Report of the Ad Hoc Committee on Transport on Budget Vote 33 – Transport, dated 23 June 2004:

 

  1. Introduction

1.1 The Ad Hoc Committee on Transport held six public hearings focused on different aspects of the Transport Budget for 2004/5. The hearings covered the following themes:

1.2 The greater proportion of the total 2004/5 Transport Budget (the total is R6,76 billion) is for transfer payments to other spheres of government or to a variety of transport-related public corporations and agencies. However, the Ad Hoc Committee decided to take inputs directly from the DoT in all cases, to underline the fact that the Department remains ultimately responsible to Parliament for the transport budget, regardless of the entity that is involved in the actual spending. The Committee also believes that the DoT needs to enhance its capacity to exert effective strategic leadership over the relevant spheres of government and transport-related public agencies and corporations to which transfers from this budget are made. The budget, and budgetary transfers are an important means for achieving this greater strategic leadership.

1.3 However, in order to fulfil its oversight role the Committee will undertake further focussed interactions with a range of agencies, corporations and other entities that fall under this budget – including the Road Accident Fund, the Cross Border Road Traffic Agency, the South African National Road Agency Limited, the South African Maritime Safety Agency and the Urban Transport Fund.

 

2.Strategic overview and DoT priorities for financial year

2.1 The DoT concedes that there are many internal weaknesses within the Department. The Department’s capacities are severely stretched, and there is a complicated organisational structure with responsibility for key areas fragmented. Many projects also lack a clear strategic focus. There is a lack of emphasis and capacity within the DoT in regard to key areas like logistics, agency oversight, and rail, aviation and maritime regulation.

2.2 Of the 492 posts in the DoT, only 321 are currently filled. At least some of the capacity challenges confronted by the Department are obviously related to this reality of 171 vacancies. The Department needs to use the process of filling these vacancies in a strategic way, ensuring that new appointments are aligned with strategic priorities.

2.3 The Department has identified four strategic imperatives for the immediate three-year period:

2.4 The Ad Hoc Committee supports all of the above strategic priorities. We note, however, that the present Departmental budget before us, prepared prior to the appointment of the new Minister of Transport, and prior to the current Departmental overhaul, does not adequately reflect many of these priorities. This underlines the importance for a more pro-active engagement by the Committee in the preparation of future budgets. In order to facilitate progress, we generally support the present budget, but anticipate relatively significant adjustments later in the year. The Committee will, in principle, view such adjustments favourably. The Committee will also engage actively with the Department during the departmental overhaul process.

 
  1. Public Transport
    1. The DoT is in the process of finalising a National Travel Survey that covered 50,000 households. The interim results of this survey show that some 2,4 million commuters (some 64% of all commuters) use mini-bus taxis. These results confirm earlier surveys underlining the centrality of the mini-bus sector in South Africa’s public transport system. The Committee has requested a formal presentation on the survey, once it has been finalised in the coming month. The Committee will use the results of the survey to stimulate public discussion and debate about the challenges facing our country in public transport.
    2. The much-delayed taxi-recapitalisation programme is now approaching some finality. The Department has indicated that Government remains committed to the programme, and that a final decision can be expected within two months. The Committee supports the underlying objectives of the recapitalisation programme, however we are concerned about the affordability of the proposed new fleet of 18- and 35-seater vehicles. This concern is related, in part, to the current plan that envisages the mandatory conversion of the entire registered minibus fleet of some 97,000 vehicles within a stipulated period. The Committee does not know what the final prices emerging from the tendering process will be. We are, however, concerned that the new vehicles will be considerably more expensive than those currently on the market. It should be borne in mind that the recapitalisation programme was initiated partly because many owner-operators could not afford the new vehicles then available on the market. The Committee is also concerned that there is insufficient information on the (presumably diverse) current financial profile of minibus owners. In the light of all of the above, the Committee, while supporting the aims and principles of recapitalisation, urges the Department to consider the modalities of the programme, and to proceed with considerable flexibility in the actual implementation.
    3. The bulk of the Transport Budget is earmarked for subsidies for public transport – R2,5bn for commuter rail (which is transferred to the South African Rail Commuter Corporation), and R2,2bn which is transferred to Provinces, for bus subsidies. The Department is concerned that these subsidies are not always optimally directed to assisting the poorest of commuters. There is also the obvious anomaly that the most used mode of public transport (the mini-bus sector) has never received any subsidies. The Department has undertaken to review and assess current subsidy policy and report by September 2004 on its recommendations in this regard.
    4. Optimal delivery of effective passenger rail services in South Africa has been hampered by an unnecessarily complicated institutional arrangement with three public entities, the South Africa Rail Commuter Corporation, Metrorail and Shosholoza Meyl all involved. The Department intends to drive the integration of these three entities in the course of the current budget year. The Committee welcomes the Department’s commitment to fast-tracking the Khayelitsha rail extension.
  2. Freight logistics
    3.
    1. Challenges in the freight logistics system include:
    1. Taken together, all of these problems present a significant challenge to ensure a much more effective inter-modal, intra-public sector, and public sector and private sector linkages. The Committee welcomes the Department’s commitment to facilitating memorandums of understanding and service level agreements between key stake-holders in the freight logistics chain.
    2. The above problems have also hampered the implementation of government’s strategy of achieving a better balance between rail and road freight. Rail continues to lose market share.
    3. To address these challenges, the Department will:

 

  1. Road Traffic Law Enforcement
    2.
    1. The Department’s research indicates that over 500,000 traffic accidents occur annually on our roads. Some 80% of these are as a result of driver-related factors. These accidents cost government in excess of R13 million per annum. The Department’s research also indicates that only 28% of fines issued for traffic offences are collected.
    2. In the light of the above, the Committee has raised its concern that the Administrative Adjudication of Road Traffic Offences Act (AARTO) of 1998, designed to address precisely some of the above problems, has still not been implemented.
    3. The Committee has also raised its concern that the newly established Road Traffic Management Corporation (RTMC) has not been functional over the past two years, although it has received budget allocations of R3,098 million in 2001/02, and R3,324 million in 2002/03.
    4. The Department has undertaken to fast-track the full implementation of the AARTO and RTMC Acts in the course of this budget year, whilst investigating their respective roles within the Road Traffic Infringement Programme, and also developing an approach to public-private partnerships.

     

  2. Transport infrastructure construction and maintenance, and the role of transport in the extended public works programme
    1. Government has committed itself to increased public sector investment in social and economic infrastructure, with R100 billion earmarked for infrastructure spending over the next five years. The DoT anticipates a significant portion of this investment will occur in transport.
    2. There are major infrastructural backlogs in transport – notably in rail (where infrastructure and rolling stock require major recapitalisation), in road (where the road network requires upgrading and maintenance), and a number of our leading ports require expansion.
    3. These transport infrastructure programmes need to be located within the context of government’s extended public works programme (EPWP), and many of them present opportunities for labour intensive approaches.
    4. In particular, the Department will direct the South African National Road Agency Ltd (SANRAL) to play an active role in supporting the EPWP. The Department, correctly, underlines the importance of not limiting our approach to labour intensity and the public works programme to poverty relief funding for small, localised projects. While these are important, it is critical also to mainstream labour intensive methods, where appropriate, into the major infrastructural programmes – airports extensions and maintenance, port construction and extension, and major road construction.
    5. The Department has undertaken to provide the Committee with an updated and comprehensive report on the Poverty Relief projects on its budget.
  3. Maritime and air regulation
    4.
    1. The Department aims to improve its proactive capacity to play a strategic leadership role in the areas of maritime and air regulation.
    2. Government, through the DoT, has three key responsibilities in regard to civil aviation – overseeing safety regulation (through the South African Civil Aviation Authority); ensuring economic regulation and preventing monopoly abuse (through the Regulating Committees of the Air Traffic Navigational Services and of the Airports Company of South Africa); and regulating the access to traffic rights of the airline industry (through the International Air Service Council).
    3. In regard to the Maritime sector, the DoT’s capacities have been particular uneven in the recent past. The Department aims to correct this through pro-active trend analysis of the sector; greater emphasis on international alignment within SADC and the AU; and participatory policy and regulatory development.
    4. The enactment of the National Ports Authority Bill, and particularly the establishment of the Independent Ports Regulator, is a priority of the Department for the current budget year.

     

  4. Road Accident Fund
    5.
    1. The Road Accident Fund (RAF) continues to be plagued by serious problems, including technical insolvency, weak management and chronic corruption. In the coming months the Transport Committee will return to the RAF matter in a more focused manner. However, in the context of the budget hearings, we requested a brief update from the Department on the current situation.
    2. The Department, acting with the new Board (appointed in September 2003), has taken a number of emergency steps. These have included the suspension of the Fund’s CEO, and the suspension of the Chair of the Board as Chair (he remains an ordinary Board member pending further investigations). Arrests and sentencing of those involved in fraud (both from inside and outside of the Fund) continue. A number of emergency meetings with personal injury lawyers and other stake-holders have been held with a view to implementing mutually acceptable emergency measures to prevent a cash-flow crisis.
    3. The Department believes that these various measures will save the Fund significant sums, and will enable a turnaround, obviating the need for any request for additional Government funding in the course of this year.
    4. Parliament has revived the Road Accident Fund Amendment Bill, which seeks to introduce a number of cash-saving measures to assist the Fund. In the light of the serious challenges at the Fund, once the Bill has been formally tabled, the Committee undertakes to fast-track its engagement with it.
    5. While being sympathetic to these various interim measures, the Committee is of the view that ultimately the Fund is based on an excessively litigious, fault-based system, and that it is not sustainable, equitable, or desirable in its present form. This is a view that has been developed at length by the Road Accident Fund Commission. The Commission recommended a complete overhaul, and the establishment of a Road Accident Benefit Scheme (RABS) that would be a "no-fault" system that would prioritise the serious road accident injuries as part of a comprehensive social security system. The Committee, in principle, supports this recommendation.
    6. The Department has indicated to the Committee that the Inter-departmental Committee, mandated by Cabinet and responsible for taking the RAF Commission proposals forward, has resumed its work, and an Expert Committee will be appointed. In welcoming these indications, our Committee expresses its concern at the slowness with which the matter is being addressed. Our Committee urges the DoT to ensure that the Department of Social Development, in particular, begins to assume a more dynamic role in the process. In our view, a perspective argued extensively in the RAF Commission report, it is the Department of Social Development that is the more appropriate lead department in the transformation of the RAF into a RABS.