The entities that presented their Annual Reports were the Road Accident Fund, The Road Traffic Infringement Agency, the Road Traffic Management Corporation and the Cross-Border Road Transport Agency.
The Road Accident Fund provides cover to all users of South African roads against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa. The fuel levy was its primary source of income and the RAF portion was currently 96c per litre sold.
The financial indicators compared 2011/12 to 2012/13 where the fuel levy increased from 80c/l to 88c/l, total revenue increased from R17.1 billion to R17.9 billion (due to how expensive fuel became) and the RAF loss decreased from R16.5 billion to R4.9 billion. The deficit, however, increased to R51.2 billion. Total exposure to claims incurred increased from R72 billion to R82.8 billion which was a R6.4 billion growth in claim provision. In terms of service delivery, claims expenditure was R15.2 billion and R11.4 billion of that was compensation pay-outs compared to R8.9 billion of the previous year. More claim payments were made and the cash balance was R6.1 billion. Both fruitless and irregular expenditure decreased. On the balance sheet assets had increased to R10.7 billion and liabilities increased to R62.1 billion.
Fraudulent files constituted 5 149 and 4 572 of these files were finalised with 290 arrests made and 234 convictions obtained. The audit opinion was an unqualified one with no compliance findings, pre-determined objectives were satisfactory and the Auditor-General did not identify any internal control deficiencies. The RAF strategic framework centred on a solvent, liquid, sustainable, customer-centric, operationally effective and efficient, transformed and capacitated RAF by 2017. The operational targets and priorities for 2013/14were outlined and the RAF would like 2013/14 to be a “Year to shine”.
Members of the Committee focussed on the following issues:
- The solvency of the RAF
- The backlog of claims
- The advocacy of RAF in remote areas
- The turnaround times for claims
- The role of lawyers in the entity
The Road Traffic Infringement Agency (RTIA) strategic objectives were:
- Increase the Agency revenue share from the outstanding road traffic infringement penalties
- Implementing effective governance processes to achieve an unqualified audit opinion.
- Implementing effective adjudication processes
- Comprehensive legislative review
- Full transfer of Administrative Adjudication of Road Traffic Offences (AARTO) functions to RTIA.
The Agency started the year with a staff of 22 and increased its complement by 16 (72%) to a total of 38. A comprehensive overview of the staff profile was provided. Revenue increased significantly by 71% from R28.5 million to R49 million. The year’s overall performance was significantly lower than expected due to the impairment of debtors of R31 million. Without the impairment, the net surplus would have been 240% above the previous year’s performance of R11.1 billion. The audit outcomes included a second consecutive unqualified opinion, and the number of findings decreased from the previous year. The emphasis of matter was a material impairment of R31 million incurred as a result of the assessment made on the cash recoverability of the accounts receivable relating to the AARTO management process. 33% of total planned targets were not achieved and this was mainly due to the fact that indicators and targets were not suitably developed during the strategic planning process. The Agency did not issue and serve courtesy and enforcement letters for the period September 2012 to March 2013 in contravention of the AARTO Act. Material misstatements identified by the Auditor-General were subsequently corrected.
The Committee discussed the following issues:
- The R31 million that needed to be collected by the agency
- The legislative review that was needed so the mandate could be fulfilled
- The role the Department of Transport needed to perform in the fulfilment of the RTIA mandate
- The suspension of the issuing of AARTO courtesy letters and enforcement notices.
The Road Traffic Management Corporation reported 13 targets were achieved and 21 were not achieved for the year. The National Traffic Police staff component had decreased from 391 to 371 from March 2012 to March 2013 due to 20 members joining the Gauteng Traffic Police mainly because of more favourable working conditions. Challenges included uncertainties due to budget constraints, numerous acting senior positions that impacted on deliverables, shareholder meetings that did not take place, the non-appointment of a board of directors, an extended acting chief executive officer of over three years, inadequate funding for three quarters of the year under review and operations under a depleted senior management team.
The RTMC had achieved an unqualified audit opinion for the past two financial years, 2011/12 and 2012/13, preceded by two adverse opinions. The overall financial position showed the pendulum swung from technical insolvency to a healthy balance sheet where the cash and cash equivalent grew by 288% and the Property, Plant and Equipment (PPE) doubled while the assets exceeded liabilities by R418 million (4:1 ratio) as compared to R121 million in 2012.
The Annual Financial Statements showed cash at R375 million of which R46 million was from Administrative Adjudication of Road Traffic Offences (AARTO) which was infringement fees for both Gauteng Department of Community Safety (GDOCS), Tshwane Metro Johannesburg Metro and Road Traffic Infringement Agency (RTIA) paid into the AARTO national bank accounts and R318 million in electronic National Information System (eNatis) which represented transaction fees received by RTMC from provinces. Trade and other variables constituted R136 million and the AARTO infringements due from Issuing Authorities were R18 Million with the change in accounting principle only on cash basis thus these were monies due by RTIA and GDOCS that were overpaid in the previous accounting principle. Liabilities constituted trades and payables of R107 million of which R13 million was creditors and accruals, R7 million was accrued employee costs, R9 million was unallocated transactions fees and R75 million was AARTO infringements. The revenue showed a decrease from about R518 million to R507 million and the expenditure showed R211 million of which R111 million was the payroll.
The Committee discussed the following matters:
- The history of RTMC and past difficulties
- The R230 million accumulated debt and how it was turned around
- The different policing structures
The Cross-Border Road Transport Agency (CBRTA) Chief Executive Officer explained that in 2010 with his appointment, the Chairperson of the Portfolio Committee explained to him that the Agency was either 'dying’ or already ‘dead’ and he announced that in the year under review, CBRTA attained its first unqualified audit opinion since its establishment in 1998. He said there was a lack of clarity around CBRTA’s mandate and this in turn limited the Agency’s effectiveness. The mandate was to improve the flow of passengers and freight by road transport in the region, introduce regulated competition in cross-border road transport, reduce operational constraints for the cross-border road transport trade facilitation, provide oversight and monitor functions, and build industry partnerships to strategically re-position the work of the CRBTA, and not to only issue permits. As an example he explained when CBRTA invited stakeholders from the private sector to discuss corridor issues that meeting was stopped by an official from DoT who said that it was outside the mandate of the Agency and this was frustrating and retarded the efforts of CBRTA and it requested assistance from the Committee and would raise this issue with the Minister at the earliest convenience.
The audit outcomes showed unqualified annual financial statements with no material misstatements with an emphasis of matter on funding of operations because of pending litigation on the increase in permits tariff. Pre-determined objectives achieved an unqualified opinion with no material findings on the reliability and usefulness of the performance information. 32 out of 62 performance indicators were not 100% achieved. There was a reduction of irregular expenditure from R14 million in the previous financial year to R920 000 in 2012/13, mainly due to contracts entered into in the previous years.
The Committee discussed the following issues:
- The mandate of the CBRTA
- Whether the CBRTA added value to the transport system
- The issues of the Department of Transport (DoT) and its role with entities
- The way forward for the DoT and its entities.
Mr Chris Hlabisa, Deputy Director General: Roads, Department of Transport (DoT) introduced the entities that would be presenting their annual reports and hoped there would be robust discussions on these report as was had the previous day. The negative credit rating against the South African National Roads Agency Limited (SANRAL) had been a challenge as an entity, a department and as government and the spirit with which the transport regulated laws was handled by this Committee deserved applause. The good work of the National Council of Provinces (NCOP) on Public Service as well as the work of the ruling party and its government were recognised when President Zuma signed the Transport Laws and Related Matters Amendment Bill into law recently. The law would enable the users of this world class infrastructure to pay because it was a user-pay principle. It was hoped that by the first week of December, this Act would be in full force and people would start paying e-toll and this kind of decisive leadership was what the country needed for economic growth.
Mr G Kumbrock (DA) said the speech by Mr Hlabisa was out of order because it was political.
The Chairperson disagreed and said it was a fact that the President signed the Bill into law and it was an achievement by SANRAL because their rating was affected and in turn negatively impacted economic growth in South Arica.
Mr Kumbrock (DA) asked whether the comments about the ‘decisive leadership’ of the President were not political.
The Chairperson said the President was decisive in signing the Bill into law, and thanked Mr Hlabisa.
Road Accident Fund (RAF) Overview of Performance in 2012/13
Dr Eugene Watson, RAF Chief Executive Officer, provided background to the RAF and said the Fund provided cover to all users of South African roads against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa. The business revolved around road use and the fuel levy which was its primary source of income and was currently 96c per litre sold. He explained the business process which were origination, determination, litigation (over 90% of RAF cases were litigated), finalisation and post-finalisation. RAF employed 2 000 people with five regional processing centres, a call centre, a newly opened customer service centre in Nelspruit and roll-out plans for four more. RAF was part of the social security structure of the government and unlike other entities the Fund was not funded by the people who could benefit from it, i.e. anyone could be a beneficiary, benefits was unlimited and increasing and support was given for loss of income, loss of support and medical costs. The RAF carried an unfortunate legacy which was built over many decades and included suppositions that it was a “lawyers” business, insolvent and bankrupt as a result of a provision for claims incurred, inefficient and intensely bureaucratic and fraught with fraud. The Board and management committed in 2012 to create a new legacy, one of efficient and effective service delivery to victims of crashes who needed the support.
The financial indicators compared 2011/12 to 2012/13 where the fuel levy increased from 80c/l to 88c/l, total revenue increased from R17.1 billion to R17.9 billion (due to how expensive fuel became) and loss or deficit decreased from R16.5 billion to R4.9 billion. Deficit increased to R51.2 billion. Total exposure to claims incurred increased from R72 billion to R82.8 billion and that would be a R6.4 billion growth in claim provision. In terms of service delivery, claims expenditure was R15.2 billion and R11.4 billion of that was compensation pay-outs compared to R8.9 billion of the previous year. More claim payments was made and the cash balance was R6.1 billion and both fruitless and irregular expenditure decreased. On balance sheet assets had increased to R10.7 billion and the liabilities increased to R62.1 billion. Total revenue was R17.6 billion, total expenses were R16.3 billion and loss on income was R5.1 billion. The reason for big deficits or liabilities was the actuarial forecast and it basically said how much would be paid today for every single accident that happened before today – not all of those would be a valid claim. Of the R82 billion, R22 billion was a provision for possible claims and R16 billion was on the balance sheet. The bulk of the R72 billion to R82 billion movement related to interest, where the actuarial model dictated that each year the medical costs for the coming year had to be calculated based on inflation, and another R1 billion had to be added due to court rulings that decided that life partners were now entitled to claim and the cost of claims year-to-year.
Slide 15 illustrated the actuarial provision. Government entities that provided social benefits did not use projections similar to this, where e.g. the South African Social Security Agency (SASSA) would show what future payments would be made for every citizen that was currently alive.
Slide 19 showed the processes at the end of 2012/13 where about 150 000 claims were received and 162 000 were finalised with 279 000 still to be finalised, of which 61 000 related to lawyers costs. In 2012 248 000 claims needed to be finalised and that number was reduced by 15% to 212 000 and the focus was to reduce that number considerably. Slide 20 gave statistics, notably that RAF paid for almost half of the funerals of the approximately 14 0000 that died on South African roads annually. Slides 21-22 showed the composition of claim payments and the total average cost per claim, which since 2009 the average payment per claim went from R30 000 to a little over R64 000, but the average legal costs were R68 000, and this needed to be addressed via the legislation in partnership with the Committee and DoT.
Fraudulent files constituted 5 149 and 4 572 files were finalised with 290 arrests made and 234 convictions obtained. The highlights in 2012/13 were outlined on slides 24-25 and included the RAF on the Road programme, which serviced more than 8 000 claimants and settled R102 million and the newly established Nelspruit office where the initiative to process and finalise a claim within six months without a lawyer was started and was now applied nationally, and where the Fund achieved 86% of Annual Performance Plan (APP) targets. The challenges were outlined as well the measures that needed to be taken to address those challenges. The APP performance on slide 27 showed the number road shows per annum claimants engaged and the Employment Equity target of 90% were partially achieved and the target not achieved related to the 5% reduction in the deficit.
The audit opinion was an unqualified opinion with no compliance findings, pre-determined objectives were satisfied and the Auditor-General (AG) did not identify any internal control deficiencies. Dr Watson outlined the strategic framework which centred on a legislative dispensation that was aligned to principles of social security, a solvent, liquid, and sustainable RAF, a transformed and capacitated RAF by 2017 and a customer-centric, operationally effective and efficient by 2017. He outlined the operational targets and priorities for 2013/14 and said RAF would like 2013/14 be a “Year to shine”.
Mr Kumbrock (DA) referred to the legal costs that figured R68 000 and asked whose legal fees it were since it was understood that legal fees were not refundable by the RAF and how it affected individual claims if the average pay out per claim was R64 000. He asked how long it took for an average claim to pay out with reference to the issue of technical insolvency. The analogy of provisions for the future as it related to an entity like SASSA was misleading because the RAF’s provisions was in fact those claims and interests and medical fees that would be paid out to be people who had already been in an accident and these claims related to individuals and the costs they were legally entitled to claim and would be paid out in future years. The question was how the fund operated if the money that it had to pay out was far more that its assets. Personal claims for this particular year was listed at 27 000, and outstanding claims at 236 000 and it seemed that four and a half times more claims outstanding than coming in any particular year. He said the Fund were technically insolvent and were merely postponing those future costs as long as five years in the future and that way they would not had to pay it all out in one year. He referred to this personal assistant who had been in an accident and had been waiting five years for the claim to pay out and similarly had clients who had been waiting as long and he had sent numerous letters of enquiries to the RAF in EThekwini with no response, and the RAF merely put a spin on the turnaround times for cases since they could not pay the claims. He also referred to the fuel levy increase of 80c to 88c which was a 10% increase but if that was so for the full 12 months there would have been more than a 5% increase in the revenue. He asked clarification and suggested that an average of the fuel levy should be used over 12 months rather than an arbitrary point in time and the levy could then be related to the gross revenue.
Dr Watson replied and said R3.6 billion was spent on legal fees and two thirds went into the bank and one third was paid to RAF attorneys as mandated by RAF Act. Claimants were affected by the contingency fees, or profit or risk share which were paid from the compensation and it could be any share from 25-50% of the compensation. The turnaround times for claims depended on the nature of the claim. If it was a complicated case it could take up to 1 300 days to be paid and during such a process five to fifteen experts could be called by legal and the current RAF Act dictated that maximum medical improvement should be reached and that took 18 months. Certain logistical issues related to the law made the process long. Simpler cases, e.g. funerals and medical costs could be processed within 242 days. He stated on the issue of technical insolvency that the question became would you pay a claim from last year based on money you had today or would the monies that were due also be factored in. The liabilities of the RAF in 32 years had never fallen due and the RAF had a cash reserve of R6 billion which could be used in the processes of the backlog. He referred to slide 19 and said 150 000 new claims were lodged, of which 47 000 were personal claims and 53 000 personal claims were finalised, some old and some new, but the RAF monitored the turnaround times and knew that when the backlog was processed well, the compensation that was paid out would be an old claim and that would be justified with a report. The provisions were for accidents, possible accidents and accidents that had happened, but not every accident was an eligible claim because it depended on fault, as well the type of passenger you were in the vehicle, etc. and unlike short term insurance the risk of an accident did not imply the risk of a claim. In terms of a spin on turnaround times, some months in this financial year the fund had paid more than collected, and they had the R6 billion and together with DoT and National Treasury (NT) they monitored expenditure closely and both departments, NT and Dot supported that the backlog should be cleared and if the R6 billion started depleting, during the quarterly and regular sessions the Fund would look at how much money was needed for additional funding. The revenue was depended on the fuel levy, which was 88c/l and much fuel was sold. For the financial 2012/13 fuel purchasing had grown by only 3% and that was smaller than the previous financial year.
Mr I Ollis (DA) referred to the Statement of financial Position and asked if the decrease in Provision for Outstanding Claims (from R20.372 billion to R6.377 billion) could be explained. He asked, with reference to slide 14, if those percentages referred to the number of actual cases and to slide 17 and the “other revenue” that had gone up by 127% and asked what those revenues were and the 222% deficit on the same slide. He referred to slide 19 and asked why there were no numbers under a certain section for 2011 on the statement to enable comparisons to the following years. On slide 20, he asked why the funeral costs had increased so dramatically in three financial years. Too much was being spent on legal fees and one point was that so much lawyering was not needed to issue payments, other points included that it was so difficult to get their money that people needed lawyers or the claim paid out too little and litigation was needed to increase the pay out. That indicated that the Fund was reluctant to pay and people needed lawyers to get additional money. Less educated people may fill in the forms wrong, or not be able to argue their case for compensation properly or could possibly not read or understand English very well, and the need to spend less on legal fees should not compromise the needs of those people that might need the legal expertise to get the appropriate amount.
Dr Watson referred that the Provision for Outstanding claims showed the growth and referred to slide 12 and the Total Liabilities over three years where in 2011 it was R34 billion, in 2012 it was R54 billion and in 2013 it was R62 billion, and the growth was a third of what it was 3 years ago. The 127% growth was about R140 million interest earned and investment income of R1.4 million. The 222% deficit was a good statistic because it showed going from a loss of R16 million to a loss of R5 million. The blank sections on slide 19 were purely methodology because in 2010 there was an issue on how the RAF reported on their backlog and the AG chose a calculation, but it could not take into account those claims already finalised, so they started using audited claim statements from the system which started in 2012. Funeral costs increased because of the rand value per claim increased, as well as the number of individual claimants which increased from 2 949 in 2011 to 6 303 in 2013. He said the RAF was a public entity with no profit motive nor a motive or incentive to rob clients and an analysis showed that when lawyers were involved clients the offer made was on average 10% higher than what the RAF offered across the board and this analysis was to ensure that when the RAF processed claims directly that individuals got a fair deal. There were cases where lawyers have sued the RAF to say that the payment offer was too low, but similarly lawyers have sued other lawyers for an under settled claim. The RAF was not reluctant to pay, because they had reduced the backlog by 15% and this financial year had paid out R3 billion more than previous years. The Fund had translators and were in the process of translating all their documentation in all the official languages
Ms N Ngele (ANC) referred to the priority of the Fund to ensure that new targets were timeously attended to and asked how they proposed to do this with so many outstanding claims. She also asked how the RAF attended to people in the rural areas where there was often no electricity – were they aware of what to do in case of an accident because those people often became targets of lawyers, and these areas needed RAF offices.
Dr Watson said the new targets were focused on the forecasted accidents and not reducing the claim numbers. RAF had mobile RAF and bought 20 new cars to go to claimants, road shows and were on community and SABC radio, but also realised that there was more needed.
Mr L Suka (ANC) said he wished for RAF offices to expand so that, e.g. if there were an office in Port Elizabeth it could service the Umtata district which was surrounded by many towns, especially those accident prone areas during the festive season. The Fund could give the information to members of Parliament on how to use their offices to assist when there was an accident. He asked how capacitated RAF was to deal with the issues especially in terms of the backlog and the 14 000 deaths annually with a 2 000 strong workforce. He wanted to know what RAF policy was with regards to foreigners in an accident situation. He referred to interaction with communities with regard to print and electronic media and advocacy, because lawyers scout for accidents but if people were educated surely the middleman would not come into play. If there were certain Acts that prohibits the RAF’s functions, it should be communicated to the Committee so that those laws could be interrogated.
Dr Watson said the priority of the RAF was to first have a presence in every province, and now that that had been achieved they needed to do assessment of where they needed to expand based on accidents and the needs of a community. The law did not exclude foreigners and anyone who used the road could claim and not much had been paid out to foreigners and there were RAF equivalency in Namibia, Swaziland and Botswana and signed a multilevel agreement so that when their nationals were involved in an accident they would assist the RAF in South Africa and vice versa. He thanked Mr Suka for the comment and suggestion on legislative change and said they would communicate with the Committee. The moratorium on appointments had been lifted at RAF and had hired 313 people since October 2012.
Ms R Motsepe (ANC) congratulated the RAF on their successful outreach programme and asked about the monitoring of the offices, because the office at the hospital was often closed with no idea when it would be open and asked if there were a staff shortage.
Dr Watson said they performed a review of the hospital-based offices to look at the staff, the security, the facilities and the infrastructure and would look at the results to have a better picture and could then better answer this question, but they had recently opened an office at Baragwanath Hospital a review of their hospital offices
The Chairperson said she had received a number of calls related to the attitude of the staff of the EThekwini office, particular a Mr Dlamini. The staff were the face of RAF which in turn was a government entity. She asked what kind of training was given to staff with regards to sensitivity training and if there was monitoring of customer treatment interaction. She referred to the service infrastructure of the RAF and said the Eastern Cape was really affected by accidents particularly during the festive season and said there were 23 presidential poverty model points in South Africa she would have thought that the roll-out of service centres would be focused on those areas, and that would address poverty and job creation and she asked what informed establishment of customer service centres.
Dr Watson replied that the RAF had not been able to track down Dlamini, but urged everyone to report bad service and the RAF would act to remedy that. The Durban RAF office was a R4 billion per annum business that was seriously understaffed and had since been capacitated, with two senior managers, five managers that oversaw the teams, of which one was a Quality Assurance Manager that would specifically monitor service. There was a training programme dedicated to the staff with customer care training done annually. Five years ago RAF staff would never have seen a claimant, and it was a process. He realised that Eastern Cape presented a unique problem because of the big gaps between towns, and would look into what was needed for the Province, may it be a mobile or satellite office or possibly shared offices with other government entities. The RAF felt strongly about community outreach programmes and had been in partnership with a church in Johannesburg who had taken on road safety as a cause.
The Chairperson touched on the importance of Employment Equity in government entities and asked how many victims of accidents that were now disabled were employed by RAF?
Dr Watson said that 1.9% of RAF employees were disabled and that was just below the target, but a Memorandum of Understanding (MoU) was signed with the Quadriplegic Association of South Africa (QASA) to employ disabled people with a specific skills set (QASA provided training) for positions at the RAF.
Road Traffic Infringement Agency (RTIA) Annual Report 2012/13
Mr Japh Chuwa, RTIA Registrar, outlined the strategic objectives and the performance of RTIA against those strategic objectives. These objectives were to increase the Agency revenue share from the outstanding road traffic infringement penalties; implement effective governance processes to achieve an unqualified audit opinion; implement effective adjudication processes; effect a comprehensive legislative review; and transfer fully AARTO functions to the RTIA.
The Agency started the year with a staff of 22 and increased its complement by 16 (72%) to a total of 38. Slide 11 gave a comprehensive overview of the staff profile.
Slides 12-14 gave breakdown of infringement notices issued per authority. Those authorities were the Road Traffic management Corporation (RTMC), Gauteng Department of Community Safety (GDOCS), the Johannesburg Metro Police Department (JMPD) and the Tshwane Metro Police Department (TMPD).
Revenue increased significantly by 71% from R28.5 million to R49 million. The year’s overall performance was significantly lower than expected due to the impairment of debtors of R31 million. Without the impairment the net surplus would have been 240% above last year’s performance of R11.1 billion.
The audit outcomes included a second consecutive unqualified opinion, and the number of findings decreased from the previous year. The emphasis of Matter was a material impairment to the amount of R31 164 022 and was incurred as a result of the assessment made on the cash recoverability of the accounts receivable relating to the AARTO management process. 33% of total planned targets were not achieved during the year under review and this was mainly due to the fact that indicators and targets were not suitably developed during the strategic planning process. The Agency did not issue and serve courtesy and enforcement letters for the period September 2012 to March 2013 in contravention of the AARTO Act. Material misstatements identified by the Auditor-General were subsequently corrected.
In spite of the difficulties experienced, the Agency was fully committed to the achievement of its mandate.
Mr Ollis (DA) asked who the adjudicators were and if they were suitably qualified to do adjudications. He referred to the staff complement and asked if they only existed in Gauteng and if RTIA had adjudicators elsewhere in the country. He asked where the R31 million was that was declared – where did it come from and where did it sit and would RTIA be able to get it. In terms of RTMC issuing the 61 000 notices – who were the officials that issued notices especially on the freeway in Gauteng because the public had reported that they had been stopped and asked to fill in documents by SANRAL traffic officers. The courtesy letters and enforcement notices had been suspended essentially because there was no money for postage – how come neither the entity, nor the DoT or government had calculated or budgeted the cost of postage beforehand? What happened to the fines when the correct letter or enforcement notice were not sent? On the system were millions of fines where the law and AART had not been followed. If those go to court it would be difficult for RTIA of the DoT to prove that the law had been complied with.
Mr Chuwe said the adjudicators were highly qualified individuals with legal qualifications such as attorneys and advocates and the prerequisites were determined by legislation. The R31 million was the revenue that had been generated, movement had been indicated in the AARTO accounts and the in the money sat at the different licencing departments in other provinces. It would be able to collect the money since compliance had been effected. AARTO was only implemented in limited jurisdictions like Tshwane and Johannesburg, but if an individual had outstanding infringements anywhere in the country and they went to that traffic department it would show that a portion was still outstanding. All the officers were situated within Gauteng with the office in Midrand. RTMC had officers employed and offered a highly interactive enforcement where drunk drivers could be identified or a vehicle’s roadworthiness could be assessed which camera traffic enforcement could not do. Mr Chuwe said that Tshwane and Johannesburg did fall within Gauteng province but law enforcement operated within certain jurisdictional boundaries and this also answered Ms Motsepe’s question. Because of a lack of legislative framework there were no mechanisms for RTIA in place to verify the details of individuals. If infringement notices were not collected because of an incorrect address, an enforcement notice was then sent to the same incorrect address and coupled with the limited funding of RTIA the Board decided it was reckless trading to continue with courtesy letters and enforcement notices. It was indeed budgeted for and it should have funded itself the more successful it became. Mr Chuwe explained that the legislation was so contradictory that it was difficult to see the way forward with regard to the unpaid and undelivered infringements on the system.
Mr Ollis said if no letters or notifications were sent out to the public, it would be justifiable legal recourse to say that you cannot be held accountable for a traffic infringement if you did not know about it and ultimately these cases would be thrown out of court because the law was not followed.
The Chairperson RTIA was in this position because of the DoT. For three years RTIA had come to the strategy meeting and asked the DoT for a legislative review so that it could fulfil its mandate. The Chairperson said the previous day they talked about the Scholar Transport System which was now taking seven years and the DoT had given no reason why they were not responding. The Board came to the same conclusion and suspended the notification system because of lack of response while the entity lost a lot of money and the Chairperson asked for a commitment from the DoT.
Mr Hlabisa said there had been some capacity issues within the legal department of the DoT, but it was not an excuse and promised that this issue would be addressed.
The Chairperson said the legal department should do its work and the DoT should perform its nurturing and supportive role.
Mr Ollis asked for clarification on what the different law enforcement agencies looked like.
Mr Chuwe asked if the Road Traffic Management Corporation (RTMC) could clarified that since they were more in law enforcement.
Ms Motsepe (ANC) asked why Johannesburg and Tshwane was different since it was both Gauteng.
Mr Suka (ANC) said a comprehensive legislative review was needed in terms of the governance of the entity and the analysis document accompanying the Annual Report eluded to that. The presentation did not give a clear picture of South Africa, but it gave a clear picture of Gauteng and it was not clear why since the entity was a national agency and the funds allocated to RTIA seemed to be focused on one province. The structure of the entity was not clear with regards to the capacity needed to fulfil its functions and its mandate.
Road Traffic Management Corporation Annual Report 2012/13
Mr Gilberto Martins, Acting Chief Executive Officer, was accompanied by Mr Ashraf Ismail, Executive Manager: Law Enforcement and Mr Michael Mogorosi, Deputy Chief Financial Officer. Mr Martins stated the RTMC ensured safe, secure and sustainable roads in South Africa through road safety management, safer roads and mobility, safer vehicles, safer road users, and post-crash responses. They coordinated and intervened and supported the provincial police and municipal police and there were currently 231 officers nationally.
Mr Ismail outlined what was required from the RTMC as a lead agency on road safety, as well as the goals and objectives centred on the targeted outcomes to make roads safer, to ensure effective stakeholder relations, to ensure corporate excellence and to provide corporate support, bearing in mind that between 38 and 40 died on South African roads daily. The targeted outcomes for 2012/13 included 34 planned key performance indicators of which 13 were achieved and 21 not achieved.
The National Traffic Police staff component had decreased from 391 to 371 from March 2012 to March 2013 due to 20 members joining the Gauteng Traffic Police mainly because of more favourable working conditions. Skills development saw the recruitment of 20 interns in collaboration with the Safety and Security Sector Education and Training Authority (SASSETA) and the United Nations Development Programme through the National Department of Transport (NDT). Ten bursaries were allocated to deserving employees under review and RTMC received a discretionary grant of just over R1 million and a R384 000 mandatory grant from SASSETA which was used to capacitate officials on technical competencies and soft skills training interventions. Challenges included uncertainties because of budget constraints, numerous acting senior positions that impacted on deliverables, shareholder meetings that did not take place, the non-appointment of a board of directors, an extended acting chief executive officer of over three years, inadequate funding for the three quarters of the year under review and operations under a depleted senior management team.
The achieved targets under Road Safety Management were solvent RTMC funding, the development of a Crash Information Management System (CIMS), crash investigation and recording, the NTP continued to operate as a national resource deployment, the National Anti-Corruption Unit successfully operated with other law enforcement agencies, the second International Road Safety Conference was held, the Driving School Summit took place, the South African Road Assessment Programme and the National Rolling Enforcement Plan II was developed. The achieved targets under Safe Road Users were the launch of the “Get there. No Regrets” campaign, the World Professional Drivers Championship and the learner programmes such as the National Road Safety Debates and Participatory Educational Techniques held in Cape Town. Mr Ismail then gave an overview of the pre-determined objectives and the challenges.
Mr Mogorosi explained the RTMC had achieved an unqualified audit opinion for the past two financial years, 2011/12 and 2012/13, preceded by two adverse opinions. The overall financial position showed the pendulum swung from technical insolvency to a healthy balance sheet where the cash and cash equivalent grew by 288% and the Property, Plant and Equipment (PPE) doubled while the assets exceeded liabilities by R418 million (4:1 ratio) as compared to R121 million in 2012. See slide numbered 22 for a detailed statement of financial position.
The Annual Financial Statements showed the cash and cash at R375 million of which R46 million was from Administrative Adjudication of Road Traffic Offenses (AARTO) which was infringement fees for both Gauteng Department of Community Safety (GDOCS), Tshwane Metro Johannesburg Metro and Road Traffic Infringement Agency (RTIA) paid into the AARTO national bank accounts and R318 million in electronic National Information System (eNatis) which represented transaction fees received by RTMC from provinces. Trade and other variables constituted R136 million and the AARTO infringements due from Issuing Authorities were R18 Million with the change in accounting principle only on cash basis thus these were monies due by RTIA and GDOCS that were overpaid in the previous accounting principle. Liabilities constituted trades and payables of R107 million of which R13 million was creditors and accruals, R7 million was accrued employee costs, R9 million was unallocated transactions fees and R75 million was AARTO infringements. The revenue showed a decrease from about R518 million to R507 million and the expenditure showed R211 million of which R111 million was the payroll. See slides numbered 23-26 of detailed Annual Financial Report.
The slide numbered 27 illustrated the Emphasis of Matter and how it differed from the previous financial year when the way forward was to approach National Treasury for additional or new funding source to 2012/13 where the way forward was to reconcile transaction fees monthly, to fund projects in line with the strategic plan and to position RTMC to lead in road matters. Mr Mogorosi explained the road from an adverse to an unqualified audit opinion and said RTMC had a +/- 60% vacancy rate, where the supply chain was operated mainly by interns, the lack of funding and all these things contributed to a low morale with the possible closing down of RTMC, and the management letter from last year was 120 pages compared to 60 pages this year.
Mr Mogorosi gave an overview on the audit findings that dealt with non-compliance with laws and regulations. These findings were the 38% achievement of planned targets, Annual Financial Statements and Reports, non-compliance with the RTMC Act and the inefficient internal control processes. The internal control deficiencies dealt with leadership, financial and performance management and governance. He gave an overview of the challenges as experienced in the year under review and said the RMTC was continually developing appropriate strategies to counter the identified challenges and risks. He said in closure, that the year under review was one of great difficulty, but RTMC had moved from a deficit in the previous financial year to a surplus in the current year.
The Chairperson said that RTMC had been in dire straits a few years back and when the Committee started, the acting CEO used to come to the Committee meetings alone with no support.
Mr Ollis (DA) said the Minister, Deputy Minister, the DG or the DDG needed to be in this meeting because the problems concerning RTMC were of a strategic nature and needed to be addressed to them. He asked an explanation of what the different traffic police entities looked like, e.g. the National Traffic Police, the Gauteng Traffic Police and the SANRAL Police. He asked an explanation of the SANRAL debt write off of R26 million and said that when he joined the Committee in February 2012 RTMC had accumulated debt in the region of R230 million and now there were surplus, assets and profits in the region of R400 million and he felt it was artificial. He asked an explanation of how this happened.
Mr Martins replied and said the SANRAL police had white vehicles with a gold star on the door, The NTP had white vehicles that clearly stated National Traffic Police and the officers wore blue uniforms and the Gauteng traffic Police had black vehicles.
Mr Mogorosi said the figures for 2011/12 was an accumulated loss of about R41 million and this year translated in a profit of R80 million in recognition of the AARTO fees which was recognised on a cash on cash basis.
Mr Ollis (DA) asked what amount the AARTO fees was.
Mr Gift Mbanjila, RTMC Senior Manager: Finance, said for 2010 the AARTO fees were about R46 million but the accounting policy was changed. This was because in previous years RTMC recognised fines in Western Cape or KZN on their books, and that was incorrect and when it was corrected the financial position moved from a net deficit to a surplus and the liabilities decreased.
Ms Ngele (ANC) asked if RTMC had a board, and when last did the board meet.
The Chairperson said that there was no board, the board was dissolved. There were shareholders, but even the AG recognised that the stakeholders were not meeting regularly and when they met they would take decisions that affected the budget and it caused confusion so much so that the media contacted the Chairperson with rumours that RTMC was being dissolved. Questions put to RTMC would be flagged because the issues were of a strategic nature. She echoed Mr Ollis in the confusion surrounding the different traffic police and said the Freedom Charter stated there should be one policing system.
Mr Martins said there was no board but the adverts for a board had been placed last month. The advert for a CEO had also been placed, and there was a shortlist. He said that the eNatis system would be converted to RTMC and planning and development would take place according and there was plans to develop a uniform policing structure.
Mr Ollis (DA) said he understood the movement to transacting on a cash basis, but the R230 million debt was because the previous leadership spent money internally that should have been paid over, but now the debt had vanished.
Mr Mogorosi said the transaction fees received amounted to R480 million which had been kept since November.
Mr Mbanjila said the R230 million debt was accumulated based on a practice note that stated that the money received by RTMC should be paid over to the DoT, and in 2012 the practice note was removed.
The Chairperson said that was how the Committee understood it and thanked the RTMC for the presentation.
Cross-Border Road Transport Agency (CBRTA) Annual Report
Mr Sipho Khumalo, CBRTA Chief Executive Officer, explained that in 2010 with his appointment the Chairperson of the Portfolio Committee explained to him that the Agency was either ‘dying’ or already ‘dead’. He announced that CBRTA attained its first unqualified audit opinion since establishment in 1998. He said there was a lack of clarity around CBRTA’s mandate and this in turn limited the Agency’s effectiveness. The mandate was to improve the flow of passengers and freight by road transport in the region, introduced regulated competition in cross-border road transport, reduced operational constraints for the cross-border road transport trade facilitation, provided oversight and monitored functions, and build industry partnerships to strategically re-position the work of the C-RBTA, and not to only issue permits. Since CBRTA had for years not fulfilled its mandate, other entities did not fully understand the role of the Agency and political assistance was needed in getting its mandate across.
Mr Khumalo gave an overview of the strategic imperatives of the organisation. He said the reason for the focus on the mandate and the strategic imperatives was implementation thereof was seen as interference from certain sections of the Department of Transport (DoT). As an example he explained when CBRTA invited stakeholders from the private sector to discuss corridor issues that meeting was stopped by an official from DoT who said that it was outside the mandate of the Agency and this was frustrating and retarded the efforts of CBRTA and the Agency requested assistance from the Committee and would raise this issue with the Minister at the earliest convenience.
Three years ago a ten point plan was developed that addressed the key challenges. Slide 5 gave an overview on the current status of each of the ten issues, i.e. what was achieved and still needed work on. Consensus on organisational mandate and developing strategic partnerships with stakeholders were some of the points that still needed substantial work. As an example he explained on an invitation from the South African Revenue Services (SARS) Commissioner CBRTA was invited to a meeting set up by the Presidency to discuss the North-South Corridor (Durban to Tanzania) and at the meeting a junior official from the DoT said that CBRTA was not welcome at the meeting, as the meeting was not for agencies, but for government officials whilst CBRTA had valuable input since they worked on this corridor.
The audit outcomes showed unqualified annual financial statements with no material misstatements with an Emphasis of Matter on Funding of Operations because of pending litigation on the increase in permits tariff and pre-determined objectives achieved an unqualified opinion with no material findings on the reliability and usefulness of the performance information. Additional matter showed that 32 out of 62 performance indicators were not 100% achieved and there was a reduction of irregular expenditure from R14 million in the previous financial year to R920 000 in 2012/13, mainly due to contracts entered into in the previous years.
Slide 8 gave a breakdown of organisational performance, and the plan going forward was to reconfigure the Annual Performance Plan (APP) so that there were fewer targets but only targets that responded to the strategic mandate to achieve 100% performance in all targets. Organisational performance with respect to law enforcement showed in a year-on-year movement an improvement of 6.2%, prosecutions showed an improvement of 33.2% and compliance rate showed a decrease of 1.9%. Total permits issued showed an increase of 5.49%, with the breakdown showed the movements for taxis were a decrease of 11.81%, for busses an increase of 32.83%, freight transport showed an increase of 0.41% and tourist transport showed a decrease of 14.01%. Slides 11-13 gave a breakdown of the countries to whom those permits were issued.
Slide 15 showed revenue for 2012/13 from 2011/12. Permit income increased from R164.89 million to R165.93 million, penalty income increased from R15.07 million to R20 million, other income decreased from R3.15 million to R2.14 million and interest increased from R2.45 million to R4.92 million. Expenses showed employee costs increased from R70.75 million to R101 million, operating costs increased from R44.49 million to R57.58 million and the surplus decreased from R71.05 million to R34.50 million. The increase in employee expenses was because employees increased from 178 to 241, but the expense had been red flagged and the Agency were looking into measures to curb employee expenses, while the surplus amount was for the event of an adverse finding in the pending litigation.
Assets for 2011/12 to 2012/13 showed an increase from R96 million to R138.68 million and total liabilities showed an increase from R21.40 million to R29.59 million. Employment Equity (EE) showed 51% females, which constituted 47% of senior management and 49% males. 83% of employees were Africans, 9% whites, and 4% Indians and Coloureds respectively. Recruited 21 trainee inspectors with the intention to absorb within the organisation, employed ten interns and running a programme called ‘Women in Transport’ aimed to introduce women to cross-border transport and the dynamics in this area.
Mr Khumalo gave an overview of the strategic imperatives and challenges, especially recognising the changes in dynamics of border transport. He explained that previously people had come from Zimbabwe to Johannesburg to buy goods, but the Chinese had built a huge mall in Musina and traffic had reduced by 40% in that corridor. Another key challenge was the Lesotho/Free State cross border passenger transport issue which had been threatening violence and for which the CBRTA needed assistance from the Committee.
The CBRTA was geared to adding public value, was poised to support the national programme of Action of industrialisation and job creation and had broken the cycles of audit qualifications and attained an unqualified audit opinion.
Mr Duma (ANC) said that it seemed that the people who did not understand this entity were within the DoT. This input had to have been made to the Director-General (DG) of the DoT and it seemed that the DoT was not doing what he was supposed to do.
Ms D Pule (ANC) said the misunderstanding between the DoT and CBRTA should be addressed as soon as possible. She wished the mall built in Musina had been built by South African business people and spoke about the negative impact this mall could possibly have on the South African economy and warned that one issue should not resolved by creating another.
Mr Ollis referred to the mandate of the CBRTA and said the entity introduced a license that entailed paperwork and red tape, and then introduced an inspection at the border that caused delays, and now with the introduction of the e-toll Bill would collect toll fees for border crossing. Companies did not think that CBRTA was improving freight and transport, but did exactly the opposite. He said the quota system for vehicles was a further impediment of trade and the entity was established by the government to create red tape, delays and cost. He was not in favour of undocumented people crossing the border but asked exactly what this entity did that added value to the system.
Mr Khumalo said the South African Development Community (SADC) Protocol bound all the countries in rules of engagement off cross-border protocol and if Mr Ollis could go through the Protocol and had a better understanding of what happened on the ground, he would see the value of the entity. Every country was a sovereign country and was therefore entitled to follow different standards. If a truck was driven with its container from Sandton, it could drive straight through to the Democratic Republic of Congo with the same height clearance, and this was not the case in 1994. CBRTA achieved a lot in just two years and last week delivered an analysis paper in Europe that received a standing ovation on what the entity had been able to achieve and the way forward to achieve inter-Africa trade. When the entity was established it was clear that it would be funded on a user-pay principle. CBRTA synchronised inspections where joint operations meant a vehicle was stopped once and everything was checked at the same time. The cost of a cross-border licence was far less than un-harmonised cross-border costs. The entity however did not communicate effectively what the organisation actually did, and once that was done the value of the entity would become clear.
Ms Ngele said the mandate of the CBRTA as explained by Mr Khumalo was very clear and thanked him for the presentation.
The Chairperson commended Mr Khumalo and said the perspective of the ANC as the ruling party was that the CBRTA was adding value and was established by the party to do so. She addressed the DDG of DoT, Mr Hlabisa and said the same problems that happened with CBRTA happened with the Passenger Rail Agency of South Africa (PRASA) and the South African Maritime Safety Authority (SAMSA) because of a lack of common understanding between entities. The Committee had assessed that the entities had a better understanding of their mandate than DoT officials, because the presenters were former DoT officials and they had informed the establishment of each and every entity. This spoke to the issue of institutional memory and it was lost every time there was a new Director-General or administration. CEO’s read the mandate and they were exposed to opportunities and were able to identify those opportunities and when that happened it was seen as overstepping boundaries by the DoT. The DoT was lagging behind and the entities were leading the Department. The DoT was not nurturing entities, but there seemed to be a competition between DoT and entities, as in the case with RTIA and the assistance it had been seeking from the DoT on legislative issues to fulfil their mandate for a long time without success. She asked Mr Hlabisa to go and give feedback to the Department that the Committee was seeing an uneven level of performance where the entities were stronger than the DoT.
Mr Khumalo said engagement on international level required liaising through the DoT, which could take weeks sometimes and the nature of CBRTA mandate required to be responsive to opportunities and this was often viewed by the Department as disrespectful of its protocols, but in a face-to-face sit-down with the Department, Mr Khumalo said he was sure they could find each other.
The Chairperson thanked everyone and the meeting was closed.
- PC Transport: Entities of Department of Transport on their Annual Reports and Financial Statements for 2012-2013 - part 4
- PC Transport: Entities of Department of Transport on their Annual Reports and Financial Statements for 2012-2013 - part 5
- PC Transport: Entities of Department of Transport on their Annual Reports and Financial Statements for 2012-2013 - part 2
- PC Transport: Entities of Department of Transport on their Annual Reports and Financial Statements for 2012-2013 - part 3
- PC Transport: Entities of Department of Transport on their Annual Reports and Financial Statements for 2012-2013 - part 1
- Road Traffic Management Corporation Annual Report 2012/13 presentation
- Road Traffic Infringement Agency Annual Report 2012/13 Analysis
- Road Accident Fund Annual Report 2012/13
- Cross-Border Road Transport Agency Annual Report
- Road Traffic Management Corporation Annual Report 2012/13
- Road Traffic Infringement Agency Annual Report 2012/13 presentation
- Cross-Border Road Transport Agency Annual Report presentation
- Road Traffic Infringement Agency Annual Report Presentation
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