ATC190705: Report of the Portfolio Committee on Higher Education, Science and Technology on Budget Vote 30: Science and Technology (2019/20), dated 5 July 2019.
Higher Education, Science and Innovation
2. Report of the Portfolio Committee on Higher Education, Science and Technology on Consideration of the Budget Vote 15: Higher Education and Training, Dated 05 July 2019
1. INTRODUCTION AND MANDATE OF THE COMMITTEE AND THE DEPARTMENT
The Portfolio Committee on Higher Education, Science and Technology (hereinafter referred to as the Committee), having considered the 2019/20 Annual Performance Plan (APP) and budget of the Department of Higher Education and Training (hereinafter referred to as the Department) on 03 July 2019, reports as follows:
1.1. Purpose of the Budget Vote 15 Report
The purpose of this report is to account for work done by the Committee in considering the 2019/20 APP and budget of the Department submitted in accordance with Section 27(1) of the Public Finance Management Act, 1999 (Act. No 29 of 1999), and as referred by the Speaker of the National Assembly (NA) on 28 June 2019 to the Committee in terms of Rule 338 for consideration and reporting.
1.2. Mandate of Committee and the DHET
Section 55(2) of the Constitution of the Republic of South Africa stipulates that “the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) national executive authority, including the implementation of the legislation; and (ii) any organ of state”. Rule 227 of the Rules of the National Assembly (9th edition) provides for mechanisms contemplated in section 55(2) of the Constitution.
The Department derives its mandate from section 29 of the Constitution of the Republic of South Africa and the following legislation: Higher Education Act, 1997 (Act No.101 of 1997), National Student Financial Scheme Act, 1999 (Act No. 56 of 1999), Continuing Education and Training Act, 2006 (Act No. 16 of 2006), National Qualifications Framework Act, 2008 (Act No. 67 of 2008), Skills Development Act, 1998 (Act No. 97 of 1998), Skills Development Levies Act, 1999 (Act No. 9 of 1999) and General and Further Education and Training Quality Assurance Act, 2001 (Act No. 58 of 2001). The Committee oversees the implementation of the above mentioned legislation.
1.3. Method
The Department’s 2019/20 Annual Performance Plan and budget were considered against the background of key government policy documents, including, amongst others, the National Development Plan (NDP), Medium Term Strategic Framework (MTSF) 2014 – 2019, and the 2019 State of the Nation Address (SONA).
Due to time constraints, the Committee could not convene a briefing session with the Auditor-General of South Africa (AGSA) to get a presentation on the audit outcomes of the Higher Education and Training Portfolio for the 2019/20 Annual Performance Plans. Moreover, other entities that receive voted funds from the budget of the Department could not be invited due to time constraints.
2. OVERVIEW OF THE KEY POLICY FOCUS AREAS RELEVANT FOR THE DEPARTMENT
2.1. Relevant Government policy documents
2.1.1. The National Development Plan (NDP) Vision 2030 and the 2014 – 2019 Medium Term Strategic Framework (MTSF)
The 2014 - 2019 MTSF, which is a five-year strategic plan of government, forms the first five-year implementation phase of the NDP. The aim of the Framework is to ensure policy coherence, alignment and coordination across government plans as well as alignment with the budgeting process. The Department is responsible for Outcome 5: “A skilled and capable workforce to support an inclusive growth path”.
2.1.2. 2019 State of the Nation Address (SONA)
The President, in his 2019 State of the Nation Addresses (SONAs), both February and June emphasised that education and skills development must be prioritised. At the centre of efforts to achieve higher and more equitable growth, and to draw young people into employment and to prepare the country for the digital age, there must be the prioritisation of education and the development of skills. The President stated that government has committed to contribute R100 billion into the Infrastructure Fund over a 10-year period and as a first step, government plans to expand projects underway already, such as student accommodation.
In line with Government’s commitment to the right of access to higher education for the poor, fee-free higher education for qualifying first year students was introduced in 2018. The policy would be phased in over a five-year period until all undergraduate students who qualify in terms of the criteria could benefit; and government plans to prioritise stabilising the business processes of the National Student Financial Aid Scheme (NSFAS) to ensure that it is properly capacitated to carry out its critical role in supporting eligible students.
3. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2019/20 MEDIUM-TERM EXPENDITURE FRAMEWORK (MTEF) BUDGET
3.1. Overview and assessment of the 2019/20 Medium-Term Expenditure Framework (MTEF) Budget and the 2019/19 Annual Performance Plan (APP)
Table 1: Overall Budget Allocation and Expenditure Estimates: 2019/20 financial year
For the 2019/20 financial year, the Department is allocated a total budget of 108.3 billion including the direct charges against the National Revenue Fund. The budget is comprised of R89.5 billion for the Department’s six budget programmes and R18.8 billion for direct charges against the National Revenue Fund for the Sector Education and Training Authorities (SETAs: R15 billion) and the National Skills Fund (NSF: R3.7 billion). The overall budget has increased by 19.70 percent (R17.8 billion) from R90.4 billion in 2018/19. The budget is projected to increase in the outer two years of the 2019/20 MTEF period to R119.2 billion and R126.7 billion in 2020/21 and 2021/22 respectively. The Department’s six programme budget increased by 22.4 percent. For the two outer years of the 2019/20 MTEF, the budget is projected to increase to R98.7 billion and R104.4 billion in 2020/21 and 2021/22 respectively. Two delivery programmes, University Education and Technical and Vocational Education and Training (TVET) take the bulk of the budget, which represent a 96.23 percent of the Department’s budget excluding direct charges.
3.2. Expenditure estimates per economic classification
Table 2: 2019/20 allocation and expenditure per economic classification
|
Economic Classification |
Financial year |
|||
|
2018/19 Revised Appropriation |
2019/20 Appropriation |
2020/21 Appropriation |
2021/22 Appropriation |
|
|
R’000 |
R’000 |
R’000 |
R’000 |
|
|
Current payments Compensation of employees Goods and Services |
9 380.2
|
10 300.2 |
11 097.6 |
11 811.6 |
|
8 952.3 |
9 637.7 |
10 360.5 |
11 034.0 |
|
|
427.9 |
662.5 |
737.1 |
777.6 |
|
|
Transfers and subsidies |
81 040.8 |
97 944.4 |
108 067.5 |
114 862.2 |
|
Payments for capital assets |
13.9 |
12.0 |
11.7 |
12.4 |
|
Payments for financial assets |
1.4 |
- |
- |
- |
|
Total |
90 436.2 |
108 256.7 |
119 176.8 |
126 686.2 |
The Department’s total budget for the 2019/20 financial year amounts to R108.3 billion, inclusive of direct charges against the National Revenue Fund. In terms of economic classification, 89.65 percent (R97.9 billion) of the total is allocated for transfers and subsidies. The budget for transfers and subsidies increased significantly by R16.9 billion, which represents a 20.86 percent increase from 2018/19 allocation of R81.0 billion. The significant increase, mainly in the departmental agencies and accounts is due to the phasing in of the implementation of fee-free education policy to expand access of students from poor and working class family. Transfers and subsidies for both the departmental agencies and accounts and higher education institutions accounts for 85.14 percent of the budget allocated for transfers and subsidies.
The bulk of the allocation to transfer and subsidies, R73.1 billion which represents 74.66 percent goes mainly to, higher education Departmental agencies, the National Student Financial Aid Scheme (NSFAS) and higher education institutions for subsidies and for capital expenditure. The second largest allocation of R15.0 billion in the transfers and subsidies goes to the SETAs.
Current payments received an allocation amounting to R10.3 billion which is the second largest allocation in terms of economic classifications. The allocation increased by 10.37 percent from R9.3 billion allocated in 2018/19. Of the total current payments allocation, 93.56 percent (R9.6 billion) is allocated to compensation of employees and R662.5 million is for goods and services. Of significance to note is that the bulk of the budget amounting to R9 billion for compensation of employees, is allocated for compensation of employees for the TVET and CET colleges employees. The allocation for payments for capital assets amounts to R12 million for the 2019/20 financial year. The allocation has decreased by R1.9 million from R13.9 million allocated in 2018/19.
In terms of projected spending on goods and services, 26.79 percent (R177.5 million) of the total budget for goods and services is allocated to travel and subsistence expenditure line item. The allocation increased significantly by R86.8 million. This represents a 48.89 percent increase from R90.7 million in 2018/19.
Computer services allocation amounting to R135.4 million is the second largest expenditure line item in goods and services. The allocation has increased significantly by 64.61 percent (R87.5 million) from R47.9 million in 2018/19. The third highest projected expenditure is for consumables stationery, printing and office supplies amounting to R84 million, which increased by 41.22 percent (R34.6 million), followed by operating leases allocation amounting to R57.8 million, training and development allocation which increased significantly by 91.08 percent from R4.1 million in 2018/19 to R46.1 million in 2019/20. The significant budget increase for training and development is very concerning given the spending patterns in this line items over the years. Between 2015/16 and 2017/18, expenditure on this line item was below R3 million annually and it increased to R4.1 million in 2018/19.
Budget increases were effected in line items such as consultants: business and advisory services increased from R21.8 million in 2018/19 to R24.1 million in 2019/20 and contractors from R149 000 in 2018/19 to R600 000.
Cost-containment measures were effected in line items such as consumables supplies, which decreased from R5 million in 2018/19 to R2.8 million, venues and facilities from R41.9 million in 2018.19 to R34 million in 2019/20, transport provided for Departmental activity from R4.6 million in 2018/19 to R3 million in 2019/20 and rental and hiring from R2.6 million in 2018/19 to R147 000.
3.3. Overview and assessment of the 2019/20 MTEF budget allocation per programme
3.3.1. Programme 1: Administration
The purpose of this programme is to provide strategic leadership, management and support services to the Department. The Programme has six sub-programmes, namely: Ministry, Department Management, Corporate Services, Office of the Chief Financial Officer, Internal Audit and Office Accommodation.
3.3.1.1. Overview and assessment of the 2019/20 MTEF budget allocation
For the 2019/20 financial year, the programme received a total allocation of R460.4 million. The programme’s budget increased by R13.8 million, which represents 2.9 percent increase from R446.6 million in 2018/19. The programme’s budget accounts for 0.51 percent of the Department’s total budget excluding the direct charges. The budget is expected to increase in outer two years of the 2019/20 MTEF period to R491.6 million and R519.8 million in 2020/21 and 2021/22 respectively. The largest projected spending amounting to R184.8 million is allocated to sub-programme 3: Corporate Services, followed by sub-programme 4: Office of the Chief Financial Officer at R98.1 million, sub-programme 6: Office Accommodation. Four sub-programmes experienced budget decreases as follows: Ministry: -R11.4 million, Departmental Management: -R2.2 million, Internal Audit: -R0.1 million and Office Accommodation: -R2.8 million.
In terms of economic classification, R455.0 million is for current payments, of which R265.7 million is for compensation of employees and R189.3 for goods and services. The bulk of the budget on goods and services allocation, R52.7 million is allocated for operating leases, followed by R37.0 million for computer services and R22.3 million on property payments.
3.3.1.2. Overview and assessment of the 2019/20 performance targets
For the 2019/20 financial year, the programme retained its three strategic objectives with seven performance indicators. There are seven targets planned under this programme. For the 2019/20, the programme will focus on filling 90 percent of the approved positions, to resolve 100 percent of the of the disciplinary cases within 90 days, to fill advertised positions within 180 days, to pay 100 percent of invoices received from creditors within 30days, to receive an unqualified audit opinion from the Auditor-General and to achieve 95 percent of network connectivity uptime.
3.3.2. Programme 2: Planning, Policy and Strategy
The purpose of this programme is to provide strategic direction in the development, implementation and monitoring of departmental policies and in the human resource development strategy for South Africa. The Programme has six budget sub-programmes, namely; Programme Management: Planning, Policy and Strategy; Human Resource Development Strategic Planning and Coordination; Planning, Information, Monitoring and Evaluation Coordination; International Relations; Legal and Legislative Services and Social Inclusion in Education.
3.3.2.1. Overview and assessment of the 2019/20 MTEF budget allocation
For the 2019/20 financial year, the programme’s total budget amounts to R90.8 million. The programme’s budget accounts for 0.10 percent of the Department’s total budget excluding direct charges. The programme’s budget has increased by R10.8 million in nominal terms from R79.9 million in 2018/19. The budget is projected to grow in the outer two years of the 2019/20 MTEF to R98.1 million and R103.1 million in 2020/21 and 2021/22 respectively.
In terms of economic classification, R86.6 million of the programme’s total budget is allocated to current payments, of which R75.2 million is for compensation of employees and R11.4 million for goods and services. An amount of R3.9 million is allocated for transfers and subsidies to foreign governments and international organizations (India-Brazil- South Africa Trilateral Ministerial Commission and Commonwealth of Learning) for the 2019/20 financial year. The payments for capital assets allocation amounts to R0.3 million.
3.3.2.2 Overview and assessment of the 2019/20 performance targets
The programme has five strategic objectives with nine performance indicators. For the 2019/20 financial year, the programme has nine planned targets, which are: to propose amendments to the National Qualifications Framework (NQF) Act and gazetted for public comments by 31 March 2020, to develop annual report on NQF and get it approved by the Director-General (DG) by 31 March 2020, to gazette by 31 March 2020 a policy framework on Gender-Based Violence in the Post-School Education and Training, to develop annual report on social inclusion and get it approved by DG by 31 March 2020, to report on skills supply and demand and on statistics on PSET get it published by 31 March 2020 and to get at least two new agreements with foreign countries on international scholarships approved.
The programme will also initiate a process for the development of a Master Skills Plan in support of government’s priority projects; to monitor, coordinate and improve the implementation of the NQF Act; to develop and implement the National Open Learning System for the PSET system, amongst others.
3.3.3. Programme 3: University Education
The purpose of this programme is to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system and to provide financial support to universities, the National Student Financial Aid Scheme and national institutes for higher education.
3.3.3.1. Overview and assessment of the 2019/20 MTEF budget allocation
For the 2019/20 financial year, the programme budget amounts to R73.4 billion. The budget increased by 23.9 percent (R14.2 billion) in nominal terms from R59.2 billion in 2018/19. The programme’s budget is projected to increase in the outer MTEF period to R80.6 billion and R85 billion in 2020/21 and 2021/22 respectively. The programme’s budget accounts for 84.69 percent of the Department’s total budget excluding direct charges against the National Revenue Fund.
In terms of projected spending for the year, the bulk of the budget of this programme, 57.63 percent (R42.3 billion) is allocated for spending in sub-programme 3: University Subsidies. The sub-programme budget increased by 9.32 percent (R3.6 billion) in nominal terms from R38.7 billion in 2018/19. This sub-programme is responsible for transfer payments to universities annually. The significant increase in the budget reflects government’s commitment to increase spending on universities as per percentage of Gross Domestic Product (GDP) from 0.68 percent to 1 percent over a period of five years from 2018/19. In expanding access to higher education and training through expansion of student housing, R120 million has been allocated in 2019/20 to address student housing challenges at the Nelson Mandela University, Sefako Makgatho Health Sciences University and Vaal University of Technology. Government will also continue to support the operationalization of the three new universities, Sol Plaatje University, University of Mpumalanga and Sefako Makgatho through earmarked grants.
For the 2019/20 financial year, an amount of R3.9 billion has been allocated for capital expenditure for the higher education sector. Of this, R2.8 billion is allocated for universities infrastructure and efficiency. University of Mpumalanga and Sol Plaatje University received an allocation amounting R665.9 million and R378.4 million respectively.
Institutional Governance and Management Support sub-programme received the second largest budget allocation amounting to R31 billion. This sub-programme monitors and supports institutional governance management, and provides sector liaison services. The budget increased by R10.5 billion from R20.4 billion in 2018/19, which represents a nominal increase of 51.44 percent. The significant increase is attributed to the phasing in of the implementation of fee-free education policy over a period of five years. The implementation of the fee-free education is in the second-year of implementation. The funds will support students from poor and working class families from households with combined annual income of up to R350 000 per annum. The budget is projected to grow at an average growth of 22.3 percent between 2019/20 to 2021/22.
In terms of projected spending for the 2019/20 financial year, 99.42 percent (R30.8 billion) of the sub-programme’s total budget is allocated for transfers to the NSFAS. Transfers to the NSFAS grew at an average growth rate of 22.4 percent between 2018/19 to 2021/22. This sub-programme is also responsible for transfers and subsidies to other Departmental agencies as follows: The Council for Higher Education (CHE) is allocated R53.2 million for the 2019/20. The budget increased by R2.5 million which represents 4.69 percent increase from R50.7 million in 2018/19. The South African Qualifications Authority (SAQA) received an allocation of R69.9 million in 2019/20. The budget increased by R3.2 million from R66.7 million in 2018/19.
Of significance to note is that over the 2019/20 MTEF Cabinet has approved reductions to spending on goods and services as follows: the CHE: R1 million, the NSFAS: R22.3 million and the SAQA: R1.8 million. In the 2018 Budgetary Review and Recommendations Report (BRRR), the Committee observed that the overall performance of the CHE for 2017/18 stood at 52 percent and this was largely attributed to the funding shortfall of R12.5 million for operational costs. The Committee raised the funding challenges of the entity in several reports. In the 2018 Budget Report, the Committee noted that the DHET Grant allocation to the CHE was not growing significantly and this impacted on the ability of the Council to improve its administrative capacity to discharge its quality assurance, accreditation of higher education qualifications, maintaining the Higher Education Qualification Sub-Framework. Furthermore, the mandate of the Council was expanded without commensurate funding. The funding constraints would further jeopardize its work to support the higher education and training sector and by ensuring that the goal of providing quality higher education in South Africa which is internationally comparable was realised.
In terms of economic classification, R102.2 million is allocated for current payments, of which R80.1 million is for compensation of employees and R22.1 million is for goods and services. In terms of the projected spending on goods and services, R15 million is allocated for spending on consultants: business and advisory services line item. In the previous financial year this line item was not allocated funds. The allocation for transfer and subsidies amounts to R73.3 billion, of which R30.9 billion is allocated for Departmental agencies and R42.3 billion for transfers and subsidies to higher education institutions.
3.3.3.2. Overview and assessment of the 2019/20 performance targets
This programme has three strategic objectives and 10 performance indicators. For the 2019/20 financial year, the programme has two types of outputs, Departmental direct outputs and system outputs. For the Departmental direct outputs, there are 24 targets planned for the 2019/20 financial year. The programme planned, amongst others, to have draft regulatory framework for universities developed and approved by the Minister by 31 March 2020; to develop guidelines for student funding for the DHET bursary scheme for students at public universities and get it approved by the Minister by 31 December 2019; to develop guidelines for scholarships offered by government departments and get it approved by the Minister by 31 December 2019; to develop Ministerial Statement on University Enrolment Planning for 2020 – 2025 and get it approved by the Minister by 31 December 2019; to revise student Leadership Capacity Development Programme and get it approved by the DG by 31 March 2020; to allocate 100 new Generation of Academics Programme posts to universities, and to get 50 additional academic and professional staff at universities supported to undertake Doctoral studies through University Capacity Development Programme.
This programme is also responsible for implementing targets related to sub-outcome 3 of Outcome 5: “Skilled and capable workforce to support an inclusive growth path”. This sub-outcome is responsible for increasing access to and improving efficiency of high level occupationally-directed programmes in needed areas. The 2014 -2019 MTSF committed the Department to increase graduate outputs in needed areas such as engineering, health sciences, natural and physical sciences, as well as increasing graduate output of teachers
For the system targets, the programme will oversee the following: enrolment of 1.070 million students in public higher education studies; 300 000 eligible university students obtaining financial aid from NSFAS; 35 000 students enrolled in foundation programmes, 10 universities accredited to offer TVET college lecturer qualifications. The programme will also oversee increased graduate output as follows: 13 000 graduates in Engineering Sciences from universities; 11 000 graduates in Human Health and Animal Sciences from universities; 9 000 graduates in Natural and Physical Sciences from universities; 25 000 graduates in Initial Teacher Education from universities; 3 200 doctoral graduates from universities; 8 100 Research Masters graduates; 78 percent success rates at universities; 82 percent higher education undergraduate success rates (contact) and 68 percent higher education undergraduate success rates (distance learning); 70 percent of universities with good governance and 46 percent of university academic staff with PhDs.
With regard to progress in the achievement of these system targets, the overall numbers of students enrolled in public higher education studies at universities increased from 975 837 in 2017/18 (2016 academic year) reported and verified by 31 October 2017 to 1 036 984 (2017 academic year) reported and verified by 31 October 2018. Notwithstanding the increase in the enrolment numbers, from 2017/18 to 2018/19, the 2018/19 target of 1 039 500 was not achieved as planned. The actual achievement was 2 516 below the target. The actual achievement on target of 22 200 students in foundation programmes for the 2018/19 was 913 below the target. The target for the enrolment of students in foundation programmes was never achieved since the commencement of the MTSF. The programme did not achieve the target to have three universities accredited to offer TVET college lecturer qualification for the 2018/19. The actual achievement was two.
With regard to graduate output in engineering sciences, the 2018/19 target of 12 590 was exceed by 365. The 2018/19 graduate target of 8 490 in Natural and Physical Sciences from universities and 22 780 for Initial Teacher Education were exceeded by 111 and 2 432 respectively. Similarly, graduate target of 2 965 for Doctoral studies from universities was exceeded by 92. The actual achievements for the following graduate targets were below the target: 8 366 Research Masters (-356); 10 630 in Human Health and Animal Health (-174); 78 percent success rates at universities (-1 percent); higher education undergraduate success rates (contact) (-1 percent), and higher education undergraduate success rates (distance) (-2 percent) and 100 additional first-time entrants (black and women) to the academic workforce in addition to normal replacement and plans (-10).
3.3.4. Programme 4: Technical and Vocational Education and Training
The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for technical and vocational education and training. The programme has five budget sub-programmes. The sub-programmes are: Programme Management: Technical and Vocational Education and Training; Technical and Vocational Education and Training System Planning and Institutional Support; Programmes and Qualifications; National Examination and Assessment and Financial Planning.
3.3.4.1. Overview and assessment of the 2019/20 MTEF budget allocation
For the 2019/20 financial year, the programme’s total budget amounts to R12.7 billion. The budget allocation increased by R1.9 billion, which represents a nominal increase of 18.2 percent. The programme accounts for 14.68 percent of the total budget of the Department excluding direct charges against the National Revenue Fund. The programme’s budget is projected to increase in the outer two years of the 2019/20 MTEF to R14.5 billion and R15.4 billion in 2020/21 and 2021/22 respectively.
The bulk of the budget amounting to R12.1 billion is allocated for sub-programme 2: TVET System Planning and Institutional Support. This sub-programme accounts for 95.33 percent of the programme’s total budget for the 2019/20 financial year. The sub-programme provides support to management and councils, monitors and evaluates the TVET system performance against set indicators, develops regulatory frameworks for the system, manages and monitors the procurement and distribution of learning and teaching support materials, provides leadership for TVET colleges to enter into partnerships for the use of infrastructure and funding resources, and maps out the institutional landscape for the rollout of the TVET college system. The budget increased by R1.9 billion, which represents a nominal increase of 18.63 percent from the 2018/19 allocation. The budget increase will cater for the operationalisation of the three new TVET college campuses, Nkandla and Bhambanana in Umfolozi TVET college and Waterberg in Thabazimbi. R200 million goes towards the operationalisation of the three new TVET college campuses for the 2019/20 financial year. The projected spending will increase in the outer two years of the 2019/20 MTEF to R322 million and R445.2 million in 2020/21 and 2021/22 respectively.
An amount of R3.9 billion is allocated for subsidies at TVET colleges. The allocation increased by R897.2 million from R2.987 billion in 2018/19. The allocation for spending on infrastructure efficiency grants amounts to R1.4 billion. This is a new grant which commenced in 2018/19, mainly for refurbishment of TVET college buildings, purchasing of modern workshop equipment and for maintenance of existing facilities.
Whilst gains were made in securing funds for the operationalisation of the three new TVET college campuses, it is critical to note that cabinet has approved reductions amounting to R300 million as follows: R200 million in 2019/20 and R100 million in 2020/21 for the operationalisation of the other new TVET college campuses indicating that fewer will be operationalised in these years to come than projected.
In terms of the progress report submitted to the Committee by the Department on the remaining new and refurbished TVET construction sites, it was anticipated that nine (9) of the new TVET college campuses would be completed by end December 2019 and one by May 2020. Funding for operationalisation of the nine TVET college campuses will be required for the 2020/21 financial year.
Sub-programme 4: National Examination and Assessment’s budget for the 2019/20 financial year amounts to R557.9 million. The budget increased by 17.28 percent (R82.2 million) in nominal terms. The budget is projected to grow at an average growth rate of 12.9 percent between 2018/19 and 2021/22. The increase in the budget is to ensure that national examination and assessments are appropriately conducted to eradicate the certification backlog and to implement an information technology (IT) examination service system. This sub-programme accounts for 4.39 percent of the programme’s total budget. Sub-programme 3: Programmes and Qualifications’ budget for the 2019/20 amounts to R17.3 million. The budget increased by R3.1 million from R14.2 million in 2018/19.
In terms of economic classification, R7.1 billion is for current payments, of which R6.7 billion is for compensation of employees and R391.6 million is for goods and services. The budget is projected to grow at an average growth rate of 8.6 percent between 2018/19 and 2021/22. The budget allocation for compensation of employees accounts for 53 percent of the programme’s total budget of R12.7 billion.
In terms of projected spending on goods and services, the bulk of the budget, R133.9 million goes to travel and subsistence expenditure line item. The budget allocation for this line item increased significantly by R98.8 million, which is an increase of 73.78 percent from 2018/19. Of significance to note is that spending patterns on this line item in the previous financial years, 2017/18 and 2018/19 was below R36 million. The second largest projected spending of R97.2 million is on computer services. The line item budget has increased significantly by 75 percent (R72.9 million) from R24.3 million in 2018/19. The third largest projected spending of R70.9 million is for consumables: stationery, printing and office supplies. Training and development line item budget amounts to R37 million for the 2019/20 financial year. The programme has not allocated funds for this line in the previous financial years, 2015/16 – 2017/18. Spending on this line item during the 2018/19 financial year amounted to R100 000. In the previous financial years, the Department effected shifts and virements from this line item budget.
The allocation for transfer and subsidies amount to R5.58 billion, of which R5.5 billion goes to TVET colleges and R16 million to the Departmental agencies and accounts, Education, Training and Development Practices Sector Education and Training Authority (ETDP SETA). Payments for capital assets allocation amounts to R2.3 million.
3.3.4.2. Overview and assessment of the 2019/20 performance targets
This programme has three strategic objectives and seven performance indicators. For the 2019/20 financial year, there are 12 targets Departmental direct targets spread across the performance indicators. The targets are: to have 65 percent of TVET colleges compliant to approved financial governance standards; to have 70 percent (R1.038 billion) of TVET maintenance expenditure achieved in terms of approved infrastructure maintenance plans; to have 100 percent of public TVET colleges examination centres conducting national examination and assessments in compliance with national policy; to revise TVET funding norms and get it approved by the Minister by 31 March 2020 and to approve six monitoring and evaluation reports on the performance of TVET colleges.
In addition to the Department direct outputs, the programme is also responsible for targets relating to sub-outcome 2: Increased access and success in programmes leading to intermediate and high level learning. For the 2019/20 financial year, the programme will oversee 710 535 headcount enrolments in TVET colleges. The headcount enrolments at TVET colleges was capped at 710 535 from the MTSF target of 1.2 million due to underfunding in terms of programmes and inadequate physical infrastructure and human resource. Despite the increase in the baseline funding for the sector, the headcount enrolment remains capped at 710 535 for the 2019/20 MTEF period. Targets for the 2019/20 include, 290 467 qualifying TVET students obtaining NSFAS financial assistance per annum; 4000 TVET students enrolled in foundation programmes; 50 percent National Certificate Vocational [NC(V)] Level 4: certification rate; 65 percent N3: certification rate 36 percent TVET throughput rate NC(V) Level 4 and 33 percent of lecturers undergoing specified hours of work in their industry for specific period.
In terms of 2018/19 performance on the system targets as reported in the 2019/10 APP, provisions performance shows that, the target of 710 535 for headcount enrolment in the TVET college was not achieved. The actual achievement was 687 955. The Committee was informed during its oversight visit to Northern Cape and the Free State that TVET colleges were not achieving enrolments targets in the NC(V) programmes. The colleges (Northern Cape Rural, Goldfields and Motheo) reported that the enrolment in the NC(V) programmes had been declining for a few years. This was due to the high cognitive demand and students who would enrol into the programme with a Grade 10 qualification and would not be able to cope with the cognitive demand of the programme; resultantly, they would drop out. Its equivalence to Grade 12 and the lack of interest from employers, especially mining houses, where the preference would be the NATED N1- N3 programmes were contributory factors to its decline.
The programme had achieved the 2018/19 targets in the following areas: 50 percent NC(V) L4 certification rates; 66 percent N3 certification rates (exceeded by 10.8 percent); 66 percent N6 certification rates (exceeded by 30.1 percent). Underperformance was recorded in the following areas: 600 TVET students enrolled in foundation programmes (-232 below the target) and 20 percent of TVET lecturers undergoing specified hours of work in their industry for specified period (-11.2 percent below the target).
3.3.5. Programme 5: Skills Development
The purpose of this programme is to promote and monitor the National Skills Development Strategy. Develop a skills development policy and regulatory framework for an effective skills development system. This programme has four sub-programmes, namely: Programme Management – Skills Development; SETA Coordination; National Skills Development Services and Quality Development and Promotion.
3.3.5.1. Overview and assessment of the 2019/20 MTEF budget allocation
The programme’s budget for the 2019/20 financial year amounts to R282.4 million. The budget increased by R17.9 million, which represents an increase of 4.1 percent from R264.5 million allocated in 2018/19. The budget is projected to increase in the outer two years of the 2019/20 MTEF period to R299.6 million and R318.8 million in 2020/21 and 2021/22 respectively. The bulk of the budget at 84.28 percent (R238.1 million) is allocated for Sub-programme 2: SETA Coordination, which supports, monitors, reports on the implementation of the national skills development strategy at sectoral level by establishing and managing the performance of service level agreements with SETAs, and conducting trade test at the Institute for National Development of Learnerships, Employment Skills and Labour Assessments (INDLELA).
The second largest allocation for the 2019/20 amounting to R26.1 million is allocated for Sub-programme 4: Quality Development and Promotion. The budget decreased by R1.3 million from R27.4 million in 2018/19. The sub-programme budget accounts for 9.24 percent of the total programme budget. The third largest allocation amounting to R14.4 million goes to sub-programme 3: National Skills Development Services. The budget increased by R2.7 million in nominal terms from R11.7 million in 2018/19.
In terms of economic classification, R142.3 million is allocated for current payments, of which R126.0 million is allocated for compensation of employees and R16.2 million is for goods and services. The allocation for transfers and subsidies amounts to R138.4 million, of which R26.1 million is for the Quality Council for Trades and Occupations (QCTO) and R112.3 million is for transfer to the Public Services SETA. It is critical to note that allocation for the QCTO decreased by R1.3 million from R27.4 million in 2018/19. Cabinet has approved reductions amounting to R9.3 million over the 2019/20 MTEF period on the transfers to the QCTO. The payments for capital assets amounts to R1.8 million.
3.3.5.2. Overview and assessment of the 2019/20 performance targets
For the 2019/20 financial year, the programme has two strategic objectives with five performance indicators. There are nine departmental direct outputs planned under this programme, which are: to conduct trade test within 60 days from the receipt of application; to achieve 65 percent of national artisan learners trade test pass rate (including INDLELA); to register 30 000 new artisan learners per annum; to have 24 000 new artisan learners qualified, and to have five SETA monitoring reports approved.
3.3.6. Programme 6: Community Education Training
The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for community education and training. The programme has four sub-programmes, namely: Programme Management: Community Education and Training; Community Education and Training Colleges Systems Planning, Institutional Development and Support; Financial Planning; and Education and Training and Development Support.
3.3.6.1. Overview and assessment of the 2019/20 MTEF budget allocation
The programme received a total budget of R2.5 billion for the 2019/20 financial year. The programme’s budget accounts for 2.83 percent of the Department’s total budget excluding direct charges. The programme budget increased by R177 million from R2.4 billion allocated in 2018/19, which represents a nominal increase of 7.5 percent. When factoring in inflation, the real increase is R52.0 million. The bulk of the programme’s total budget amounting to R2.3 billion is allocated for sub-programme 2: Community Education and Training Colleges Systems Planning, Institutional Development and Support. This sub-programme accounts for 91.98 percent of the programme’s total budget. The second largest allocation amounting to R186.9 million is allocated in sub-programme 3: Financial Planning. The sub-programme budget increased by R11.0 million from R175.9 million in 2018/19 and it is projected grow at average growth rate of 5.7 percent between 2018/19 and 2021/22.
In terms of economic classification, R2.4 billion of the programme’s total budget is allocated to current payments, of which R2.3 billion is for compensation of employees and R31.9 million for goods and services. The allocation for spending on compensation of employees increased by R169 million from R2.2 billion allocated in 2018/19. The allocation for goods and services has decreased by R25.9 million from R57.8 million in 2018/19 to R31.9 million in 2019/20. This represents a decrease of 44.80 percent.
In terms of spending on goods and services, the bulk of the budget is allocated amounting to R14.1 million is for travel and subsistence expenditure line item. The allocation decreased by R16.5 million from R30.6 million allocated in 2018/19. The allocation for spending on consumables: stationery, printing and office supplies and training and development amounts to R4.5 million. It is critical to note that between 2015/16 and 2018/19 there was no expenditure on training and development line item.
The allocation for transfers and subsidies amounts to R151.7 million. Of this amount, R2.9 million is allocated for transfer to the Education, Training and Development Practices Sector Education and Training Authority (ETDP SETA) and R148.8 million is subsidies to CET colleges. The subsidy allocation to CET Colleges increased by 26.14 percent (R38.9 million) from R109.9 million allocated in 2018/19. The allocation for subsidies to CET Colleges is projected to grow in the outer two years of the 2019/20 MTEF to R156.8 million and R165.4 million in 2020/21 and 2021/22 respectively. The payments for capital assets allocation amounts to R1.8 million.
3.3.6.2. Overview and assessment of the 2019/20 performance targets
For the 2019/20 financial year, the programme has one strategic objectives and one performance indicator with the following target: to approve two monitoring and evaluation reports per annum.
There are two system targets related to the MTSF planned for the 2019/20 financial year. The MTSF has set targets to have 34 000 headcount enrolment in the CET sector and to achieve 45 percent certification rates in CET formal qualifications. The two targets were not achieved in 2017/18 and 2018/19 financial years. For both financial years, the actual achievement was 273 431 and 258 199 respectively. The NDP has set a target to have 1 million enrolments in the CET sector by 2030. Of great concern is that enrolment has decreased between 2017/18 to 2018/19. The certification rates target of 45 percent in CET formal qualifications have not been achieved in 2017/18 and 2018/19. It is noted with concern that efforts to improve certification rates in the CET formal qualifications could be hampered by decreased allocation by R16.5 million for goods and services for 2019/20.
4. COMMITTEE OBSERVATIONS
The following formed part of the Committee observations:
4.1. Programme 3: University Education
4.1.1 The bulk of the budget amounting to R73 billion / 82 percent is allocated to university education. However, this is mainly as a result of the subsidy payments to universities and the National Student Financial Aid Scheme. In addition, the budget is also dominated by transfer payments in terms of the economic classification of expenditure. However, the concern raised is whether it is sustainable to continue this model of funding allocation since there is a large population of young people out of school without employment, education and training. Some university graduates may be unemployable, which requires a mind shift in the higher education and training sector.
- Concerns were expressed with what appears to be a decline in the number of eligible university students obtaining financial aid (NSFAS) from 323 337 to 300 000 in 2019/20.
- It was noted that financial exclusions in higher education institutions had been partly contributed by the late disbursement of allowances and funding to eligible students by NSFAS. Some of the NSFAS funded students experienced evictions in privately owned student accommodation facilities due to late payments by NSFAS.
- The majority of students that are being funded by NSFAS in higher education are not enrolled in the scarce and critical skills programmes required to build a sustainable economy.
- The gap in the relationship between the Department and the student leadership in higher education remains a concern. Student leadership has a critical role to play in championing the needs of students, and the need for close relationship remains critical.
- The low representation of black academics, particularly females at senior management level of previously white institutions was noted as a concern.
4.2. Programme 4: Technical and Vocational Education and Training
4.2.1 The TVET sector has made many strides. However, the sector faces many challenges. Ideally, the ratio should be 4:1 for TVET vs University student enrolment respectively. 4.2.2 Certification backlog remains a huge challenge since students find it difficult to apply for jobs without certificates.
4.2.3 Curriculum development remains a challenge due to a lack of alignment with other streams i.e. basic education and innovation. Some courses may be irrelevant due to the employability of graduates.
4.2.4 The TVET sector presents many systemic issues relating to infrastructure, ICT, training of lecturers and assistants and curriculum.
4.2.5. The backlog in the processing and payment of student allowances by NSFAS remains a critical challenge for the sector. There is an indication of poor integration between NSFAS and colleges IT systems. Compounding the situation are the delays by colleges in submitting student enrolment data to NSFAS for processing their applications.
4.2.6. The shortage of student accommodation in the TVET sector remains a serious challenge, including the backlog in infrastructure maintenance. Most of the TVET colleges do not have access to Wi-Fi connectivity which makes it difficult for students to undertake their research projects.
- The allocation of students’ living allowances (food, accommodation, transport and books) in the TVET sector is lower as compared to students in universities. The disparities in the allocation are a disadvantage for students in the TVET sector since they encounter similar socio-economic pressures with their university counterparts.
- The shortage of suitably qualified lecturers in the TVET sector remains a serious concern. At some TVET colleges, students are taught by lecturers with NATED qualifications and this contributes to the low certification and throughput rates of the sector.
4.3. Programme 5: Skills Development
- The role of SETAs towards contributing to skills development is critical, however, the targets of SETAs on learnerships and other similar skills interventions are inadequate and their impact is not properly assessed.
- The majority of skills that are in high demand are mostly in the management field and there is need to properly quantify the shortage of artisans against the skills in high demand.
4.4. Programme 6: Community Education and Training
4.4.1 The CET sector is confronted with many systemic challenges including, a policy framework.
4.4.2 The under-utilisation of the CET colleges as spaces of learning in communities remains a concern.
4.4.3 The curriculum in the CET sector does not respond to the relevant needs of particular communities and their main purpose is mainly not understood by communities.
5. SUMMARY
The Committee welcomed the APP 2019/20 of the Department as tabled in Parliament on 28 June 2019 for consideration and reporting. The APP 2019/20 of the DHET provided members with an opportunity to understand the planned activities of the Department for the current financial year and it also reflected on some of the performance highlights of the Department from the previous year. The 2019/20 APP of the DHET is the first of a kind for the newly established Committee in the 6th Parliament, and the Committee undertook to hold the DHET accountable for the targets as contained in the APP going forward. Similarly, the Minister undertook to account to the Committee and provide feedback on the proposals and other issues raised by the Committee.
With respect to the funding for 2019/20, the Department’s total budget for the 2019/20 financial year amounts to R108.3 billion, inclusive of direct charges against the National Revenue Fund. In terms of economic classification, 89.65 percent (R97.9 billion) of the total budget is allocated for transfers and subsidies. The budget for transfers and subsidies increased significantly by R16.9 billion, which represents a 20.86 percent increase from 2018/19 allocation of R81.0 billion. The significant increase, mainly in the departmental agencies and accounts is due to the phasing in of the implementation of fee-free education policy to expand access of students from poor and working class families.
The Committee is mindful of the fact that the Department of Higher Education and Training plays an important role in fulfilling the objectives of the post-school education and training sector. However, the realignment of the DHET with the DST as pronounced by the President in the 2019 SONA would need to be carefully undertaken in consideration of the huge demand for education and training opportunities in the PSET sector, and as such, the budget disparities of the two departments should not have a detrimental impact on their respective mandates. The Committee expressed the view that the allocation for transfers and subsidies may need to be separated going forward to provide a clear picture of the funding that is meant directly for the six programmes of the DHET.
The Committee acknowledged the magnitude of the entities (over 100) in the PSET sector and undertook to develop an oversight strategy that will enable it to ensure that these entities account on their work. The Committee agreed with the Minister that the rapid expansion of the TVET sector to cater for the needs of young people who are not in education, training and employment is significant. However, the systemic challenges such as inadequate infrastructure, outdated curriculum, training of suitably qualified lecturers and poor ICT systems will have to be addressed as a matter of urgency. The majority of concerns that were raised by members were centred around the challenges in the TVET sector and the need for additional funding to support the growing demands for education and training opportunities to tackle the challenge of unemployment among the youth.
6. RECOMMENDATIONS
The Committee recommends that the Minister of Higher Education, Science and Technology consider the following:
6.1. Programme 3: University Education
6.1.1 Establish a joint task team comprising of Basic Education, Higher Education and Science and Technology to review the education curriculum in the context of university streams and pathways. The intention is to ensure a seamless education system through integration and linkages.
6.1.2 Expand university education to create more access through diverse learning, i.e. blended learning, online programmes, Recognition of Prior Learning (RPL), etc.
6.1.3 The Department is anticipating a decline in the number of NSFAS funded students in higher education for 2019/20. The Department should engage National Treasury with respect to the need for additional funding to meet the objectives of the post-school education and training sector.
6.1.4 The Department should put measures in place to ensure that the target to have 10 universities accredited to offer TVET college lecturer qualifications is attained within the current MTSF so as to ensure quality training and skills training in the TVET colleges.
6.1.5 The accessibility of NSFAS for students who need to be assisted with queries relating to allocation of the allowances remains a concern. The Department should ensure that NSFAS expands its offices so that it can be more accessible.
6.1.6 The Department should ensure that the expansion of student accommodation in higher education is expedited, especially in the previously disadvantaged institutions where the demand is much higher.
6.1.7 The Department should consider developing intergovernmental partnerships with local government to ensure that crosscutting activities are better coordinated. This will assist in ensuring that the development projects (such as bus rapid system) in local government are also benefitting students.
6.2. Programme 4: Technical and Vocational Education and Training
6.2.1 Expedite the review of the TVET sector curriculum so that it is aligned with the requirements of the industry and the economy respectively.
6.2.2 Expand and professionalise the TVET sector so that it can cater for the needs of young people that are not in education and training. The expansion of the TVET sector should also be accompanied by requisite funding.
6.2.3 Enrolment in the TVET sector will remain capped at 710 535 for the 2019/20 MTEF period due to inadequate funding. To address youth unemployment, poverty and inequality, more education and training opportunities should be created. The Department should engage National Treasury on additional baseline funding to increase enrolment in the TVET sector.
6.2.4 TVET colleges still experience the challenge certification backlog. The Department should expedite the implementation of the new IT system for the TVET college programme certification process.
6.2.5 The placement and absorption of TVET graduates into workplaces remains a concern. The Minister should expedite the engagements/interactions with the private sector to open more spaces for work-integrated learning opportunities and the employability of TVET graduates.
6.2.6 The allocation of NSFAS funding in the TVET sector should be based on the full costs of study just like universities.
6.2.7 The Department should undertake a skills audit of TVET lecturers to identify the training needs and areas that require capacity-building.
6.2.8 The expansion of student housing in the TVET sector should be prioritised given the shortage of student accommodation in TVET colleges. The Department should also build proper infrastructure to enhance quality teaching and learning environment (lecture halls, workshops and laboratories) in the TVET sector.
6.3. Programme 5: Skills Development
6.3.1 SETAs have an important role to fulfil with regard to skills development. The Department should ensure that the development of targets by SETAs is aligned with the needs of society to contribute to the reduction of unemployment particularly among the youth.
6.3.2 The Department should strengthen its oversight mechanisms over SETAs to improve their performance and sustain good governance and accountability.
6.3.3 The Department should prioritise the training of young unemployed people with entrepreneurship skills so that they can access the economy.
6.3.4 The Department should ensure that the skills intervention programmes such as learnerships offered by SETAs are aligned with the demands of the private sector. This will contribute to the absorption of learners into the workplaces upon completion of learnership programmes.
6.4. Programme 6: Community Education Training
6.4.1 The curriculum of the CET sector should be reviewed so that it can cater for the specific needs of communities.
6.4.2 The Department should investigate causes for low enrolment in the CET sector and put measures in place to address them.
6.4.3 CET colleges should be equipped with sufficient infrastructure so that they can be spaces of learning for young people in communities.
6.4.4 The Department should undertake advocacy campaigns to educate the public about the important role of CET colleges.
Report to be adopted.
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