Beginning his speech, Finance Minister Malusi Gigaba said the Budget had prioritised the country’s most pressing issues: “educating our youth, protecting the vulnerable and investing in enablers of inclusive growth”. He allocated a total of R324-billion expenditure on higher education over the next three years, including an extra R57-billion to cover fee-free higher education.

“We have shown the ability to find common ground amidst a painful history and deep division, and a fearlessness of youth that has helped us to choose ourselves again and again by giving something up or taking something,” Gigaba said.

In December, former President Jacob Zuma suddenly announced the fee-free higher education plan after repeated student #feesmustfall protests in recent years.

Under the plan, first-year students from households earning under R350,000 per annum at universities and TVET colleges will not pay fees. Returning students on the National Student Financial Aid Scheme (NSFAS) will have their loans converted into bursaries. For students from families that earn between R350,000 and R600,000, government will pay up to 8% of the fee increases for the 2018 academic year.

“This will be rolled out in subsequent years until all years of study are covered,” said Gigaba. “This is an important step forward in breaking the cycle of poverty and confronting youth unemployment, as labour statistics show that unemployment is lowest for tertiary graduates. Higher and further education and training is being made accessible to the children of workers and the poor.”

The Department of Higher Education and Training’s budget will increase at an average of 13.7%. Of those increases, NSFAS allocations will increase annually at an average of a whopping 51.6%, coming to R43.4-billion in increases over the medium term.

The number of undergraduate students supported by NSFAS is expected to increase from 230,469 in 2017/18 to an estimated 1,123,212 over the next three years.

“We were pleased about the indications of long-term stability and that’s the important thing,” said Universities South Africa CEO Professor Ahmed Bawa.

He said universities must now work closely with government to ensure the new system is rolled out smoothly, especially as more students qualify for free education.

DA shadow minister of finance, Alf Lees, said the increase was unsustainable.

“The allocation of R57-billion over the medium term to fund poor students in higher education may seem like a step in the right direction. However, it is not sustainable and fails to address the true nature of the problem and the decades of chronic underfunding of this sector.”

Equal Education general secretary Tshepo Motsepe said Gigaba’s Budget was anti-poor.

“Tragically, the desperately needed investment in higher education is at the expense of the basic education system. This pits poor black students against poor black learners,” he said.

The Department of Basic Education’s budget increased slightly against inflation but there were cuts in areas such as infrastructure grants which will impact on delivering on school maintenance and build projects.

“The increase in the allocation for higher education is a positive step in capacitating NSFAS as the disbursor of grants. However, for very many learners, fees are not the only or primary barrier to higher education – poor quality primary schooling is,” said Motsepe.

Cosatu welcomed the “huge achievement” towards free higher education but warned that the missing middle would not be included.

“This means that more medium- and long-term planning and sustainable funding is needed to ensure free and affordable education,” said spokesperson Sizwe Pamla.

The extra funds required for higher education were a key reason for Gigaba’s announcement that Value Added Tax (VAT) is rising from 14% to 15%, among other taxes increased. There was a concern that the most needy, the poor, would be hardest hit despite an increase in social grants spending.

A total of R528.4-billion will be spent on social grants in the next three years. The increase in VAT has been predicted to negatively affect the poor and the Budget allocated an additional R2.6-billion over the medium term to offset the negative impact on increased taxes on grant recipients.

Social protection spending increased by 7.9%, which Gigaba and the ANC celebrated as a commitment to providing a comprehensive social security net. The old age, disability and care dependency grants will increase on 1 April from R1,600 by R90 and by a further R10 on 1 October. The child support grant will increase on 1 April from R380 by R20 and 1 October by another R10.

Isobel Frye, director of the Studies in Poverty and Inequality Institute, said the poor would continue to be trapped in poverty.

“When the minister of finance says it’s a tough but hopeful Budget, it’s very difficult to see where the hope is for 45% of the country,” she said, referring to the amount of households depending on income from grants.

“We had anticipated that a government committed to improving the lives of the people would in real terms have substantially increased grants,” said Frye.

She said that in real terms, the old age grant only increased by 0.4% and the child support grant by 1.1%. She said the general VAT increase could have been avoided. The 25% estate duty tax introduced for estates greater than R30-million should have been broadened and a VAT on luxury goods could have been introduced, she said.

In a pre-Budget statement, 27 civil society organisations warned the minister against increasing VAT, which could place a disproportionate burden on the poor. Associate Professor Tessa Hochfeld from the University of Johannesburg had not had a chance to study Wednesday’s Budget, but said grant increases are generally arbitrary and are not linked to cost of living or poverty levels.

Confusion continues over whether the SA Social Security Agency will be able to pay grants on 1 April after dragging its feet on replacing Net1 with a new distributor.

“As highlighted by the president in the State of the Nation Address, government will ensure that social grants will continue to be paid without disruption,” said Gigaba, without elaborating.

Cosatu’s Pamla said, “Our Budget is still very much biased towards the formal economy and it says very little about the survivalist informal economy that carries many of our poor citizens.”

The DA’s Lees said the VAT increase “is a smack in the face for millions of South Africans”.

“This increase, combined with the new fuel levy increase, will force poor South Africans to pay more for basic goods, services and transport.” DM

Photo: Students from Wits University demonstrate on campus during a fourth week of clashes with police forces during protests against the cost of higher education in Johannesburg, 10 October 2016. Photo: Kim Ludbrook/(EPA).