Transport Budgetary Review and Recommendations Report (BRRR) 2010

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25 October 2010
Chairperson: Ms R Bengu (ANC)
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Meeting Summary

The Committee, the Department of Transport and its entities met to review the draft Budgetary Review and Recommendations Report and to put forward their recommendations for inclusion in the final Budget Review and Recommendations Report. Key recommendations were that as transport was the key driver of economic development, increased funding and human capacity were needed to realise the mandates of each of the transport entities.

Meeting report

The Chairperson welcomed the delegates from the Department of Transport and its entities. The purpose of the meeting was to adopt the Budget Review and Recommendation Report. She asked members and the delegates to read through the BRRR, and highlight, change or add what needed to be included in the report in terms of the Department’s strategic plans and measurable objectives. There would be no presentation on the report. Instead she asked them to read through the report so that thereafter they could make the necessary amendments and recommendations.

She explained that the Committee had invited the Department and its entities to allow them to recommend to the Committee which important issues they felt needed to be included in the BRRR. The responsibility of Parliament was to ensure that service delivery promises were realised, and it was therefore important for Committees to exercise their oversight duty by engaging with their departments in order to fulfil their mandate.

She noted that there was nothing about the roads in the report and there were a number of grey areas. 
They should look at the areas that linked the entities represented at the meeting, and be able to identify programmes that talked to their mandates. In terms of recommendations, the Chairperson stated that entities should not be shy in voicing their challenges because it was important that those issues be included in the report. Entities should raise their concerns in terms of infrastructure, capital resources and human capacity so that such issues would be included in the recommendations. It was important to recommend what needed to be done to correct institutional arrangements which were root causes of problems in the Department and its agencies.

Mr M De Freitas (DA) said that he was not sure how to proceed with the report but highlighted a number of programmes in the BRRR which he thought were not presented clearly. He asked for a resolution from the Committee on those issues.

The Chairperson explained that the Committee would not be asking questions of the delegates of the Department and agencies. She repeated that the delegates were there to make recommendations to the BRRR about the challenges of the various entities they represented.

Ms P Ngwenya-Mabila (ANC) pointed out that it was important to look at financial management within the Department because there was a lack of compliance in terms of under-spending and over-spending. T
he department’s procurement policies needed to be reviewed by the Committee because it was not necessary for the Department to outsource to outside consultants when it could save those funds. The Committee should look at the Department’s mandate in terms of its objectives, whether it was able to achieve its objectives in relation to the programmes it was suppose to deliver on. If funding was the challenge for its objectives, the Committee would have to recommend to Treasury for additional funding for the Department.

The Chairperson stressed that transport was a key driver of economic development in South Africa. For expenditure on bus subsidies, the Chairperson recommended that the budget of that programme should be reviewed and aligned to cover previously disadvantaged groups for Broad Based Black Economic Empowerment (BBBEE).

Mr George Mahlalela (Director General, Department of Transport) said that when looking at the report, most of the issues were based on researched policy documents but not service delivery priorities. When the new administration of President Zuma came in, new priorities also came in whilst the old plans were already passed through Parliament. New Ministers and new administrators brought some challenges and pressures, and in transport there was no budget for these new plans in 2010, they had to find resources within the Department of Transport to coordinate 2010 activities. A unit that was established to coordinate 2010 transport activities and it operated without a budget but it did an excellent job.

He recommended that they review and redirect the budget to the pressing demands of other programmes. He also recommended that policy documents that were already formulated, like the National Transport Master Plan, should be delayed given the challenges faced by the department. The procurement policy of the department needed to be sorted out because there were long delays in appointing outside consultants and that challenge needed to be improved on by the department as it moved forward. Another departmental challenge was management inefficiency. When outside consultants were hired, their work was not monitored. The Committee should recommend that the department’s procurement policy needed to be streamlined so as to capacitate internal staff to be able to perform project management.

The question of bus subsidies was a big issue that needed much debating between Government and the taxi industry. However, the taxi industry itself needed restructuring in order for the BBBEE policy to be fully operational. At the moment they were structured in associations and did not have legal entities. As the department, they needed to lead the drive and assist the taxi industry to corporatise and that was the challenge they were ready to take forward.

In terms of outside organisational issues, he was appealing to the Committee to support increased infrastructure funding for rail, roads and maritime ports especially at provincial and local levels. The challenge was not only rands and cents, but how to manage those rands and cents. And it should be remembered that provinces and municipalities were not good in managing allocated funds and also there was limited monitoring and oversight, which was another challenge for the department. He recommended that a model should be developed and followed within the department as a centre that would be able to trace and locate allocated funds, and determine if they were delivering on the mandated goals.

The DG felt there was a strong case for investment in the commuter rail scheme. The Department needed the Committee’s support in arguing for additional funds for the recapitalisation of the rail sector. Also it was crucial to get support about sorting out the rail sector in terms of responsibility because Transnet (Public Enterprises) owned the infrastructure - it was important for institutional re-alignment.

The Director-General concluded that there was a need for upgrading the Department’s systems of monitoring and evaluation which were not on par at the current level. They were not managing well in their drive to migrate from road to rail. The Department had managed to identify those entities that were struggling with funding such as the Road
Traffic Management Corporation and Road Accident Fund. He appealed to the Committee to assist in arguing the case for increased funds.

Ms N Ngele (ANC) was concerned that the Department was not monitoring. They should beef up their capacity.

Mr Lucky Montana (CEO, PRASA) said that there were five strategic areas that needed intervention. He had identified funding as the key area which was common amongst the government entities. Support was necessary in arguing for those funds so those entities could fulfil their mandated objectives. When government was investing in the transport sector it was important to take into consideration human capacity, infrastructure and how it was going to fund all of the programmes. There was a need to create legislation to deal with migrating from road to rail so that there could be greater access for the population.

He noted that there was a huge cut in previous years in transport funding. Therefore it was crucial for the Committee to support the argument for increased funding. Also in terms of transport infrastructure, there was a need to develop rail, roads and ports. He concluded that proper planning was crucial for long distance travel.

The Chairperson stressed that the Committee would not be reporting on the annual reports but was giving direction on the issues to be included in the final Budget Review and Recommendation Report. That was the reason they had invited the delegates from the Department and its agencies. She explained that the rail sector was the backbone of the transport industry, while roads and other means were complementary.

The main purpose of the meeting was to make interventions in order to change the manner in which funds were allocated, and also the strategic positioning of the Department of Transport for the economic development of the country. There was a need for a model to be developed that would assist in restructuring the Department because it was viewed as a policy department. It was important to turn the Department around and give it power to implement and coordinate programmes.

She said that much had been said about the degrading road infrastructure. Therefore the Committee should prioritise asking for funding for the Road Recovery Plan and Road Infrastructure Protection as well as the Road Accident Fund Plan and Model. The role of Transport was to facilitate public transport and give the population access to the transport infrastructure, and realise the economic development of the country. She asked the Cross-Border Road Transport Agency CEO to explain the strategic mandate of SADC that was never fulfilled and his organisation’s spending models, and the recommendations they felt should be included in the report.

Mr Sipho Khumalo (CEO: Cross-Border Road Transport Agency) said that when the Agency was formed it was not to be responsible for issuing of permits and border control law enforcement. It was formed to be the driver for harmonising transport systems in the SADC region. There was nobody to fulfil that need, and CBRTA had no capacity to do that. There was nobody championing integration in terms of transport in the region. They had just learnt that SADC had mandated Minister Trevor Manuel to look at issues of integration in the region. Historically over the past 12 years the Agency had never lived up to its mandate and the consequences of that was the Agency was under-performing not just in its programmes but in the strategic value the country could be deriving in having an agency such as the CBRTA. Regional integration was as important as issues of developing internal capacity. As a country, South Africa was located miles and miles away from major markets, and if there was a market within SA’s reach, this should be realised and the transport challenges solved. SADC was a market for South Africa. Economic growth was vital. All that was needed was the link with SADC countries to utilise the market optimally.

The Chairperson interjected by stressing that there was a need to improve the rail and road infrastructure within the SADC region to realise the economic development of the country. She noted that South Africa was an economic harbour of the region and was important to shift the budget from under-performing programmes to issues of economic and social development.

In terms of recommendations, Mr Sipho said that it would help to centralise the five main issues that were mentioned by the Director-General of Transport and include them in the recommendations so that they would impact on the interventions in various programmes.

Mr Riad Khan (CEO, Ports Regulator) said it was important to make use of the existing transport entities and to fully capacitate them in order for them to deliver on their mandate. The Department should learn how to use the Committee to its advantage because one of the duties of the Committee was to appoint the port regulator. There was an outstanding policy decision which needed to be implemented by government in terms of pricing in the ports.  The port regulator was capacitated to make right decisions. However, those decisions were useless as far the country was concerned if the ports regulator keeps pricing down, but transport providers like the international shipping companies, maintain their rates of increased pricing. Effectively the ports regulator’s prices would have no impact. It was therefore crucial for government to intervene with new policies and those policies should be coherent with what was happening on the ground. He recommended that the key item needed by their organisation was relevant funding, and to address the question of human capacity.

Mr Nazir Alli (CEO,
South African National Roads Agency Limited) said the Department needed to learn more how to utilise the agencies in terms of implementation. For example, it was the duty of the Committee to empower the ports regulator in order to achieve the desired outcomes that government requires. It was immaterial that the ports were owned by another department, what was important was where the power lay and that power lay with the Ministry of Transport.

He said it was important for the Committee to check when it was necessary to make interventions on behalf of the entities. It was crucial to check the timing for those interventions before it was too late. The Committee should get presentations from all entities before they make their Budget Review Report to the Department and then taken to the National Treasury, and that would be the write stage to consider interventions.

In terms of SANRAL’s road summit, he explained that instead of telling the provinces how they should manage their funds, they had engaged with the provinces on two levels: with the provincial transport departments to look after the roads in the provinces and with the provincial treasury because it was important to convince the provincial treasury to allocate more money to roads. SANRAL in return would manage the management system of the provincial transport and would also collect their data in order to ensure that the quality of data was up to standard and consistent throughout the country. On the issue of the extended mandate of SANRAL, it was agreed at the road summit that the mandate would be extended because of the long network of roads in South Africa that SANRAL had to manage. The Committee should not only monitor the expenditure that was allocated to the agencies but also look at how effectively it was used. He also recommended that the rail sector needed to be capacitated and funded, and if there was borrowing, there should be a system of check and balances that would be followed by the national Department in order to achieve the desired results.

The Chairperson appreciated that the weakness of capacity which had been identified by the delegates could be overcome if the agencies and the Department worked hand in hand. The agencies should move away from the culture of working in isolation and competing. It was the responsibility of the Department of Transport at national level to plan and lead the country on how to intervene and respond to issues of transport in the country, and the plans of local and provincial Departments must feed into the national plan. It was important for government to develop policies that would assist in the in the economic growth of the country.

Mr James Mlawu (Acting DDG, DOT) said he sensed that there was a general agreement that the Department should use the agencies more. The agencies should assist the Department in terms of capacity to coordinate implementation. In terms of the maintenance fund, the Department should start addressing the question of how to maintain infrastructure and so be able to create jobs.

The Chairperson advised the Committee to reflect on the recommendations and should move for the adoption of the report. In terms of observations, the Committee had noted that the Department and the agencies had received unqualified reports. There was tremendous improvement in the transport infrastructure in the country for the 2010 Soccer World Cup. Both the Department and the agencies had managed to identify key strategic areas of intervention in the delivery of transport services in the country. Transport was the key economic development driver in South Africa.

On the negative side the Committee had observed that capacity was the main negative factor for the entities and the Department. Insufficient funding was also noted as the other contributory factor that hindered the entities to deliver on their mandate.

Mr N Gcwabaza (ANC) said that he fully supported what had been said about impressing on Parliament and National Treasury the need to ensure increased funding for the transport industry. As transport was the key driver of economic development, increased funding and human capacity were needed to realise the mandates of each of the transport entities.
Adoption of Report
Ms D Dlakude (ANC) moved for the adoption of the Transport Budgetary Review and Recommendations Report (BRRR) 2010

Ms Ngele seconded the move.

The report was adopted with amendments.

The meeting was adjourned.


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