Budget Impact

How the budget will impact on private learning providers

• Posted by Hannes Nel on February 26, 2015 at 10:21 in Training Service Providers
• Back to Training Service Providers Discussions

Not mentioning private learning providers in the budget speech does not mean that it will not have any effect on us. It most certainly will and the prognosis is, as can be expected, not a very good one. Private learning providers need to know how the budget will impact on their operations and they need to manage their finances in such a way that they will at least survive in the face of this new monster that already broke down the door.

A budget, that hits the middle class the hardest, inevitably hits the private learning institutions equally hard. Private learning institutions whose learners mostly come from middle class households will find that they lose learners. One way to overcome this is to see if you can focus more on offering learning to learners whose tuition fees are paid by corporates or government institutions.

The focus of the budget, however, is not the most important effect that the budget has on the financial health of private learning institutions. The cumulative effect of all the tax increases is the biggest threat.

• Raising the marginal income tax of all but the lowest income groups reduce the money available to households for education and training and reduce the income of learning providers. To this should be added to effect of bracket creep (tax brackets are shifted 4.2% higher except for the low income groups).

• Not so luxury home owners (steeper transfer duties on homes worth more than R2.25-million) and car owners (all facilitators must have cars) further reduces the nett income of education and training practitioners.

• The increased electricity levy form 3.5c/kWh to 5.5c/kWh, coupled with the inevitable load shedding has a huge impact on learning institutions that are dependent on electricity in numerous ways.

• I will mention sin taxes to show that it was considered. However, sin taxes are a product of the individual’s indulgence in the good life. The impact on education and training should be minimal.

Private learning institutions will need to find ways in which to limit the effect of the above on their costs and ability to offer professional education and training. Examples include;

• going green (gas stoves and geysers, sun panels to generate electricity, etc.);
• using more efficient teaching methods;
• limiting travel to the minimum, etc.

There are a number of opportunities in the budget, although most are directed at public learning institutions. The initiatives listed below are spread over a period of three years.

• R640-billion will be spent on basic education.

• R195-billion will be spent on post school education (including tertiary education and occupational training).

• R3.1-billion will be awarded in bursaries for aspirant teachers.

• R7.4-billion will be spent on the replacement of 500 unsafe or poorly constructed schools.

• R4.1-billion will be spent on establishing public libraries.

• University subsidies of R72.4-billion will be made available.

• The National Student Financial Aid Scheme will be increased from R9.2- billion to R11.9-billion. Private learning institutions will need to identify the opportunities that this offers them.

For example, one can negotiate with public learning institutions to offer learning programmes in partnership with them or on behalf of them, one can make facilitators, assessors and moderators available to public learning institutions, one can develop learning materials for public learning institutions, etc.

In closing, all the money that the government will collect through taxes will be wasted if it is not spent responsibly. All right, every political party in opposition to the governing party and every financial expert harps on this. The following should, however, already have received more attention in the budget speech:

• The Minister should have explained to us what government is doing to bring those who constructed unsafe schools to book and what government will do to ensure that such shoddy work is never delivered again.

• The Minister should have explained to us what government is doing to ensure that the increase in the electricity levy will, indeed, only be temporary.

• The Minister should have explained to us exactly what government is doing to destroy corruption and why their efforts will work this time around.

• The Minister should have explained what government will do to ensure that students who receive bursaries, government subsidies, stipends, etc. will study hard and achieve success.

• The Minister should have explained to us what government will do to ensure that public learning institutions will offer good quality education and training.

• The Minister should have explained to us what government will do to ensure that government officials will provide a professional service to the community.

• The Minister should have given us the assurance that government will lead by example and the President should openly have declared that he supports the Minister in this respect.