Skills fund was raided for student fees

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The government has raided the National Skills Fund (NSF) to meet the promise of a no-fee increase for students at tertiary institutions, jeopardising the fund’s future investment income and forcing it to axe projects aimed at developing much-needed artisans.

Details of the trade-off the government has been forced to make by the student protests that began in 2015 are laid bare in the NSF’s 2017/2018 annual report, which was tabled in parliament on Monday.

It shows the NSF was forced to finance 50% of the no-fee increase for 2016 and the entire no-fee increase for 2017 from its accumulated surpluses, which ran to R6.56bn, or 59% of its accumulated surplus.

Since this money had already been earmarked for future projects, it has been forced to put these initiatives on ice. These include R1.5bn for artisan development, and R1.5bn more intended for improving the post-school education and training system, including artisan training at Technical and Vocational Education Training colleges.

The cuts to the artisan development programmes are a blow to the National Development Plan’s (NDP’s) goal of producing 30,000 artisans a year by 2030.

While the annual number of artisans produced is rising, it stands only at about 21,000, according to the department of higher education & training.

The artisan shortage has forced companies to import welders and carpenters.

“It is important that SA gives as much attention towards artisan development as is given towards the needs of university students. [It] must be followed by [an] increased level of funding to ensure the objectives of the NDP are realised,” NSF CEO Mvuyisi Macikama said.

In March 2016, R2.46bn had been earmarked for artisan development over five years.

The Treasury was unable to fund the no-fee increase for 2016 and 2017 from the fiscus and directed the department of higher education & training to reprioritise funding within the sector, Macikama said. The NSF disburses grants to postschool education and training institutions. It is funded through a skills development levy, payroll tax intended to encourage learning and development in the workplace, and from sector education and training authorities.

Running down the NSF’s surplus funds had knocked its annual investment income, which declined from R766m to R490m per annum, Macikama said. Its investment income is expected to decline significantly over the medium-term expenditure framework, he said.

“This will have a direct impact on the funding that is available for undergraduate and postgraduate bursaries for university students in scarce and critical skills, as these bursary allocations were funded from the NSF’s investment income stream,” Macikama wrote.

Belinda Bozzoli, DA higher education & training spokesperson, said the government’s decision to redirect NSF funds distorted its purpose.

“NSF initiatives are meant to be specific and focused, not generalised. Offering a no-fee increase to university students in general hardly fits these criteria,” she said.

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