Intergovernmental Fiscal Review: Provincial Roads and Transport

Meeting report

FINANCE SELECT COMMITTEE
20 October 2005
INTERGOVERNMENTAL FISCAL REVIEW: PROVINCIAL ROADS AND TRANSPORT

Chairperson: Mr T Ralane (ANC) [Free State]

Documents handed out:
Provincial Budgets and Expenditure Review- 2001/02-2007/08: Roads and Transport

SUMMARY
Provinces that had been invited to appear before the Committee did not arrive. Treasury briefed the Committee on spending trends in relation to roads and transport. The transport sector played an important role in the economy. It was a catalyst for economic growth and social integration. SA had a proclaimed road network of 532 000 and 221 000 of unproclaimed network. Provinces accounted for 63% of the proclaimed roads. The aggregate infrastructure expenditure was R10, 6 billion in 2004/05.

Capacity constraints remained a major challenge in the sector as mature and well-experienced engineers retired. The preparation for the World Cup presented an opportunity to fast track public transport planning and implementation. Fraud and corruption in vehicle licensing, registration and driver licensing remained a challenge to safety and the effectiveness of traffic management.

The Arrive Alive campaign was not just the responsibility of the Department but also of the road users. There was a need to inculcate a culture of respect for fellow road users. Accidents happened even in well maintain roads purely because of the behaviour of drivers.

The Committee raised the following issues, amongst others:
- why motor vehicles licensing fees differed so much per province;
- whether there was value for money from the work done by provinces;
- whether the Arrive Alive campaign was making any headway taking into consideration number of accidents around the December-January period every year; and
- whether there was a fair distribution of way bridges that would make it possible for all provinces to achieve the objectives of having them.

MINUTES
Presentation by National Treasury
Ms M Ngqaleni (Director: Infrastructure Policy) made the presentation. (See document attached). The transport sector played an important role in the economy. It was a catalyst for economic growth and social integration. There were different modes of transport and concurrent responsibilities across spheres of government for all aspects of transport. South Africa had a proclaimed road network of 532 000 and 221 000 of unproclaimed network. Provinces accounted for 63% of the proclaimed roads. There was a great potential contribution to employment through the Expanded Public Works Programme given the need for access road and maintenance backlogs.

The aggregate infrastructure expenditure was R10, 6 billion in 2004/05. Municipalities had spent R2, 7 billion (31%) of the total aggregate. The combined aggregate of national and provincial spending grew from R5, 1 billion in 2001/02 to R7, 8 billion in 2004/05. Provincial roads infrastructure grew from R6, 4 billion to R7, 2 billion during the period 2004/05 to 2005/06. Roads expenditure accounted for 3, 4% of the total provincial budgets.

Capital Expenditure
There was a lack of consistency in the measurement of backlogs. Backlogs in maintenance and access roads presented an opportunity for job creation and a challenge for funding and prioritisation. Capacity constraints remained a major challenge in the sector as mature and well-experienced engineers retired. The preparation for the World Cup presented an opportunity to fast track public transport planning and implementation. Fraud and corruption in vehicle licensing, registration and driver licensing remained a challenge to safety and effectiveness of traffic management.

Discussion
The Chairperson said that the provinces that had been invited to appear before the Committee had not arrived. He asked why motor vehicles licensing fees differed so much per province. Western Cape had the highest fees. Maybe the amount of fees payable in the Western Cape explained why the province had all sorts of car. Why was there no attempt to standardise the licensing fees? He asked if Treasury and the Department of Transport were satisfied with the kind of outcomes in terms of sealed roads and the trends in respect of road construction. There were ups and downs in terms of maintenance and this was related to the number of accidents in South Africa. Provinces were doing so much construction and maintenance. Was there value for money from the work done by provinces? It had always been said that roads grew the economy. All South Africans needed a growing economy. He asked if the country was winning the battle of growing the economy.

The Department replied that this was a historical thing. In terms of legislation provinces could set their licensing fees. What had happened in KwaZulu-Natal was that the province had decided to add 10% on licensing fees specifically for road safety activities. Some provinces had raise or lowered their fees.

Mr M Goeieman (ANC) [Northern Cape] said that the presentation referred to the Arrive Alive campaign. There was a need proper infrastructure in order to achieve the objectives of the campaign. The N12 between Warrenton and Wolmaranstad was pathetic. People did not even use the road. There was a need for growing economies in North Cape and North West provinces. He asked how far was the Department in terms of improving conditions on the road.

Mr N Alli (SANRAL: CEO) replied that the road between Warrenton and Wolmaranstad had become a national road. It had always been a provincial road. It had been recognised as one of the strategic roads and this was the reason it had been incorporated into the national road network. Geo-technical and engineering investigations were taking place on that road. It was hoped that the process and the design would be completed by the second quarter of the new year. The first thing to do as soon as any road had been incorporated into the national network was to put routine maintenance procedures in place. This meant patching it and filling in the potholes in order to make the road safe as much as possible. This was ongoing at the moment. There would be a meeting on 26 October 2005 with the people in the North West to discuss strategies about the road.

A member asked if there had been any standardisation with regard to bus subsidies, particularly in Limpopo province where there were three types of subsidies. A person who was traveling from Limpopo to Johannesburg had to pay R120 on toll roads. He ask how much of the toll gate fees assisted in road maintenance. How was the money accounted for?

Mr K Pillay (Chief Director: Public Transport Subsidy Management) replied said the subsidies were based on the number of the population, distance and number of buses used. The highest amount of subsidy was in Gauteng and a lot of people tended to migrate to the province. This did not necessarily mean that the people who benefited from the subsidies were from the province. In the Eastern Cape there were services that were subsidised by the national government and others that had been part of former Transkei and Ciskei and were being subsidised by the province. They were operating under appalling in the sense that the vehicles were old. The government had tried to go on tender on some of the provincial subsidised services but there were not takers of the tenders. The volumes were low and it did not make financial sense for some operators to operate under such conditions.

Mr Alli referred the Committee to SANRAL's Annual Report that indicated how every cent was accounted for. The money collected went to the repayment of loans and the maintenance of the road. He said that he would be happy to come back to the Committee at a later stage and explain how the money was being used.

Mr Pillay replied that there were two types of subsidies in Limpopo. One was based on the interim contracts and there were three negotiated contracts with the Great North Transport (GNT). The intention was to level the playing fields with the private operators. The GNT was the operator of the negotiated contracts and was owned by the Limpopo Development Corporation (LDC). In terms of the contracts certain things had to happen to ensure that the parastatal operators became competitive. There were other interim contracts in the other parts of the country. Those contracts were put in place because before 1994, certain operators had life long concessions. It was agreed that there should be an interim phase after which all operators would then hand over their permits to the government. All operators would then have to participate in the tender process. There was a moratorium on going to the tender process due to a court case in the Western Cape. The Western Cape had decided to go on tender for quite a few of the Golden Arrows operations. The National Land Transport Transitional Act (NLTTA) required that there had to be transport plans in place and the design of the contracts had to be based on the plans. The transport plans were not in plans. All contracts were stopped in view of this. The NLTTA had been amended and there was a need to move away from the interim contracts because they were inefficient. The MINMEC had decided that all outstanding interim contracts should move towards tendered contracts in the next two years. A model tender document had been published for comments and the closing date was 30 September 2005. The Department was busy analysing and evaluating the comments.

Mr D Botha (ANC) [Limpopo] asked how much was budgeted for the Arrive Alive campaign. Last year there was a huge amount of money that had not been spent. The explanation that had been given for this was that the campaign had started late. He asked what were the spending patterns for the past two years and if there been rollovers over the years.

Mr D Pretorius (CFO) replied that the up to 2004/05 the campaign was funded by the Road Accident Fund through donations to the Department. All of the funds had been spent. From 2004/5 onwards Treasury had allocated R50 million per year to the Department for the campaign. In 2004/05 the Department had underspent and had a rollover of about R20 million. The Department was expecting to spend the whole allocation for this financial year.

Mr E Sogoni (ANC) [Gauteng] asked if the Arrive Alive campaign was making any headway taking into consideration number of accidents around the December-January period every year. He asked who was responsible for the classification of roads and whether the classification take into account the South Africa's history. Roads in Sandton were okay and the issue was whether the same could be said about roads in other areas. What was the national Department doing or contributing to ensure that roads were upgraded in all areas? He also asked the extent to which National Treasury monitored the expenditure. With regard to capital expenditure some provinces had spent around 72% of their budgets. What was Treasury doing to ensure that provinces improved their expenditure patterns?

Mr Alli replied that in the past roads were classified in different ways which did not take into account the social requirements of roads. This was one of the main reasons why the Department was looking at the issue of classification. The study would inform the Department on how best to ensure that nobody walked around with the view that there were 'orphaned' roads. He was of the view that there should be no ‘orphaned’ roads because there were shoulder to shoulder boundaries. There was a time when such boundaries did not exist and people referred to some roads as unclassified or unproclaimed roads. There must be some authority responsible for a road. SANRAL was not allowed to spend money on roads that were not declared national roads.

With regard to the Arrive Alive campaign, he said that the campaign was not just the responsibility of the Department but also of the road users. There was a need to inculcate a culture of respect for fellow road users. Accidents happened even in well maintain roads purely because of the behaviour of drivers. There was a need of some kind of mobilisation plan to ensure that people behaved responsibly on the roads.

Ms Msomi replied that the Department had looked at the functional classification of roads. There were six classes of roads. It was a functional classification that deliberately avoided looking into the question of ownership. The approach was to do it in a phased manner. The first step was to look at functional classification and then deal with the issue of ownership.

The Chair asked if there was a policy on the taxi recapitalisation process and what was the projected amount of the process.

Mr Pillay replied that a national household travel survey had been conducted. From the survey, it was quite clear the majority of the people in the country used taxis. There was a situation wherein operators did not invest in their vehicles and this compromised the safety of the vehicles. Some vehicles could not be repaired to satisfactory conditions given their age. There was also the issue of regulation in the industry. It had led to over supply and competition on lucrative routes. The competition on lucrative routes had led to taxi violence. The Department had tried to address the issue of violence in particular routes. The process was to convert to route based permits. This process had been done in respect of all provinces. The next step was the conversion of permits to operating licenses. The operating licenses would give the boards an opportunity to place certain conditions in terms of the service that would be provided. MINMEC had decided that the conversion process should be complete by the end of November in all provinces. Cabinet had scrapped the tender for the new vehicles and decided to address the safety specifications of the vehicles. The specifications had been put to Cabinet and approved. The Minister had published regulations on 02 September 2005. The rollout plan was currently being finalised. There would be continuous assessment of the province’s readiness to roll out the recapitalisation. The process could not be run from the national level and the Department would intervene when necessary.

He said that in determining the amount that would be required, the Department had based the scrapping allowance on 97 000 vehicles that were captured on the system. The amount was captured in two process: one in the late 1998/99 special legalization campaign and the 2000 illegal campaign.

Mr Makgatho said that the Limpopo province had the highest figures in relation to the weighing of vehicles. The weighing of vehicles was done 24 hours a day. The reality was that most of the trucks were not from the area. They just passed through the area. There was no actual weighing in the areas from which those trucks came from. The 24 hours a day weighing of vehicles should happen in all provinces. There was also a problem of the "orphaned" roads. They belonged to no one and most of them were in the rural areas. He asked what informed the South African National Roads Agency Limited (SANRAL) in terms of dealing with the roads. A lot of money had been wasted on the road from Port Elizabeth to Durban in terms of patching it. Things would have been different had the road been closed and tarred once and for all.

Mr Alli replied that to the layman it might seem that all that the Agency did was patching roads time and again. He was prepared to come and demonstrate before the Committee the Agency's pavement management system. It was a fairly sophisticated system.

Ms Msomi replied that the Department was faced with the question of quantifying municipal road backlogs. The Department had commissioned a study to look at and begin to quantify the extent of the municipal road network. The Department would then take 'orphaned' roads and classify them.

The Chairperson said that the Western Cape and Free State provinces had two and three way bridges respectively. One of the problems was the lack of norms and standards relating to the distribution of way bridges. He asked if there was a fair distribution of way bridges that would make it possible for all provinces to achieve the objectives of having them.

Mr Alli replied that it was not SANRAL’s jurisdiction to be putting up way bridges. This was the responsibility of provincial governments. SANRAL had decided that spending money on way bridges was a better investment than not spending it at all. There were additional facilities that were needed in order to deal with traffic offenders. The problem was that both SANRAL and the Department could not man the way bridges because they did not have peace officers there. They relied on provinces to supply such officers. Provinces were beginning to have a better cooperation with the Agency. Overtime was being paid to ensure that there officers at any time of the day at the way bridges. The Agency would do all it could to ensure that roads were safeguarded.

Ms N Msomi (DDG- Transport Regulation and Public entity oversight) replied that it was not just about the improvement of the structure but also about human behaviour on the roads. In the past year there had been increase for both construction and maintenance allocations from National Treasury to provinces. The growth on allocations had averaged 11% but spending on provincial roads accounted for about 5% of the provincial budgets. This was a challenge to provincial Treasuries.

She said that there was an overload control strategy. The distribution of way bridges was catered for in the strategy. The Department was working closely with provinces to ensure that way bridges that were not operational were attended to.

Mr Pretorius replied that the way that way bridges were funded had been done away with two years ago. Up to then various provinces contributed to a national overload control fund that was managed by the Department of Transport. The decisions with respect to where the way bridges would be built were made collectively between the Department and provinces. The reason for the apparently skewed distribution of way bridges was that way bridges were placed where they would make the most impact. They were not necessarily allocated per province. Now that the over loading control fund had come to an end, provinces had the responsibility of putting up such facilities.

The Chairperson said that way bridges were not strategically placed in the Free State province. The province had two way bridges. One of them was not in those places through which big trucks passed. There was no way bridge next to Winberg. There was a big problem in the Free State in terms of the allocation of the way bridges.

Mr Alli agreed that there was a strategy for way bridges. The Chairperson was right in respect of the situation in the Free State. The way bridge in Senekal would be upgraded and a new one would be put up in Harrismith. Satellite stations were being built and there would be mobile facilities in such stations. A great cooperation from the law enforcement agencies would be required to ensure that the stations worked properly.

The Chairperson said that another problem was that most of the trucks traveled at night and the law enforcers were asleep at that time.

Mr Robertson (ANC) [Eastern Cape] asked what were the criteria for declaring a road to be a national road. He wondered if provinces could approach SANRAL for help in relation to provincial roads.

Mr Goeieman said that it had been indicated that the N12 had become national road only a month ago. The N12 stretched from Mpumalanga to Three Sisters and should been declared a national road long time ago. One could find a person who had a traffic fine in Kimberley. The person might decide that he or she would not pay the fine. He or she would then go and visit a friend in Johannesburg. Obviously, the Northern Cape would not send someone to go and look for the person in Johannesburg. How were provinces assisted in this regard?

The Chairperson said that law had a long arm. One would never get away from net.

Mr Alli replied that there were national or inter-provincial routes. A road only became a national route after it had been proclaimed to be a national route by the Minister of Transport. There were a number of criteria but the main issue was whether the road served an economic activity or not. The Department was moving away from this and was beginning to look at the strategic network. SANRAL offered great assistance to provincial Departments but such assistance did not include money. SANRAL was not allowed to offer financial assistance to provinces.

Mr Sogoni said that it would be helpful to should invite the Department of Social Development to these hearings because it dealt with the orphans. He asked who was responsible for monitoring expenditure once conditional grants had been transferred to provinces. Last year there was a province that had spent 1% in nine months and the figure had increased to 104% the in next three months. Was this money being thrown into a river? One should be able to understand how expenditure was taking place. Gauteng rehabilitated only 44 kilometers of the road network. South Africa would host the FIFA World Cup in 2010. The question was what informed the spending. He also asked how the National Traffic Information System (NaTIS) worked. Was it only concerned with vehicle licensing? What about drivers' licenses? He said that he had a R1000 fine for driving without his license. The traffic officials could not verify if he had a license at all.

The Department replied that NaTIS recorded all inspectors, drivers' license and vehicle license.

Mr Makgatho said that the table 7.15 on overload control made an interesting reading. Eastern Cape had two way bridges and accounted for 792 vehicles per way bridge. Free State had three and accounted for 25 783 vehicles per bridge. The Western Cape had 9 way bridges and accounted for 31 668 vehicles per bridge. North West had 10 way bridges and accounted for 2 226 vehicles per bridge. Limpopo had 17 way bridges and accounted for 13 958 per bridge. The Western Cape was doing well in terms of fines per bridge. It had been said that there was an overload strategy but the statistics suggested that some way bridges were over worked and others were not being utilised. He asked why there was such a skewed picture.

The Chairperson said that he had invited Eastern Cape, Northern Cape, North West and KwaZulu-Natal. The Committee did not know why the province did not honour the appointment. The number of cars in Eastern Cape was high compared to the Free State. However, the amount of fees collected in the Eastern Cape was less than in the amount collected in the Free State. The provinces were supposed to come and explain such things. There was a funny trend in Gauteng. The numbers were declining. He suspected that some provinces had deliberately decided not to come. Perhaps they had heard from the Departments that had appeared before the Committee last week that the Committee was concerned about certain issues.

Ms Ngqaleni said that Treasury was aware of the spending trends. The challenge was looking at what was actually happening. The issue of value for money was important. It was not only about how much money provinces were spending but also about how they were spending it. Another issue was whether provinces identified needs and designed the roads taking into account the identified needs. The national Department should begin to look at the issue. The issue of monitoring was a challenge.

The meeting was adjourned.