The University of the West Indies (UWI) economist Dr Roger Hosein believes that the Government Assistance for Tuition Expenses (GATE) should not be fully subsidised by the State and that students should begin making a contribution by paying their own tuition fees.
“I do not agree that tuition fees at this point in time is the most optimal strategy, but I do agree that students need to contribute to the funding of their university education even up to 100 per cent because of the large amount of private returns involved. Perhaps the State in this regard would like to consider an income contingent loan programme or a graduate tax,” he told the Business Guardian by email on Sunday.
He said the GATE programme was a step in the right direction made by the government of T&T in terms of increasing tertiary-level enrolment of the relevant age cohort in the TT economy.
When the programme started in 2006, government revenues were $21.4 billion as compared to $4.58 billion in 2000/2001 and, in his view, the State got carried away in the rapid fiscal revenue increase.
However, by 2014/15 fiscal revenues from the energy sector declined to $13.7 billion and even more the rapid decline via a demultiplier effect in part triggered a collapse of the economic growth process in the economy with 2015 experiencing negative growth of 2.1 per cent and 2016 already forecast to contract by -2.7 per cent.
Education Minister Anthony Garcia has said that students should expect changes in accessing tuition funds from September as Cabinet was expected to deliberate the findings of a task force set up to review GATE yesterday.
Inefficiencies
Hosein said GATE was “vertically inefficient” as students took the money they would have paid for tertiary education and instead used it for consumption.
“GATE, as designed, is vertically inefficient and therefore students who can afford to pay have instead utilised the money they receive for the purpose of investment in tertiary level education, for consumption, a sad mistake made by policymakers in T&T. Further to facilitate the inefficient allocation of resources associated with GATE (over production of some areas of study) an OJT programme had to be designed to help students in these “overproduced” areas, these students build relevant skills so that they could functionally participate in the economy.”
He said the consequences of all this is to change the funding strategies for tertiary level education from full funding being provided by the State to a funding formula in which students contribute, in one form or the other, to the cost of their tertiary level expenses.
On the topic of other social programmes, Hosein said the same government action would have to be applied to other areas of subsidy.
“I think other programmes such as CEPEP would have to be cut and indeed the State should take a thorough review of its various social sector programmes to see where wastage is involved and clip away accordingly,” he said.
Middle class
Economist Indera Sagewan-Alli told the Business Guardian on Tuesday whether the governments keeps GATE, reduces it or stops funding it all together, this action will affect the middle and lower classes.
“It would be a safe thing to say that for middle and lower income class of people, that is going to be very difficult. The middle class will continue to be squeezed in terms of having any extra cash lying around to meet this particular expenditure. We are in an environment where jobs and salaries are stagnant or declining as people are being asked to work less or there is unemployment,” she said.
She also said retaining GATE is a function of affordability and the Government must determine its priorities.
“If it is no longer a priority to make tertiary education free and accessible, then a change in policy would come with that.”
She added that giving nationals the opportunity to access tertiary education can also include loans even if GATE is no longer fully subsidised.
“It would mean a mechanism is put in place to allow people to have access to the funds that they require to meet tertiary education. Then if the Government’s objective is for people to have the funds, and they do not become a burden on them post graduation that would cripple them, that would speak to the kinds of funds and the kind of interest rates that would be attached, if any at all,” she said.
She also said the next step would be for the Government to target what group of people needs to be targeted or who needs to be given priority for tertiary level education.
“Is it going to be carte blanche available to anyone who wants to access it? Or do the students or the students’ parents need to fall within an income bracket? All of these are things that need to be thought through when you are moving from a situation of across-the-board access to a situation where the Government is changing that,” she said.
Apart from the economics of keeping or getting rid of GATE, she said the Government would also have to look at the political consequences.
“People have grown accustomed to this. This is their first year in office and the argument can be if they do it, people will forget in four years.”
Sagewan-Alli said the Government must create the conditions to link the education system to the economic system.
“In my view, the country has failed in linking tertiary-level education to an economic platform. Is the curriculum being offered by the university matching the needs of the country? But do we know what the country’s economic needs are?
The problem is that we do not know where the Government is planning to take the economy. This siloed approach to everything we do is not getting us anywhere in terms of the sustainable development we need as a country,” she said.
T&T's failed welfare
She believes all governments of the post Independence era have had a failed economic policy of depending on energy incomes for their revenue.
They took this oil and gas largesse and distributed it to the masses.
“There is a large segment of the society that believes that the state must provide everything for them down for milk for their children.”
She pointed to the North European welfare states where they have provided health, education and other benefits to their populations.
She said it has worked well there but not in T&T as this country’s economy depends on only one source of revenue whereas those countries have more diversified economies.
“In those countries there are the productive sectors that are providing the employment like Norway. Those economies are more wide ranging and so the State gets its taxes from various sources. Those economies are growing and cutting edge,” she said.
