Road Accident Fund, SA Maritime Safety Authority, Road Traffic Management Corporation, Road Traffic Infringement Agency Annual Reports 2012, Regulations not provided to Committee

Meeting report

Road Accident Fund Annual Report 2011/12
Mr Eugene Watson, Chief Executive Officer, Road Accident Fund, noted, by way of introduction that accidents resulting in fatalities had increased by 3.6%, and road accidents now were the leading cause of death in persons under 30. In this financial year, there had been detection of some deficiencies in the business model of the Road Accident Fund (the Fund), and another problem had been the inconsistency across the various court rulings, that saw outcomes unfairly shaped by the amount claimants could spend on legal costs. Claimants were also not receiving all the monies awarded, as a result of excessive fees commanded by lawyers, assessors and experts.

The Fund’s revenue had, over a five-year period, increased 100%, currently standing at R17 billion. A breakdown was given of the compensation amounts, which totalled R8.9 billion. R4.3 billion was spent on loos of earnings and support, R3.9 billion was spent on general damages, R785 million on claimants’ medical costs and R49 million on funeral costs.

In the 2011/12 financial year, a total of 164 000 claims had been finalised, while 253 111 were still outstanding. He noted that 90% of all claims were currently being handled by attorneys and therefore were litigious in nature. In addition, delays arose because of a case mix comprising more ‘serious’ cases, the requirement for patients’ maximum medical improvement as well as greater use of experts such as psychologists.

The Fund had, at 31 March 2012, noted a deficit of R16.48 billion. Its total claims liability for 2012 stood at R72.6 billion, a substantial increase from the previous year’s figure of R47.6 billion. Liability was largely shaped by the provision of claims incurred. The reasons for the increase in liability included earlier assumptions that were insufficient, the more expensive nature of claims, that fact that many settlements were higher than estimates and the widening of the beneficiary base.

He then moved on to describe the Operational Outputs of the Fund. Noteworthy progress had been made in relation to governance, in that there were no adverse audit findings and the Fund had complied with requirements. The targets were met for stakeholder relationship management, with the Minister, Deputy minister, various departments, National Treasury, and SADC counterparts. On the financial management side, the Fund had obtained an unqualified audit opinion, had capacitated its procurement environment and maintained its investment policy. On the legal and compliance side, it had developed, submitted and had approved some Regulations, and had successfully implemented risk mitigation measures. Progress had also been made in relation to forensics, in that 502 arrests were made, which resulted in 244 convictions.

In relation to its performance, the Fund was functioning within a particularly challenging operating environment. Despite this, significant work had been executed, with notable progress made. There were, however, concerns around slower claim processing and the increased provision for outstanding claims.

In relation to its performance target of efficient management of the organisation through increasing its footprint across the country, it had exceeded its target of 25 000 claims originating from its Customer Service Network, which was located at hospitals, mobile units and other places.

From a financial perspective, the performance target of managing the Fund’s solvency could not be met, as a result of the Fund being grossly under-capitalised. The fuel levy did not correlate with the increasing amounts needed to settle claims. In addition, he reminded Members that provision for outstanding claims had increased from R33.5 billion in 2011 to R53.9 billion in 2012. The Fund was prioritising the processing of open claims,  and was confirming the backlog by way of an audit, and repudiation of unprocessed claims, was enhancing operational delivery, was optimising financial controls and managing the deficit, through prioritising amendment of legislation to remove fault and instead define a set benefit.

He noted that the Fund was operating in a context which was very different to that of other entities. Funding via the fuel levy was not associated with claim frequencies and costs, while beneficiaries were not constituted by past, present or future contributors to the fuel levy. Benefits available to claimants were not defined and were, in some instances, not limited to a maximum value. Social security obligations of the Fund extended to the protection of income, the provision of support and the funding of healthcare needs.

Discussion
Ms R Motsepe (ANC) asked how many offices the Fund had in hospitals, and where these were located in the provinces.

Mr Watson answered that these offices were located at 75 hospitals across the country. The Fund was currently looking into ways in which to expand this service. Its walk-in office service was currently located at all its offices.

Mr I Ollis (DA) asked for details around how the assessed loss figure of R72 billion had risen so significantly from the previous year’s figure of R46 billion. He also wanted to know what was being done to address the slow rate of payment.

Mr Watson answered that this apparently significant liability figure was manageable once it was fully understood. The R53 billion was a measure of the Fund’s noted obligations. The total figure of R72 billion was broken into two figures: R53 billion as the noted obligations, and R18 billion to serve as contingency funds. Although the total figure was indeed large, it was the consequence of what had been allowed to happen at the Fund over the past 30 years. The slow rate of payment was being addressed through changing of the Fund’s structure, the inculcation of a performance-driven culture internally, as well as the holding of regular settlement meetings with attorneys.

Mr P Mbhele (COPE) asked what the current status was of the fraud cases in which no judgments had yet been given.

Mr Watson answered that, in these cases, criminal proceedings were still under way.

Mr E Lucas (IFP) said greater effort had to be made to reduce the number of road accidents in the country. The percentage of fraudulent claims also needed to be addressed. The matter of lawyers receiving too great a portion of the settlement amount paid to claimants was a significant problem, and needed to be looked into.

Mr Watson answered that the Fund was currently initiating road safety programmes to address the problem of frequency of accidents.

The Chairperson commented that the Fund had shown significant improvements. It was, however, unfortunate that R72 billion would possibly have to be spent as a direct consequence of road-users’ behaviour. She agreed that the only effective way to prevent this was to address the root causes of accidents. This responsibility did not rest with the Fund, but rather with the Members of the Committee, who would need to look at effective ways to facilitate changes to the behaviour of road-users. The Department of Transport (NDOT) would also need to implement stricter controls around matters such as the transportation of farm workers and school pupils. Enforcement agencies also needed to make significant contributions.

She added that poor road conditions, particularly in accident hot-spots, were also an important contributing factor to the high accident rate. If level crossings could be manned on a 24-hour basis, this could not only assist in bringing down the high accident rates, but would also go towards the creation of employment opportunities for many people. She believed that those in violation of road laws should face stiffer punishments, as they were a danger to other road-users. Since alcohol was a major contributory factor, the operating licences for those selling alcohol on a 24-hour basis should also be re-thought. Since these measures cut across many departments, a concerted inter-Departmental approach was needed.

South African Maritime Safety Authority (SAMSA) Annual Report 2011/12
Mr Sobantu Tilayi, Chief Operating Officer, South African Maritime Safety Authority said that the SAMSA had implemented several strategic initiatives in the 2011/12 financial year. These included an employee satisfaction survey, a cost optimisation strategy that was in line with its long-term financial sustainability programme, and engagement with maritime stakeholders. It had also implemented a Supply Chain Management Turnaround Strategy, established a SAMSA Leadership Development and Training Institute of Excellence Academy, and implemented an automated integrated performance management system, a Business Intelligence and Analytics System and an Enterprise Risk Management System.

He noted that the challenges in relation to the first programme included the recruitment and retention of talented candidates, the significant financial implications of new investments in ICT infrastructure, an ageing workforce and increased constraints in respect of adequate and sustainable office accommodation. Key highlights included the garnering of numerous awards, such as Best African Maritime Agency 2012, and Top Public Service Award 2012.   

In the Maritime Safety Programme, strategic initiatives implemented included national and regional capacity improvement to ensure region-wide improvement of safety standards, the implementation of safety programmes, the development of the National Maritime Contingency Plan and maritime search-and-rescue coordination.

Challenges related to this programme included the increased frequency of incidents involving uninsured and sub-standard ships, the speed of processing required for enabling legislation, and the ratification of international and regional instruments. In addition, the funding for Emergency Casualty Response remained a significant challenge, as costs here averaged around R1.2 million per day, yet there was no clear indication or arrangement where these funds would emanate. Highlights in relation to this programme included the successful management of casualties, the saving of 76 people in total through search-and-rescue efforts, as well as the successful implementation of small vessel training and Safety of Fishing programme.

In its Maritime Governance Programme, SAMSA had been instrumental in the reviewing and redrafting of numerous Bills and subsidiary instruments.

In relation to its Maritime Security Programme, strategic initiatives implemented included the completion of a Maritime Security Concept Document, the enhancement of Maritime Security Domain Awareness and effective processing of Vessel Pre-Arrival Notifications.

In the Maritime Environmental Protection Programme, strategic initiatives implemented included environmental risk management through the implementation of the National Maritime Contingency Plan,  and ensuring the safety of the maritime environment through improved maritime casualty response and management, as well as the monitoring of oil spills. The challenges in this programme included the fact that there was no funding for incident response, the non-ratification of international instruments aimed at mitigating maritime pollution, and inadequate response capacity.

SAMSA’s  Maritime Sector Development Programme had, as one of its particular highlights, the Cadetship Programme in which over 100 cadets had secured berths.

The financial statements were outlined. SAMSA’s total revenue in the 2011/12 year was R2.5 billion. A serious point was that cash from operating activities had dropped by 66%. The total revenue had increased marginally from the previous year, while its deficit had reduced significantly.

Discussion
Ms N Ngele (ANC) asked how SAMSA went about advertising, to recruit young people such as students.

Mr Tsietsi Mokhele, Chief Executive Officer, SAMSA, answered that such advertising was done in both local and national media.

Mr Mbhele said that the improvements made in SAMSA were commendable and encouraging. However, he asked why the figure of R1.2 million per day for emergency response operations was so high.

Mr Mokhele answered that this figure was taken as an average and was only in emergency cases.

Mr Mbhele asked for the names of the Further Education and Training Colleges with whom SAMSA was working.

Mr Mokhele said that twelve such colleges had been identified. These colleges were also provided with capacity assistance where needed.

Mr Ollis asked whether an emergency fund could not be created, so as to prevent the situation where the Auditor-General had to note irregular expenditure in SAMSA. He wondered also if any thought had been given to speeding up procedures that had to be followed at present before responding to ships that ran aground.

Mr Mokhele answered that SAMSA had debated the matter with National Treasury and it had now found that there was currently such a fund from which emergency funds could be unlocked. It was also looking into different models that could be introduced and that would not place too heavy a burden on the taxpayer. The response time needed to be shortened, and although this could not always be guaranteed under certain oceanic conditions, SAMSA was looking into ways to improve this aspect.

Mr Ollis asked that the Committee be provided with copies of the Maritime Security Concept Document.

Mr Ollis asked if any plans were in place to prevent illegal activity, by inspecting ships that stayed off-shore without coming into the country’s ports

Mr Mokhele said that SAMSA, NDOT and other stakeholders worked together to maintain effective security. The Department of Defence had been asked by Cabinet to come up with an effective strategy in this regard. 

Mr Lucas asked what progress had been made around the introduction of cleaner fuels.

Mr Tilayi answered that discussions around this were being held at an international level, as the implementation of cleaner fuels would need to be governed by an international agreement.

Mr M Duma (ANC) asked whether any links were being forged with ports across the rest of Africa.

Mr Mokhele answered that African maritime authorities had recently met up, to discuss how they could, collectively, manage African shores more effectively.

The Chairperson said that what was presented had significant potential for job-creation. She urged the NDOT to show greater support for SAMSA, rather than its current attitude of competing with it.

Road Traffic Management Corporation and Road Traffic Infringement Agency 2011/12 Annual Reports
Minutes
Mr Collins Letsoalo, Acting Chief Executive Officer, Road Traffic Management Corporation, firstly highlighted the achievements of the Corporation (RTMC) in the 2011/12 financial year. It had participated in the 1^st International Road Safety Conference. Training on the Administrative Adjudication of Road Traffic Offences Act (AARTO) was provided to trainers in nine provinces and this resulted in the production of a Training CD and Standard Operating Procedures. The first intake of traffic officers completed the newly required qualification.

RTMC had now appointed a permanent Chief Financial Officer and an audit committee.

900 learners across seven provinces were reached through the road safety debates. More than 70 schools participated in the participatory educational techniques. The newly created railway-crossing unit had led to a reduction of 80% of level crossing accidents. 138 crash investigations had been completed.

RTMC had managed to achieve only 30% of the planned targets. This was due to a lack of strategy-based funding. The plan was to involve the Department of Transport and National Treasury to assist in increasing the budget of RTMC from R82 million to R240 million, a figure that would allow the strategies to be realised.

Some projects had to be postponed, due to lack of funding, and these included the Mkhuzeni Awareness Campaign, the National Driving Schools Forum, the MultiMedia programme, and AARTO implementation. In addition, it was not possible to complete the National Traffic Law Enforcement Codes, the New car assessment programme, the National Training Framework, nor to complete the recruitment drive to attract correct analyst skills.

The leadership and governance structure of the entity was found to be wanting. There was a lack of communication platforms to create awareness of approved policies and procedures. There was a lack of agreed review dates with governance stakeholders. RTMC decided to develop an intranet system where all policies would be placed on the Web, to ensure easy access for new and old staff members. It had furthermore agreed to do monthly reviews of financial and performance information.

With regard to the financial statement, Mr Letsoalo noted that RTMC had received an unqualified audit in this financial year. It had planned to continue with the management of receivables, in order to ensure that the unqualified audit opinion was sustained over the next years. It was also continuing to manage other areas, and was trying to appoint competent asset management staff to ensure continuous monitoring. It would continue with the review of RTMC data in order to ensure compliance with accounting principles.

RTMC had received an allocation of R82 million for the year under review. It accumulated a deficit of R203 million. Irregular expenditure amounted to R150 637.He presented various tables and graphs on the finance (see attached presentation for full details).

Mr Letsoalo noted that there were some continuing challenges that were “crippling” RTMC. These included the lack of funding that he had already highlighted, the duplication of functions, and lack of skilled personnel. RTMC was not receiving sufficient cooperation from SAPS, nor from the provinces. The Shareholders committee was not meeting four times a year as required by legislation. The appointment of the permanent Chief Executive Officer and board members still needed to be finalised, and this was affecting staff morale.

Road Traffic Infringement Agency (RTIA) Annual Report 2011/12
Mr Japh Chuwe, Registrar: Road Traffic Infringement Agency, said that in the 2011/12 financial year the Agency (RTIA) had increased its staff complement from 10 to 22 people. It had managed to secure the secondment of four staff members from the Department of Transport to perform critical functions in the Agency. The appointment of the Company Secretary had been finalised, to assist the effective governance of the organisation. The number of representation officers had been increased to ten, for effective dispense of adjudications.

In this year, there were significant increases in the revenue collection significantly, by over 100%, from R10 million to R28 million. The change in the accounting basis for revenue collections enhanced the presentation of financial information and provided useful and reliable information. Debt collection resulted in an amount of R13.7 million being recovered, of which R4.7 million was payable to RTIA. The debt collection process had been piloted to assess the recoverability of outstanding infringement debt.

The legislative framework had been assessed. As a result, amendments to Regulations were published and RTIA embarked on intensive engagements with stakeholders, and developed a draft legislative amendment, based on the interactive engagements and assessment of operations. RTIA had actively engaged both the Department of Transport and National Treasury to try to get sufficient funding. It had participated in determining and implementing system enhancement on the national Contraventions Register. Graphs and figures on infringement performances and adjudication performance were shown.

In respect of the future performance of the RTIA, Mr Chuwe noted that it needed, as a matter of urgency, increased funding, and that better enforcement of the AARTO mandate was needed. The RTIA also needed to have more board members appointed. The amendments to the AARTO Act had to be approved, as well as the amendment to the Regulations, so that they could be published.

In respect of the financial statements, Mr Chuwe noted that in the 2011/12 year, the RTIA  had moved from a disclaimer of opinion (2010/11 financial year) to an unqualified audit opinion, with an emphasis of matter. The improvement was attributed to the interventions that management made during the year. Audit findings indicated that 50% of planned targets were not achieved, due to the non-implementation of the complete AARTO rollout. The preference point system was not applied in the procurement of goods and services, and goods and services were acquired without at least three written quotations. The additional once-off grant of R12 million required at the end of the financial year was an indication of material uncertainty about the future of RTIA and this, in the Auditor-General’s opinion, may cast significant doubt on the ability of RTIA to operate as a going concern.

It was summarised that in the 2011/12 financial year, RTIA had received an allocation of R45 579 863.  At the end of the financial year, it had R46 in the bank account. Its postage expenses amounted to R21 million, which was 62% of total operating expenses, and this was the RTIA’s largest expense. However, there was no correlation between postage expenses and revenue collected. Tables and graphs giving a more detailed breakdown of the finances were presented.

Mr Chuwe concluded that although RTIA had experienced tremendous difficulties, it had achieved good performance, through the dedication of its board, management and staff. With adequate support, the RTIA could be one of the best-performing entities under the Department of Transport.

Discussion
The Chairperson remarked that there was no support given to RTMC, despite its very large and important mandate of achieving less deaths on the roads, greater efficiency on roads, and less violation of road laws.

Ms Dlakude said it appeared that the NDOT was failing these two entities. They were excelling in their work but were not given enough financial support. She stressed that in previous budgets it was indicated that the two entities should be given more money, but that had not happened.

The Chairperson said also that the Committee had previously made it quite clear that when an entity of a national Department was making any presentation, the Director-General or Deputy Director-General responsible for that unit or entity within the NDOT should be present. However, no such representative from the NDOT was present during these presentations.

Mr Duma suggested, and Ms Dlakude agreed, that the Director General and the Chief Financial Officer of NDOT should be called to answer to the Committee on relations between the entities and the Department, and on financial support given to the entities.

Ms Ngele said the issue of mandates given to entities, relative to the budget allocated to them, should be discussed with the finance committee of the Department of Transport.

Members agreed that the NDOT would shortly be called to answer these queries.

Regulations of the Department and media reports
The Chairperson raised the recent media reports about regulations, and thought that more clarity was needed from the Department of Transport (NDOT or the Department). It was unfortunate that the matter was reported on in the media without the Department being given time to respond. She asked Mr Ollis to repeat the question he had raised earlier, so that the Departmental representatives could comment.

Mr I Ollis (DA) asked why the Committee had not been given an opportunity to make comments and recommendations around three sets of regulations gazetted, by the previous Minister of Transport, in a Government Gazette earlier in this year. These regulations amended the existing regulations under the Road Traffic Act. The Committee had only received one set recently, and he wondered, firstly, why there had been such a delay in sending the regulations to the Committee, secondly, what would happen with the other two sets of regulations, and thirdly, what the procedure would be in future. He wondered if any of the regulations were to be withdrawn.

The Chairperson added that the media had incorrectly reported these regulations as Bills, despite her clarification to the journalist in question. This mixing of issues, and the confusion it caused to the public, was tantamount to sensationalist reporting. She commented that media representatives who reported on Parliamentary matters should educate themselves adequately around Parliamentary processes.

A Departmental representative answered that the Department had followed the correct procedures but could, if needed, provided the Committee with a more comprehensive response.

Mr Ollis replied that it was mandatory that the draft regulations should be made available simultaneously to the public, and to Parliament for comment. However, he reiterated that this Committee had not received any draft.

The Chairperson suggested that Mr Ollis should furnish the Committee with copies of the documents to which he was referring. The Committee could then engage further with the Department. She cautioned that the media should not report further on the matter until clear and accurate information was provided by the Department.

The meeting was adjourned.