Spinning austerity: The non-existent R16,3 billion increase for higher education
“An additional R16.3 billion has been allocated for higher education over the next three years”, Finance Ministeyr Pravin Gordhan said in his budget speech 24 February. A number “R17 billion” was also circulated by Minister of Higher Education Blade Ndzimande before the Budget, so nobody was surprised by the Finance Minister’s announcement and the amount sounded sizeable.
In his poem Homage to Learning, the late German play writer Bertold Brecht once gave the advice: Put your finger on each number and ask how it got there. Following this advice, we should ask: To what has the “additional R16.3 billion” been added?
According to the 2016 Budget Review (page 65), the “R16.3 billion was added to medium-term allocations for the post-school education and training function group”. By medium-term the Budget Review refers to the three financial years 2016/17-2018/19. The latest medium term budget allocations were published the Mid Term budget, presented by former Finance Minister Ntlahla Nene in October last year.
Table 5.8 in the Budget Review shows that the R16.3 billion simply is the difference between the estimated cost level in 2015/16 (R64.2bn) and the budgeted level in 2018/19 (R80.5bn) for Post School Education and Training, of which universities are a part.
In nominal terms – “to the name” – there are additions everywhere in the annual budgets, even now when the expenditure ceiling is lowered by R25 billion over three years. The question is whether the new amounts increase in real terms, i.e. if they match or exceed forecasted inflation and if there is a change compared to what was budgeted before. We cannot call the R16.3 billion an “addition” just by noting that the nominal allocation in 2018/19 is R16.3 billion higher than 2015/16.
A speech cannot be as exact as a text and we should perhaps forgive the Treasury if it puts some “spin” to a number in order to defuse political tension. The Budget Review, however, seems to turn the spin into an error. The medium term allocations 2016/17-2018/19 in the Mid Term budget was R12.9 billion, not R16.3 billion as in the new budget. The average nominal growth per year was then projected at 6.3%, as compared to 7.9% in the new budget. R3.4 billion has been added to all Post school education and training over the three-year period compared to the Mid Term budget. In 2015/16 the total budget was R64.2bn. The Mid Term budget then planned for R77.1bn in 2017/18. In the 2016 Budget Review this has become R80.5bn. The difference is R3.4bn.
To address the political crisis, allocations to different Post school line items are also balanced below or above forecasted inflation. University subsidies are budgeted to grow by 9.1% per year, but University infrastructure by 4% per year (compared to 10.8% in the 2015/16 budget). The National Student Financial Aid Scheme (NSFAS) gets R5 billion more in 2016/17. The financing of NSFAS will be lowered a little in the following two years, but because of the first hike, the three-year average nominal growth is 14.1%. Will this be enough? At the Nelson Mandela University in P.E., the promise to the students at a mass meeting that debts would be cancelled turned out to be a new loan, financing the previous loans. The change was communicated via SMS.
Based on the fees for courses and registration at the universities and technical colleges, Statistics SA publishes the inflation rate for tertiary education in its Consumer Price Index reports. It is done in March every year from the point of view of paying fees, so if the universities stand by the promise not to increase any fees this year, it will show “0% year on year” in March. As for now, we can however use the increase in fees as a rough estimate of all other cost increases in tertiary education, assuming that fee increases follow them. This index stood at 9.8% year on year in March 2015 and has been hovering around 9% for a decade. The government’s improved allocations for higher education should be compared to this inflation rate to get an idea if the 2016/17 budget did enough, not to speak of the demands that both Fees and Outsourcing Must Fall.
At Wits, UJ and UKZN insourcing is now to start. As a consequence, workers’ wages at Wits will be increased from R2500 to R5000 per month from July. It is obvious that a completely different fiscal and economic policy is needed to match the decolonisation movement, the aspiration to break out from economic insecurity and ensure dignity and a decent life for all. If it is not clear now, it will be clear at the next “downgrade” that the government needs to break the spell of the financial markets and the credit ratings agencies, which now are taking on the role of shadow government. The “aggressive austerity measures” announced in the Budget Review in case of a credit downgrade show the logic the Treasury is trapped in. It is a logic that will finally threaten democracy.
With the fear of a downgrade, South African analysis and commentary on the budget has been overtaken by some kind of “fanatisation of consensus” in media and in parliament. Even the EFF lost it critical voice and joined the choir of praise singers; this is what make it possible to “spin” a R3.4 billion increase in the higher education budget to “R16.3 billion”. It is not helpful. We need a frank debate, not a propaganda war.
Even conservative observers have pointed out with surprise that a main opportunity was missed 24 February. The government should have made a substantial increase of the tax rates for high income earners and planned this over three years to meet the demands of students and workers at the universities.
But it should not be the conservatives that we rely on to point out that there were real and viable alternatives to Gordhan’s budget. Where are the voices from progressive society? Where is the left? Apart from the capitulation of the EFF that has joined the SACP as conservative economic choir singers dressed up in red garb, green reds would be able to offer a cogent and coherent alternative.
We do not have to bow before the shadow government of the credit agents. South Africa is no ordinary country; we are a nation of extremes; with some of the highest levels of violence, inequality and unemployment in the world. Yet, South Africa has great wealth that can be utilized to bring peace and dignity and not create greater burdens by pushing the crisis on to the shoulders of the poorest. And while we are all looking at Post school education, with a three-year increase by R3.4 billion compared to the Mid Term budget, the allocation to Basic education has been adjusted downwards by R6.6 billion over three years. 8.1% average annual growth in allocations in October became 7.4% in the new budget.
Jobs can be created by driving three inter-related programs, namely mass housing, food sustainability and low carbon industrial strategies. They should be three development pillars. How will we pay for them and the other needs not reflected in the budget, such as drastically improved public health and free education? The budget should and can reflect a shift in development strategy.
The largest domestic savings pool in the country is the R1.8 trillion Public Investment Corporation (PIC), owned by the government. It should now be used to meet the borrowing needs of a state driven job creation strategy, making it possible to deprive the financial shadow government (credit rating agencies) some of their power. The tail must stop wagging the dog. Together with control over speculative capital flows, such socialist or “left” policy moves are what can save the social fabric of society instead of further tearing it apart.
We are in a prolonged crisis of the global capitalist economy. The non-capitalist sector of the economy must be allowed to grow and take responsibility where the for-short-term-profit capitalist sector dismally fails, contracts and retreats.
Brian Ashely is director and Dick Forslund is senior economist at Alternative Information and Development Centre, AIDC.