Economic Regulation of Transport Bill, National Road Traffic A/B & National Land Transport A/B: DoT response to public submissions

Meeting report

The Chairperson welcomed Members of the Committee and the Department to the meeting. He said this meeting was a culmination of a process that started once they received the Bill. Today’s agenda concerned the responses to written and oral submissions regarding the Bill by the Department of Transport (DOT). He invited Members to engage with clarity-seeking questions regarding the submissions. He asked if they had any comments on the Department’s presentations before they began.

Mr T Brauteseth (DA, KZN) said the Economic Regulation of Transport Bill was going to take away the ability of municipalities of provinces to regulate their own affairs in terms of tariffs, licensing, etc, and asked how the Department could justify taking away this authority? They were placing this authority in the hands of a regulator who could make arbitrary decisions from a central position that may not suit the local environment. The Constitution clearly states the different spheres of government must cooperate with each other, but could not tell the other what to do.

The Chairperson thanked Mr Brauteseth. He said they must continue with the agenda, and invited the Department to present the responses to the submissions on the National Road Traffic Bill.   

DOT responses to submissions on the National Road Traffic Bill A/B

Written comments from the Western Cape Government

Clause 1

The Western Cape government wanted clarity on whether “a power-assisted pedal cycle” would be required to be registered and licensed. The DOT responded that this would not be required.

Clause 4(a)

Suggested that the wording of Section 3C(2)(a) be broadened to include persons known or connected to examiners of vehicles. The DOT noted and agreed to this suggestion.

Clause 4(c)

Suggested that the wording of Section 3C(2)(c) be broadened to include persons known or connected to traffic officers, traffic wardens, or National Administration Traffic Information System (NaTIS) officers. The DOT noted and agreed to this suggestion.

Clause 5(c)

Since there was only a formal qualification for traffic officers and not for the other categories of officers, it was proposed that the word “diploma” be added after qualification. The DOT noted and agreed to this suggestion.

Clause 6(d)

Suggested that the rationale for limiting the offences to those included in schedules 1 and 2 of the Criminal Procedure Act be included in the memorandum. The DOT noted and welcomed this suggestion.

Clause 7(c)

Delete the word “may” in the closing paragraph.

Suggested that the relevant sections referred to in the Criminal Procedure Act be identified in the proposed paragraph (q) of section 31 of the Act. The DOT accepted this suggestion.

Clause 11

Suggested replacing the word “body” with “organisation.”  The DOT noted and agreed to this suggestion.

Clause 12

Suggested that subsection (1) be broken up into three paragraphs, each dealing separately with the decision which may be appealed against. The DOT noted and accepted this suggestion.

Clause 15(a)

Suggested clarity be provided as to the rationale for not including national departments from applying for approval to operate a driving licence testing centre.

The Department responded that this was one of the critical functions under transport and played an important role in ensuring that only skilled drivers were issued with driving licences, thereby ensuring improved road safety and a reduction of fatalities. Other departments should stick to their own mandate without encroaching on other departments’ mandates. The problem was that the driving licence testing centres (DLTCs) that are operated by the SA National Defence Force (SANDF) were not easily accessible to the inspectorate of DLTCs, and at the SANDF’s bases where the DLTCs were located and military bases, the right to access was reserved.

Clause 15(b)

It was proposed that the wording “No department of State” be retained.

The DOT responded that the inspectorate of DLTCs works on unannounced visits, and the SANDF requires that any intended visits to their bases must be upon notification always. Regulation 97 (2) has the powers to a person who acts on behalf of the inspectorate of a DLTC to enter the premises of any DLTC at any reasonable time and without prior notice to inspect any of its records. All this must be done without prior notice, whereas the SANDF prefers that there must be prior arrangements to enter their bases. 

Clause 22(b)

Suggested that in these instances, measures be introduced to combat fraud, corruption, and theft. The DOT noted and accepted the suggestion.

Clause 34

Insert the word “learner’s” as follows: “the MEC concerned may, after such learner’s licence, driving licence…” The DOT noted and accepted the suggestion.

Clause 40

There was a drafting error in the proposed amendment to section 58(3)(b), which was affecting the meaning of the subsection. The DOT agreed.

Clause 41

Delete the word “a” as follows: “…the driver of [a]… an emergency vehicle…." The DOT noted and agreed.

Written comments by South African Local Government Association (SALGA)

Generally, SALGA supported the proposed changes, with concerns raised that the Select Committee could address.

There were always concerns of accountability when legislation provided direct powers to the chief executive officer (CEO) without providing a clear mechanism of how the CEO would account for the execution of such functions.

See attached for full document

Discussion

The Chairperson thanked Mr John Motsatsing, Chief Director, Department of Transport, for the comprehensive responses to the issues that had been raised. He asked the legal advisor to guide them through the submissions.

Ms Phumelela Ngema, Parliamentary Legal Advisor, said most of the submissions and responses were of a technical nature. These appeared to be the drafting style preferences, which they would check against the conventions and existing law, especially regarding the schedules and their additions. These were the schedules to the Criminal Procedure Act which they would consider, with the direction of the Committee.

The Chairperson said the Department had welcomed the suggestions by the Western Cape government's Department of Mobility regarding clause 6(d), which suggested that the rationale for limiting the offences to those included in Schedules 1 and 2 of the Criminal Procedure Act be specified in the memorandum. They had also suggested that schedule 5 and 6 be included. What about the concern that conduct could not be retrospectively made a crime? This meant persons who had been convicted of offences and had already been employed as an examiner, could not be suspended due to clause 6(d). Did the Department have an estimate as to how many persons convicted of crimes contained in schedules 1, 2, 5, and 6, were currently employed?

His second comment concerned the oral submission made by the Congress of South African Trade Unions (COSATU) and the Medical Research Council (MRC). They had supported a 0% blood-alcohol concentration for drivers. Having considered the research on the impact of reducing the blood-alcohol concentration on road fatalities, what was the Department’s view on the current permissible blood-alcohol concentration levels? Also, the issue around the definition of 'disaster' in the Disaster Management Act was a bit categoric on what it entailed. The inputs made around clause 40 were critical regarding the safety provisions on roads. What safeguards were in place for the use of clause 40?

The Chairperson said the concepts of standards were also important, because they were proposals to which the Department had not responded. The proposal was that the Committee should consider widening the scope for the approval and monitoring, and allow for more accredited certificate bodies to participate in this sector or market. An example was made as to the role of the South African Bureau of Standards (SABS) and the South African National Accreditation System (SANAS). If accreditation was broadened, then it would allow for greater monitoring. For example, the Department of Employment and Labour had done away with SABS approval for fire extinguishers, and replaced it with approval by accredited certification bodies. It improved monitoring and afforded choices for those involved in the sourcing of fire extinguishers. The National Credit Regulator had done the same with the removal of SABS approval for companies applying for a letter of authority. This improved monitoring of all regulated conducts, and allowed for better services in the industry. Did the Department have a view on the broadening of the scope for product approvals?

The Chairperson said his last question related to the presentation by the South African Driving School Operators Association. The proposal was that clause 22(b) was prejudicial to the driving school industry. If licence test centres provided a motor vehicle, then the authorities would be competing with the driving schools. The concern was that the struggling driving school business could be negatively impacted. Driving school employees might lose their jobs, and this could lead to a rise in corruption and create unrest. What was the Department’s view in relation to the presentation by the South African Driving School Operators Association regarding clause 22(b)?

DOT's response

Mr Mosatsing started by addressing the retrospective applications in the proposal. The law would not allow any retrospective applications in so far they related to what had been approved. Therefore, it would not affect those with a criminal history -- it would be applicable only henceforth. In terms of the process that Members of Executive Councils (MECs) had to follow concerning registering the applicants for examiners of driving licences, some of the requirements in the Bill were that the MEC was required to make those considerations to satisfy him or herself that a particular applicant was fit to operate in that environment. The Bill would not allow retrospective applications.

As to how many people had been convicted of those offences, the Department had not done that assessment as of yet. However, they must advise the MEC of any criminal offences for which they had been convicted.

Mr Motsatsing said it would have been ideal for the Department to do away with the alcohol content aspect, because of the practical challenges they had with alcohol in the entire road safety environment. Alcohol contributed to a number of fatalities on the road. Therefore, the Department would like to see the intake of alcohol and driving being dealt with. It would be ideal for the DOT to retain the limit of 0% alcohol. He noted the practical challenge of food products that contain alcohol.

Mr Motsatsing referred to the standard regulators in the sector. He said that the current practice was for the SABS, as the standards body, and the National Regulator for Compulsory Specifications, being the responsible authority, to manage those particular standards. This fell within the domain of the Department of Trade and Industry (DTI), who would have to look at how, in the context of the Standards Act, they would allow any certification or accrediting body that provided compliance to standards. In terms of the DOT’s legislation, they referred to the SABS and the National Regulator for Compulsory Specifications.

Regarding driving schools, Mr Motsatsing noted the reservations raised by the driving school sector. The DLTCs operated by local authorities and provinces did not necessarily go beyond the testing of drivers. The driving schools would still proceed with what they were currently doing in terms of training prospective drivers. The intention was not the training of a driver to drive, but if they were submitted to tests, the DLTC would provide one with a motor vehicle. The DLTC did not get involved in the training -- that remained the domain of the driving school sector.

The Chairperson thanked Mr Motsatsing for addressing those questions.

Ms N Tafeni (EFF, Eastern Cape) asked the Committee Secretary to forward all of these bills to her email, as she had not received them.

Ms Ngema added that Clause 22 concerned the amendment of section 82 of the existing Act. The question that the driving school association was raising, could be the same question raised by applicants. The principal provision implied that the applicants should bring their own vehicles for testing purposes. The provision was trying to provide for an instance where, if an applicant could not supply their own vehicle, the centre would provide one. She said the issue that the driving school association was raising was that they might monopolise the market, in that driving centres would be the only ones supplying vehicles. The same argument could be made where the driving schools charged exorbitant amounts for applicants to use a vehicle. It was a balancing act.

The Chairperson said he hoped the Department had grasped the context of the point that had been raised.

He expressed appreciation to Mr Motsatsing for his responses to the amendment bill. He said their task as a Committee was to specifically address the reservations that the President had expressed in terms of section 79 of the Constitution.

DOT responses to submissions on the National Land Transport  Bill A/B

• Section 11 of the Principle Act

SALGA noted that section 11(8) of the Principle Act presupposes some form of devolution without any clear mechanism and conditions for such a devolution. SALGA was unaware of any issued assignment of such functions by the Minister or the MEC to a municipality such that it met the conditions set out in the Constitution.

The Western Cape Government said Section 11(1)(b) of the Principle Act provides for the responsibilities of the provincial sphere of government. It was submitted that it should be specified that the provincial sphere of government was able to plan, implement and manage provincial land transport initiatives, including public transport services.

• Clause 7(a)

The Western Cape Government said the proposed amendment to section 11(1)(c)(v) includes a reference to “state-owned rail operators.” It was submitted that a definition for this term should be inserted in section 1 of the Act.

• Clause 7(c)

The Western Cape Government said the proposed amendment to section 11(1)(c) (xix) uses the term “other rail service providers,” but did not define this term and did not clarify whether this was a reference to private or state-owned service providers or both.

• Clause 7(g)

The Western Cape Government referred to the insertion of proposed subsection (10)(a), and submitted that the inclusion of a prescribed process or procedures to be followed in the negotiation or tendering of contracts contemplated in proposed subsections (1)(c)(xxvi) and (8) was problematic.

• Clause 11(1)(c)

SALGA said the Section presupposed that the current subsidies were already devolved to municipalities. Although SALGA supported the devolution, the appropriate process must be followed as per the conditions set out in the Constitution. Municipalities might already have their own subsidised contracts which were not the current bus contracts managed by provinces.

• Clause 10

SALGA corrected the spelling from “models” to “modes” in line 52.

Written submissions on remaining clauses

• Clause 1(a)

The South African Bus Owners' Association (SABOA) said the definition of ‘‘association” should be a voluntary joining of an association, and not enforced by some entity. They suggested adding before (a), “who voluntarily join an association."

SALGA said the inclusion of the definition of an association was supported. However, the idea of them representing their interests seemed to create conflict with the intention of the legislation, which included the interests of the commuters.

• Clause 1(b)

SABOA said the emphasis on a “phased manner” was too wide and open to abuse by authorities. These integrated transport plans were also to be used in the design of public transport services. There ought to be minimum requirements for the different phases of development of an integrated public transport network, and these should focus on the basic elements that ought to be in place.

SALGA referred to Section 1(b), and said the definition of 'contracting authority' included Section 11(8), (9), and (10) for purposes that were not obvious. What was the problem that the inclusion of these clauses sought to solve or cure?

• Clause 1(d)

SALGA said the definition of “integrated public transport network” included the phrase “high quality networks of car competitive public transport services." Whilst the intention was understood, the wisdom of such specificity in legislation could open the government to forms of litigation, especially those opposed to an integrated public transport network (IPTN).

• Clause 1(f)

SALGA said the clause referred to a function assigned only from the national sphere -- what happened when it was assigned from a provincial government? Did that make any material difference? There were Provincial Regulatory Entities (PREs) performing this function for their respective provinces.

• Clause 1(h)

SALGA said the amendment could also include a phrase which referred to the successor of the Passenger Rail Agency of SA (PRASA), which would help if PRASA was changed without having to amend the NLTA again.

• Clause 1(i)

SABOA referred to the definition of ‘‘regulatory entity,' and said that as the transport policy now makes provision for private sector concessionaires, the focus on state-owned rail operators ought to be removed.

• Clause 3(a)

SALGA said they supported the inclusion of operators, but no provision had been made for users or commuters.

• Section 3(b) of the Principal Act

The City of Cape Town said Section 3(b) of the NLTAB inserted a further regulatory power for the Minister "to regulate fees payable for any application made in terms of this Act or any document issued in terms of this Act." The determination of fees for applications for licences related to transport activity that fell within "municipal public transport" was necessary for, and incidental to, the performance of the "municipal public transport" function.

• Section 3(c) of the Principal Act

The City of Cape Town said Section 3(c) of the NLTAB seeks to empower the Minister to regulate "colour coding and branding of vehicles used for public transport where national uniformity iss required." On the assumption that this provision was also aimed at municipal public transport, a constitutional problem emerged.

• Section 5(4) of the Principal Act

SALGA said that in Section 5(4) of the Act, the use of the word “ensure” in Section 5(4)(i) was challenging, considering that the Constitution gave municipalities exclusive functions on municipal public transport.

• Section 5(6) of the Principal Act

SALGA said the Act did not define what an executive obligation was. Municipal public transport was an exclusive function to local government. Section 139 of the Constitution allowed a provincial executive, not the National Minister, to intervene in situations where a municipality could not perform its functions.

• Section 5(6) of the Principal Act

The City of Cape Town had a general concern with the Act, which was carried over into the Bill, that there was an assumption that national government could be more interventionist than the Constitution allowed.

• Section 8(1) of the Principle Act

SALGA said that although this Section was clear about the Minister making regulations, it was not clear whether such regulations would include the Minister being able to impose such a moratorium.

• Section 8(1)(b) of the Principal Act

The City of Cape Town said that in determining the lawfulness of regulations, an examination must be done not only of whether the provision in the Act was constitutional, but also whether the regulations issued in terms of that provision went beyond what was constitutionally permissible.

• Sections 8(1)(n) and (p) of the Principle Act

The City of Cape Town said subsections 8(1) (n) and (p) of the Act provided for the Minister to regulate "meetings of ... municipalities" and "procedures at those meetings, quorums and the keeping of records." Section 160(1) of the Constitution protects the power of municipalities to make decisions concerning the exercise of all the powers and "the performance of all the functions of the municipality."

• Section 8(1)(t) of the Principle Act

The City of Cape Town said Section 8(1)(t) of the Act required the Minister to "regulate procedures for the preparation, updating and approval of transport plans" and "regulate procedures to be followed in promoting public participation in the transport planning process." In the local government context, these two activities formed part of "municipal public transport." The municipality, not the Minister, had executive authority over these activities.

• Section 9 of the Principal Act

SALGA asked what the material difference was between the functions of the MEC and the responsibilities of the provincial government. In performing his/her functions, the MEC must consult with planning authorities. Furthermore, in Section 9(2)(f), the MEC was expected to promote intergovernmental relations. However, in making regulations, the same MEC was not obliged to consult in the same manner that the Minister was obliged to consult the MECs. This was currently not in the spirit of the Inter-Governmental Relations (IGR) Act.

• Section 11(a) of the Principle Act

The City of Cape Town said it was widely accepted that public transport in a city or region should be integrated, which also required integration of governance. The Constitution provided for 'public transport' as a Schedule 4A function, and 'municipal public transport' as a distinct Schedule 4B function, yet optimal transport governance would obviously have to integrate the governance between the two functions.

• Section 12(1) of the Principal Act

The City of Cape Town said creating a provincial entity was one of two broad mechanisms to bring about integrated public transport. This concept was already contained in the current Act ,but had been strengthened by additional clauses.

SALGA commented that Section 12(1) of the Principle Act seemed more like a provision to allow for formations such as the Transport Authority for Gauteng (TAG). In an event where the province had legislated for the entity to be formed, but things were not going as the municipalities wished, what recourse did they have?

• Clause 15

SALGA said Section 15(3) referred to service level agreements (SLAs), whereas Section 11(1) (c) xix referred to service level planning. It was not clear what the purpose of the SLA was.

• Section 18(5) of the Principle Act

The City of Cape Town said Section 18(5) of the Act compelled municipalities that established an integrated public transport network to, "in the prescribed manner, establish a call centre where passengers and other interested persons may lodge complaints or inquiries regarding public transport services in its area, and must follow up such complaints and, where appropriate, take the necessary action." It was the municipality, not the national government, that was empowered to decide whether it established a call centre in support of its "municipal public transport" function.

• Clause 13(a)

SALGA said the Section suggested that the members of the NPTR were accountable to the Director General (DG), but must exercise independent discretion. More clarity was needed here to avoid confusion.

• Clause 14

SALGA said there was a similar challenge, where a Minister issued a directive when a municipality was not performing a function as per the view in Section 5(6). Only an MEC could intervene as per the provisions of Section 139 of the Constitution.

• Clause 16(c)(i)

SABOA said each PRE must obtain and keep up to date the prescribed information in the Operating Licence Administrative System contemplated in section 6 insofar as it relates to “…Particulars of associations operating in its area, their members and the vehicles operated by them."

• Sections 33, 34, 35 and 36 of the Principal Act

SALGA said these sections referred to integrated transport planning, which required an overhaul. Ironically, there were minimum changes to this Section of the Act. The current integrated transport planning framework was cumbersome, and was unable to produce quality plans needed for better use of limited resources.

• Section 36(4) of the Principle Act

The City of Cape Town said requiring the MEC's approval of municipal integrated transport plans was unconstitutional. Section 36 dealt with integrated transport plans to be drawn up by municipalities. The way section 36(4) of the current Act was drafted meant that the plan had no status until the provincial MEC approved it.

• Section 36(5) of the Principle Act

The City of Cape Town said requiring the approval of the Minister for the municipal integrated transport plan in respect of rail matters, was unconstitutional.

• Section 38 of the Principal Act

The City of Cape Town said Section 38 of the Act addressed the intersection between traffic, transport matters and land use management. It provides that "any authority with responsibility for approving substantial changes in land use" must submit such an application to the planning authority for approval. Anyone aggrieved by the planning authority's decision may appeal to a tribunal or other entity in the province responsible to hear planning appeals.

• Clause 20(b)

SALGA said Section 39(3) of the Act was included in the Bill. How did one know/determine that an operating license was not in use?

• Clause 20 (c)

SABOA asked if the wording in the Section should not be, “take measures under section 78 to cancel operating licences and permits that are not in use on that route,’’ as well as those that were not in use. They recommended extending it to include permits that were in use.

• Section 39(1)(b) of the Principle Act

SALGA said the Section provided for issuing of a moratorium under specific circumstances, but not under general circumstances.

• Clause 21

SALGA asked, with respect to municipalities, what the difference was between a 'Planning Authority' and a 'Contracting Authority?' Regarding Section 40 of the Act, provinces and planning authorities could integrate, but only the Contracting Authority could negotiate contracts. Assuming a material difference, did this mean a Planning Authority could not negotiate a contract?

• Clause 21(b)

SABOA asked what the purpose was of inserting this provision, other than to allow the contracting authority to contract with operators that did not operate in the area. Surely, it was the intention of the Act not to disadvantage existing operators in the areas where the contracting authority was contemplating negotiated contracts in terms of the integrated transport plan (ITP)? Further to this, it was envisaged that the contracts with these other operators may be increased or amended in a phased manner during the period of the contract.

• Clause 21 (c)

SABOA said this amendment would allow the contracting authority to only negotiate with operators on affected routes. This would further enable the contracting authority to rationalise services (S 8(1)(d)) or simply place an unrealistic offer on the table. If the operator did not accept the offer, their operations would be terminated.

• Clause 21 (e)

SABOA highlighted that ‘‘(6) Section 42(6) applies with the necessary changes to negotiated contracts contemplated in this section.’’ It would appear that this was intended to make the model tender documents binding on negotiated contracts, which would limit the scope of negotiations.

• Clause 22

SABOA said the provision appeared to be a logical development, given the Auditor-General’s (AG's) findings and reports on the extension of current tendered, negotiated and interim contracts. This was a new form of contract that was proposed.

• Clause 23(a)

SABOA asked what would happen should such an authority wish to negotiate the contract. This option appeared not to be available to the contracting authority in the proposed amendment to section 42 (4) of the NLTA.

• Clause 23(b)

SABOA said that “material provisions,” as used in the provision, were open to wide interpretation. By prescribing the content of the contract and limiting amendments for each particular situation, contract negotiations would be very limited.

• Clause 23

The City of Cape Town said Section 42 of the current Act dealt with subsidised service contracts. Sub-sections 6(a) and (b) provided for the Minister to issue model tender and contract documents and make these compulsory for any contracting authority to comply with in concluding subsidised service contracts.

• Clause 24

SALGA gave the same comment on the inclusion of section 80(1)(a) of the Systems Act, as insinuating that only municipalities could engage in contracting for commercial service contracts.

• Clause 25

SALGA supported this repeal, as it was not clear why it was there in the first place. This highlighted two important general comments. One of these was the need for a new rethink on legislation of the land transport system, as the changes were too many. Secondly, the legislation was used to deal with temporary difficulties, thereby creating some confusion.

• Clause 26

SALGA asked why change the wording from 'contracting authority' to 'municipality,' when a municipality and other spheres of government could be contracting authorities. If subsection two was deleted, how did the Act suggest a disagreement could be resolved?

• Clause 27

SABOA said it was doubtful whether the PRE would have the capacity to convert the operating licences during the period allowed.

• Clause 28

SABOA said the new Section 48(2)(a) would not be prescriptive, and there was no time-line as was previously the case. In reality, it was unlikely to materialise, considering the cost implications.

• Clause 36

SABOA said any operating licences issued, whether temporary or not, must be issued by the regulatory entities, not the municipalities.

• Clause 37

SALGA was unsure why this requirement was being done away with, considering the current financial difficulties that the Road Accident Fund (RAF) faced.

• Clause 41

SABOA said the industry view was that this amendment may open up a situation where informal/unregulated operators may object, as they were operating country-wide – in both urban and rural areas -- especially in cases where some charter services were operated with minibuses (small groups of people).

• Section 78 of the Principal Act

SALGA asked what it meant -- that an operating licence had not been “in use”?

• Clause 46

SABOA said this amendment appeared to leave a lot of discretion to the relevant authority. There should be an appeals process built in. This could be included under section 92.

• Clause 51

SABOA said the amendment appeared more flexible, and allowed for disputes of any nature to be appealed to the Transport Appeals Tribunal. This was especially important from a contracting point of view.

• Clause 52

SABOA was not sure what the intention of this amendment in practice was. What was the intention of this Section?

• Clause 53

SABOA said the interpretation of “practicalities” in the new Section 93A(1)(b) could be quite wide. Consideration should be given to including practicalities and examples of practicalities under Section 1: Definitions. They wanted the meaning of municipal public transport in the new Section 93B to be clarified. Was this proposal limited to municipal-owned transport or public transport offered in a municipality(ies)?

See attached for full document

Discussion

The Chairperson thanked Mr Muzi Simelane, Director, Department of Transport, for the response to SALGA and the City of Cape Town’s submissions. Concerning clause 7, he said there was clearly a lot that the team had learned from the referral. Each sphere was distinct, but was interdependent and interrelated.

Ms Ngema said that if they looked at the joint rule, section 209 (2)(3), it states that if the Committee agrees with the President’s reservations, they must report whether they agree with the amended Bill passed by the Assembly, if the Assemble had passed such a bill or reported a rejection of the Bill. She said there were two options before the Committee. To do the deliberations and decide whether it agreed with the Bill as amended by the first House, taking into account the reservations of the President, or whether it rejected the Bill. There was no in-between option for the Committee. She said she was satisfied that the responses of the Department, in light of all the submissions raised and the reservations of the President, had addressed these concerns and the Committee had dealt with the process properly.

The Chairperson asked if there were any clarity seeking questions from Members. In the absence of questions, he assumed that there was no confusion and Members were happy with the presentation. He thanked Mr Simelane and Ms Ngema for providing clarity on the submissions.

After a brief adjournment, the Chairperson said they should allow the Parliamentary Legal Advisor a chance to share her reflections on the responses presented by the Department.

Ms Thiloshini Gangen, Parliamentary Legal Advisor, said the legal advisor’s role in this Committee would be purely to address legal concerns that Members raised. She pointed out that they would have noted that many of the submissions were already dealt with in the National Assembly (NA) process. She had no difficulty with the Department’s responses. She would guide the Committee through the legal questions and answers as they continued. The Department would deal with issues of policy. The State Law Advisor would deal with any question of constitutionality.

The Chairperson said Mr Brauteseth raised a general question that the Department had captured. He asked Mr Brauteseth if he would like to reiterate the question.

Mr Brauteseth said section 1(c) of the Constitution stated that Parliament must refrain from giving the executive unchecked discretionary authority when enacting laws. The problem with this particular Bill was that many clauses provided the Minister or Regulator with the unchecked ability to make judgments based solely on whatever was guiding them at the time. It gave them authority to assign officials and give specific instructions to specific individuals. This allowed government to reach into the transport industry and allowed the Minister and Regulator to reach into the private domain without any justification. The Bill seeks to centralise governmental power away from civil society and independent institutions, affording it to the Department of Transport and its Minister. It also affects the ability of different spheres of government to regulate their tariffs, permits and fees.

The Chairperson said the South African Bus Operators Association had raised issues concerning the legal remedies available to institutions, where the wrongful regulatory decision could cause harm. Those decisions were not addressed timeously according to section 12(1). Were there any legal remedies for these entities?

The Chairperson said one of the issues raised by Prof Muller had been around the broad regulatory model -- specifically, the limitations and challenges experienced in the electricity sector. A comparison had also been raised with other regulatory models in other countries. Would the Department review the implementation of the broad regulatory model in other sectors and countries, just as lessons to be learned?

Transnet had raised the issue of the absence of policy in relation to the transport sector. What should have happened was that the green paper should have come first in relation to the economic regulation of the transport sector. Such a policy position would have assisted the stakeholders to understand the thinking around the proposed Bill. Would the Department look into the possibility of developing an economic regulation of transport policy to ensure clarity on the direction the Department was taking this Bill?

The Chairperson said the Western Cape Government raised an issue around clarity on the division of services. Was the definition of ‘service’ integral to the scope of the Bill? They had asked if the Bill needed to be clarified to avoid confusion or doubt. What was meant by ‘service’? For example, did service also include non-commercial services that could possibly be provided?

In the absence of policy, Transnet had said there was a need for elaboration in the form of a preamble. The intent of the Bill should be stated in the beginning, and apply the broad principles contained in the Bill. Given the importance of this Bill, was that not necessary? Issues of constitutionality had also been raised in relation to schedules 4 and 5 of the Constitution, which made a distinction between what belonged to local, provincial and national spheres, particularly in relation to possible conflicts between national and provincial legislation.

The Chairperson said the annual fee paid by regulated entities to fund the operational expenses of the Regulator, was a tax that ought to be imposed by way of a money bill provided for in section 77 of the Constitution.

He then handed over to the DOT to address their responses, and thereafter, they would give the floor to the legal advisor.        

DOT responses to the Economic Regulation of Transport Bill

Clause 1

Gautrain Management Agency:

 We recommend that the Bill be explicit in its acknowledgement of the importance of striking this balance by requiring, where appropriate, that the Transport Economic Regulator and/or Transport Economic Council consult with relevant regulatory bodies, who were mandated to regulate the provision of safe, secure, and reliable transport operations/ services, e.g. the Railway Safety Regulator in the context of the rail sector, prior to deciding on access requests and disputes between access seekers and infrastructure or facility owners.

Western Cape Government Mobility Department:

While no express reference was made to the non-financial resource allocations, comments submitted by the province previously highlighted the importance of absorbing existing personnel into the new organisational structure to avoid overburdening the taxpayers and industry with additional resources being directed to the Public Wage Bill.

Southern African Bus Operators Association:

The memorandum provides a detailed policy review which was informative and interesting. While the Bill was primarily aimed at ending specialised sector regulators, it was written very broadly in a “catch all” manner. It could have unintended consequences for the contracted subsidised commuter bus industry.

Profs. Muller and Muller:

We do not believe the Bill, as it stands, would best serve the public interest, either of transport users or the broader South African public. It could potentially further destabilise sectors through unreliable pricing, creation of complexity where existing capacity was failing (e.g. access) and taking skills from where they were needed (actual operations and management).

Transnet:

The ERT Bill aims to consolidate the economic regulation of transport within a single framework and policy; to establish the Transport Economic Regulator; to establish the Transport Economic Council; to make consequential amendments to various other Acts; and to provide for related incidental matters. Transnet's concern was that the ERT Bill fundamentally shifts from this objective when it focuses on other various substantive matters of policy development, competition regulation and oversight on safety regulation.

Western Cape Government Mobility Department:

The definition of ‘access’ should be extended to provide for other types of access seekers, not only those who provide goods or services to customers.

Gautrain Management Agency:

Definition of “access”: It was unclear whether the legislature intended that “a resource” was envisaged to include human capital in areas of scarce skills, e.g., intelligent transport systems.

Transnet:

 Definition of “Access Agreement." It appeared, on the reading of the above definition, that the access agreement was an agreement that would be concluded by an access seeker and an infrastructure or resource owner. Therefore, it was unclear as to whether an access seeker was required to enter into another type of agreement with the facility owner or if the envisaged Act would not apply to facilities.

Clause 2

Transnet:

Over the past years, Transnet, noted that regulated entities were being subjected to investigations by the Competition Commission for excessive pricing, exclusionary acts, price discrimination, etc. In instances where the Regulator would determine price control for services provided by regulated entities, such entities must be exempted from any investigation where the Regulator had made a determination on the matter.

Clause 2(a)

Southern African Bus Operators Association:

These requirements were well articulated in the contracting regime for the commuter bus industry. It appeared as if the Bill was purposefully anti “larger businesses."

Clause 2(2)

Gautrain Management Agency:

The words “signing or initialling" seem to dilute the grammatical soundness of the provision. It would seem that their omission would enhance the syntax of the provision.

Clause 2(4)

Gautrain Management Agency:

This provision gives the Bill precedence over any transport legislation on matters dealt with in the Bill. Because a dispute on an access agreement could be rooted in legislation that was not transport-related, such as the Conventional Penalties Act, it was not clear on the restriction of transport legislation.

Clause 3

Transnet:

Transnet views the ERT Bill as a means by which the DOT intends to consolidate several Acts in the transport sector and the regulation of the transport sector, covering the provision of rail, ports, air and road into a single Act. Therefore, Transnet recommends that the ERT Bill should endeavour to maintain the state of law applicable within the various economic regulators providing oversight to regulated entities in the current context, and also simplify the statutory landscape.

Clause 3(1)(a)

Gautrain Management Agency:

The use of the term “transport industry” was inconsistent with the defined term “transport sector” which was consistently used throughout the Bill. Substitution of the word “industry” with the word “sector."

Clause 3(1)(a), (c)

Western Cape Government Mobility Department:

A key component of an efficient, reliable and viable transport industry in South Africa was the consideration of impacts outside the normal area of concern for the transport industry.

Clause 3(1)(c)

Gautrain Management Agency:

Reliability, safety and performance are currently regulated by the likes of the Railway Safety Regulator, the Civil Aviation Authority and the South African Maritime Authority. It was not clear whether by including “reliability, safety and performance,” the legislature intended to do away with these regulators or curtail their mandate.

Clause 3(1)(e)

Gautrain Management Agency:

Without qualification, someone could interpret the enhancement of transparency, envisaged in the Bill, liberally to get access to others’ confidential information.

Clause 3(1)(f)

Transnet:

Clause 3(1)(f) provides for the purposes of the envisaged Act, one of which was to "promote appropriate investment in transport facilities and service." It was common cause that state-owned companies (SOCs) invest billions of rands in the railway and port infrastructure, and commercial road freight operators partially contribute to the maintenance of the roads by paying taxes and toll fees. The exclusion of the private sector (road freight operators) from the definition of a regulated entity could exacerbate this situation, with the burden of the enhancement and development of that infrastructure falling squarely on the shoulders of SOCs, yet the private sector would benefit from this with the proposed access regime.

Clause 4

Western Cape Government Mobility Department:

The inclusion of regulators should follow a process of consultation with such regulators (i.e. before they were included). Revise the proposed subsection (11) to address these matters.

Clause 4(1)

Gautrain Management Agency:

The exclusion of rail transport from the ambit of this provision, despite Chapter 2 -- which was dedicated to the economic regulation of rail -- was contrary to the professed object of the Bill to ensure the economic regulation of all modes of transport. It would seem that the drafting of this provision, such that it excludes rail, was therefore an oversight. Review the provision to cover all modes of transport.

Clause 4(1)(a)

Southern African Bus Operators Association:

In the subsidised commuter bus industry, competition was “for the market” and not “in the market." This was practised by almost all countries that make use of a contracting regime in public transport. Based on the current 70%, all commuter bus operators on contracts would be a target of this Act whilst the service delivery, fares, routes etc., were already regulated via the specific contract conditions.

Clause 4(2)

Western Cape Government Mobility Department:

Clause 4(2) allows the Minister to include any other market, entity or facility (public or private), if a single operator controls more than 70% of the market concerned, or the preconditions for efficiency and cost-effectiveness do not exist in the market concerned.

Clause 4(2)(a) and (b); Clause 4(4)(a)

Western Cape Government Mobility Department: 

In terms of clause 4(2)(a) of the Bill, if at least one entity had market power, the entire market could be regulated. It was recommended that the specific entity with market power be regulated, rather than the entire market.

Clause 4(4)

Southern African Bus Operators Association:

By definition, when a commuter bus operator was awarded a public transport contract for seven or 12 years (tendered or negotiated), the operator would have market power by virtue of the design of the system. No other operator was allowed to compete with this operator, as the “market” entry was regulated through a permit system.

Clause 4(5)(b)

Western Cape Government Mobility Department:

It was unclear what would happen should objections be received from the public. How would the process be affected? Consider and revise this clause accordingly. This also applies to clause 4(8).

Clause 4(5)(c)

Western Cape Government Mobility Department:

The intention was to regulate the private market, but public hearings were “optional." It was recommended that public hearings be compulsory towards enhancing transparency.

Clause 4(7)

Gautrain Management Agency:

The requirement that the Minister grant an exemption “in consultation with the Regulator” may lead to deadlocks that grind decision-making to a halt, as the term: “in consultation with” denotes that the Minister and the Regulator must agree, whereas the term: “after consultation with”, denotes that the Minister would have the discretion in the event of the Minister and the Regulator not reaching agreement on an exemption. Substitution of the phrase “in consultation with the Regulator" for the phrase “after consultation with."

Clause 4(7)(a)

Gautrain Management Agency:

As a check and balance against the erroneous granting of exemptions and cronyism, it was important that the process envisaged in this provision be transparent and include the participation of other stakeholders. As the Minister’s decision would constitute an administrative action, the participation of affected stakeholders would, amongst others, obviate any possible challenges that may be triggered by the Promotion of Administrative Justice Act (PAJA).

Clause 4(10)(a)

Western Cape Government Mobility Department:

It was important that sufficient time be afforded to the public to provide comment and that extensions were permitted, where necessary. Reconsider the wording of the clause in light of the comments.

Clause 4(11)(a)(v)

Western Cape Government Mobility Department:

It was unclear what other types of regulators were envisaged in clause 4(11)(a)(v). This should be clarified. The other types of regulators should be clarified.

Clause 4(11)(b)

Western Cape Government Mobility Department:

Clause 4(11)(b) presents performance-based prerequisites for subsuming other regulatory authorities into the Regulator, where the only prerequisite should be the functions of those regulatory authorities in relation to the mandate of the Regulator.

Clause 5

Western Cape Government Mobility Department:

The provision states that "an infrastructure owner must lodge all existing agreements with the Regulator within one year from the date of the determination contemplated in subsection (1)." However, it was unclear what would happen if an infrastructure owner did not do so.

Clause 5(3)

Gautrain Management Agency:

Given that public-private partnership (PPP) agreements were subject to comprehensive approval processes stipulated in the regulatory framework applicable to them, including checks and balances contained in the PFMA and Treasury Regulations, the provision should take into account such processes and be aligned with them.

Clause 5(4)

Gautrain Management Agency:

The comment above regarding the restriction of the term “all existing agreements” to agreements related to rail infrastructure and facilities was inserted by reference here. The phrase “all existing agreements” should be qualified to restrict its meaning to agreements related to rail infrastructure and rail facilities.

Clause 6(1)(a) and (b)

Western Cape Government Mobility Department:

These clauses should cross-refer to particular subclauses in clause 4.

Clause 6(2)

 Western Cape Government Mobility Department:

The word “prescribed” was defined to mean “prescribed by regulation” (see clause 1 of the Bill). Clause 6(2) states that the Regulator must “prescribe fees for processing access applications." It may be prudent to use alternative wording to avoid confusion with the making of regulations by the Minister. It must also be clear where the fees are to be published.

Clause 7

Transnet:

Where the ERT Bill empowers the Regulator to determine the cost of access to infrastructure and facilities, it was worth noting that for Transnet National Ports Authority (NPA), the cost of the rail infrastructure provided by the Authority was included in the ports infrastructure and already regulated by the Ports Regulator.

Clause 8(4)

Gautrain Management Agency:

Similar to comments made in sections 6(1)(a) and (b) above, we think that it is imperative to ensure that decisions made in terms of the Act do not detrimentally affect safety. We thus view the involvement of the Railway Safety Regulator in the decision-making process envisaged in this provision as important. There was an explicit requirement for the involvement of the Railway Safety Regulator in the decision-making process envisaged in this provision.

Clause 9(2)

Western Cape Government Mobility Department:

The Regulator should give a decision within a set period in order to ensure the granting of access was not subject to undue delay.

Clause 10

Western Cape Government Mobility Department:

It was possible that an entity that had been granted access approval could have the intention from the start to cede its access rights for monetary gain. It was unclear how this clause links with clause 9(2).

Clause 11

Western Cape Government Mobility Department:

Clause 11 did not expressly provide for consultation with the affected sphere(s) of government. It was recommended that clause 11 be amended to require the Regulator to consult with the affected provincial and municipal authorities with respect to the price control affecting their area of jurisdiction.

Clause 12

Western Cape Government Mobility Department:

It was unclear what happened after the extraordinary review has been conducted. It was recommended that the Bill be amended to clarify this matter.

Clause 13

Western Cape Government Mobility Department:

The word “licenced” should be changed to “licensed” throughout this clause.

Clause 14

Transnet:

Clause 14 provides that the Regulator may require a regulated entity to have an independent review of the financials and other relevant information by the regulated entity's auditor, or by an alternative auditor nominated by the Regulator in consultation with the regulated entity. It was worth noting that the regulated entities would mainly be organs of state, as defined in section 239 of the Constitution. When an organ of state contracts for goods and/or services, an organ of state was constitutionally required to follow a procurement system that was "fair, equitable, transparent, competitive and cost­ effective. It was common cause that an auditor whom the Regulator would nominate would not be appointed in accordance with the aforementioned procurement clause.

Clause 15

Gautrain Management Agency:

It was unclear whether the legislature intended to empower the Transport Economic Regulator to consider complaints relating to ‘uncompetitive fares/pricing,’ or whether the intention was to leave such complaints within the domain of the Competition Commission.

Clause 16(1)(a)

Gautrain Management Agency:

It was not clear whether the Council would not be acting ultra vires by considering a complaint that falls outside the ambit of the Act, as the mandate of the Council was aligned to the objects of the Act.

Clause 17(1)(a)(i)

Western Cape Government Mobility Department:

The wording was too broad and could lead to unintended consequences. It was recommended that the wording be revised in light of the comments.

Clause 18(a)

Western Cape Government Mobility Department:

Clause 17(1)(a)(i) states that the Regulator may issue a non-referral notice (if the matter is deemed to be frivolous or vexatious) before an investigation is done. Clause 18(a) provides for the Regulator to issue a non-referral notice after the investigation is completed and a report is provided to the Regulator. It was unclear why non-referral could occur upon receiving a complaint and then later again after receiving a report of an investigation. This must be clarified.

Clause 19(1)

 Western Cape Government Mobility Department:

The clause does not clarify how the Regulator and the respondent must engage one another on the outcome of the investigation.

Clause 20(2)(b)

Western Cape Government Mobility Department:

It was unclear why the words “if any” appear in this clause. A compliance notice was normally only issued if a person failed to comply with a particular provision of a piece of legislation. It was recommended that the words “if any” be deleted.

Clause 21

Transnet:

Clause 21 provides that the Regulator may direct a reduction in the current applicable price control for any facilities or services provided by a regulated entity. It was worth noting that the Regulator's power to direct a reduction in price control may negatively affect loan covenants that a regulated entity was subjected to.

Clause 28(1)

Western Cape Government Mobility Department:

Clause 28(1) refers to publication of a decision on “the site." The clause should preferably use the word “website” and clarify that the Regulator’s website was being referred to. It was recommended that the Bill be amended as set out in the comments.

Clause 29(2)

Transnet:

Clause 29(2)(a) provides that the Regulator would have jurisdiction throughout the Republic. It was worth noting that some of the regulated entities conclude transport services agreement with an over-border customer (as Transnet currently does). However, it was unclear as to whether the Regulator would have jurisdiction to determine price control where the regulated entities transact with over-border customers.

Clause 30(6)

Western Cape Government Mobility Department:

The word “some” was vague and open to interpretation. The number of board members to be appointed for three years should be specified.

Clause 31(1)(a)

Western Cape Government Mobility Department:

The term “suitably qualified” was vague and open to interpretation. It was recommended that suitable qualifications be specified in the Bill, such as an honours degree in economics, law, or transport.

Clause 33(3)

Western Cape Government Mobility Department:

It was recommended that the wording be revised to state that the person must be afforded an opportunity to state why he or she should not be removed from office.

Clause 34(4)

Western Cape Government Mobility Department:

It was unclear where the internal procedures would be published. This should be clarified. Revise the clause in order to clarify the matter.

Clause 36

Gautrain Management Agency:

It was not clear whether “engineering” was included in the term “transportation industry." Express inclusion of “engineering” in the list of qualifications and experience was considered requisite for eligibility to be appointed as executive officers.

Clause 38

Western Cape Government Mobility Department:

The National Land Transport Act, 2009 (Act 5 of 2009) (NLTA) sets out various functions of the three spheres of government insofar as land transport is concerned. While it was noted that the Bill amends a provision of the NLTA dealing with the functions of the National Public Transport Regulator, it was unclear to what extent the various functions of the three spheres of government, set out in the NLTA, were considered during the drafting of the Bill.

Clause 39(1)(b)

Western Cape Government Mobility Department:

Clause 39(1)(b) should be qualified to state that the Regulator may consult any person, organisation or institution with regard to any matter that falls within the scope of its mandate -- and not simply “any matter”. It was recommended that this clause be revised accordingly.

Clause 42(1)(d)

Western Cape Government Mobility Department:

It may also be useful for the public to have access to a guide that sets out the functions of the Regulator. Consider providing in the Bill for the publication of a guide that explains the functions of the Regulator.

Clause 43

Western Cape Government Mobility Department:

It was recommended that the Department consult with all relevant regulatory authorities for the purpose of obtaining their input on the provisions of this Bill. This would assist in mitigating the potential unintended consequences of the Bill.

Clause 45

Transnet:

Clarity of roles was required in terms of defining the differences in the inquiries and investigations initiated by the Minister, as compared to those that the Regulator initiates.

Clause 50(1)

Southern African Bus Operators Association:

It seemed as if a significant number of entities would be identified as regulated entities in order to finance the activities of the Regulator. Had the impact of these potential fees on the regulated entities been determined, and had they been consulted in the matter?

Clause 60

Transnet:

Transnet had noted that the Bill did not make provision for the management of legally privileged documents. It was recommended that the Bill make provision for such documents.

See attached for full document

Discussion

Ms Gangen said Schedule 4 of the Constitution deals with the functional areas of national and provincial legislative competence, and Chapter 3 regards cooperative governance. It states that it is interrelated, and these different spheres need to coordinate their actions and legislation with one another. Chapter 7 of the Constitution states that a municipality had the right to govern on its own initiative, subject to national and provincial legislation. Section 154(2) states that draft national/provincial legislation that effects the status, institution, powers, or functions of local government, must be published for public comment before it is introduced to Parliament, in a way that allows organised local government an opportunity to make representations with regard to the draft legislation. The Constitution was quite incredible, as it made provision for all these types of scenarios.

She said the ERT Bill is peppered with public consultation before the Minister makes determinations, and it must also first appear in the gazette. There was a concern regarding section 41(b)(c) of the constitutionality, and the idea was that they wanted uniformity in terms of legislation. They did not want a situation they had recently, where there was a conflict between national and provincial spheres. The idea was to create uniformity without encroaching, and the way this would be done was through consultation. The Regulator was not going to run the show, as there would be consultation. The Regulator may advise the Minister, and the Minister may or may not take that advice.

Mr Brauteseth said his concern was that the response of the Department stated that private entities could engage with the Regulator. The Regulator could get involved when there was a monopoly of 70%. The South African National Roads Agency Ltd (SANRAL) monopolised toll roads. The Regulator could therefore make a finding that toll fees were too expensive. If SANRAL had a problem with that, then they would have to report it to the same Regulator, and not to some other independent body. Also, the Minister instructs the Regulator, so they might be on the same page. What relief was there for an entity that had a problem with what the Regulator was doing, outside of the Regulator itself?

Mr Allen Chikamdvi, Department of Transport, said the Bill proposed the establishment of the transport economic regulator and the transport economic council, which would answer to the Minister. However, they were two separate entities. The transport economic regulator was responsible for administrative and enforcement regulation, economic regulation, education, control and access approvals, and conducting investigations into complaints. The transport economic council would take appeals if there was a contested decision. If affected parties had a problem with the decision of the council, they could turn to the judicial system.

The Chairperson said much clarity had been given regarding the responses they had received and the broad overview by the legal advisor. He asked for the Committee secretary to provide further clarity on the process going forward.

Mr Hlupheka Mtileni, Committee Secretary, said they had completed the leg of public participation. They were going to combine this leg with the public participation of the provinces. In November, they were going to deal with the negotiation mandates and the final mandates of all these bills.

The Chairperson expressed gratitude to Members for their participation and the Department for their readiness to give responses to public concerns. Also, the legal team for providing clarity on the constitutionality of the bills.

The outstanding minutes would be dealt with in November, because next week would be the Expropriation Bill hearing.

The meeting was adjourned.