On Monday, President Jacob Zuma finally released the so-called Fees Report – the Heher Commission’s report into funding of higher education. The 752-page report is detailed, thorough and reasonable. It concludes that fee-free education is not possible, as did a report released by the Davis Tax Commission on Monday. Is it conceivable that government could ignore this expert consensus and strong-arm into action a half-baked plan for free education cooked up by a Zuma family friend now revealed to have been a state spy? By REBECCA DAVIS.
Those seeking further context on the resignation of top Treasury official Michael Sachs might want to start by reading the full Heher Commission report on the feasibility of free higher education.
According to the report, it was Sachs who appeared before the commission on behalf of National Treasury to deliver some hard truths about fee-free education. Sachs presented the commission with the evidence of the parlous state of the South African economy and the fact that South Africa is consistently spending more than its income.
The Treasury told the commission that “should the position be taken to fund free education, money would have to be cut from other social priorities”.
Taking money from sources like the Unemployment Insurance Fund or unclaimed pension funds for use in higher education, warned Treasury, would currently be a violation of the Constitution. Treasury also cautioned against funding higher education through increasing personal income tax or VAT increases. In addition, it found multiple problems with the idea of a graduate tax – among them, the fact that “there is no correlation between the cost of study and the revenue collected from an individual graduate”.
As rumours amplify that President Zuma may ignore these warnings in favour of pushing through a plan for free education, Sachs’ resignation smacks of deep frustration.
While the Presidency accompanied the release of the Heher report with a statement announcing that ministers were still “processing it”, for President Zuma to announce his own plan for free education would effectively mean he is choosing to reject the recommendations of the commission.
Here’s one of them:
The Commission respectfully advises the President that a stand taken at the outset that university students should accept the common sense and inevitability of paying for what they receive if and when they can afford to do so would be politic and responsible and very much in favour of future generations who enter the higher education system.
The report cannot be faulted for rigour. Over the course of its 752 pages it painstakingly and soberly analyses the submissions made to the Heher Commission by students, universities, civil society, economists, academics and parents. It considers not just the question of funding, but also the role of a university in society and the issue of whether university education is a right.
It concludes that it is simply not accurate to suggest that higher education is purely a “public good”, citing research showing that South Africa has the highest private returns on higher education in the world. In other words, the primary benefit of higher education is to the individual graduate and their family: for “the potential increase in personal or family advancement, status, income, future opportunity or, simply, self-gratification”.
As such, the commission concludes that there can be “no principled objection to cost sharing of higher education provided the core values of equity and fairness are maintained”.
The commission points out that universities are by no means the only form of educational facility that need funding. There are also “chronically under-funded” Community Education and Training Colleges (CET), which offer training for youths and adults who did not finish school. Early Childhood Development facilities could also benefit from funding, and private colleges even argued to the commission that they deserved funding too.
Perhaps most significantly, it is the TVET sector – technical colleges – which most urgently needs funding within higher education. TVET students were not involved in the protests and moreover, ironically, ended up suffering budget cuts as a result of the protests.
The report states that it is completely counterintuitive for a developing economy to have more students enrolled in university than in technical colleges, as is currently the case in South Africa. Students with “theoretical skills”, derived from a university degree, should make up a small portion of the whole rather than the bulk. The report suggests that the problem is because colleges are viewed as “less prestigious” than universities.
Universities have consistently received more government funding than TVET colleges, and as a result the latter are heading for a “major crisis”.
When it comes to the notion of “fee-free education”, the commission concluded that the definition of financial aid would have to cover the full cost of study for students – including books, healthcare, food, transport and accommodation. The latter was taken as particularly critical. The commission heard that Rhodes University has the highest throughput rate in South Africa – in other words, the highest number of students who graduate relative to the numbers enrolled – partly as a result of its residence system.
Where would the money to pay for this all come from? The commission heard a wide range of ideas: mandatory contributions from all JSE-listed companies; all employed people being made to contribute R20 towards a fund; the state wage bill being cut; and spending slashed from the defence budget. There was also a general agreement that students who could afford to pay for education should do so.
The commission heard that completely fee-free education – introduced in a number of African countries post-independence – has largely been found to be unsustainable.
However, the commission did endorse completely free higher education in one specific case: for TVET students.
For university students, the commission determined that the most appropriate funding solution was the implementation of income-contingent loans from commercial banks. This would allow for students to take out a loan at the beginning of their studies, and only pay it back when (or if) their income post-graduation reaches a certain threshold.
These loans should include the full cost of study. Application and registration fees should also be scrapped, the report says, with proof of application for a loan being used as an alternative form of surety.
The commission’s recommendations are certainly not a magic pill. One issue is that the plan naturally requires buy-in from South African banks. The report notes that the Banking Association South Africa (BASA) has remained “essentially uncommitted”.
Another potential issue is that the report recommends that the collection of student loans should be administered through SARS – an institution which seems to be riven with challenges as it is.
Perhaps most contentiously, from the perspective of Fallists, the report also recommends that “aggressive strategies” should be implemented by universities “to eliminate violent student protests and the destruction of property of campuses”. The commission suggests that this may help boost support for universities from alumni and donors.
Reaction from politicians to the report has already been mixed, with the Democratic Alliance and FF+ greeting it with tentative enthusiasm. The Economic Freedom Fighters panned it, on the basis that it endorses a form of class segregation in which “predominantly black students will attend TVET colleges, and the majority of white students will attend universities”.
The ANC Women’s League, meanwhile, has rejected it because of the involvement of commercial banks. “Government must refrain [from] doing business with commercial banks that are fingered in the manipulation of the currency and failing to pay back the money as per the Public Protector CIEX report,” the league stated.
“The ANCWL calls [on] the President not to deviate from the resolution of the ANC to provide free education,” it continued – essentially urging President Zuma to reject the report.
If the president presses ahead with free education, he will also be flying in the face of findings released on Monday by the Davis Tax Commission. That commission similarly found fee-free education unfeasible, recommending instead a “hybrid model” of funding which incorporates grants for the poor, loans for the “missing middle”, and fees for the well-off.
It now remains to be seen where the president will place his trust: in the findings of two independent panels commissioned by his own government, or the ideas of a former Fallist now revealed to have been a spy for the State Security Agency. DM
Photo: #FeesMustFall protest in Johannesburg, 21 Septembar 2016. (Photo by Greg Nicolson)
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