Department of Transport on its 2011 Budget and Strategic Plan

Meeting report

Department of Transport: presentation
Mr George Mahlalela, Director General, Department of Transport, presented the Department’s budget for 2011, as well as related programmes. He gave the budget allocations per major allocation, which included the Public Transport Infrastructure Support (PTIS) to municipalities and the allocations to bus, rail and taxi programmes. Overall, the allocation for the 2011/12 financial year was R35 billion, which amounted to 38.73% of the Medium Term Expenditure Framework (MTEF) expenditure. With regards to the roads and roads grants, growth within the South African National Roads Agency Limited (SANRAL) network had increased from approximately 18% to 25% over the previous years. However, this percentage would decrease in the coming years up to 2014, as more funds would be going into the maintenance and rehabilitation of roads.

Mr Mahlalela explained that the New Provincial roads grant, which had been included in the Department of Transport budget from 2011/12, had an allocation of R6.4 billion. This amount was specified for maintenance of road networks, as the Department had realised the importance of road maintenance, and the Minister had made an announcement two months ago to address this need. The Department had also allocated provincial roads grants for the purpose of the coal haulage networks for Mpumalanga as well as Gauteng. This was a joint responsibility initiative with Eskom and coal mining companies to upgrade roads around mining areas. The allocations had conditions attached to them by Treasury, which stated that the funds would be released once the programme schedule had been submitted to the National Treasury providing the projects, kilometres or square metres per project, project cash flows projections per year over the MTEF period, responsible entity or relevant service level agreements and start and end dates. All expenditure needed to be reported separately according to project expenditure and progress.

Major conditions of the 2011 Division of Revenue Framework were that:
Provincial departments must submit quarterly infrastructure reports to the national Department of Transport that complied with the infrastructure reporting model toolkit.
A final list of projects must be captured on the Infrastructure Reporting Model and submitted to the relevant provincial Treasury and Department of Transport by 02 April 2011.
A detailed Asset Management Plan, which was compliant with the requirements of the Government Immovable Asset Management Act (2007) and based on the Road Asset Management System, must be submitted by 31 August 2011 to the Department of Transport and to National Treasury by 30 November.
The payment of the instalments of this grant was dependent on receipt by the Department of Transport of the quarterly performance reports.
Expenditure of this grant must be in accordance with the maintenance requirements as identified by a road asset management system.
Mpumalanga and Gauteng provinces must allocate the following amounts to the coal haulage projects: Mpumalanga – R511 million in 2011/12, R659 million in 2012/13 and R808 million in 3013/14, Gauteng – R74 million in 2011/12, R4.4 million in 2012/13 and R0.9 million in 2013/14.
Provinces must submit Road Asset Management Systems priority projects in the form of a User Asset Management Plan by 30 November 2011.

Mr Mahlalela continued by explaining the Public Transport Operations grant growth, specifically growth related to the bus service. Growth over the past few years had been steady, but in 2009/10 an unusual upward trend in growth occurred, whereby it increased from 5.2% to 18.4%. This was because an old system was used based on how many tickets were being sold. The expected growth for the 2011/12 financial year was 7.5% and was expected to level out in upcoming years. Gauteng and KwaZulu-Natal had received the highest allocations from the grant. Public Transport Integration Committees (PTICs) were established in all nine provinces and all provinces had to submit monthly and quarterly reports to the Department. The Public Transport Infrastructure Support (PTIS) given to municipalities amounted to R4.8 billion over the 2011/12 financial year and this amount would increase to R4.9 billion in 2012/13 and to R5.5 billion in 2013/14.

Mr Mahlalela then presented the rollout of the Provincial Roads Maintenance Programme. The Road Infrastructure Strategic Framework for South Africa (RISFSA) was part of this programme. The RISFSA was a framework developed by the Department to identify the key challenges and focus areas of roads management in South Africa. Based on the challenges found, the Department then developed strategies to address these needs.

The extent of the road network in South Africa was approximately 746 978km of road nationally. Of this, SANRAL had 16 170km of national road. The provinces had 184 816km of road, and the municipalities 339 849kms of road. However, there was 140 000km of gravel road which was unproclaimed. This meant that these roads did not belong to any government sphere and still needed to be proclaimed; therefore it could not be maintained by anyone. The available network condition data indicated that the majority of roads in municipalities and provinces were in a poor to fair condition.

The Provincial Roads Maintenance Grant (PRMG) had been allocated to all provinces as part of the S’hamba Sonke programme. R22 billion had been allocated over the next three years. This programme was adopted by the transport Ministers and Members of the Executive Council (MINMEC) on 02 February 2011. S’hamba Sonke loosely translated meant “We are moving together” or “We are moving together in step”. The programme’s thrust was to focus on a few key actions whose achievements would represent a turnaround in the sector outlined in key programme components.

A key programme component was to increase investment in the maintenance of key arterial routes to support the rural economy. This would be achieved by having provincial roads identified, collecting key data on such roads, and outlining methods of implementation that unbundled contracts to create opportunities for emerging contractors and local labour. Another key programme component was to improve access to schools, clinics and other public facilities. The key actions involved in this component were to have provinces itemise backlogs and progress, and to submit business plans that responded to job creation.

Mr Mahlalela highlighted that all the funds would be implemented according to the Division of Revenue Act 2011. The purpose was to supplement provincial road investments and support preventative, routine and emergency maintenance on provincial road networks and ensure that provinces implemented and maintained road asset management systems. The outputs included an improvement in the percentage of roads in a poor to very poor condition and the stabilisation of roads in a better condition (very good, good and fair). There was a commitment to creating 70 000 Full-time Equivalent (FTE) jobs on maintenance, construction and rehabilitation of roads. Traffic volumes and pavement conditions data would be updated, as well as road asset management systems. One of the grant conditions was that there should be adherence to the Infrastructure Delivery Management Toolkit. This toolkit would ensure that the correct maintenance standards were being used.

Mr Mahlalela gave the targets for job creation, with a total of 155 057 jobs to be created in 2011. From this amount, 68 765 would be FTE jobs. The expected outputs from provinces indicated the number of projects submitted as part of the S’hamba Sonke programme, the number of existing projects rolled over, and the value of projects as per the PRMG.

Some of the achievements for 2010/11 as per planned objectives were the establishment and revival of Public Transport Integration Committees (PTICs) in all provinces to oversee and drive the phased implementation of new subsidised service contracts. As a result of the 37% increase in the subsidy allocation in 2010/11, the PTIC in the Northern Cape had approved the introduction of a new rural public transport service in the Namakwa and Frances Baard District Municipalities.

The Department achieved another objective by appointing a team of transport specialists to assist in developing the necessary strategies and frameworks to align the current bus subsidy process, paid through the Public Transport Operations Grant (PTOG), with provisions of the Public Transport Strategy in preparation for the roll out of the Integrated Public Transport Networks. The Department had a scrapping target of 8 758 vehicles, and of this amount 5 758 were scrapped. The delay was due to access of funding, the cost of the preferred vehicle (Toyota) being very expensive, the recession, and operator credit worthiness with the requirements of the National Credit Act.  

The priorities for 2011/12 included having Integrated Rapid Public Transport Networks (IRPTNs) rolled out in five cities by developing 300km of trunk Bus Rapid Transit (BRT) by 2014 and empowering the industry through cooperatives. Five cities had developed Network Operational plans. A priority was to also develop IRPTNs in rural districts. The last priority for 2011/12 was to have effective regulation of transport operations. The objective was to establish the National Transport Regulator, Provincial Regulatory Entities and build municipal capacity by 2014. These would be established based on the Operating Licences Board and the Provincial Taxi Registrars in all provinces.

Discussion
Mr H Groenewald (North West, DA) asked when the taxi recapitalisation programme would come to an end as the results had been very slow.

Mr Mathabatha Mokonyama, Deputy Director General: Public Transport, Department of Transport, agreed that the scrapping programme should have come to an end. There were some reasons why it had gone slowly, such as the recession and the cost of new Toyota minibuses. The Department did not have a set date for when the recapitalisation would be terminated but the target was behind by 3 000 taxis.

Ms M Themba (Mpumalanga, ANC) said that the presentation was not detailed enough as it seemed it was more for the Portfolio Committee and not for the Select Committee. She wanted to see more detail regarding provinces and specific municipalities within the provinces.

Mr Mokonyama replied that the Department would do so in future presentations. This presentation focused on the overall budget and did not show specific municipalities within provinces.

Mr M Jacobs (Free State, ANC) said that the Department should not use so many acronyms and if it did, it needed to explain them.

Mr Mokonyama said that the Department would try to shy away from using acronyms in the future; most were explained throughout the presentation and those not explained were those it assumed Members were aware of.

The Chairperson (Mpumalanga, ANC) wanted to know whether this presentation was for the preparation of the budget vote.

Mr Mahlalela replied that it was for the preparation of the budget vote.

Mr Groenewald said that the condition of roads in South Africa was very concerning. The whole economy depended on the functioning of roads. He was worried whether tenders were being allocated correctly, as in the North West province, roads were only being built halfway, due to the mismanagement of funds. He wanted to know which preventative measures were being put into place by the Department to ensure that financial management was up to standard.

Mr Mahlalela replied that provinces were being monitored by a project performance management unit, which would oversee the usage of funds. This performance unit would also ensure that proper standards were adhered to with the fixing of potholes.

Ms Themba asked whether a final list of projects, as referred to on slide 8, had been completed.

Mr Mahlalela replied that indeed, all provinces had submitted their business plans and projects, as well as figures of jobs that would be created. 

Mr Jacobs asked what FTE (Full-Time Equivalent) meant.

Mr Mokonyama replied that FTE employment was projects related to the Extended Public Works Programme (EPWP) and jobs were for over 12 months. These were not permanent but rather related to maintenance and rehabilitation projects.

The Chairperson said that because the Select Committee had a say in the final decision of the budget vote, he was disappointed to see such a small amount of people from the Department attending the meeting.

Mr Groenewald said that there were numerous trucks on the road. The roads were not built to carry such heavy loads. He suggested that an alternative would be to make more use of the railway systems in South Africa. He wanted to know whether the Department had any future plans for the revival of rail transport for cargo.

Mr Mahlalela replied that the Department had been looking at the usage of rail for the transportation of cargo. The rail system in South Africa needed upgrading, especially in areas where the rail system had not been accessed for many years. The Department had started a process to develop a rail policy, which would be finalised by December 2011. The majority of branch lines were owned by Transnet and Government would be stepping in for the revitalisation of this network usage.

Ms Themba wanted more information on the Public Transport Integration Committees (slide 10). She wanted to know who served on these committees and to whom these committees reported. She agreed with Mr Jacobs that the presentation contained too many acronyms.

Mr Mokonyama replied that these committees were set up by the provincial departments and municipalities. They made the needed decisions as to where funds would be allocated.

Mr Jacobs wanted to know how many buildings the Department was renting or had bought.

Mr Mahlalela replied that the national Department was renting only one building in Pretoria.

The Chairperson wanted more information about the Moloto Road development in Free State and requested that the Department provide him with the information before the end of the week.

Mr Mahlalela said that he would submit the information as requested.

Mr Groenewald said that the idea of creating toll-roads in the major cities across the country was not a good idea. Vehicle owners would not agree with having these toll-roads implemented as they already had to pay road taxes and fuel levies.

Ms Themba wanted to know the meaning of “unproclaimed roads” as shown on slide 15. She asked what happened to these roads which were unproclaimed.

Mr Mokonyama replied that these roads were mostly footpaths, routes and streets created by people. There were currently approximately 140 000km of unproclaimed roads, but gradually proclamation happened.

Mr Jacobs asked whether the Department was involved in providing scholar transport, and if so, to which provinces.

Mr Mokonyama replied that five provinces were currently given scholar transport by the Department of Basic Education. Mpumalanga and the North West were given scholar transport by the Department of Transport, with KwaZulu-Natal also wanting the Department of Transport to help it. The Eastern Cape was experiencing problems as it was not clear by whom this province was being catered for. The Department had finalised a scholar transport policy and a migration plan to have the mandate taken from the Department of Basic Education and given entirely to the Department of Transport. However, there were some challenges as the categorisation of functions was not yet complete.

The Chairperson asked the Department to explain more about the Gautrain project and how far planning was.

Mr Mahlalela replied that the route between Johannesburg and Pretoria had been completed and was expected to be operational from June. The provincial Department had set up a task team who would be starting next month. This planning team would be looking at expanding the Gautrain project for approximately over the next 20 years. The project was still in its preliminary stages; the planning team had one year to come up with expansion plans. The provincial Department had however not engaged with the national Department yet.

Mr Groenewald commented that the Department needed to step in more firmly to take over the scholar transport policy; the Department of Basic Education should not be the custodians.

Mr Mahlalela agreed that the Department needed proper engagement with the Department of Basic Education. Scholar transport was heavily under funded and there was massive institutional confusion. The problem also lay with the funding model that was being used, as funding was currently being calculated with the Department of Basic Education’s funding model.

Ms Themba asked whether the 70 000 jobs to be created included women, youth and people with disabilities.

Mr Mahlalela replied that indeed women, youth and the disabled were all included in the detailed breakdown of jobs created from provinces.

Mr Z Mlenzana (Eastern Cape, COPE) said that the provincial monitoring unit was a good step going forward. He was concerned about the rumours in the Eastern Cape that R3 million was spent unauthorised. He wanted the Department to follow up on these rumours as he had mentioned these rumours in a previous meeting.

The Chairperson wanted to know whether maritime and aviation also belonged to the provincial departments, as these entities were not included in the presentation.

Mr Mahlalela said that the Airports Company of South Africa (ACSA) airports did not include provincial airports. Maritime needed to be developed as South Africa did not own any of its own ships. All together there were 11 agencies across the country, which were road, maritime and aviation based. At some stage the committee had to meet with all these core agencies for a special session of its expenditure.

The Chairperson asked the Department to take note of the alleged mismanagement of funds in the Eastern Cape. The Department should also tell the Committee of problems it was experiencing so that the Committee could assist it.

The meeting was adjourned.