2016 Medium Term Budget Policy Statement: Human Sciences Research Council briefing

Standing Committee on Appropriations

09 November 2016
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Committee was addressed by the Human Science Research Council on its observations regarding the Medium-Term Budget Policy Statement.
Debt levels had roughly doubled over the last eight years. The biggest item in spending by government had been the repayment of debt. The reason for that had being the halving of SA’s growth rate, which had big consequences for tax raising and the country’s ability to spend.

Government spending on education, health and other basic services had effectively doubled over the last 10 years which was quite impressive and reflected good economic performance over that period as many jobs had been created over that period as well.

According to the Organisation for Economic Co-operation and Development 8-9% of South Africans had tertiary education. 112 000 people had passed matric with a bachelor pass in 2008; of concern was that 35% of those 112 000 did not go to university immediately. 13 000 of those people came from the Quintile 1,2 and 3 schools which were no fee-paying schools and the point was that no one could be lost along the way when it took so much effort from people from all three quintiles to achieve a bachelors pass.

Access to schools, universities and Technical and Vocational Education and Training colleges had improved but completions remained elusive. In 2016 the enrolments at Technical and Vocational Education and Training colleges had dropped to 580 000 from 800 000 in 2014, which was a big concern for the Department of Higher Education and Training. The Technical and Vocational Training sector skills were critical for the economy where the biggest concern was that the throughput and success rate had not been good.

SA had to look at how it could shift in terms of the type of tertiary qualifications.  One of the Human Sciences Research Council’s recommendations was that to date university enrolments were comprised of 30% for science and technology, 30% for Business and 40% were for the Humanities; whereas the need was for the increased enrolments in the set areas to 35% and perhaps decrease Humanities uptake.

On health and social protection, the increasing burden of diseases was something that would bankrupt many countries including SA or at least the health sector of the country since that referred to non-communicable diseases including diabetes; obesity; hypertension and others. Ill-health began at childhood and therefore it was quite pleasing that there were improvements and increases in the budget for the school health programme as that was where obesity began.

On capable and skilled public service, the Council said the question would be whether numbers as presented in the National Treasury graph on National and Provincial employee headcount were solving the problem of the delivery of services. The South African Social Attitudes Survey was part of the International Social Attitudes Survey and an ISAS study was done in 2014 where in 34 countries the question was asked how citizens felt about the quality of service they received and how they had been served. In SA 48% of the surveyed population having being satisfied in the way they had been served; 48% dissatisfied with the rest being neutral or uncertain. The second question was how widespread citizens thought corruption was in the public service. Out of the 34 countries SA was fifth from the bottom, 56% of SAs population believed that public service personnel were corrupt.

The Committee observed that Council had not referred to the Ocean’s economy in terms of its bemoaning the lack of economic focus by government, though projections were that the ocean’s economy could add about R177 billion to the gross domestic product. What was HSRCs view on those projections and had that ocean’s economy actually been implemented to date?  It was not clear whether a blanket increase would be effected as suggested by the proposed Value Added Tax increase. Seeing that it would be on selected items, what was HSRCs view on that and to what extent would the proposal to increase VAT affect the poor? Members also asked if the rise in government borrowing could be attributed to mismanagement of government resources at State Owned Companies (SOCs).

The Public Service Commission had reported to the Committee that some of the violent service delivery protests could be attributed to government failing to provide services to citizens: had the Council done research around that or could it comment on the validity of such possibilities? Had HSRC done work on the service delivery protests dynamic prior and post-election times?

The Committee further asked whether any research and a skills audit had been done on the increased number of National and Provincial employees in the public service. How many Technical and Vocational Educational and Training colleges were subsidised by government and how many were independent? Which of the energy preferences as listed in slide 32 were cheapest and suitable for SA?
 

Meeting report

Briefing by Human Science Research Council (HSRC)
Prof Crain Soudien, Chief Executive Officer, HSRC, said up to 50% of HSRCs funding was from a voted Parliamentary voted budget and the Council’s mandate was to do Human behaviour based research which could inform public policy.
There were a number of critical features of the economic situation in which South Africa (SA) found itself in which it needed to be deeply aware of, and which needed to be understood very clearly.

Prof Ivan Turok, Executive Director, Economic Performance and Development Unit, HSRC, said the National gross and net debt outlook showed that debt levels had roughly doubled over the last eight years. The biggest item in spending by government had been the repayment of debt. The reason for that being the halving of SA’s growth rate which had big consequences for tax raising and the country’s ability to spend.

Government spending on education, health and other basic services had effectively doubled over the last 10 years which was quite impressive and reflected good economic performance over that period as many jobs had been created over that period as well.

On the vision to encourage investment, the assumption that the economic cycle had reached the bottom and growth would be over 2% within a year or so had to be questioned as to what conditions were required to turn SA stagnant position around to inject some momentum into the economy.

Dr Vijay Reddy, Executive Director- Education and Skills Development research programme, HSRC, said that though there was commitment from everyone to education, SA was still not experiencing the kinds of changes perceived to be happening.
According to the Organisation for Economic Co-operation and Development (OECD) 8-9% of South Africans had tertiary education and the definition of tertiary education under the OECD was anyone who had completed a grade 12 and needed grade 12 to complete some sort of studies thereafter which would have at least taken two years.
In 2000 112 000 people had passed matric with a bachelor pass and it was concerning that 35% of those 112 000 did not go to university immediately. 13 000 of those people came from the Quintile 1,2 and 3 schools which were no fee-paying schools and her point was that no one could be lost along the way when it took so much about from people from all three quintiles to achieve a bachelor pass.
Access to schools, universities and TVET colleges had improved but completions remain elusive
In 2016 the enrolments at Technical and Vocational Education and Training (TVET) colleges had dropped to 580 000 from 800 000 in 2014, which was a big concern for the Department of Higher Education and Training (DHET). The TVET sector skills were critical for the economy where the biggest concern was that the throughput and success rate had not been good.

Dr Reddy said that SA had to look at how it could shift in terms of the type of tertiary qualifications.  One of the HSRC recommendations was that to date varsity enrolments were comprised of 30% for science and technology, 30% for Business and 40% were for the Humanities; whereas the need was for the increased enrolments in the set areas to 35% and perhaps decrease Humanities uptake.

Professor Demetre Labadarios, Executive Director: Population Health, Health Systems and Innovation, HSRC, said that one of the key elements was the question of how to increase equal access to healthcare. The question was quite important in relation to section 27 of SAs Constitution. The question was also important as equal access could only be improved through universal coverage.
Equally important was that despite the consolidated government increase of 7.6% over the Medium-Term Expenditure Framework (MTEF) the increasing burden of diseases was something that would bankrupt many countries including SA, or at least the health sector of the country, since that referred to non-communicable diseases including diabetes; obesity; hypertension and others. Ill-health began at childhood and therefore it was quite pleasing that there were improvements and increases in the budget for the school health programme as that was where obesity began.

Prof Narnia Bohler-Muller, Executive Director-Democracy, Governance and Service Delivery, HSRC, said the question would be whether numbers as presented in the National Treasury (NT) graph on National and Provincial employee headcount were solving the problem of the delivery of services.
The South African Social Attitudes Survey (SASAS) was part of the International Social Attitudes Survey (ISAS) and there had been an ISAS study done in 2014 where in 34 countries the question was asked how citizens felt about the quality of service they received and how they had been served. SA had fared relatively well as it was number 13 of the total 34 with 48% of the surveyed population having being satisfied in the way they had been served; 48% dissatisfied with the rest being neutral or uncertain. The second question was how widespread citizens thought corruption was in the public service. Out of the 34 countries SA was fifth from the bottom with Venezuela, Croatia, Lithuania and Russia leading from the bottom in terms of public perceptions of corruption.  Specifically, 56% of SAs population believed that public service personnel were corrupt.

Discussion
Mr N Gcwabaza (ANC) said it was not clear whether a blanket increase would be effected as suggested by the proposed Value Added Tax (VAT) increase. Seeing that it would be on selected items, what was the HSRCs view on that and to what extent would the proposal to increase VAT affect the poor?

The HSRC had not referred to the Ocean’s economy in terms of its bemoaning the lack of economic focus by government, though projections were that the ocean’s economy could add about R177 billion to the gross domestic product (GDP). What was HSRCs view on those projections and had that ocean’s economy actually been implemented to date?

Was the dissatisfaction in terms of housing under social spending because of quality or access to housing or both and perhaps was it that people did not quite appreciate what the Reconstruction and Development Programme (RDP) houses were meant to be?

Professor Turok responded that as far as he was aware the proposed VAT increases would be tabled in February 2017 but his view was that VAT was an attractive source of revenue raising for government as it brought a lot of tax revenue.  He suspected that it would be VAT on selected items and certainly an increase would definitely hit the poor the hardest.

On the operation Phakisa Ocean’s economy, there had been some investments in the eThekwini Port for example, things had been happening at Saldanha in terms of oil and gas. There certainly was potential but the Phakisa was not a panacea to the unemployment challenges and certainly a review of Phakisa could be timely to see whether it had been delivering to its full potential and what had been the continuing blockages.

The factors Mr Gcwabaza had alluded to could be the reasons for dissatisfaction around housing. Moreover, those that had been promised and had not been delivered a house could also be frustrated that they had not been allocated housing.  The backlog had been increasing in housing delivery because of the rising population. Some of those that had received housing were dissatisfied because of the quality of the construction and many of the dormitory settlements built were on the edges of towns far from schools, work places and health clinics which were also a frustration for many.

Professor Bohler-Muller said the Ocean’s Lab was the most successful oceans’ Phakisa to date which was also the first Phakisa. It was focused on ports and shipping and in particular small ports and an increased focus on gas and oil exploration, fishing and aquaculture. There had been jobs created in those areas and indeed around special economic zones (SEZs) however, much more could be done. Environmental issues and sustainable growth were always at the back of people’s minds in that regard.  She was aware that SAs International focus had moved to the Blue economy since SA would from 2017-19 be the chairperson of the Indian Ocean Rim Association (IORA). SA also led what was called the blue economy core group within the IOR which focused on skills transfer including areas which operation Phakisa would have not focused on sufficiently which was tourism in the Indian Ocean. The African Union (AU) had adopted a maritime strategy which focused on the role of women in the maritime sector.  HSRC was quite involved in that activity which would enable not only youth but women to access opportunities in maritime.

Some issues which emerged during the survey on housing satisfaction was the slow pace of upgrading of informal settlements where individuals felt that there was a slow response from government on provision of services and housing and that local government was not keeping up with migration to cities.

Professor Labadarios added that his comment regarding the sugar tax was based on his hope that the revenue from that tax would be specifically directed towards the Department of Health (DoH) rather than being used according to government priorities as determined by National Treasury. Though the tax was not owned by DoH the prevention interventions that had to be introduced were tremendously expensive.

Dr C Madlopha (ANC) asked what HSRC thought could be done to adequately address policy objectives in budget programme priorities targeting unemployment, poverty and inequality.
Had HSRC done any research on government revenue streams? If yes, what was HSRCs view in that regard or how better could said revenue streams be improved?
Given that debt-servicing and post-school education and training were the fastest growing government expenditure items; what was HSRCs view regarding the sustainability of the country’s budget for the next three years? What were the implications for those items in the current deficit?

Dr M Figg (DA) had raised repeatedly the point around debt as a percentage of GDP, which had risen rapidly from 28% of GDP in 2008 to 47% to date and continued rising.  He felt that government had failed in allowing borrowing to have risen that much. What was a reasonable figure to stop at in terms of debt to GDP?

Zero rating particular items so there was no VAT still disadvantaged the poor as the implication was that they could only buy those zero-rated items; was government not supposed to be developing a model where the richer people were charged VAT by perhaps giving the poor a VAT card. Essentially the card would zero rate items for the poor but also have a limit because to date the rich and the middle class were also benefiting from the currently zero rated basic items.

It could not be that every poor person benefited from no or lower fees in post-school education: there had to be a condition where an individual would be allocated funding on merit.

Ms E Ntlangwini (EFF) said she hoped that the reports by the research council would see the light of day and that they actually would inform government policy, so SA as a country could start moving forward.  Quite alarming was the percentage attitudes of citizens that perceived the public service to be corrupt, and that had to be used to inform change attitudes of government employees so that citizen’s attitudes could change. It was certainly up to the Committee to ensure that the recommendations from the HSRC report would be implemented.

Could the rise in government borrowing be attributed to mismanagement of government resources at State Owned Companies (SOCs)?

The Public Service Commission (PSC) had reported to the Committee that some of the violent service delivery protests could be attributed to government failing to provide services to citizens: had HSRC done research around that or could it comment on the validity of such possibilities? Had HSRC done work on the service delivery protests dynamic prior and post-election times?

Had any research and a skills audit been done on the increased number of National and Provincial employees in the public service?

Was the Servaas van der Berg study on Progression through education only done in public schools or had the private schooling system been included? Was the study done across all provinces? What factors contributed to the numbers decreasing?

How could government assist South Africans to be more mindful about the kinds of energy packed foods they could consume and to deal with obesity?

Was there enough capacity for the state of the art health facilities which government built?

Ms M Manana (ANC) said it would help if Professor Labadarios could share with the Committee as to what had gone wrong and when in terms of the non-communicable disease plaguing South Africans?

NT had reported that of 10 students entering TVET colleges, only one completed their qualification; what were the HSRCs views regarding that report?

Regarding the throughput of higher learning institutions versus labour market requirements; what were HSRCs views?

Mr A McLoughlin (DA) said that ever since he had been a member of the Committee he had heard ‘acceleration of economic growth’ from various people where so far the government had failed miserably. Increasing tax would hardly accelerate economic growth, in fact it would have the opposite effect.
Was there any universally accepted model of accelerating economic growth in any given situation throughout the world that HSRC was aware of?

The economies of Japan and the United State of America (USA) had borrowing rates of 150% of GDP and certainly they could afford to do so; if speaking from the percentage of the growth in borrowing what was the percentage growth in the cost of servicing that borrowing? Was that escalating as fast if not more that the rate of borrowing?

Professor Turok had commented that government had succeeded in at least increasing its spending in its main budget spending per capita for 2015 prices. The PSC had reported on the percentage of achieving goals related to the percentage of spending where in many instances the two had been terrible; where people spent 100% of their budget with only 14% achievement. Was that not supposed to be compared with as well with what was been achieved with spending instead of relating to schooling and higher education. If money was spent on putting people through university where 60% fell through the cracks, could that not be wasteful expenditure? Was government not supposed to have a more efficient screening process where it could ascertain who would likely be able to complete their qualification?

Were the percentages in the Comorbidity graph percentages of the specific racial groups as divided or the total group?

Ms C Shope-Sithole (ANC) said that Minister Pravin Gordhan had reported that private sector non-investment was a global phenomenon and was not only affecting SA. Was there a better way of studying private investor patterns to enable government to get the private sector to assist in social spending through job creation?

She was also concerned about the illicit flows of capital from SA where businesses under-priced their goods or mislabelled them purposely for export.

Were institutions of higher learning able to study the labour market and the demands of the market economy to be able to train people on relevant and required skills? There had to be a dialogue on what qualifications government was spending SAs money because continuing to fund qualifications in saturated sectors was fruitless expenditure.
 
Ms N Ndongeni (ANC) said that given the need to maintain our social protection floor and protect the poor and vulnerable from further hardships associated with the prevailing tough economic climate; what proposals was the HSRC tabling to protect the poor and vulnerable?

What proposals did the HSRC have for government to curtail the growing government wage bill without adversely affecting frontline service provision and being able to retain scarce skills in the public services?

The Chairperson said the MTBPS already highlighted the need to promote urban planning reforms supported by public and private investments; what in HSRCs view were the main constraints in accelerating those reforms in urban planning? Where were the best practices that SA could benchmark its performance against in that regard?

How could funding be better streamlined to target government’s objectives for inclusive urban settings?

Though most of SAs graduates were in the public and financial services the MTSF spoke of the need for small enterprises to make a larger contribution to growth. The NDP projected that 90% of jobs would come from small enterprises; how could SA reconcile both projections and enable small enterprises to have meaningful role in growing SAs economy?

Professor Soudien said possibly if the Council would have not responded to all the questions it would certainly send written responses, but his delegation would try to respond to all the questions raised by the Committee.

Professor Turok said his responses would not be the exact solutions as they were based on ongoing debates some of which were quite controversial.
In relation to government borrowing not being problematic historically was that at the perception was that at some level it had been counter-cyclical such that SA could sustain a reasonable level of debt which was a good thing to do in a recession; because the borrowing at that time was to try and prevent a recession from continuing. When a recession was not turning around a country then borrowed more and at some point the borrowing became a big problem, which was the stage where SA was at. At 50% of borrowing against GDP was where serious damage could occur and of course countries like Japan indeed could maintain its borrowing because the situation was completely different from that of SA.
 
There was no silver bullet on how to inject growth into the SA economy and it was going to be hard. Across society there was a need to prioritise the need for growth more consistently since SA still did not recognise economic growth as the number one priority in its existence. That meant recognising that making small enterprise establishments had to be made much easier as there still remained a lot of red tape around starting a small concern. Government also had to get its act together around coordination and what the agenda was, despite the NDP. The NDP had been criticised for being vague as there had been a task team set-up to improve the economic aspects for the different chapters of that document, and to get more consensus as there was contradiction between the different chapters where there had been no buy-in from the top.

Professor Turok was not convinced that it was about labour market reforms and the privatisation of state entities only. SA was a different society and people would not tolerate a neo-liberal solution as the Growth, Employment and Redistribution (GEAR) strategy had failed. There had to be a social consensus amongst business and labour and a real willingness to compromise amongst all stakeholders. Urban renewal was a part of that and if one followed the MTBPS logic of a need for cooperation and the case it made, the argument was quite compelling.
Cities were where there was a proven record of private sector investment, but it was also where protests were happening, where there were housing backlogs. Most provinces did not support their cities as KwaZulu-Natal (KZN) was a case in point as it basically said Durban could look after itself.
Indeed, there was quite big mistrust of government intentions by the private sector and it was a global phenomenon. Minister Gordhan had been right when he quoted R600 billion as money sitting in that sector and government had to speak with that sector more honestly and frankly about what it was that stopped private investors from investing in SAs economy.
Spheres of government apart from the private sector did not trust each other and the non-cooperation in human settlements was another case in point because provinces wanted to build housing in different places as the municipalities would want. There were systematic conflicts about infrastructure spending.

It would be administratively complex to waiver VAT for some people with a card as every retail outlet would have to have two systems to deal with that; a better way could be to raise the thresholds of the personal income tax system.

Professor Soudien said the National Student Financial Aid Scheme (NSFAS) already had the conditions raised by Members; two years ago the NSFAS had implemented a rule that if a student failed a course or was below 60% in marks overall the said student would not receive further support the following year. In essence, the HSRC did not disagree with the notion that a deserving child who met the entrance requirements of university on merit and who was poor must not be denied the opportunity. What was in disagreement was that everyone had to get free education. Contentious as that was SA had to have the modalities to make clear that there had to be a system where the wealth, rich and well-off actually paid for their education. That could simply mean rethinking how the subsidy system worked inside universities.

The administration of a system which would require differentiation between people of different income levels and streams was exceptionally difficult as Professor Soudien had recently come out of such a university administrative system. SA had not arrived at being able to deal with each individual student’s needs specifically. The R600 000 which Minister Blade Nzimande had proposed was quite a high cut-off point but there were many families putting three/four children through universities, and earning R300-R400 000 that was quite challenging. It was quite difficult to get the fairness right in the current system.

Dr Reddy said SA had quite a high unemployment number, which was 8 million. 60% of those people had less than grade 12 educational achievements. There were shortages and vacancies for scarce high level skills, so the challenge was growing the economy in a world where there was mechanisation, digitisation, auto mechanisation and an increase in technology intensive methods. Though it was easier to mechanise a formerly labour intensive job and jobs were lost that way. Traditionally labour intensive sectors like manufacturing, agriculture and mining had contracted since 2008 and the big expectation was that manufacturing would increase. HSRCs document had detailed all of that and the decrease in the manufacturing sector had been in terms of its contribution to GDP and in numbers employed in the country. Though there had been a big increase in the public sector that had seen government creating jobs for those with low skills.

In terms of the skills level of public servants; HSRC had conducted research and because a skills levy was paid HSRC had found that in the public sector quite a large section of the workforce was undergoing training. In terms of whether that training led to better efficiencies and what the outcome had been of all that training; Dr Reddy said there had not been enough research on quantifying the successes of the training. And the HSRC was not convinced that training had led to better service delivery anecdotally. Only 44% of managerial level staff in the entire public sector from legislators, CEOs and senior managers in government, had tertiary education with 6% without. The level below that, categorised as the professionals, was characterised by 75% of those individuals in possession of a tertiary qualification.   

Dr Reddy said the methodology used in the van der Berg study had been to find first all those that would have written matric in 2008 and to then have followed them as they entered the different institutions. The study was national and it included both those who wrote matric in public schools and those in independent schools as well. Independent schools constituted about 7% of all learners at school.  Secondly the methodology was largely statistical therefore the reasons on how people were distributed as presented in the graph.

She agreed that it was quite concerning that only one in 10 entrants to TVET colleges completed their qualifications. Certainly, the challenges of the TVET sector, from the qualifications, students and lecturing staff were all things that had to be considered.

In terms of responsiveness and planning; the Labour Market intelligence Project (LMIP) had responded to government’s outcome 5.2.2 which was the development of a skills planning mechanism for SA. TVET colleges would have to do local planning and that meant addressing the question of how a TVET college operated in its own local system and the issue of its responsiveness to the economic demands in that environment. There were some very successful TVET colleges which were quite entrepreneurial in that they were able to link to their local economies. 

Professor Bohler-Muller said investors wanted a stable society before investing and the HSRC had done some work on community and service delivery protests where the Council had worked with the South African Local Government Association (SALGA). HSRC had also recently finished a study where it had been looking at the perceptions of municipal managers (MMs) about the service protests. It had also done a project with University of Johannesburg (UJ) on communities’ perceptions about services. The results suggested that managers and communities were missing each other completely.  MMs had said that they were doing their jobs well and that the communities were too demanding whereas communities had been saying MMs were unresponsive and did not allow public participation during planning. There was a lot that happened before protests and even a lot more before protests became violent. At some point, government would have to really review its Intergovernmental Relations (IGR) and the fiscal frameworks because they were complicated and confusing for everyone to date. For example, a municipal official would say to a citizen that was seeking assistance that the assistance sought was a provincial competency, which was simply not good enough.

Professor Labadarios said he did not believe that VAT had reached its full potential in terms of its utilisation. That needed to be reviewed as it related to the question as to what had caused all of current problems SA was facing currently. At the risk of being seen as a nanny state VAT had a role to play.  Evolution had gone wrong or SA had gone wrong in its evolution because one could not get away from the fact that one had to eat. The issue was that SA did not eat to survive, it ate for pleasure. And then there were those well-to-do, the fortunate ones and they loved food and SA overate as a nation. That was why there was a need for new interventions but that was one arm of the problem as it evolved, having more money meant eating too much.  The poor were worse off as it was expensive to be poor as the poor also overate, but energy dense stuff.  The third component of the problem was that SA did not look after its children properly. Essentially when they did not grow properly from two or three years upwards, their growth became stunted. Following those children up from then, the HSRC had found that they were seven times more likely to develop obesity. There was an inheritance dimension as well and historical impaired development in children had been very high and remained quite high to date at 22-23%.

Ms Shope-Sithole said the Wall Street inflicted pain which affected Europe and SA the most was very unfair.  She personally did not trust economists because they had been unable to foresee the global economic shock of 2008.

Ms Ntlangwini asked whether the burden of disease affected the entire country equally. Was it not possibly more prevalent and had adverse implications for those in rural areas as compared to those in urban centres?
She also agreed with both perspectives from the HSRC that though perhaps rural areas had to be developed to urban centre standards because people from rural areas were migrating to cities and towns, both had to be prioritised for further investment.  

What was HSRCs perspective on what could have triggered the violent #FeesMustFall# movement? She also requested that HSRC to leave the research documents which it had referenced in the presentation and discussion.

Had HSRC ever done research on the schools feeding schemes and what the possible reasons could be of children falling sick most recently?

How many TVET colleges were subsidised by government and how many were independent?

Which of the energy preferences as listed in slide 32 was most cheap and suitable for SA?

Ms Manana wanted to know what interventions government could institute in alleviating the burden of disease.

The Chairperson said that the MTBPS had reported that the science councils were not effective in partnering with the private sector. What was HSRCs view in that regard?

The Committee had noted reluctance during the MTBPS process from some business groups including the Black Management Forum (BMF), Business Unity South Africa (BUSA), Business Leadership South Africa (BLSA) and others to participate yet, issues of spending on small enterprise and infrastructure affected them directly. Where was the challenge possibly and how could government ensure participation from those structures?

Professor Turok said it was indeed a tough economic climate to date, as Brexit and the election of Donald Trump as US President highlighted the increasing degree of protectionism. There would be more competition for SAs export and tariff increases as well. Life would get tougher as there were a lot of things outside the country’s control like Wall Street. There were things in SAs control where government shot itself in the foot and the issue was about the quality of spending. For example, the mismanagement of some state entities; there had to be consequences when people were stealing public money.
The austerity measures hopefully would encourage quality spending and force efficiencies.

The rural versus urban development was not an either or but creating inclusive development. Government could do more in agriculture in supporting rural development as many projects like rural tourism were in the rural areas. Professor Turok felt that the best bet in terms of public investment was it cities infrastructure.

The private Sector did not come to the party because they simply did not trust the government.

Professor Labadarios said the burden of diseases was a multidimensional problem with no silver bullet solution.  Essentially the country had to eat less, which took education into account and had to be more active. The points of intervention that made health so expensive were that intervention had to start at school level. Intervention also had to be at the worker level because a lot of time was spent at work. Intervention also had to be at the community level and most importantly in the home environment. Put together intervention had to be in the environment as people did not exercise at school or at work to date; because it was not safe sometimes or the curriculum had changed.
All those had to be looked into with the aim of increasing energy expenditure in order to reduce weight and to eat less of the right foods. That was where the VAT came in as it was more expensive to buy healthy foods than it was to buy the starchy, energy dense foods.
Lastly possibly, SA had to think like the Swedes by urbanising its rural areas so that the burden on cities could be reduced. 

Professor Bohler-Muller said HSRC had done some research into violent protests in communities but not enough yet, to reach any conclusion. The council was planning to go into Vuwani to commission action research into how the situation had reached the extremes it had reached. However; the work was funding intensive.

The issue of police responses also came up a lot in the community’s research where people had felt the South African Police Services (SAPS) were not training its officials well enough, and that the responses sometimes were excessive and there was not enough negotiation and a better approach of the anger of people.

There had been so many developments around the world on renewables and SA could learn quite a lot from Germany in terms of affordability of the technology. Ocean wave energy also had to be considered though it could be a bit more expensive; countries like the United Arab Emirates (UAE) were developing technologies to bring the prices down. NT said all those had to be costed; she would be interested to see if NT had done the costing itself.

Dr Reddy said HSRC had not done any work on the schools feeding schemes but there had been impact assessments done on that, certainly she could send the information to the Committee. Regarding nutrition, the Department of Science and Technology (DST) and the Council for Scientific and Industrial Research (CSIR) had started a pilot project in the Cofimvaba area of the Eastern Cape (EC), where the focus was on how the traditional foods and the micronutrients present in beet, spinach could be harnessed as that had been overlooked to date. The pilot project had extracted those micronutrients and had prepared a breakfast drink to give the learners when they came in the morning. Currently DST and CSIR were evaluating the impact on the health of the learners.

The majority of TVET colleges were public and HSRC had sent a link to the secretariat for a report on the skills supply and demand report. There was a chapter on skills supply which comprehensively described the TVET and university sector and the public versus private split. The private TVET sector was quite small though they had been very good in terms of short-term responsive courses like plumbing and others; HSRC had recommended to DHET that public colleges had to be as responsive with short courses. On a recent trip with DHET to Germany and Australia, it had been amazing that the TVET sector in both countries had been driven by the private sector. It was also driven by the scientific councils as they had very strong relationship with the TVET sectors in both countries.
It was true that during HSRCs skills planning workshops it sent invites to business formations and the big gap would be that the workshop would be focused on skills for the economy but the people who could invest in the economy and could add value would not be in attendance.  

Professor Soudien said the HSRC had quite a lot more work to understand the issue of burning of infrastructure during service protests and indeed HSRC had sent a team to Vuwani to understand what had been going on. The fact that up to 31 schools had been burnt down by people who would have gone through some schooling was something that needed to be understood: was there so much alienation from the educational process in SA that people saw no value in having learning institutions.

On #FeesMustFall# the movement was not homogenous and there were many different interest groups. The number of students responsible for the burnings was quite small and what had to happen was that scientific counsel had to be able to empirically demonstrate that which was very possible.  Once that was done, hopefully the Council would understand that those students brought quite a lot of social factors to the particular act of burning. Lots of things were going on in the particular students’ lives, including personal tragedy.

The HSRC was a very different council from the CSIR. The Public Finance Management Act (PFMA) designated CSIR as a schedule 3B council and the HSRC as a schedule 3A meaning CSIR could make profits and the HSRC could not. HSRC was not allowed to generate income and that had a major impact in the kinds of relationships it had with the private sector. HSRC, the Agricultural Research Council (ARC) and the Medical Research Council (MRC) would approach the private sectors on a very different footing compared to the CSIR. HSRC generally waited for the private sector to seek assistance from it.  

HSRC was developing a new white paper for science and technology where the paper would be presented to Parliament around November 2017. Key in that paper was cooperation between the public and private sectors, higher education and the science councils, as there was big concerns that the four sectors were not talking with each other about the kinds of innovation required to move SA to another level of economic growth. Collaboration and behaviour change were the next big things in the following period.

Ms Shope-Sithole asked if HSRC could not look into the illicit flows of capital from SA.

Professor Soudien said HSRC would certainly generate a written response however; he did not think the HSRC had enough requisite expertise to do the whole thing.

Ms Ntlangwini interjected that the Davis Tax Committee (DTC) had done some work on the illicit flows of capital from SA and that report was quite substantive.

Professor Soudien said the HSRC had a magazine called the Human Sciences Review which put a short digest of the work of the Council. The council would be happy to respond to any further proposals and questions Members would have. Though there was a very active public commentary environment people often spoke very freely on radio and social media, however the platforms were not sufficiently enriched with the best thinking that was available on key questions when the questions arose as opportunities for debate. The fees question at higher learning institutions for example; required a very clear technical understanding of what was possible in the current situation. The public domain had been unable to get clear information about what the possibilities were sufficiently enough to influence the way the debate was taking place.

The Chairperson thanked all the Members for attending the briefing by the HSRC. She then summarised the proceedings of the briefing.

Committee business
Dr Figg requested if possible that the Committee deal with proposals for the Division of Revenue Bill on the 14 November 2016 as the Democratic Alliance members of the Committee would not have had sufficient time to prepare inputs into that bill.  

The Chairperson said procedurally it would be a challenge to do that as the bill had to be submitted for ATC on that very same day after adoption, which meant there would not have been enough time to discuss Members’ proposals to reach consensus.

Dr Figg said his second proposal was to provide possible proposals regarding the Appropriations Adjustment Bill on the 29 November 2016. The Committee would be briefed the following day so that there would be public hearings on the Appropriations Adjustment Bill and that was why he was asking the DA to be allowed to make proposals.

The Chairperson read correspondence from the House Chairperson which spoke to wasteful expenditure during oversight visits. The House Chairperson had requested and was alerting members that Parliament would no longer allow Members of Parliament (MPs) to leave oversight early as that amounted to wasteful and fruitless expenditure by Parliament.

The chairperson said there remained a report back on the appearance of the Committee of Appropriations before the Commission of Inquiry into Higher Education and Training (The Fees Commission).

Appearance of the Committee of Appropriations before the Commission of Inquiry into Higher Education and Training (The Fees Commission)
The secretariat reported that, as mandated to share information with the Fees Commission by the Committee, the representatives of the Committee had gone to the Commission. The Commission insisted that information sharing had to be in a format of subpoena and because of that the presentation had not been done as it would have required swearing in of the representatives. Additionally, the legal advice from legal services of Parliament was that to be sworn into the commission would be violating the principle of cooperative governance.  However; the representatives had left the presentation with the Fees Commission.

The meeting was then adjourned.    

 

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