Draft Report on Budget Hearings of the Portfolio Committee on Transport
1. Introduction
The committee supports and welcome all of the above strategic priorities.
4. Analysis of the 2006.2009 Budget
The expenditure has risen rapidly from R5, 7billion in 2002/2003 to R 15, 5 billion in 2008/09 at an annual average rate of 18%. In regard to public transport there is an increase of R7, 2billion for Gautrain over the MTEF and R 1, 6billion for passenger rail infrastructure over the MTEF and public transport infrastructure fund has been allocated R3, 5billion over the MTEF. The spending on national roads grown by 13,4%, R1, 2bn in 2002103 to R1, 75bn in 2005/06 and growth increases to 26,1% over MTEF reaching R3,5 bn in 2008/09.About R94m in 2006/07,R70m in 2007/08 and R75min 2008/09 has been allocated for the
5. Entities of department of Transport
Some of the entities are functioning effectively well in their respective areas in particular Air Traffic Navigation Services Agency, South African National Road Agency Limited, and Airports Company of South Africa. The committee was concerned about security issues highlighted by a recent theft from Johannesburg Airport. The managing director of ACSA told the committee that investigations were underway and that for those who were involved, justice was going to take its course will take its course.
However, in regard to Cross-Border Road Transport Agency, South African Maritime Safety Authority and Road Traffic Management Corporation the committee did not see any progress.
In regard to Railway Safety Regulator the committee was quite happy with the progress made by Railway Safety Regulator. This progress was measured when the regulator issued safety permits and redefines its railway safety management regulations. The regulator assured the committee that there is a business model that will make sure that the regulator is self sustainable as this is one of the concerns. The committee was very happy to see that the regulator was properly functioning and showing a clear indication of intended actions. The regulator shared with Members that they have insufficient resource to carry out its mandate, but they communicated this to Treasury.
Since Road Accident Fund was announced as having technical insolvency, weak management and corruption during the past years, the new CEO has taken emergency steps. Changing the operating mindset, by developing a new model was one of the steps that needed to be taken. The Fund shared with the committee the total number of claims, which were still outstanding the figure was 450,000. These claims were put on hold when Road Accident Fund ran out of money and the Fund stop processing claims. This led to a very tight situation for the Fund and on top of that the fund had no assets. There were external factors that were identified by the Fund these were high level of fatality in South Africa which makes the financial health of the Fund not good.
Reasons for South Africa's high accident rates that were identified were alcohol abuse and inadequate enforcement of road safety. The factor that also made it difficult to process backlog. It was identified that there is an inadequate correlation between the amount of fuel sold and the number of accidents. This means that the fuel and accident is not increasing at the same rate. This lead to sharp growing claims since 1997 and since then claims have been growing four times faster at 22% rate. Out of that 54% is from foreigner whereas 46% in from South Africa.
So to-balance the equation, fuel levy growing has to be above inflation targets, but the fund has limited control over the fund economics. Another contributing factor is the Fund legal costs that have tripled in 3 years as the legal process proceeds. The internal factor is the ability of fund to process claims constrained primarily by cash availability and this causes large inefficiencies within the Road Accident Fund.
The key challenges that the fund has control over were inability to effectively process claims, high cost of administration and service providers, unsustainable economic model and prevalence of fraud and corruption. However the are action plans that are being pushed to address the sustainability of the Fund. One of these plans is developing a business model, an improved organisational structure and stakeholder engagement When it comes to financial of the backlog, discussion had been held with department of Transport and Treasury. The committee welcome the new direction the fund is taking and they were very sure that given time the fund can be very effective and efficient also manage to sustain itself.
6. Committee's comments
While the committee acknowledged departments hard work it also raised concerns, that some of departments major projects were too ambitious. The committee also expressed concern around institutional disjuncture and integration of transport system, which is slow at metros and municipalities level citing the Gautrain and Taxi Recapitalization
To this, Department has indicated that the delayed taxi Recapitalization programme it is approaching some finality. The department has indicated the project would be rolled out by June 2006. Although the committee fully supports department's objectives regarding this project it still fell that affordability and the whole process around subsiding and integration its of concerns. Questions were on how the incentives are going to make people to enter new regime. To address some of the questions and concerns, the committee has, the latter has suggested a workshop on the progress of Taxi Recapitalization and Road Safety Issues and Gautrain.
In regard to 2010 World Soccer finals the committee was pleased to know that the department was alreadily implementing bigger projects like tickets allocation that are supporting the Soccer World Cup Final. The department is in the process of implementing conditional grant to fund some of the urgent public transport infrastructure projects for host cities. This grant will fund infrastructure investment of R3, 5billion in all municipalities.
In respect to freight infrastructure the committee felt that there is hope to improve the service delivery which is often associated with an adequate infrastructure but the department come to realise that it also linked to outdated managerial and operational practises. The committee was pleased to hear that there is freight logistics strategy underway to eliminate bottlenecks in freight logistics operations. To address these challenges the department will address institutional and regulatory frameworks, infrastructure, ownership, management and skills by developing new policies on Maritime, Appropriate cargo for appropriate mode.
With regard to road traffic enforcement the committee remains unsatisfied with the RTMC's progress. Although the budget allocation will increase over the next three years from R 144 million; R153 million and R169 million. According to statistics South Africa has one of the highest traffic accident rates in the world. Medical Research Council revealed that some 18 000 people lose their lives on our road each year. The committee also concern raised of corruption that is happening to vehicle testing stations but the department assured the committee that the is a best practice model for vehicle testing station that has been finalised and the model will be introduced country wide.
The department has identified areas of significant challenges. These challenges include access, safety, security and public transport system for all. The department shared the milestones that have been covered regarding security. They told the committee that an agreement has been finalized between SAPS and DoT to established a dedicated railway police unit for the Metrorail system. The department assured the committee that the project is progressing very well and will be fully implemented soon. The committee welcome this development
The committee believes that in coming years the department together with committee and all relevant stakeholders will move towards a much more integrated approach to the subsidisation, planning institutional arrangement and proper regulation of public transport
7.Recommendations
The committee recommends that the department should involve the communities and relevant stakeholders to be part of the decision-making processes during the Recapitalization Project. The committee believes that in coming years the department together with committee and all relevant stakeholders will move towards a much more integrated approach to the subsidisation, planning institutional arrangement and proper regulation of public transport.