TOUGH STANCE:  Academics, lecturers and students protest against university fee increases under the banner #feemustfall outside Parliament in Cape Town on Thursday. Picture: EPA/NIC BOTHMA
TOUGH STANCE: Academics, lecturers and students protest against university fee increases under the banner #feemustfall outside Parliament in Cape Town on Thursday. Picture: EPA/NIC BOTHMA

A LEADING industry association has advised against hiking personal and corporate tax to fund free university education, saying such a move would have an adverse effect on the economy.

South African Chamber of Commerce and Industry CEO Alan Mukoki said in an interview with Business Day on Thursday that business made significant tax contributions and paid a skills levy to Sector Education Training Authorities (Setas). He said the Setas needed to get their act together because they were run inefficiently and that business has raised this with the government.

International Labour Organisation SA director Joni Musabayana said on Thursday that the university fees debate needed to factor the entire skills value chain in the country and warned against making decisions that would disadvantage future generations.

"Yes, business can do more but it doesn’t necessarily have to be financial because we are already taxed to a point we believe it will start to affect the economy adversely if you tax more," Mukoki said.

Mukoki and Musabayana made their comments against the backdrop of escalating tension on campuses throughout SA.

"We support the idea of a free education on a financial needs basis," Mukoki said, but the government had to conduct a thorough financial needs assessment.

Higher Education and Training Minister Blade Nzimande made the 2017 fee announcement this week, and said students from households with a combined income of less than R600,000 annually would be exempted from paying more.

Universities will be allowed to hike fees up to 8%.

Department director-general Gwebinkundla Qonde said fingerpointing about Setas had to be directed back to business, which, together with trade unions, dominated the boards of various Setas.

"Business can tell you better how they are utilising the money at Setas because whatever project that comes through they approve."

In 2015, Nzimande gazetted a proposal to convert Setas over two years from authorities to become advisory boards. In the 2016 budget review, the Treasury said that Nzimande’s department would investigate how funds from the Setas and the National Skills Fund could be used to support universities and the National Student Financial Aid Scheme.

But Qonde said: "Let’s not talk as if there is money sitting somewhere doing nothing." He said R2.5bn would be required to pay for the fee adjustment and that the government would have to reprioritise existing projects.

Michael Sachs, head of the Treasury’s budget office, said on Wednesday that funding to projects including early childhood development and health initiatives may have to be slowed to find money for the fees shortfall.

He said it was impossible to raise funds in the current fiscal allocations and the government was unable to borrow money to meet the demand for education subsidies, as it owed R2-trillion to banks and pension funds.

A senior Treasury insider, who spoke on condition of anonymity, said: "Two or three years ago, you could have moved from the premise that there is a wider scope to reprioritise and cut areas of inefficiency and of waste to fund programmes, but we are approaching a point now where we have to give up something of high priority to fund yet another high priority. Choices are getting very, very tough."

Former finance minister Nhlanhla Nene also weighed in on the debate and called on parents to get involved.

"If we move to an overall no fee education, which is happening at lower levels, it would then mean that everybody that has an interest in the matter needs to be at the table." He said the business community had played its role and provided massive investment in education but this had not been properly co-ordinated so the effect was not felt.