Report of the Portfolio Committee on Transport on Budget Vote 33: Transport, dated 1 July 2009:

The Portfolio Committee on Transport, having considered the budget vote of the Department of Transport, Vote 33 reports as follows:

Introduction

The Portfolio Committee on Transport as guided by the Rules of Parliament, promulgated by the Constitution of the Republic of South Africa conducts an oversight function over the Department of Transport and its Entities. The Committee analyses the strategic plan and budget of the Department and ensures these are aligned and prioritised in accordance to the needs of the country. Due to the tight parliamentary programme the Committee was unable to meet with the 11 public entities for transport however, in the course of the year the Committee will meet with each entity to get an update on their activities.

The Committee had an overview briefing with the Department of Transport to familiarise the new members on the organisational structure and content of the Department through its branches. The Committee had further engagements with the Department of Transport to understand how the strategic objectives and budgetary inputs align both to the needs of the country and enhancement of public transport. The report further includes the cluster priorities for 2009 – 2014 for transport.

Department of Transport’s Strategic Plan

The Director General presented the strategic plan of the Department as guided by the Public Finance Management Act (PFMA) which is structured in terms of functional areas indicating particular priorities. The Department of Transport does not have a master plan for transport due to challenges in coordination since the completion of the master plan would include input from other stakeholders that operate in the transport sector. The Department has embarked on a project to develop and complete the master plan for transport although they acknowledge the challenges in obtaining information from other stakeholders and users of transport. In 2006 the Department tried to integrate all infrastructure plans in the Department which will become the prioritisation tool for all other departments.

The Minister of Transport is the chairperson for the Infrastructure cluster which is the first priority for the Department. The strategic goal in this area is to speed up growth and transform the economy by providing job opportunities. The department was working towards the finalisation of an integrated infrastructure plan although they have been experiencing challenges with prioritisation mechanisms and budgeting.

The public transport strategy will focus on the implementation of integrated public transport networks that will be developed across South African cities. The Department is also working on a systems grant that will currently be rolled out for 2010, however at a later stage it will be implemented for all transport matters.

The Rural transport strategy by the Department will be key in co-ordinating rural economy departments. The focus will be on improving rural transportation, freight movements and accessibility of roads in the rural areas. The department will also upgrade rural roads as the current conditions are unsatisfactory. In its anti-poverty alleviation strategy the department has launched the “Shovakalula” programme where which forms one part of the anti- poverty strategy that gives free bicycles to poor learners who walk more than 5 kilometres to school in the rural areas. However, the programme for bicycle tracks and infrastructure is not well funded and the bicycles are expensive because they are imported. The department had targeted to hand out 1 million bicycles but experienced financial challenges in achieving this goal.

The Department of Transport requires a new infrastructure investment development strategy that will be financed differently from the existing ones. This strategy seeks to develop different models that would attract the private sector to invest in transport. The department was working on an expansion programme whilst maintaining the existing infrastructure. The department further acknowledges that this could not be achieved by the fiscus alone and emphasised that infrastructure should be planned differently to address the current backlog. The department has identified the significance of managing cost inflation since this affects its projects and it would further develop rural and urban standards.

The department is in the process of improving airport infrastructure for 2010. This is important because the games will be played in all host cities and most matches will occur at night and therefore airports become more important for commuting. There would be a development of the automotive sector particularly for the production of goods locally, thus creating employment and reducing poverty.

There would be effective infrastructure regulation that would look at tariffs. A contentious issue has been the regulation at toll gates. The department was exploring the possibility of tolling those vehicles that cause damage to roads, especially the heavy vehicles such as trucks. The department was still engaging in a legal battle regarding the proposal of a no-fault policy for the Road Accident Fund (RAF).

The driver’s license testing centres were still an area of concern although progress has been made with the computerised learner’s licenses. The department was exploring the possibility of a border management entity that would deal with corrupt entities.

Budget: Medium Term Expenditure 2010 - 2012

Additional funding allocations

Additional funding was allocated to bus operations and fuel costs. There had been a series of court cases regarding bus subsidies not paid to operators due to financial challenges as a result of under budgeting from the National Treasury. Payment for bus subsidies would now directly come from the Division of Revenue Fund. The biggest challenge faced by the Department is the insufficient public transport to accommodate all commuters; however there are interventions in place to address this issue.

The Public Transport Infrastructure Systems (PTIS) fund which is the grant aimed at improving public transport infrastructure for 2010 and beyond will increase in allocation after 2010 since it will fund other transport infrastructure beyond 2010 host areas. Other programmes that have received additional funding include taxi operations, the Gautrain Rapid Rail link due to its financial model and the South African Rail Commuter Corporation (SARCC) compensation of employees and infrastructure amongst other things.

The Road Accident Fund has received a balloon payment of R2.5 billion for the 2009/2010 financial year to address its liquidity challenges and no further allocation will be made to this agency in the MTEF period. The Department is working towards an objective where all its agencies would be self-reliant and not require funding from the Department.

The Gautrain project will not be completed by the targeted date; however, phase 1 of the project which is the section between OR Tambo international airport and Sandton will be completed by September 2010. The Department is working on tightening this time frame and intends to complete it before the indicated month. However the developers were requiring more money to develop tighter targets. Gautrain will operate on a wide gauge compared to the normal trains but will use the same platform to pick up and off load people. An interim measure was to integrate the old and new rail tracks and the goal is to eventually do away with the old.

The SARCC grants will be a once off payment for 2010 and therefore they have not received funding this financial year for 2010. The Department of Transport had overspent for the 2008/09 financial year due to bus subsidies. This was a result of money transferred by National Treasury to the Department of Transport that was paid over to the various bus companies.

Findings by the Committee

• The Committee observed that the Department of Transport has experienced an institutional challenge in coordinating overall transport due to Transnet not reporting directly to the Department of Transport (DOT) but reporting to the Department of Public Enterprises (DPE).
• Passenger Rail Agency of South Africa (PRASA) does not have borrowing powers and therefore depend on the Fiscus and the department would be unable to maintain this arrangement in the long-term.
• More funds are required for rural infrastructure development.
• There are a series of unfunded mandates such as law enforcement in the taxi industry, turnaround of the Operation Licensing Boards (OLB), turnaround of the Cross Border Road Transport Agency (CBRTA) amongst others due to inadequate funding.
• The Department had requested R31 billion from National Treasury and it received R1.3 billion and this resulted in some of the unfunded mandates and challenges for DOT in executing its programmes.
• The Department has not moved with speed to transform transport in South Africa and a speedy recovery is required. Therefore there is a need for the department of transport to speed up the transformation process.
• The master plan and integrated development planning occurs at the planning phase coordinated by the district municipalities but the committee observed that this function was not implemented to its maximum. The implementation of programmes do not accommodate integrated planning and integrated service delivery which is a concern.

Programme 1: Administration

The Department of Transport had undergone a restructuring process with a growth from 3 to 9 branches as a result of various policies and expansion of the Department to improve transport. The Department now has a new Deputy Ministry office which it did not have in the past. There has also been an expansion in the Director General’s office due to her involvement in cabinet services. The department is still faced with the challenge of unfunded posts that were as a result of the change in organisational structure that was approved by Treasury. However, the entire structure could not be financed in a single financial year. The department has a 9% vacancy rate that includes acting positions but excludes unfunded posts. Retaining skills has also been a challenge and there is a serious issue of job hopping in the public sector.

Programme 2: Transport Policy and Economic Regulation

This branch will establish a national coordinating policy that will improve transport and accommodate inter-governmental relations. There has been a disjuncture on the department responsible for transporting learners to school and lack of coordination. The DOT will now take that initiative through the national scholar transport policy. The department will also implement non-motorised transport policy in areas where animals are used as a form of transport or other non-motor transportation systems. The Department was tasked by the aviation sector to lead the global initiative for change in aviation. The department is experiencing challenges in obtaining suitably qualified skilled candidates for research.

Programme 3: Transport Regulation and Accident and Incident Investigation

This branch regulates all modes of transport and investigates accidents. The Department will improve customer and service delivery at testing centres and the renewal of licenses will not be a challenge as currently the case. There is a need to develop skills for safety in aviation. South Africa will be hosting the maritime launch in October that will be dealing with the maritime charter. The branch is embarking on a project where they would teach scholars from a young age the rules of the road and rules of driving to make it easier for them to obey the law when grown up. Maritime is largely owned by international organisations and the department would work at improving the situation so that South Africa also owns its own maritime. South Africa only has 3 registered ships and they have been experiencing challenges with training learners and providing necessary skills.

Programme 4: Integrated Planning and inter-sphere coordination

This branch focuses on an integrated approach for transport. The national public transport regulator will oversee accreditation of public transport. The road classification project will be finalised and a routine maintenance plan should be closely monitored. The Extended Public Works Programme (EPWP) has been allocated R3 billion, however this is not enough to meet the target requirements expressed by the President in the State of the Nation Address. The integrated development programme would look at the implementation of the National Land Transport Act (NLTA) and deregulate the transport authority. The Department has the South African National Women in Transport (SANWIT) programme where women are mainstreamed in transport through developing skills and business.

Programme 5: Transport logistics and Corridor Development

This branch manages the development of western and eastern corridors. It ensures rural development, access to international markets and collaboration in moving freight. The department manages the network and maintain infrastructure and in future it would like to have the private sector participating in branch sector network. Transport seems not to be visible at port entries and there is a need to define the role of Transport at Border posts.

Programme 6: Public Transport

This branch involves the operationalisaton of all the plans of other branches, particularly on public transport issues. The focus is on developing operational plans for all three modes of transport. There is a detailed support operational plan for the taxi industry and the DOT is exploring the possibility of a route for a meter-taxi industry and formalising it as a form of business, particularly for evening operations. There is a structured process of engagement with the taxi industry on the Bus Rapid Transit system (BRT). The branch also focuses on enterprise development, regulation and operating licenses. A framework for general public transport in determining fares has been identified and the department is exploring implementation possibilities.

Programme 7: Public Entity Oversight

This branch focuses on the department’s oversight role on public entities and according to the PFMA the department acts as a shareholder with these entities where the entities report to the Department on operational plans and the Boards as accounting authorities. The Department monitors the appointment of Board members and intervenes on legislative tools that are applicable to the entities by advising those entities on policy matters in executing those particular entities mandates.

2010 FIFA WORLD CUP

An acting Deputy Director General has been appointed to focus particularly on 2010 issues because the department wants to leave a lasting legacy. The involvement of mini bus sector is important in the functioning of the games since 60% of the country’s public transport is made of mini bus taxis. Experiences from the confederations cup have shown challenges with “park and rides” especially where people do not read the signs at the stadiums. The Department has launched a website on operations of the confederations cup. The department would like engage further with the committee on 2010 preparations and the state of readiness for the country and thus provide an analysis of lessons learnt from the hosting of the confederations cup.

Resolutions

• The Committee would re-visit the Gautrain report conducted by the 3^rd parliament committee since concerns were raised on financial implications in rolling out the entire rail system to use a wide gauge. The committee would look at the advantages and disadvantages of Gautrain, its impact in upgrading the rail networks and look at other countries to study the relevant implementations.
• The Committee will re-visit accessible public transport for disabled people, state of roads to pension pay points and transportation for physically disable people in the rural areas. This is an area of concern which should be dealt with urgently.
• The Committee agreed that the current reporting authority of Transnet to the Department of Public Enterprises (DPE) needs to be resolved in that companies such as Transnet and South African Airways (SAA) that have direct impact on transport should report to DPE on corporate issues but report to transport regarding operational systems. This has been a challenge particularly on freight logistics and port operations since Department of Transport (DOT) has no control over freight transportation from Transnet and a follow up would be made by the Committee on this issue.
• Transnet is currently a state monopoly yet plays the role of a regulator and this is not good for any organisation because it limits the activities of other organisation that could execute part of that function and the committee would follow up on this matter.

Recommendations by the Committee to the Department

The Committee made the following recommendations to the Department and intends on following up on them:

• The Committee was keen to understand the SADC Protocol on Rail and requests the Department to provide the protocol document by SADC on rail.
• The Committee requested the Department to respond in writing on the total legal costs that the department had to pay on a case involving an accident that occurred due to lack of road maintenance. The Committee was of the view that the department could have avoided the legal court case, had they properly maintained their roads and urged that in future such accidents should be avoided.
• Shovakalula is a programme that enables children who walk for more that 5 kilometres in the rural areas to obtain free bicycles. Those bicycles are not manufactured locally and therefore the programme is not assisting in the poverty reduction initiative and not addressing the high unemployment challenge. The Committee requested the department to explore alternatives on manufacturing bicycles in South Africa, to assist in job creation.
• The Committee requested the department to develop clear coordination and inter-relatedness of its programmes by focusing on implementation.
• The Committee requested the department to align its strategic plan to the findings of the national household survey relating to issues such as high cost travelling of a person. The findings of the survey indicated the cost of travelling for an individual to be more than 10 percent and that was viewed as a serious challenge. The Committee believes that it should not cost more that 10 percent of a person’s income to travel.
• The Committee requested DOT to develop a comprehensive plan in the rural areas for public transport since most people in the rural areas use taxis which are not subsidised by government and the challenge of un-roadworthy buses still remains. There is no adequate transportation for old people in the rural areas some still get their pension money using wheelbarrows and this was unacceptable.
• The committee was concerned about the unfunded mandates yet they had passed legislation to deal with sources of funding and the committee recommends urgent engagements between the DOT and National Treasury on this matter.
• The Committee recommends that the department should address the inter-sphere coordination challenge by re-focusing and targeting poor people in the rural areas particularly on budgeting and halving poverty by 2014.
• The Committee requested the department to report on a country wide road assessment infrastructure.
• The Committee requested a briefing by the Department on the restructuring process of the Road Accident Fund (RAF), particularly the no-fault policy that has been recently established.
• The first democratically elected president of South Africa launched the “masakhane” campaign in 1995 relating to infrastructure and service delivery. The key issues relating to transport were the uneven levels of development in the country. The campaign identified three different types of services namely, adequate services where government’s role is to maintain the existing services and infrastructure so that they do not degrade. The Committee recommends to the department that in areas where there are inadequate services, the department should upgrade and improve services to close the gap between the poor and wealthy. The department should make provision for areas where there are no services and this was a concern because the department could not indicate the percentage of their budget allocated to maintenance, upgrading and provision of services.

· The department did not indicate clearly its allocation of resources on issues arising from the “Masakhane” campaign. The Committee requested the department to familiarise itself with the reconstruction and development programme and the Masakhane campaign document.

The Democratic Alliance (DA), Congress of the People (COPE) and Inkatha Freedom Party (IFP), while accepting the contents of the report, abstained from recommending the acceptance of the Budget Vote because they had not consulted with their relevant parties in caucus.

The Portfolio Committee on Transport recommends that Budget Vote 33 be passed.

Report to be considered