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EDITORIAL - Reassess subsidies at tertiary level

Published:Monday | February 1, 2010 | 12:00 AM

Education Minister Andrew Holness demonstrated commendable political skills at the University of the West Indies' (UWI) Mona campus last week when he over-rode the instincts of security officials and insisted that protesting students be invited close enough to an open-air function, at which he was the guest speaker, so they could hear him address their concerns.

Mr Holness later had an informal meeting with student leaders, with a promise of future deeper negotiations. Although the students' demonstration had been orderly, the minister's intervention and his frank, but polite, declaration of the economic facts could only have helped to calm the situation and defuse the potential of it developing into a disruptive protest.

Going forward, though, it will be difficult for the Government to satisfy the concerns of the students at tertiary institutions in Jamaica who receive state subventions/subsidies.

Containing public expenditure

The demonstration at Mona was over the planned increase by the university of tuition fees during the coming academic year. The reason for this is locked into why the Government is heading to the International Monetary (IMF) to borrow US$1.2 billion and is being forced into a search for ways to contain public expenditure.

The country's debt of $1.3 trillion is unsustainable and is only made worse when the Government runs high fiscal deficits - now at around 12.5 per cent of GDP. Tertiary education, in the circumstances, is one of the sectors feeling the pinch.

Indeed, in its letter of intent to the IMF, the Government promised a "nominal freeze" on tuition subsidies in the coming fiscal year and to introduce means testing for those who get help. So, in the next Budget, tertiary institutions will be allocated the same $11 billion as in 2009/10 which, given inflation of over 12 per cent, will, in real terms, translate into a significant decline.

Clearly, unless UWI, Mona has an unexpected and urgent inflow of endowments targeted to tuition costs, it is improbable that the near 80 per cent subsidy on the economic cost of their education, enjoyed by most Jamaican students can continue. This brings back to the fore the matter of how the Government should allocate its education budget. Unfortunately, the former finance minister, Dr Omar Davies, was mostly scoffed at when he attempted to place the issue on the national agenda early in the last decade. It, as well as the broader issue of financing education generally, now demands debate.

A means test

On the matter of tertiary education, we believe that a means test, properly designed and sensitively implemented, makes sense. As is the case with indiscriminate subsidies, all students at Mona get it, even those who can afford to pay more. This is an economically inefficient way to help those who need the support most.

With reduced subsidies to tertiary institutions, the Government has to ensure enhanced efficiency of its students' loan system so as to reduce operational costs, allowing more cash to go to students. Rates on students' loans will also have to decline with market trends and it is imperative that the Government keeps them on a downward trajectory.

The Government should also consider creative solutions to help tertiary students. For instance, the rate of interest on their loans could be reduced if they agree to work for a period of time in the public service, which need not mean government institutions.

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