Minister on 2nd Higher Education Transformation Summit & student protest intervention plan; National Skills Fund & CETA Annual Report 2014/15; Higher Education & Training BRRR

Meeting report

Minister on  by the Department of Higher Education and Training
The Minister of Higher Education, Dr Blade Nzimande, stayed fairly closely to the text of the presentation document. He explained that his presentation would begin with a statement of the resolutions of the 2nd Higher Education Transformation Summit because he believed that they would map the way forward to deal with the recent challenges in the higher education sector. Among other important findings, the summit had been unanimous in its view that levels of funding in the sector were inadequate to match its growth and needed to be increased. Dr Nzimande added that this was in fact true of the entire post-school system. The summit had also concluded that further interrogation of the balance between the institutional autonomy of universities and their public accountability was needed. The issue of fees had been discussed with the Vice-Chancellors in February, and it had been agreed that greater transparency in fee structures and increment were also needed. It was suggested at the summit that transformation goals needed to be included in the performance contracts of all Vice-Chancellors.

Dr Nzimande said that he had gazetted new regulations for Sector Education and Training Authorities (SETAs) which included the re-prioritisation of SETA funds from mandatory grants to PIVOTAL (Professional, Vocational, Technical and Academic Learning) programmes. He had been taken to court by Business Unity South Africa (BUSA) on this matter and while he had lost, he planned to appeal the judgement. BUSA's case was unpatriotic and ran contrary to the Department's efforts to educate the country's youth. He suggested that BUSA be called to the Committee to explain their position.

Minister Nzimande said that free education for the poor was a goal that should be fast-tracked. Scholarship that engaged from an African and South African perspective needed to be encouraged. This had already been understood before the summit and the current student uprisings, which, along with feelings of alienation of black students at historically white universities, had catalysed calls for this more general transformation of higher education.

Minister Nzimande explained that the cost of the 0% fee increase would be shared between government and the universities, each according to their means. In closing, he called on students to return to their classes and exams, and called on parents to assist them.

Discussion
Dr B Bozzoli (DA) asked Minister Nzimande what steps he had taken to find additional funding for universities in the past few years.

Minister Nzimande said that there was hardly anything he hadn't done. A lot of money had been re-prioritised from SETAs and the National Skills Fund. The Department of Higher Education and Training (DHET) had asked NSFAS to do its own fundraising, particularly from the private sector, but unfortunately this had not really happened.

Mr Theuns Tredoux (Chief Financial Officer, DHET) added that since the creation of DHET in 2010, they had bid each year for additional funding for the entire higher education sector. Funding to NSFAS had more than doubled since then to approximately R4bn, and funding to the university sector had also increased, from R17.5bn to over R26bn in the same timeframe.

Dr Bozzoli said that it was outrageous that DHET was having to shift money around its various programmes. She said the Committee would make representations to the Appropriations Committee. It seemed that DHET had been abandoned by the fiscus to its crises.

Dr Bozzoli asked whether the Presidential Task Team on higher education funding included National Treasury or any other body that could make decisions about funding. Will it have powers to seriously recommend the re-prioritisation of funds to higher education?

Minister Nzimande confirmed that it did include Treasury. He was looking at ways to harmonise the work of various task teams working on related matters.

Dr Bozzoli asked Minister Nzimande to confirm that he was not in favour of redirecting money from the National Skills Fund to fund the 0% increase in university fees.

Minister Nzimande explained that the remarks to which Dr Bozzoli referred, he only meant that this source of funds should not be used as a milking cow. The NSF had its own important needs.

Ms M Nkadimeng (ANC) asked whether charges against students would be dropped, as had been suggested. What about students who committed criminal acts?

Minister Nzimande said that there was nothing they could do about cases which were already before court, but that Vice-Chancellors had agreed to engage with students. He agreed that they also could not condone destruction of property and violence.

Mr Y Cassim (DA) questioned whether DHET could really be considered a victim of its own success in increasing the number of black students at universities. He asked the Minister whether university funding as a percentage of gross domestic product (GDP) in South Africa, relative to various other countries, was really adequate, putting aside for the moment the increase in the number of students.

Minister Nzimande denied that the issues raised could be separated like this. He conceded that the spending on universities had not increased commensurately with the increase in student numbers.

Mr Cassim did not think that the Minister had answered his question, which had concerned the proportion of GDP spent on university funding.

Minister Nzimande insisted that the issues could not be separated, but he admitted that, at around 0.6 to 0.7% (depending on whether NSFAS funding was included), the proportion was below the continental and global averages.

Mr Cassim said that the meeting agenda had talked about an intervention plan to address student protests. He asked why the Department could not have been more proactive and prevented the protests from breaking out in the first place. Why had they waited for a crisis? They had shown earlier in the year that money was available to support university students in the short term. He added that the 0% increase would not prevent students who had already been excluded from continuing to be so. Protests would snowball next year among indebted students who had not received the financial aid that they had been promised. Did the Minister have a plan in place to deal with this likely scenario?

Minister Nzimande pointed out that as things stood it was the prerogative of university councils to determine fees. If he allowed universities to govern themselves, he was accused of being absent, but as soon as he intervened in response to a problem, he was accused of interfering.

Mr Cassim said the Minister had not answered the second part of his question.

Deputy Minister, Mr Mduduzi Manana, said that the President had asked universities and student leaders to resolve this issue, and although Mr Cassim had been part of this meeting, he had not raised the issue then.

Dr Bozzoli said that if it was the preserve of university councils to set fees, did the President not override the Constitution when he announced the 0% increase?

Minister Nzimande did not think so. It was the university councils who would decide that there would be no increase. It was not the President's decision.

Mr Cassim said that the Minister needed to take some responsibility for the widespread financial mismanagement in the SETAs, since he appointed the chairpersons, many of whom interfered with operations, and the Minister had done nothing to hold these people accountable. The Safety and Security SETA (SASSETA) had been a particular problem.

Minister Nzimande pointed out that he had put SASSETA under administration because he was concerned about its management.

Mr Cassim complained that he had written to the Minister on several occasions this year without having received a response. One issue he had written about was the underspending of SETAs, which amounted to R2 billion at the time.

The Chairperson asked if the questions could engage with the presentation.

Minister Nzimande found it strange that Mr Cassim chose this moment to raise the issue, when television cameras were present. He had responded timeously to most of Mr Cassim's letters during the year. There was only one, requesting that he retract a statement made by his media liaison officer, that had not been replied to. It was a matter for his own judgement whether to respond to such a letter.

Mr Cassim said that a letter dated 22 January 2015 had not been responded to.

The Chairperson again asked Mr Cassim to focus on the substance of the Minister's presentation.

Mr Cassim insisted that it was serious if a Minister was lying to the Committee.

Ms M Mothapo (ANC) asked Mr Cassim to withdraw his allegation that the Minister was lying.

After some dispute about whether he had actually made an allegation of lying, Mr Cassim agreed to withdraw his comment.

Prof T Msimang (IFP) endorsed the Minister's call to students to return to class. However, he had been disturbed to discover that attempts had been made that morning to burn down buildings at the University of the Witwatersrand (Wits), and threatening to interrupt exams. Did the Minister have any positive suggestions for persuading students to go back to class?

Minister Nzimande was also concerned about the situation at Wits. Student leadership had confirmed to him that the majority would be returning to class today, and that the ongoing unrest was probably the work of a minority group opportunistically building on students' legitimate demands.

Dr Diane Parker (Deputy Director-General: Higher Education, DHET) said that the Vice-Chancellors had reported that morning that the majority of campuses had returned to normal operations. Exceptions were the Universities of Cape Town (UCT) and the Western Cape (UWC) and the Mafikeng Campus of North-West University, and Cape Town University of Technology (CPUT). Some groups were refusing to return until the big issues of free education and an end to labour outsourcing were sorted out.

Dr Bozzoli said that the Minister had said in the Sunday Times that eight universities were on the verge of bankruptcy. Which ones were they, and what was the plan to fix them? If there was a bailout, how much would it be?

Minister Nzimande explained that he had meant that of the eight historically disadvantaged institutions, some of them were in a dire financial position. He had not given a specific number.

Prof Msimang asked the Minister to comment on reports of abuse of the National Student Financial Aid Scheme (NSFAS) by wealthier families.

Minister Nzimande replied that he had appointed a forensic team to investigate irregularities at NSFAS. They were also piloting a scheme that would make the relationship between NSFAS and students more direct.

Dr Parker added that at present, they had only anecdotal evidence of this kind of abuse, and the forensic investigation would hopefully turn up some hard evidence of what was going on. She also alluded to the problem of the “missing middle,” that is students who are too wealthy to access NSFAS but not wealthy enough to be able to take conventional loans or be supported by their parents.    

Mr Cassim asked about the delays and issues plaguing the pilot system. What had been done to hold those responsible for the problems accountable?

Dr Parker conceded that the timeline of the pilot had shifted, due to unforeseen complications. Since it was such an important system, they had slowed down the implementation in order to ensure they got it right.

Prof Msimang asked whether the Minister had confronted the Vice-Chancellors on the size and use of their capital reserves and investments? As long as there was no transparency, students would demand that these sources be used for their needs.

Dr Parker said that the Department had done an intensive analysis of the financial statements of all universities. She explained that universities' reserves were of different kinds. There were endowments that might have come from a particular will and be restricted thereby in terms of what it could be used for. There were also council-controlled reserves which were less restricted. The Department's analysis had shown that some institutions had critically low reserves, while others were more secure, but none had the outrageously large undeclared reserves, up to R48bn, that some students had alleged they did at the summit. Using the reserves that did exist could destabilise the institutions and was not a sustainable solution.

Mr C Kekana (ANC) asked if there were any international precedents of free higher education, especially where there were as many poor families as there are in South Africa.

Minister Nzimande said that Cuba had free universities, but it was different from South Africa insofar as it was a socialist country. Germany also provided free higher education, but most capitalist countries could not do this. Even so-called welfare states like the United Kingdom were cutting back seriously on support to higher education.

Ms Mothapo was concerned about the poor rate of recovery of NSFAS student loans. They were not doing enough.

Minister Nzimande conceded that returning students with debt was a serious problem.

Ms Mothapo thought that the Minister was right to appeal the judgement of the BUSA case, and urged him to take it to the highest court if necessary.

Minister Nzimande said that he would. The case was a political one, he felt.

Ms S Mchunu (ANC) asked whether DHET had a concrete plan for free higher education. How soon did the Minister think this ideal could be realised? She also alluded to a misunderstanding that free education would be for all, whereas it would actually just be for the poor.

Minister Nzimande said it was realistic, but only if the money was made available.

Ms Mchunu said that there was a lot of blame-shifting by Vice-Chancellors. Did the Minister not think it indicated the need for a review of the powers and institutional autonomy of universities?

Minister Nzimande agreed that further discussion of the balance between the autonomy and public accountability of universities was necessary, as well as a review of curricula.

The Chairperson questioned the degree of force used by the police in their response to the student protests, in particular the use of teargas, rubber bullets and stun grenades. She said water cannons, for instance, seemed like a more reasonable response. She was concerned about the possible unintended consequences of excessive force by the police.

Deputy Minister Manana suggested that the Committee direct their queries to the Portfolio Committee on Police. However, he thought that the police had been provoked and actually needed to be commended for their restraint. "We could have been sitting with another Marikana". Parliament and the Union Buildings were national key points.

The Chairperson asked whether the Minister had been able to exert any real influence on Vice-Chancellors regarding their transformation programmes.

Minister Nzimande explained that the Department used conditional grants to exert some influence on university operations.

In closing, Minister Nzimande insisted that the focus of their efforts should be on the whole post-school education and training (PSET) system, not just universities. There was a huge shortage of technical and vocational skills in the country. He felt that the division of funds between national and provincial education departments needed to be reviewed. Without suggesting that funding to basic education should be re-prioritised to higher education, he did observe that the figures for numbers of school-goers were higher than the reality, partly as a result of a high dropout rate after Grade 9.

Mr Cassim wished to state, for record purposes, that the Minister and Deputy Minister had misled the Committee and that the matter would be raised with the Ethics Committee.

Minister Nzimande wished to state for the record that they had not misled the Committee.

National Skills Fund (NSF) on its 2014/15 Annual Report
Mr Mvuyisi Macikana, NSF CEO, gave a breakdown of NSF activities during 2014/15. At the highest level, its operations could be divided among three areas of expenditure: education and training (R2.319bn spent), strengthening the PSET system as a whole (R827m spent) and research (R53m spent). The spending on education had been distributed between workplace-based training, the technical and vocational education and training (TVET) college system and the university sector. The largest projects funded were the expansion of medical and veterinary facilities at the University of Pretoria (R208m) and new TVET colleges (R220m), three of which, in Bhambanana, Nkandla and Thabazimbi, had begun construction.

Of the six performance targets the NSF had set itself in its skills development funding programme, two had been achieved and four partially achieved. In its second programme, which was internally focussed on the operational efficiency, they had achieved three out of three performance targets. The Auditor-General had given the NSF an unqualified audit, with some findings, the most important being that 33% of their performance targets were not measurable, and 33% of reporting was not reliable.

Mr Wean Minnie (Chief Financial Officer, NSF) gave an overview of the NSF financial situation. Of particular note was the amount of R3.2bn that had been redirected to NSF's capital and reserves from uncommitted SETA funds, according to the provision of new regulations.

Discussion
Dr Bozzoli said that the NSF seemed to lack a clear purpose. Its achievements were inadequately measured. Its activities were scattered and badly defined. It had funded some projects that did not seem to have much to do with skills.

Mr Macikana assured the Committee that though the NSF may seem to lack a unified purpose, all of its activities were aligned with its original mandate contained in the Skills Development Act.

Dr Bozzoli said that the NSF had also funded some highly questionable projects such as the R70m Vukani Aviation Project, which now looked like it was to be abandoned. She understood that the report commissioned by the Department on the Vukani project had been completed, and asked what the main findings were. Was a forensic audit going to take place? What had been done about the students?

Mr Eubert Mashabane, NSF Chief Director, assured the Committee that they had not abandoned the students. Although training at Vukani had been suspended, he hoped it would resume in 2016, failing which the students would be transferred to other colleges.

Dr Bozzoli asked to see the report. She also wanted to know why the Vukani School was still licensed.

Mr Macikana agreed to make the report available.

Dr Bozzoli noted with concern that the Quality Council for Trades and Occupations had reported that many of the organisations funded by the NSF and many of the SETAs were not quality assured by them.

Mr Macikana said that the process of evaluating an entity for NSF funding included checking for quality assurance.

Ms Mchunu asked for information about student success rates and employability.

Dr Bozzoli agreed. She observed that a measure of student success had not been provided despite the fact that it had been asked for last year. It was not helpful to be told only how many students had been given money, because all of them may be failing.

Mr Macikana said that success rates were recorded and would be reported in future.

Ms Nkadimeng enquired about serious underspending at the NSF.

Ms Mchunu was also concerned about the underspending.

Mr Macikana conceded that underspending was a problem. The processes of procurement around the TVET colleges had incurred unexpected delays. They had hoped to begin construction on all nine of the new colleges, but the delays had meant that construction could only begin on three.

Ms Mchunu asked why the NSF had not acted on the Auditor-General's recommendations from the previous year in the area of performance reporting.

The Chairperson asked about the possibility of redirecting surplusses to help fund the 0% university fees increase.

Construction Education and Training Authority (CETA) on its Annual Report 2014/15
Mr Nhlanhla Raymond Cele (Chairperson, CETA) explained that the purpose of their presentation was to account to the Committee on management and governance at CETA since their period under administration from 2011/12 to 2013/14, to present their Annual Report, and to highlight their main focus areas for 2015/16.

Mr Webster Mfebe, CETA board member, said that governance was the main reason CETA had been placed under administration, and good governance was now their focus. The most important change in this respect was that an independent body had been appointed to oversee grant applications, evaluations and adjudications. In the past, people had sometimes adjudicated their own grant applications, which was obviously an unacceptable state of affairs. He said that an independent investigation commissioned by DHET into the management of CETA was under way, in response to allegations of abuse of power by senior officials. The board was in full support of the investigation.

Ms Sonja Pilusa (CEO, CETA) said that CETA had received an unqualified audit opinion for 2014/15 with only one emphasis of matter, concerning re-licensing, that had been received by all the SETAs. There had also been no new irregular or fruitless and wasteful expenditure. Of the three performance indicators that were audited, two had been given unqualified opinions, with the remaining one only being qualified for lack of completeness. Ms Pilusa went through CETA's operations for 2014/15 (see document).

Mr Velile Ndlovu (CFO: CETA) said that CETA had a revenue of R640m of which about 90% was drawn from levies, and the remaining 10% from their investments. Total expenditure was R412m, of which R91m was disbursed as mandatory grants, R194m as discretionary grants, and R57m was spent on administration.

Mr Cele closed the presentation, saying that CETA had three critical goals for 2015/16: to achieve a clean audit, to complete the skills development centres project, and to increase the involvement of women, people with disabilities and military veterans in the CETA programmes.

Discussion
Mr Cassim asked if the Department could make a comment, given that they had commissioned an investigation into CETA.

Mr Zukile Mvalo, (Acting Deputy Director-General for Skills Development, DHET) noted that Section 15 of the Skills Development Act allowed the Minister to instruct a SETA to investigate allegations of mismanagement, and the Minister may place it under administration if deemed necessary. However, in view of the seriousness of the allegations in this instance (which included violations of procurement systems, favouritism, nepotism, fraud, corruption and others) as well as the possible involvement of the board, the Department had decided to commission an independent investigation. He could not give many details as the matter was before the courts, but he did mention that the independent investigators, Gildenhuys Malatji, had set up a confidential email address for whistle-blowers to report allegations. In general the Department was not happy with CETA's performance, but he was positive about the Skills Development Centres that were being developed.

Dr Bozzoli said that she had received a large number of complaints about CETA's management in 2015. She said that there was something wrong with the Annual Report, because it said nothing about the forensic audit that had been done, the ongoing independent investigation, and the serious allegations of corruption. Quality management had failed completely at CETA. She recommended that the Annual Report should contain information on the quality of teaching, learning and internal processes. She wanted information about the success rate of students funded by CETA.

Dr Bozzoli was concerned about some of the entities that had been funded by CETA. There was one, the Dambuza Trust, which was chaired by the Minister, and another chaired by Mr Mathole Motshekga, a very senior member of the ANC. She wanted assurance that there was nothing improper about the awarding of grants to these entities.

Ms Pilusa said that the Minister was not the chair of Dambuza Trust. She interacted with this Trust every day. But in any case, the allocation of grants was handled by an independent agency and it was based on the merit of the proposal. She did not know about the entity allegedly owned by Mr Motshekga.

Dr Bozzoli asked for clarity on recognition of prior learning (RPLs). Was a certificate issued? How were skills assessed for this purpose?

Ms Pilusa explained that people were issued with a certificate or a statement of result that recognised their skills.

Dr Bozzoli asked for more details on the nature of Skills Development Centres.

Ms Pilusa said that they were linked to TVET colleges, and they allowed anyone to offer a SETA-accredited training course.

Mr Cassim was concerned about the non-achievement of targets in many of CETA's programmes. In access to occupationally directed programmes, for example, CETA had failed to meet 31 out of 35 targets. The target for number of learners enrolled in skills development programmes had not been achieved. The Auditor-General had also mentioned the unreliability of CETA's performance information. Together with the allegations of mismanagement that were coming in, a very worrying picture was emerging.

Ms Pilusa noted this concern, but said that CETA was the second-highest performing SETA in terms of number of learners reached.

Mr Cassim asked for some more information about a report that he said had been sent to several Committee members, called the 'Closeout Forensic Report to CETA.'

Mr Cele said he had not seen this report.

There were some doubts about receipt of the report among Committee members.

Mr Cassim observed that it was strange that the CETA Board Chairperson knew nothing about the report. Could it be a hoax?

Ms Pilusa said that this report had been commissioned by the administrator. It had resulted in savings of over R200m.

Mr Cassim asked the CEO to comment on allegations that she had instructed CETA staff not to co-operate with Gildenhuys Malatji, on allegations of favouritism and intimidation, and that she was benefiting from contracts with providers, including JSK Consultants and Africa Wide, and that CETA continued to award lucrative contracts to people implicated in the forensic report.

Ms Mchunu was also concerned about pervasive conflicts of interests in CETA. She wanted to believe that everything was fine, but she was not convinced.

Mr Mvalo said that some of these issues were part of the terms of reference of the investigation, and he asked if they could wait until the first week of November, when the investigation would had been completed.

Notwithstanding this, Ms Pilusa dismissed the allegations of intimidation. She also denied that she benefited from business with JSK.

Mr Mfebe said that it would be very serious if the CEO was indeed intimidating staff into not co-operating with the investigation, but the allegations were news to him. However, he said that the Protected Disclosures Act made a clear distinction between whistle-blowing and slander, and the allegations had followed the procedures for whistle-blowing recognised by the Act.

Mr Cassim questioned why the CEO had received a salary increase to R2.7m despite the fact that CETA was not performing.

Ms Nkadimeng was also surprised at the CEO's salary. Were SETA CEO salaries set by the Department?

Ms Mchunu agreed, saying that salaries should be commensurate with performance.

Mr Mvalo said that SETA CEO salaries had not been regulated by the Department in the past. New regulations had been developed to regulate the entire remuneration structure of the SETAs. Another SETA was challenging these regulations, however.

Ms Mchunu asked what plans were in place to meet their targets this year.

The Chairperson was concerned that CETA was failing government and simply wasting taxpayers' money. CETA's failures damaged the reputation of government. She urged CETA to take corruption seriously.

Higher Education Budgetary Review and Recommendations Report (BRRR)
On page 15 of the BRRR the following sentence was added: “The Department runs a risk of overspending on its budget since it achieved 72% of its targets while spending 99.9% of its budget.”

On page 20, an amendment was made to reflect the permanent appointment of the Deputy Director-General for one of the programmes.

On page 22, a remark that “proper procedures and processes should be followed to obtain additional funding to assist universities with the 0% fee increment for 2016” was added.

The BRRR was adopted with these amendments.

The meeting was adjourned.