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TRANSPORT PORTFOLIO COMMITTEE
6 November 2002
ROAD INFRASTRUCTURE ROLL-OUT PLAN; HIGHWAY TOLL PROJECT: BRIEFING BY NATIONAL ROADS AGENCY
Chairperson: Mr J Cronin (ANC)
Documents Handed Out:
Presentation on Road Infrastructure Roll-Out Plan
Objections to the N1 & N2 Highway Toll Project:
Rear Admiral Wijnberg (Appendix 1)
Elgin, Grabouw, Vyeboom and Villiersdorp Agricultural Association (Appendix 2)
The South African National Road Agency briefed the Committee on the Road Infrastructure Roll-Out. Discussion by Members focused on the creation of a toll road through the N1/N2 Highway Toll Project. The Agency contended that the proposed toll road will provide economic benefits to the surrounding communities like jobs, skills transfer and poverty alleviation. The construction of this toll road will not impact negatively on the environment, especially the wetlands.
The Chairperson also drew attention to the concerns of interest groups. They had submitted their objections to the proposed toll road. The groups argued that the toll road project is being imposed on communities and will create so-called "captive communities".
Presentation by SA National Roads Agency
Mr Nazir Alli indicated that roads play a critical role in providing access for people and economic advantages in general. There is cooperation with various provinces on the implementation strategic objectives pertaining to national network of roads, he added.
On the capacity to deliver on the construction national roads, the Agency needed to build existing capacity. The quality of skills within the Agency is comparable with the best in the world and has gained international recognition. But admittedly there is still a need to develop capacity as it is inadequate to meet the present challenges.
Mr Alli contended that sources of funding for construction and maintenance of national roads would never be sufficient. The demands on the Treasury for other pressing needs in our society are immense. Most rural communities are without proper road infrastructure while most urban roads are surfaced. This disparities in road infrastructure needed to be addressed and based on this, funding will continue to be a contentious subject. At present there is 540 000 km of road surface available in our country and 100 km of these roads are surfaced.
Mr Alli expressed his delight on the improvements of our currency and submitted that the Treasury must allocate 10% of the budget for road infrastructure development. He also reported to Members that Groblersdal Bridge at the border post between South Africa and Botswana has been reopened after three years of closure. He asserted that the Agency would like to see traffic flow in other border posts that closed for traffic. The Agency intends to provide infrastructure such as computerised tracing devices and law enforcement personnel to reduce overloading on our roads. He added that this would help to control and monitor overloading which accounts for deterioration of road infrastructure.
Furthermore the Agency insists on creating partnerships between the private and public sector. He indicated that this kind of partnership could lead to stability in the flow of funding and minimise fluctuations in funding sources for development of the road infrastructure. He explained that rural roads refer to intra-village roads such as roads in Northern Free State. Such roads needed to be revamped in order to add quality to the infrastructure in those areas.
The Agency proposed that R3 billion be set aside for reconstruction of roads in intra-villages. Part of this money must be used to develop skills in civil engineering. He also emphasised the need to forge cooperation with universities and technikons with the view to developing a curriculum in development economics. It was the view of the Agency that this institution should be University of the Western Cape. Partnerships with other institutions like Wits, UCT and Stellenbosch have already been established in areas of pavement engineering and concrete engineering.
Mr Alli urged the Members of the Committee to visit the communities that have benefited form projects initiated by the Agency in order to review the situation. This view was uttered in respect of poverty relief relating to road infrastructure. In regard to black economic empowerment it was highlighted that the Agency is committed to it provided it is value for money. Mr Alli expressed the view participation of black engineering firms in this projects must add value to road infrastructure. He was satisfied that skills transfer and equity are being achieved by the Agency. However he cautioned members that fronting continues to frustrate the efforts of a sustainable black economic empowerment initiative.
The findings of the environmental study have been evaluated by internationally accredited assessors. The World Bank was also in favour of the project as it will impact less negatively to environment. Preservation of the environment was central to the planning related to the proposed toll project. The Agency argues that they are adopting an environment-sensitive approach and assured Members that there will be no bulldozing of the wetlands. He submitted that a balance must be struck between the preservation of the environment and the economic benefits to be gained from the construction of this toll road.
He reminded Members of the scepticism and criticism around the Komatipoort Toll Project when this project was proposed. The proposed toll project must be seen from an angle of financial spin-offs it would create.
The Chairperson circulated a submission with official objections from the EGVV Agricultural Association to the N1/N2 toll road proposal. He asked the Agency to take note of the concerns expressed regarding unsolicited bids.
Ms Shilubana (ANC) asked what the criteria is for setting tariffs for the toll roads. She also raised concern over the lack of development of the communities living near the toll road in Komatipoort.
Mr Farrow (DP) requested clarity on whether the Agency will be part of the R30 billion allocations announced by the Minister of Transport, Dullah Omar. According to media reports the money is set aside for road infrastructure. Further asked if there was difference of opinion between the honorable Minister and the Agency on earmarking of national roads.
Mr Alli explained that there was no disagreement between the Agency and the Minister. The Agency was included in the R30 billion earmarked for the road infrastructure by the Minister.
Mr Slabbert (IFP) needed clarity on whether there was any disagreement between the Minister of Transport and the Agency on the earmarking and maintenance of roads.
Mr Alli responded that there is no disagreement between the Minister and the Agency in this regard.
Mr Scheemann (ANC) asked how sustainable are the poverty relief projects under the auspices of the Agency. This question arose out of concern for the creation of jobs and prevention of further deterioration of the road infrastructure.
Mr Alli replied that a number of jobs have been created for communities nearby the road construction sites and thereby improved the lives of people. However he cautioned that Member must visit these areas and see for themselves if any progress is made or not.
Mr Mudau (ANC) asked if the conditions of employment of workers on the toll roads are commensurate with standards required by our labour laws. He was also concerned that the toll roads were being constructed without an alternate road.
Mr Alli replied that the conditions of employment at the Toll Gates meet the required labour standards. But there Toll Gates employees are undertaking overtime on purely voluntary basis. In response to the second question, he said that legislation no longer requires that an alternate route be build for those who cannot afford to use the Toll roads. Nonetheless it is required by public transport policy that such a road be provided.
Ms Coetzee-Kasper (ANC) queried the difference in the tariff paid at the different toll roads in various provinces. She also felt very strongly about the language used in the documents and roads meant to assist the broader public. She lamented the use of language not understood by ordinary people, which precludes them from exercising their right to participate in processes such as public submissions on the toll roads.
Mr Alli replied that the discrepancies in the tariffs charged at the various localities with toll roads could be attributed to frequency of the use, costs of labour and so forth. He expressed his view that indeed the languages used in official documents needs to be changed to accommodate those who cannot read English.
Mr Schneemann (ANC) asked if there is any institution monitoring the maintenance and repair of the road infrastructure. Was there sufficient transfer of skills in the construction and engineering field?
Mr Alli admitted that there is a problem with law enforcement but insisted that collective effort with various provinces can address this. Such a cooperation measure has seen Heidelberg being in Gauteng with state of the art equipment.
Mr Alli said that the Agency is currently engaged in skills development in the field of civil engineering and road construction. Most of this training focused on vocational as well as on the job training.
A Member asked what the role of the Agency is in rural development and the repair and maintenance of bridges damaged by erosion and floods.
On rural development, Mr Alli answered that restoration of roads destroyed by natural causes such as erosion is happening but this requires a conscious effort to upgrade rural villages. The cultural barriers that continue to keep villagers in those areas needs review. Therefore the need for sociological study becomes a social imperative to encourage rural women to leave these villages in search of better life in cities.
Mr Pillay (DP) requested clarity on whether there is any interaction between the Agency and law enforcement to prevent further deterioration of roads.
Mr Alli replied that there is cooperation with law enforcement agencies in cases of overloading where the Agency will provide such information to the traffic officers.
A Member asked about the tendering process in relation to the construction of toll roads and the problems related to fronting in companies.
Mr Alli replied that the tenders are awarded in line with principles of black economic empowerment but warned that there are elements of fronting. This situation is difficult to monitor as the Agency relies heavily on the information given by the companies during the tendering process. He expressed an opinion that the Agency encourages partnerships between black firms and their white counterparts. He also raised concern over the fact that fronting leads to poor workmanship. The local authorities are given this tenders and this municipalities have their own specifications.
Dr Hildegarde Fast from the Financial and Fiscal Commission asked if there was no integrated funding strategy for provincial and national roads.
Mr Sipho Khumalo: Deputy Director General of Transport, replied that the municipal infrastructure grants channel funds directly to municipalities through the provincial Treasury. It is believed that this initiative will result in money being used for purposes it was allocated for. He alluded to the draft document of the Department that is meant to address infrastructure problems particularly on roads.
The Chair thanked the South African Roads Agency for its comprehensive input on the roll-out plan and remarked that it is good that developmental issues have been incorporated into this process. This aspect was initially excluded and mainly economic concerns were taken into account.
However, Mr Cronin indicated that the timeframes for consultation on the construction of toll roads seemed not to have adequately addressed the needs of all stakeholders. He thanked everyone, including the action group representatives opposing the toll road.
The meeting was adjourned.
BRIEFING NOTES: FOR PARLIAMENTARY PORTFOLIO COMMITTEE:
6 NOVEMBER 2002: by Rear Admiral P.A. Wijnberg
1. Introduce myself and who I represent - understand that the Committee have had access to some notes I forwarded to your chairman earlier in the year expressing my concern on certain aspects of the current policy regarding the establishment of Toll Roads.
There are a couple of points that concern me that I would like to highlight:
- It is now permissible to proclaim an existing National Road as a Toll Road despite there being no alternate route available thus creating captive communities who are obliged to use and pay for the toll road whilst going about their normal activities. This has come about as a result of a discreet amendment introduced in 1996. This is discriminating and particularly unfair to the captive communities.
- The policy of permitting unsolicited proposals sponsored by civil engineering contractors for the upgrading and tolling of national roads is fraught with problems - less expensive and less complex alternatives will be ignored - may seek to include construction work in which they specialise - include captive communities and financially viable options rather than concentrate on the need.
- The present process of public participation and Impact assessment concentrates on environmental aspects and although social and economic matters are included in the various studies they are treated as secondary aspects in the decision making process. The final document arising from the study and forming the basis of the approval process is the Environmental Impact Report which is submitted for approval to the Ministers of the Environment at Provincial and National level.
- I think we have all fallen into the trap of believing that we must have toll roads because the Government doesn't have sufficient funds to pay for the upgrading and proper maintenance of our roads. This begs the question "then where is the money eventually coming from to pay for these Toll Roads and provide the private sector with a handsome profit?" The answer is of course it is coming from the same source that provides the Government with their funds - yes, from you and me. The difference being that paying through a toll is a far more expensive way for us besides which it is an unfair system creating hardship for many whilst others remain unaffected.
- The Toll Road solution to road construction and maintenance is the most expensive option for it entails additional capital expenditure to provide the complete tolling infrastructure plus ongoing additional running costs to cater for the 24hr running, maintenance, security and administration of the system. When this is run by a private company an additional percentage must be added for profit. This all comes out of the pocket of those unfortunate road users who are obliged to use toll roads whilst together with the rest, they already pay a fuel levy of -+ R1.00 /litre. Historically the fuel levy was used for road construction and maintenance - SANRAL made it known recently that this levy together with other road taxes generates approx R26 billion annually - with this amount of money we could have the best roads imaginable without any need to consider tolling. Unfortunately in 1987 the previous Government saw fit to change the policy - The public are becoming aware of the situation and it is generating a good deal of anger. Perhaps it is time to reverse that policy and accept that it is the taxpayer who pays whichever way we do it - therefore rather choose the cheaper option of adjusting taxes and avoiding toll roads.
(Notes only not verbatim record - prepared by Rear Admiral P.A. Wijnberg)
OBJECTION TO THE PROPOSED N1/ N2 WINELANDS TOLL HIGHWAY PROJECT
On behalf of the members of the Elgin, Grabouw, Vyeboom & Villiersdorp Agricultural Association we wish to formally object to the proposed abovementioned toll highway project on the grounds that it is discriminating and will adversely affect not only the viability of our industry, but place an unfair additional financial burden upon the community in the region as a whole.
Furthermore, we submit that there is a need to review the national road maintenance funding policy, for it is generating a shortage of funds which is encouraging the adoption of unreasonable and inflationary solutions.
OBJECTIONS TO THE DRAFT ENVIRONMENTAL IMPACT REPORT
The mere size of the document, contained in three enormous volumes to which will be added the comment from Interested Parties before being submitted for approval as a Final Report, suggests that a thorough and critical study at the right level would be so time consuming that the danger is that approval might be granted after a mere cursory perusal.. As the study will be receive approval from an Environmental point of view there is also the danger that complex and questionable argument on other important aspects such as economics will be glanced over.
The size of the document and the time scales involved has meant that it's distribution has of necessity been very restricted, whilst the time scales involved have precluded close study and comment being prepared in order to benefit meaningfully from the copies distributed to the libaries and the Open Days arranged.
The question uppermost in the minds of the affected parties must be " what are the direct and indirect costs of this system going to be to me?" This report poses many possibilities and suggestions but does not answer that question, instead it suggests the alarming prospect of the likelihood being, that the answer to the question will only become apparent after the project has been approved, and is beyond being stopped.
Apart from this, many other economic questions remain unanswered, such as:
- What is the estimated total capital cost of the Toll Plazas and associated infrastructure?
- What is the estimated overall total annual running cost of the Toll Plazas and infrastructure including all off site administrative and security personnel?
- What is the rational for the establishment of the toll tariff and what would the acceptable profit margins be for the concessionaire to have included in this charge?
The detail in the specialist and peer reviews includes much valuable information and comment which needs to be read, as well as some dubious and flawed argument which needs to be recognised, whereas the summary, which is more likely to be read, paints a positive picture in favour of the toll road solution
EFFECT ON THE DECIDIOUS FRUIT INDUSTRY
It should be appreciated that for various obvious reasons production costs over the past ten years have increased beyond all recognition. In particular labour and packing costs have rocketed as have all imported materials such as chemicals, machinery and spare parts plus shipping and all overseas marketing expenses. The producer has no control over these costs neither does he determine the selling price of his produce. All that has saved the industry thusfar has been the advantage gained from a depreciating Rand whilst the overseas fruit prices have remained stable.
It is common knowledge that the decidious fruit industry in this country which enjoys no government subsidies or protection, earns nevertheless considerable foreign revenue for the country despite being required to compete with countries which enjoy such support, including protection against the risks which all farmers face, such as the effects of disease, pests and adverse weather conditions. It is also common knowledge that the industry has for a variety of reasons, in recent years experienced a disasterous financial set back, which has resulted in bankruptcy, liquidations and the sale of many formerly profitable farming enterprises.
To add to the woes of the industry, it has been recently announced that farmers in South Africa will in future be liable to pay rates to their local Municipalities, without any services being provided in return.
The decidious fruit farming industry in South Africa is a major risk operation involving very considerable personal capital investment whilst providing a major source of foreign revenue and employment in the Western Cape, yet recent developments have left the future financial viability of the industry balancing on a knife's edge. A poor season combined with the cumulative effect of the implications of the proposed Toll Roads could likely be the last straw.
IMPLICATIONS FOR THE COMMUNITIES IN THE REGION
As an example, the price of many goods brought into the Elgin,Grabouw, Vyeboom and Villiersdorp area, such as petrol and newspapers are already more expensive than in Somerset West, the reason given being the additional transport costs. It can therefore be quite certain that should this project go ahead, the additional toll fees will be added to the price of all goods sold and services brought from outside into our area. The whole community in our area will be effected however, the poor and unemployed represent a large portion of this community and quite obviously they will be the ones who are hardest hit.
Local community bodies such as the Planning Forums which have put much effort into trying to encourage industry to locate in this area, together with other projects such as those designed to encourage tourism, all of which would stimulate and create job opportunities, will now have their efforts frustrated. There are already indications that certain businesses are considering relocatting due to the mere perceived threat of the Toll Road and it's far reaching implications.
Suggestions that the Toll Road would in itself create significant and sustainable job opportunities in this area, is seen as misleading if not dishonest sales talk.
Somerset West/Strand is very closely connected to this area and many commute on a daily basis. Furthermore, it provides support in the form of our closest major shopping center, medical facilities such as specialists and hospitals, schools for English speaking children and much of the technical support required by both industry and householders. Travel between the two centers is already expensive and beyond the means of many who may for various reasons need to travel to and fro even if this is just to visit family members in hospital. There being no alternate road, means that the mandatory toll fee will seriously disadvantage and affect the well-being and morale of our community.
OBJECTIONS ON THE GROUNDS THAT THERE IS NO ALTERNATE ROAD
It is bad enough that the proposal includes taking over and tolling a large portion of the N2 which has already been paid for by the taxpayer, however we object most strongly to the proposal that the stretch between Bot River and Somerset West be included, thus providing no alternate route and forcing the local community to pay whatever toll charge might be demanded, in order to move in and out of their home area as they go about their normal affairs.
The original Toll Road legislation(Act No 54 of 1971) embraced detailed provisions and safeguards to protect the rights and interests of all road users, and thus avoid disruption and prejudice to local communities, by insisting on the provision and upkeep of viable alternate routes. The amendment to this legislation( as contained in Act No 24 of 1996) on the other hand, almost surreptitiously, withdraws these provisions by making no obvious reference to the subject and in a manner that suggests that there was no desire to draw the attention of legislators to its far reaching implications.
Whatever the intentions were, the present situation is seen as being immoral and very likely unconstitutional.
OBJECTION TO THE PRINCIPLE OF UNSOLICITED BIDS FOR THE ESTABLISHMENT OF TOLL ROADS
The practice of encouraging unsolicited bids for the construction and establishment of toll roads by interested parties discourages the National Road Agency from even looking at alternatives and doing proper Long Term Planning, upon which their medium and short term plans should be based after thorough study of all the alternatives.
Quite obviously any Consortium hired by their principles to propose new toll road ventures will not make any serious attempt to examine or expose more practical and cheaper alternatives nor will they make proposals which would not ensure a healthy profit for the shareholders concerned. This approach is not in the interests of the roaduser, the taxpayer or the economy of the country as a whole.
With legislation as it stands at present, it must also be tempting for such consortiums to include large sections of existing roads which require minimum upgrading and a lucrative return by including a captive clientele on those sections of road where no alternative route exists.
It is recommended that:
- The plans as presently contained in the proposed N1 /N2 Winelands Toll Highway Project be rejected in toto.
- It be accepted that the National Roads Agency Ltd will in future be responsible for the Long Term Strategic Planning for future road construction and upgrading together with the associated Medium and Short term implementation planning.
- In future unsolicited toll road proposals be limited to financially viable projects for new construction roads capable of relying on attracting sufficient traffic from the existing routes which will continue to be maintained by the State.
- The State accept responsibility for the proper maintenance and upgrading of the existing road infrastructure making use of the existing fuel levy tax for this purpose as it was originally intended. The shortfall that this will cause to the central Treasury funds will have to be made up in other ways by the taxpayer.
- That immediate alternate plans be drawn up for the upgrading of the N1/N2 highways as required making use of those State funds as recommended above.
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