Finance Minister Malusi Gigaba said R57-billion would be allocated over the coming three years to fund the fee-free higher education and training policy announced by former President Jacob Zuma in December and reaffirmed by President Cyril Ramaphosa in February.
Noting that this was the largest reallocation of resources to fulfil government’s priorities, the Minister added that this was also the fastest-growing spending category, with yearly average growth of 13.7% to R351.1-billion.
Tabling the Budget in Parliament, Gigaba stated that, as government still faced a revenue gap of R48.2-billion, a number of significant changes had to be made to meet this increased allocation, with new tax measures being implemented to raise an additional R36-billion in 2018/19.
This would be achieved mainly through a one percentage point increase in the value-added tax rate, to 15%, and below-inflation adjustments to personal income tax brackets.
The expenditure ceiling has also been revised down marginally from what was presented in the medium-term budget in October last year.
“Government is proud to implement a major step . . . towards our ultimate goal of guaranteeing access to higher education and training for all South Africans who qualify – based on merit, not class position,” said Gigaba.
He added that government would phase in fee-free higher education and training for students from poor and working-class families. “This means that all new first-year students with a family income below R350 000 a year at universities and technical and vocational education and training colleges in the 2018 academic year will be funded for the full cost of study,” he highlighted.
This would be rolled out in subsequent years until all years of study are covered.
Returning National Student Financial Aid Scheme (NSFAS) students at university would have their loans for 2018 onwards converted into bursaries.
“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,” Gigaba pointed out, adding that higher and further education and training was now accessible to the children of the poor.
However, commentators had previously said the fee-free higher education initiative could be disastrous for the country’s already struggling finances, as it would cost South Africa between R15-billion and R50-billion a year.
Basic education also remained a key focus in the 2018 Budget. Over the medium term, R3.8-billion has been allocated to the school infrastructure backlogs grant, which will replace 82 inappropriate and unsafe schools, and provide water for 325 schools and sanitation for 286 schools.
A total of R31.7-billion has been earmarked for the education infrastructure grant over the medium term to build new schools, upgrade and maintain existing infrastructure, and provide school furniture.
Meals will be provided at 19 800 schools for about nine-million learners each school day through the national school nutrition programme grant, which has been allocated R21.7-billion over the medium term.