax elements such as the sugar tax. The slowdown in public spending resulted in a 2% reduction in budgeted expenditure, or about R25 billion. The intention to freeze the public sector headcount is another tough measure, but one demanded by the constraints, as so is the approach to the state owned enterprises (SOEs), such as the sale of non-core public assets.
Dr Jacobs said investment in infrastructure is a key element and this can be linked to spatial efficiencies or inefficiencies, including tackling the apartheid legacy of spatial fragmentation. Cost of land and density of land use in inner cities are important, particularly around urban hubs. In these areas the local government structures have been confronted with rapid transport schemes, to bring people from outlying areas closer to the cities. Fast tracked integrated urban development projects raise potential contradictions, because these tend to be located on open land which, whilst suitable for large scale human settlement projects, is far from the urban centres.
Dr Jacobs said government's long standing and major infrastructure development funding has been a major theme in the New Growth Path and National Development Plan. One economic debate centres on whether the existing focus on large scale public funding of infrastructure is crowding out private sector investment, particularly in priority areas that are the platforms for economic development, such as energy, transport and logistics, water and human settlements. Sometimes there are mixed approaches, such as in telecommunications infrastructure, with a variety of different tensions emerging, and consideration needed to be given to how lessons learned could be incorporated in future spending streams. Several of the private sector, willing investors seem to have reservations about government’s willingness to assist them or put out new contracts in these areas.
Dr Jacobs turned to cost efficiencies and how these cost savings would cut across the various spending priorities including housing, transport and other government job creation schemes. The question was whether efficiencies would be created by centralisation, or through localised expenditure programmes; for instance, there could be more local, community participation in human settlements. The real dilemma is balancing costly compliance procedures to tackle mismanagement against discretion for creativity and efficiency.
Mr A McLoughlin (DA) asked for more clarity on some of the slides. Dr Jacobs had made an interesting point when he referred to “currently excessive centralisation, especially in human settlements”. He asked if this meant to refer to how the Department is run or about the way it is in fact implemented, with pockets of RDP housing. Lastly, he wanted to hear the thinking behind the statement that the RDP housing model is becoming increasingly non-viable.
Dr M Figg (DA) said he understood that there was a big problem with university fees and the cost of running universities, but wondered if there had been any research into the population at the universities and whether that was cost-effective. He had the impression that many students now were not well-equipped or prepared for university and asked for comment on that, particularly since the matric pass rates were at only 30%. Academic readiness was not the only criteria, for affordability and maturity were other important features, as well as the limited number of places. Maturity implied that students should not be vandalising the property, and this was not happening only at the university but also the schools, and could not be ignored. He thought that the country might be in denial and not addressing possible risks. Universities have funding models, and it has been argued that universities are underfunded, but he wondered if their spending models were acceptable. Dr Kruss spoke to research which could be used to benefit communities and he believed that research must be genuine, not undertaken to get free trips to conferences, and perhaps the funding for travel and accommodation must be looked into. Health was an area of underfunding, although perhaps the Department of Health was to blame because it had underspent. He asked for clarity on the 1% of population with TB, as the figures did not seem to tally. He asked why there was nothing mentioned about the satisfaction of coloured people, who were not mentioned in the presentation. He was surprised to hear of satisfaction because load shedding had stopped, pointing out that it should never have happened in the first place. Eskom has the capacity to produce electricity for the whole country and if they do not, and have to load-shed, this is a failure so recovery from that failure cannot be seen as an achievement. He noted that economic growth, was predicted as 0.9%, but he argued it was more likely to be 0.7%, or lower. In relation to the slide headed “Allocative efficiency question”, he asked what the apartheid tax on households and transport costs were. He wondered if private investment funding should come from internal or external sources; if external, does South Africa have to policies to encourage this investment?
Ms M Manana (ANC) questioned the reasoning behind the World Health Organisation apparently deciding that all those with HIV should get ARVs, a reversal of the previous decision that a particular CD4 count indicated a need for treatment. She agreed that most people who are diagnosed as diabetic take their medication, but do not control the disease, because they are unaware of the need for a special diet. She noted that the numbers of those taking the normal six-month treatment for TB is declining, but wanted to know why multi-drug resistant TB was more prevalent.
Ms D Senokoanyane (ANC) said the allocation for the Department of Higher Education and Training (DHET) at 0.68% of GDP is a matter of concern, especially in this time of belt tightening. She noted that the bulk of the Health budget was being put to compensation of employees and commented that this Department did need significant human resources and needs to develop more health professionals. She asked if HSRC knew whether it was essential or non-essential staff mainly causing the high wage bill. She asked whether the promotion of a healthy lifestyle would not be better that focusing on obesity. She asked for an explanation on the satisfaction levels of different groups, particularly with social grants which had better service delivery. She echoed the call for private investment in infrastructure, because she believed there were resources in the private sector. The presentation indicated that major construction companies are complaining about the lack of new contracts. However, experience has shown that some contractors are more concerned with looting the state than doing the work.
Dr Jacobs responded firstly to the comment that the growth figure was too optimistic, and said forecasting would depend on what is incorporated in the models, and that South Africa was in times of great economic uncertainty. Eighteen months ago the American economy was supposed to be expanding, but it went the other way. Economic forecasting is difficult, and whilst some might regard the figure as optimistic, some pessimists were then predicting a contraction for the present period. The HSRC tried to strike a balance between the two, by consulting experts within National Treasury and others such as the South African Reserve Bank. If this was a small over-estimate, then it could be more accurately presented following the figures for the first quarter of 2016.
The RDP model is a combination of top level policy making and allowing for local level flexibility, and questions here must consider to what extent does government allow for such flexibility in housing delivery models, what scope is there in the existing policy, what type of housing must different municipalities or provinces provide, is there a “one size fits all” approach or customised delivery frameworks? HSRC wanted to communicate the need for a national framework, but flexibility and decision making at the local level.
He noted that the comment on the apartheid spatial tax meant a rigid spatial separation where people were “boxed in” by the Group Areas Act to live in a certain area but have to travel far distances to work, thus essentially taxing them by making them pay additional costs.
On private sector investment in infrastructure, the HSRC was not saying that there should not be foreign investment in domestic infrastructure. However, there should be clear guidelines and regulation of where and how to make the investments, including the kind of returns to be expected. It would not be good to replicate investment models linked to mega projects such as the World Cup stadia where foreign contractors came in, did the work and exported the profits. Constraints would not be placed on foreign investments, but instead it was recognised that money should come from sources which are interested in the overall development projects of the South African economy and government.
Dr Kruss said the first question is about who should attend university and whether more limitations need to be in place. For reasons of growth and equity, South Africa’s higher education system needs to be expanded. Globally, since the 1980s, there was a move from elite systems of higher education, to systems of mass higher education, with higher participation. The participation rate in South Africa is only around 20%, but far higher in developed economies, and such participation is critical to economic growth, looking at employment structures and the kinds of jobs demanded in the growth sectors. South Africa needs far more graduates with high level skills to come into the economy. The higher education system bears the problems of equity in the schooling system and needs more funding. If government were to make the higher education system smaller and take away funding, it would be beneficial only in the immediate term. Dr Kruss did not think that too much was being spent on research; South Africa had not yet reached its goal of 1% spending on R&D. Universities do need more funding, but there is space to question how that research money is spent, and they should be spending on activities which are not only of academic benefit, but also wider socio economic benefit. Policy development here was needed.
Prof Simbayi said that the figure of 1% of the population was mentioned, and that would be calculated on whatever the population was in a particular year. The new “test and treat” approach for ARVs, which the Minister announced previously, was to be based on research done, including in Southern Africa, because it was shown through this research that people do much better if put on treatment immediately rather than waiting until their CD4 count drops below the set standard. She explained that the comment on the dropping infection rates of TB and rising multi-drug resistant TB, was important when these are notified cases of TB. A person who was diagnosed with TB was registered, and it is possible that it could fluctuate year to year, but the defaulter trend is of concern, although when seen against treatment success rates there were some positive moves. Ideally everyone should be cured, but some are not and are put on another regimen. Defaulter rates had halved over the period of 2005 to 2011. In essence the additional money allocated is to promote finding of TB cases so that treatment can start; this is similar to HIV research.
Dr Davids said the y-axes of the graphs questioned by Mr McLoughlin indicate satisfaction levels from 0 to 100. The satisfaction levels of coloured people have been recorded, although not separately reported, and the presentation showed the mean levels. The black and coloured respondents are satisfied with access to social grants, but white and Indian people are less satisfied with job creation, social grants, crime reduction and education. Marginalised populations are thus satisfied with the social grants. His comment on satisfaction with the reduction in load shedding that was merely an aside, and there are many other variables which determine whether people are satisfied with access to a service.
Prof Labadarios said it was known that the Department of Health had an inability to spend its budget, but rather than holding this against the Department, it was more important to try to capacitate it to spend fully. It was assumed that the Department of Health would have spent on non-communicable disease if mandated to do that. Perhaps its mandate ought to be reviewed so that the Department spends all the money allocated. Obesity has cultural aspects but should be clearly understood and when it starts at school, education is a major factor, although this is not something for the young only. Data shows that almost half of the population wants to be a different size. That has tremendous limitations and implications for what can be done, and questions about what interventions should be used when people do not understand a “normal body” image. Diabetes is a costly disease requiring monitoring. There are a number of ways to deal with it, although the tax on sugar is a drop in the ocean. South Africa needs to invest in restructuring resources, and examine the concept of the ideal clinic's standards and resources, particularly since there is a lack of health professionals, and unless this is addressed, the goal will not be reached as the pace of disease increases will be greater than gains made by improvements.
The Acting Chairperson asked that HSRC should respond to some points in writing later. He requested the full public satisfaction survey. He would agree that with education, health and other areas, government may have missed the opportunity to really understand at the costs, before putting forward the money. The HSRC could help, because it should be possible to determine the average cost of a student completing a four-year qualification. University fees are rising and while the NSFAS funding is increasing, the number of students accessing it is decreasing, although it is not yet sure what causes the imbalance, so it must be found out what universities are actually funding by the increases in their fees. He accepted the dissatisfaction about RDP houses, but two fundamental elements are often missed; firstly, the fact that this house comes completely free to the owner, and the benefit of full ownership. Dissatisfaction here could be on the part of those who have received RDP houses or those who are still waiting. We tend to club together both of these distinct categories. Members should now have a better sense of where the funding requirements are. There are contrasting needs in dealing with the legacy of the past, and government needed to work from both ends to bridge the gaps and accept that the population was constantly shifting. Linked to that is the cost of the maintenance of all the infrastructure, compared to the basket of public funds. Patience is needed in some cases, but in the end government must attend to the problem. This is a massive question and he was sure there was existing information, but was it complete and does it indicate a path forward?
Prof Simbayi said these sentiments resonated with ongoing discussions within the HSRC. The new CEO who joined in September 2015, and the board, had shifted the direction of the research being conducted towards the issue of continuing poverty and deepening inequality.
Department of Higher Education and Training (DHET) submission
The Acting Chairperson explained why the presentation by the Department of Higher Education and Training’s (DHET) was not included in the pack provided to Members; DHET had indicated that it was not available when invited. He had insisted upon their attendance, but by then the pack had already been prepared. The Minister of Higher Education had tendered an apology, as he was making a presentation to the NCOP. The Director General was similarly unavailable.
Mr Firoz Patel, Deputy Director General: Technical and Vocational Education Training, DHET, said that from the beginning of 2016/17 the budget of the Department was distributed into six programmes. From April 2016 the Vocational and Continuing Education and Training was split into two programmes, following approval from National Treasury, into new Programme 4: Technical and Vocational Education and Training (TVET), and a new Programme 6: Community Education and Training (CET). This was following the function shift of community education and training colleges and TVET colleges from provinces. The budget also includes direct charges, such as the skills levy collected by the South African Revenue Service, Sector Education and Training Authorities (SETAs) and the National Skills Fund. The budget, excluding the above direct charges, increases from R42.0 billion in 2015/16 to R55.3 billion in 2018/19 and will be at to R49.2 billion for 2016/17. The “fees must fall” issue and the zero percent fee increase had to be catered for, leading to a spike in 2016/17. There was historical NSFAS debt, needing a once-off injection of R2.5 billion, and there was also funding for unfunded mandate and new students, which will grow from R2 billion to R3 billion over the medium term.
Mr Theuns Tredoux, Chief Financial Officer, DHET, reflected on the structure, budget and expenditure trends for the DHET. Since re-establishment in 2010 the DHET has managed to remain within its budget. The underspend in 2010/11 and 2011/12 was much more than in the following three years. The main reason was that the Quality Council for Trade and Occupation was included within the DHET, but it was not yet fully operational, so that not all funding was transferred and amounts were rolled over by National Treasury. In 2015/16 the preliminary (unaudited) outcome is R84.5 million spending, which is mainly for compensation of employees, especially within the TVET section. Based on the function shift, the funds were allocated according to information received from the provincial education Departments and National Treasury. Those amounts were allocated for specific economic classification items including compensation of employees, goods and services and transfers of subsidies to the TVETs. Compensation of employees should have been part of the subsidies, and it represented quite a large saving, which will be corrected in the adjusted estimates during 2016/17.
Mr Tredoux moved onto a summary of the cost pressures faced by the Department. The DHET acknowledges the fiscal constraints faced, which has an impact on the service delivery of the Department so that it is not in a position to do everything it is supposed to do. DHET is unable to reach the growth requirements within the post-school education and training system, particularly with enrolments, infrastructure development, increased operations and student support. This is closely linked to the implementation of the Post School Education and Training White Paper and there is currently an almost-completed process with National Treasury and a consultant to determine the full rollout of the White Paper. There are key risks with the student fee increases and operational staff costs at institutions. Operational pressures include the limitations by government on compensation of employees which will hinder the ability of the DHET to roll out its new staffing structure, especially with the adult and community education functions which were transferred to the DHET in 2015/16. The Department is still relying on National Skills Fund project support, such as the funding of the National Artisan Moderation Body for those specific functions. The cost implications of examinations remain a concern, especially in TVET and to a lesser extent with Community Education and Training (CET), and the DHET will have to survive with inflationary adjustments, despite increased enrolments.
Mr Tredoux moved on to key budget pressures, with estimated amounts per financial year required. Subsidies to universities requires close to R20 billion a year. University infrastructure around academic activities requires R1.5 billion. Student accommodation shows a backlog of R147 billion over a 15 year period. NSFAS must increase the current reach to current university students, and TVET students, at R8 billion a year. Fee free education in universities would raise this requirement to closer to R13 billion. TVET college funding requires a baseline adjustment to assist with the present funding, at about R7 billion. The NDP target of 2.5 million enrolments means that the shortfall would be an additional R12 billion a year. For college infrastructure approximately R1 billion per year is required, because the function was inherited without funding for infrastructure or the maintenance of infrastructure within the allocations. Therefore, the DHET will have to establish some form of infrastructure grant for TVET colleges. Departmental operations, including examination services, requires close to R3 billion a year.
Ms Pearl Whittle, Director: Management Support, DHET, noted that the programme for University Education was to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system. The branch also provides financial support to universities, NSFAS and to national institutes for higher education. She then listed the seven key deliverables of the programme (see attached presentation). At the top of the agenda was the additional funding of R4.5 billion which has increased NSFAS funding significantly in the 2016/17 financial year. R2.9 billion is earmarked for continuing education and new students in 2016/17 and is now in the baseline of NSFAS. R2.54 billion is a once off injection to fund the debt of 71 753 NSFAS qualifying students. NSFAS has requested all universities to collate and quantify the number of continuing students and number of first- time entering students. The Department realises that the R2 billion is not enough to cover all NSFAS qualifying students. Preliminary information collected by NSFAS following registration for the 2016 financial year shows that an additional R1 billion will be required for unfunded qualifying students currently in the system. No NSFAS qualifying student should be denied access if they have been accepted at a university, so all these students have been allowed to register. The DHET currently provides about 40% of required operational funding for universities and the continued increases in student fees, along with the zero percent fee increase agreed to in 2015, will continue to put pressure on the system. Various interventions are currently under way with various stakeholders. A task team under the Centre for Higher Education and Training, in line with the recommendation of the Presidential Task Team, has been set up to develop a regulatory framework for setting fees and fee increases in the future. Secondly, the “missing middle” task team has been established under Mr Sizwe Nxesana, to looking at a new funding model to fund poor and missing middle students, in partnership with the private sector. Student housing has become a key pressure point; it is estimated that 23% of students are housed in university residences. It is estimated that the system requires an additional 200 000 beds, at a cost of R240 000 per bed in 2010. A Director General Task Team is undertaking a feasibility study for a financial model to attract future investments to address the shortfall. The NDP indicates that the system should grow to 1.6 million students by 2030, and current projections indicate that the system will grow by 1%, against 2.8% required to reach the target. Funding is not available for growth measures in the required areas, such as the production of health professionals to support the health sector.
Mr Patel said the purpose of the TVET programme was to plan, develop, monitor, maintain and evaluate national policy, programmes, assessment practices and systems for technical and vocational education and training. DHET had to build the system which lacked regulatory and policy instruments. The key deliverables included national admission and promotion guidelines, to avoid the situation of over enrolment and ensure the students in the system are adequately funded, rather than opening all the doors too wide and not covering all the requirements, especially for poor students. Promotion guidelines is also a problem and is an efficiency measure. Currently some students have to repeat whole years if they have not passed one or two key subjects. A system of credits is being looked at, so that students do not have to repeat whole years if they have succeeded in at least 50% of their subjects. A Ministerial task team is looking at the revision of the costing model for TVET college programmes. There is also a revised conduct policy for examinations, to address irregularities in the 50 TVET colleges over 270 campuses. The TVET sector has been left on its own too much and intensive monitoring and evaluation is now required. The core business is teaching and learning, leading to the need for proper teacher and learner support plans. Student support services plan is a major area and student irritability is seen, with reports of marches at TVET colleges that are gaining momentum. Expression ranges from boycotting classes to severe damage to property. The last two key deliverables are TVET colleges infrastructure maintenance report and establishment of coordinating structure for stakeholder engagement.
Mr Patel said that despite the NDP and Medium Term Strategic Framework (MTSF) goals, the TVET programme is not going able to attain its growth requirements within the post school education and training system regarding enrolments, infrastructure and student support. There are rumblings within the student body about this inability, riding on the wave of the “fees must fall” campaign. Students believe the TVET sector is marginalised, with too much attention on the university sector, and the TVETs have had to bear the brunt of the pressures this year. Some of the current issues emerging in the present financial year are around textbooks, materials and protective clothing. Mr Tredoux had mentioned the function shift and the preliminary under expenditure. Due to the function shift, 19000 employees who were in the employ of colleges were moved on to the Persal system. In 2015 the DHET had to focus on ensuring all the employees were paid and not lost in the transfer. A moratorium had to be placed on colleges filling posts, because of the uncertainty around what the actual personnel expenditure was. Initial indications are that over R365 million did not go into the TVET system. Colleges were over enrolled, and in 2015 the colleges had to utilise their reserves, sacrificing also their travelling, accommodation and goods and services budgets. That constituted considerable pressure, and it is hoped that in the end some of the funds will be redirected towards the colleges. The MTEF enrolment targets are not going to be met. The DHET had already had discussions with the Portfolio Committee on Higher Education and Training. It would meet with college principals the following week, to review the enrolment numbers and the MTEF enrolments. The MTEF target for 2016/17 for enrolment is 755 000, of which 429 000 are funded, leaving 325 000 unfunded or over enrolled. Colleges are carrying these unfunded students and are diluting the funds available by having large class sizes and making other sacrifices. These numbers would be reviewed in the present year. DHET believes that the full cost of each student must be known because dissatisfied students will cause pressure. When the DHET targets were set in 2009, enrolment was projected at around 400 000 but at current figures there is huge pressure on the examination system.
Mr Patel said the Skills Development programme is to promote and monitor the national skills development strategy, and to develop a policy and regulatory framework, to enable skills development institutions to implement the National Skills Development Strategy, standardise the level of governance across Sector Education and Training Authorities (SETAs) and effectively manage artisan development assessment services, inclusive of recognition of prior learning.
The NDP sets a target of 30 000 artisans trained per annum, but the challenge is that artisan development is still funded through a grant from the National Skills Fund and not from voted funds. All SETAs and other Schedule 3 public entities (including the National Skills Fund and Quality Council for Trade and Occupations) report to the DHET under the Public Finance Management Act and National Treasury regulations through strategic plans, service level agreements and annual reports.
Dr Bheki Mahlobo, Acting Deputy Director General Community Education and Training, DHET, outlined the purpose and key deliverables (see attached presentation) for the CET programme and the NDP target of 1 million by 2030. When this programme was received from the provinces it was completely amorphous and needed a regulatory framework. The programme now intends to formulate national policy, programme assessment practices and systems for CET to allow the rationalisation and consolidation of the function. The DHET would like to rationalise the 3 276 community learning centres into manageable and known institutions, and to develop and implement teaching and learning support plans for CET colleges, which the Auditor General said were lacking. Lastly, in recognition of the community organisations which exist and are involved in delivering community education, the DHET wants to put forward a framework on how to forge links with these entries.
DHET had interacted with the Department of Basic Education, which indicated that the Kha Ri Gude project had achieved its goal of halving illiteracy in the country, and would close. Statistics SA noted that about 3 million people, or 7%, were illiterate and DHET will now assume responsibility for this function through the CET programme. However, there is no dedicated funding in the Department to cater for this. Conditions of service of teachers in CET centres varies between provinces, and funding will be required to standardise. Already the DHET has had to contend with teachers in Limpopo threatening a strike, because they would like parity with their colleagues in other provinces, although when this issue was raised with the provinces at the time of takeover of the functions, the provinces said that they did not have funding. The examination system was also transferred with massive under-funding. The Minister had entered into an implementation protocol where the provinces continued to run the examinations of the General Education and Training Certificate (GETC) and Adult Basic Education and Training (ABET). The MTSF included a requirement that the DHET develop a matric equivalent qualification for the youth and adults, which has been done, although the actual training and rollout cannot be done without funding. Community learning centres are in the main operating from schools, in afternoons and evenings, except in Gauteng, where there are dedicated centres. Buildings received from DHET partners often needed refurbishing, especially to create a distinct identity. He agreed that the targets cannot be met with the current funding model.
Mr Patel moved on to recommendations made to the Department. Leveraging of funds within the post-school system was recommended, including re-looking at the efficacy of SETAs. The operational staff have not yet been geared to provide forensic monitoring. The DHET is implementing revised grant regulations and development of the new SETA landscape, and consultations had been held, and it seemed some service may have to be centralised. Key partnerships with the financial sector are in process, through the draft plan for funding the “missing middle” higher education students. A comprehensive communication strategy is under way to target students and parents on all aspects pertaining to student funding and possible financing options. The DHET is looking forward to the Presidential Commission, because part of its mandate was to make sure TVET colleges are not excluded. It must enable NSFAS to manage additional resources envisaged for the medium term. NSFAS has been conducting a number of interventions at institutions to ensure that there is a direct link between the student and NSFAS. NSFAS has an agreement with South African Revenue Services (SARS) to assist with the identification of persons who have benefited from funding and ought to start repaying loans.
Dr Figg said the Committee should support the subtle request for more funding for education, an important discipline. The target for artisans bothered him. In the past there was an effective system for training and producing artisans but when they were moved to the SETAs, which were a good model, the implementation was perhaps not ideal. Artisans cannot be created without an employer, but as he understood it the task had been placed with the TVET colleges rather than having partnerships with employers. There was a reason why the NDP targets were set, and for the economy to grow those targets need to be met so that he did not believe there was merit in revising targets. He noted the target for expanding access to a diversified second chance education for one million adults, but asked what was the coverage presently, where the CET centres were and whether there was not duplication between them and TVET colleges. He wondered if the funding pressure with the CET centres was not covered in the business plan; it should not have been pursued if not feasible.
Ms Manana said she agreed that the funding pressures indicated earlier should be sharply raised by Members with National Treasury. She asked if the new programme was reflected in the DHET organogram. She also asked about the progress in resolving disciplinary cases inherited from the provinces at the TVET colleges. There had been reports of delays in the building of the new TVET colleges, and she asked when this would start. She requested a progress report on the 288 TVET lecturers undergoing workshop exposure in partnership with the South African Cooperative Initiative. She asked at what stage the Higher Education Bill, submitted in November 2015, was presently. The Committee had been told that there was a backlog of certificates to be issued from SETA, which was causing unhappiness as students could not look for employment without those.
The Chairperson added that the same applied to TVET colleges.
Mr McLoughlin said he was trying to understand what was being presented in the bigger picture. The Committee would vote on the 2016 Appropriations Bill in the following week. He wondered if the DHET presentation was looking beyond the 2016 Appropriations Bill, and was in effect talking about the 2017 Appropriations Bill, because at this point it may be too late to remedy the problems being spoken of, unless the DHET was instead explaining why it would not be able to perform under the present appropriation. If so, it must have plans for the immediate future to avoid being on the back foot in the next year. He noted and understood the reasons for underspending on slide 3, but wanted a rationale for the future funding requests, despite that underspending, and an explanation of the effect the underspend had on the DHET’s targets. He noted the student protests at the TVET sector and asked what policy the DHET had for damage, and its control and prevention; if there was not one already then the DHET had to consult with students and formulate a policy. He asked if the 15 000 water services artisans being trained by the Department of Water and Sanitation were included in the 30 000 target. On the disparities in lecturer remuneration inherited from the Provinces, he understood that the Department in its present configuration was only a few years old, but pointed out that it had a predecessor department and wondered why only now the disparities were being recognised, and what was in place to address them in future. The Public Service Commission had said that very few heads of departments had signed their agreements, and he wondered if this applied to the DHET.
Ms C Madlopha (ANC) said that when the Committee was dealing with the 2016 registration and enrolment, the Department had raised the issues around the budget, and said it was uncertain whether it could achieve the NDP targets. She wanted to know what the response of National Treasury was. She agreed that the Committee should support the request for more funding, because education is the key to developing skills to deal with the problems of incapacity. She questioned the statement that the establishment of the new CET branch was not part of the strategic framework, and had not seen an amendment to the annual performance plan. The DHET was inconsistent, at times referring to “continuing education and training” and “community education and training”, without consistency. She asked for an explanation and the correct terminology. She asked if the organagram had been approved by the Department of Public Service and Administration, and funded. She asked if the revised language policy for higher education was public and whether public submissions had been obtained.
The Acting Chairperson referred the DHET to the recommendations of the Committee in late 2015. Some of the issues raised were responded to, but others must still be responded to. The Committee wanted to know what drove the increases in university fees and the part played by student accommodation and travelling. The cost per student to complete a four -year qualification had to be known, so that they were clear, and questions must be asked if they were justified, to inform how government must revise its funding and eventually achieve free education. Any amount of money can be poured into the system, but the cost drivers need to be clear. He added his support for the request for funding and the suspension of fee increases in 2016, but stressed that government cannot provide free education without knowing what it is funding. He asked for more explanations on the cost per student bed, and funding pressures in TVET for textbooks, materials and the like, suggesting that the DHET must negotiate prices based on the large numbers ordered. He thought that CET and TVET should cater for those who had not had the opportunity to attend school, but added that others might might simply require short courses to acquire skills, and not a full qualification, and asked if there were any statistics on who needed to attend and what they required, linking this back also to skills needs, so that the CETS must respond to the needs of the economy and the technical skills required by government Departments. The Committee is dealing with the 2016 Appropriations Bill, but also has to look towards the funding of higher education into the future. He noted that the DHET need not necessarily respond to these points now, but should look into these details. Education funding must also be benchmarked against developing and developed countries, to avoid merely throwing money at the problem.
Mr Patel thanked the Committee for the support it was promising to the Department with its funding constraints, and its suggestions for proper costing models. Responding to Mr Figg's question on artisans, he noted that prior to 2009 the old style of artisans and the involvement of the employer was side-lined, for various reasons, including colleges being made a provincial competence, problems with the management of FET colleges, and the problems coordinating the Department of Education and Department of Labour in this terrain. When it came back to the DHET, the new Minister of Higher Education and Training made artisan development a priority, with set targets and the National Artisan Moderating Body. The DHET was still grappling with the relationship between employers and TVET colleges. The ideal situation, such as the German model, is where the employer identifies the skills requirements, and provides artisans with space, and they then are able to access a TVET college for the theoretical learning. In South Africa at present, the TVETs train people, but wait for the employers to take them up to provide them with experience. The Deputy Minister is championing the cause, declaring this the decade of the artisan. A pilot is being run and discussions are being held around providing incentives in the pilot for employers. Employers believe the skills levy is supposed to be used for this. The cost of artisans is around R350 000, including the stipend they receive.
It is correct that DHET cannot review the NDP targets, because this is the role of the Department of Planning, Monitoring and Evaluation (DPME), but the DHET's own targets in its strategic plan must be achievable, related to its budget, and not be overly-aspirational. In regard to adult education and training, currently the Department is in a transition phase, and AET was offered at 3 250 centres, ad hoc, with people appointed on stipends or an hourly basis. The Auditor-General noted that the functional areas were in a poor state in the provinces, but the Minister viewed his mandate as dealing with the education of everyone, not only in schools. The process of establishing CET colleges is being started and for the moment old adult training centres are being retained. The CETs are definitely not a duplication of the TVETs, since the cost drivers in the TVET space are medium term technical and vocational skills, which require intensive equipment and workshops. Speaking to the Chairperson's suggestions for short courses, he explained that these were already possible at the CETs.
The organogram was submitted to DPSA and is linked to funding which was not available. However, the Department has to operate in a restructured environment and depending on the availability of funding it can begin populating the new organogram.
The CET programme went through an approval process with National Treasury. It is in the DHET’s strategic plan, annual performance plan and budget documents, as a self-standing programme.
The DHET is moving very fast with resolving the disciplinary processes inherited from provinces. It has taken a long time both with arbitration and when it is taken to the labour court. The Department had to concede to losing some of those cases due to administrative action, and the provinces have settled some cases. The numbers would be provided to Members.
He noted that the first TVET campus, at Bambanani, was about to open, and Nkandla A and Lepalale were 75% complete and would be opened in 2016. There were supposed to be 12 new campuses and two refurbished. Those have not started construction, because of the procurement and supply chain issues. They were served before the bid adjudication committee and would go out on tender. There are 288 lecturers undergoing training and the DHET was also working with the German government.
Mr Patel noted that the Higher Education Bill was approved by the Portfolio Committee that morning and would be tabled in the Houses shortly.
The intervention of the Portfolio Committee and Department of Telecommunications and Postal Services had yielded results with the backlogs with certificates, since the backlog of over 260 000 was now down to 3.7% and still decreasing.
Mr Patel assured the Committee that the presentation did focus on 2016/17 and the pressures of that year. He believed the DHET would be able to spend the funding. There had been under-spending of around R1 million, out of the budget of R30 billion, but pointed out that in order to spend fully the DHET would have had to shift funding around, which was incorrect. The Department is also restricted from making too many virements it could make and often there is pressure in one area, but there are limitations on the ability to shift funds. Often the unspent funds are pushed into the roll over mechanism.
The DHET’s policy on property damage is zero tolerance, because infrastructure cannot be damaged and students must respect it. The previous week at the Ekhuruleni West College there was a student uprising where there was R40 000 worth of damage and immediately the principal was asked to lay a charge, which was done. The police found evidence and arrests were made.
A disciplinary policy is in place, which is the responsibility of college councils, a Student Representative constitution and a student disciplinary process. He agreed that more work would have to be done, in consultation with students.
He explained that the 15 000 Water and Sanitation practitioners are not part of the target for artisan training.
On the disparate conditions of service, it was his responsibility to alert the Committee to a risk being faced in both TVET and CETs. Provinces did not take their employment responsibilities seriously, the nine different provinces all had different systems for CET colleges. Uniform conditions would be required, but this was not budget for. In line with section 187 of the Labour Relations Act, the DHET ensured that the employees were transferred with the same conditions, until the new employer is able to make the changes. The DHET is treading on thin ice, because people are impatient and expect that their perceptions of unfair treatment must be remedied immediately. The DHET did an assessment and in one college, to be able to bring people up to the minimum conditions of service, R4 million is required. Some of the personnel require backlog payments, because lecturers attained higher qualifications and the provincial government did not increase the pay, as national government would have required. There is a looming possible liability, and National Treasury would be told about it.
He fully agreed with the Acting Chairperson that South Africa cannot push for fee higher education, without knowing the cost drivers. In the TVET sector, the programmes are fully costed, including personnel and materials at about R35000 per programme, but there is a ministerial task team reviewing that. The DHET wants to move into the situation where the TVET Branch has a partnership with the Financial and Fiscal Commission to establish the costs. He agreed that there is an imbalance with NSFAS funding, because universities have a higher inflation rate, and the actual reasons must be examined, including whether universities raise their fees knowing that NSFAS will pay. Universities have a common procurement system, which is a non-profit organisation which does bulk procurement for the universities already. With the TVET colleges it is slightly different, because every council is responsible according to the PFMA and therefore discussions would have to be undertaken with the Office of the Chief Procurement Officer in National Treasury. CETs are meant to be there to provide education to the people who did not go to universities or TVET through short courses. The Minister stated that he is responsible for 22 million adults, while the Department of Basic Education is responsible for the 12 million children in school. He agreed that DHET will have to implement targeting of the classes of potential adult learners who could benefit from CETs.
Dr Mahlobo spoke to whether the target of 1 million people would be reached by 2030. In 2014, there were 265 000 in the ABET and GETC environment. The idea when changing the environment is not to run formal education remotely, rather to structurally embed the community colleges locally, in order to understand the skills requirement of the district municipality. CET colleges are meant to be a developmental agent, where all government initiatives are run and managed. The numbers look to formal programmes, but the CETs are aiming to deal with a broad spectrum of programmes, depending on what communities need. DHET will, in this year, have a programme which informs it about how to develop partnerships, because SETAs, the National Skills Fund, universities and TVET colleges are key for the development of this institution. Already the DHET is entering into partnerships with the SETAs, to drive certain projects. The DHET is also going to go into communities and provide them with a public institution which is tailored to the specific community’s development. DHET believed that any adult on a social grant must be developed so that the next generation is able to remove itself from that situation. Without this impact, it is completely meaningless to keep on saying that the communities are being developed and communities must be empowered to be able to make their own livelihoods. This programme has been allocated R2.3 billion. It was created from a combination of the two programmes which had a diffused focus. It was not possible to focus CET and at the same time do justice to TVET, and the advantage of splitting them is having a dedicated focus. When seeking approval for the split, the DHET had not asked for additional funding, but funding pressures were inherited. It would be difficult to achieve the targets. The MTSF requires that by 2019/2020, at least 30% of the lecturers in TVET colleges should have been exposed in their industries. The 288 lecturers receiving such exposure is a start.
He indicated that if there had been a reference to “continuing education” that was an error although the Continuing Education and Training Act regulated both the TVETs and CETs. When the programme was established, the DHET disaggregated the targets of the previous Continuing Education and Training into those for CET and TVET. The revised strategic plan was then put in as an addendum to the current planning documents of the Department.
Mr Tredoux said over the past two financial years there has been marginal underspend. In 2014/15 there was a total underspend of R1.16 million out of a budget of R36.867 billion, which equated to under 0.001%. The economic classifications where the underspend happened were: R900 000 in compensation of employees, due to outstanding claims by examiners and moderators, as well as some vacancies which could not be filled. That underspend was 0.2% of the allocation for compensation of employees. Departmental operations saw an underspend of R86 000 of a budget of almost R200 million. For 2015/16 there was a ‘big’ underspend of R84 million, which is again less than 0.2% of the total budget, which was R41.8 billion. The categories of underspending included exchange rate differences where there was a saving of just about R1 million, which under the PFMA cannot be used for another purpose. Then with normal operations there was a saving of about R3.4 million of the R390 million allocated. The biggest underspend was on compensation of employees at R79.2 million, which specifically related to plotting the correct allocations, based on the function shift. The DHET is doing this and hopefully, during the adjusted estimates for 2016/17 this will be corrected. He then spoke to the link between spending and performance. The planning and monitoring branch would confirm that the DHET over performed on some of its targets, but it did not meet some of them. This was not only because of a shortage of funding, but also because of shortage of operational funding for functions like monitoring and evaluation. The setting of targets was done based on the budget, but there were so many unforeseen issues, such as the no fee increase campaign in 2015, which have major impacts on spending. That issue increased administrative costs through additional travel and accommodation costs, additional assistance which was to be given to universities and additional meetings which had to be held; all had a serious impact on how the DHET could spend funds. The organogram shows that currently the DHET has more than R7 billion allocated to compensation of employees. However, the majority of that money is for the TVETS and CETs. The DHET’s original establishment was 1 200 and now stands at 38 031, so the huge establishment is not funded taking into account the number of staff required at Departmental level to manage this function. He cited the example of the finance directorate, which last year had 50 staff, managing 1000 employees in the Department, the transfers and other duties. Now that had risen to 90 employees, but they were managing 38 000 other employees. The Department of Justice and Constitutional Development had around 300 employees in finance to handle the total establishment of around 24 000, by way of comparison. The DHET had inherited a baseline where there was little money for administration, and it was earmarked for specific purposes, resulting in the huge backlog.
Dr Mahlobo indicated that there was a specific addendum to the Annual Performance Plan, as required by the DPME, which had been tabled by the Minister, reflecting the new programme. A number of studies were presented on international funding which showed that the universities were underfunded. The DHET was trying to flag and pursue the key recommendations of the Committee, and the DHET would provide more comments on this in writing.
Mr Mahlubi Mabuzela, Chief Director: University Policy, DHET, said the Higher Education Bill had just been passed by the Portfolio Committee, and would be tabled in the House the following week. The revision of the language policy had not gone to the public yet and a draft is being completed and will be consulted upon in the second half of 2016. The DHET intended a thoroughly collaborative approach. The Council on Higher Education has been mandated to look at the rise in tuition fees and the reasons for that although certain facts were known, including the fact that the state subsidy for universities had been in decline over the years, having dropped from around 70% to 40% over the last fifteen years. Some universities are more dependent on state subsidies than others, even up to about 60% of their funding. That decline has a very real impact on the tuition fees. Another point was that textbooks, laboratory equipment and licences were purchased with US dollars, so the rate of exchange had a real impact. Finally, inflation was significant especially for university buildings. South Africa is investing relatively little in education in comparison to any other region in the world, including sub Saharan Africa, and an aggressive approach was needed to increase the funding of education, and higher education in particular. The growing number of enrolments was another factor, with close to 1 million students, but this was not matched by government subsidies. The costs of R240 000 per student bed took into account construction costs, the unit value of the room and the amenities, and about 200 000 beds were still needed. He clarified that the concept of “free education” implied free education to the poor, for it would cost around R70 billion to provide it for all, and in the face of the declining subsidy, free education for all would not be affordable. NSFAS was effectively already providing free education to the poor, as it would not pursue repayment of loans until the graduates had employment.
The Chairperson said he agreed that free education should be offered to the poor, with others paying where they could afford to. State money will not be abused at the expense of the poor. He noted that the Committee still intended to look into further issues that would require a follow-up by the DHET.
Ms Raquel Ferreira, Director: National Budgets, National Treasury, said that the DHET had approached the National Treasury to speak to the funding pressures, and Mr Tredoux had outlined some of the amounts required per financial year, up to R65 billion per annum. The National Treasury was advised by the 2015 Medium Term Expenditure Committee (MTEC) to explore alternative financing options to meet DHET targets. A process was being following with National Treasury, DHET and DPME looking into the recommendations to formulate a set of options for how the sector could be financed, for it is clear that since the last two financial years have produced “holding budgets” the fiscus alone cannot generate sufficient revenue for the sector. A special MTEC will be sitting at the end of May 2016.
The morning session was adjourned.
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