RTMC, RTIA, ACSA on their 2014/15 Annual Reports

Meeting report

Road Traffic Management Corporation (RTMC) on its Annual Report for 2014/15

Adv Makhosini Msibi, Chief Executive Officer (CEO): RTMC Board, said the presentation would cover governance, performance, human resources, financial information, the audit committee report and the Auditor-General’s (AG’s) report.

In terms of governance, Ms Nalini Maharaj, one of the board members, had resigned and the post had been advertised to ensure that the organisation fully complied with the Act.

On its performance, the board had a total number of 41 indicators, of which 83% (34) had been achieved, 2% partially achieved (1) and 15% not achieved (6). The targets not met included:

• The National Road Traffic Law Enforcement Code. The development of the Code took into account various aspects, in particular the participation of the leadership of the SA Local Government Association (SALGA), which was in process.
• The funding model. In terms of the Act, the board was supposed to be self-sustainable. A funding model was being developed to ensure that through the budgetary timeline, the board was financially independent.
• Revenue Increase. Revenue streams were monitored and controls implemented in the NTP for the management of infringements.
• Regional Offices. Vacancies had been advertised but at the end of the financial year the board had not completed acquisition of the regional offices because it was done in collaboration with the provinces. Taking into account that the provinces were shareholders within the corporation, it was thought that the provincial government should have a say in terms of the establishment of the regional offices. There had also been negotiation with provinces like Gauteng, Limpopo, Free State and Mpumalanga, to give spaces on the board.
• Vacancy Rate. Personnel had been appointed after the end of the financial year.
• State of road safety reports. This had been complied with, but there had been imitation in terms of the qualification of the key performance area, which says that they must be published. The publishing process had to go through to the public to make sure that it was understood and acceptable. 

The board achieved its targets for:

• Road safety products.
•  Flagships.
• Youth programmes.
• Women’s programmes.
• Learner licences. The programme of rolling out learner’s/driver’s licences to schools in underdeveloped areas was beginning to bear fruit.
• MOUs with various stakeholders within the government, state agencies and the private sector.
• Awareness campaign on fraud and corruption.
• Developing a strategy for the establishment of a centre of excellence for road traffic management practitioners.
• A reduction of 51% in non-core costs against the 10% target.

National traffic police make up 78% of the RTMC’s resources. In the year under review, the vacancy rate dropped to 26%, from 31% in the previous year. More effort needed to be placed in recruiting, especially in specialised fields.

Adv Msibi said that the audited annual financial statements of the RTMC for the year ended 31 March 2015 reflected a surplus of R313.2 million. The accumulated surpluses, amounting to R545.9 million from previous financial years, had been distributed to the shareholders during 2014/15 financial year, in line with the RTMC Act. The RTMC had requested the shareholders’ committee to retain the surplus of 2014/15 of focus on strategic programmes, such as upgrading of the e-Natis system, intensifying road safety mobilisation and education, training of road safety and traffic personnel, and nationalisation of road traffic and law enforcement.

The Corporation had suffered a material loss of R4.4 million due to fraud. However, R4.2 million had been recovered.

Auditor-General’s Report

The Auditor-General reported no material findings on the usefulness and reliability of the reported performance information for the selected objectives. The entity had received an unqualified audit report for 2014/15. However, financial statements submitted for auditing had not been prepared in accordance with the prescribed financial reporting framework. There had been non-compliance with supply chain management (SCM) guidelines, and a lack of internal control systems.

Discussion

Mr L Ramatlakane (ANC) congratulated the Corporation on their performance.  On the funding model, he sought clarity on what was meant by ‘still in progress.’ What was it doing about the internal control issues raised by the AG? What was the turnaround plan, and when would it be completed?

Mr C Hunsinger (DA) also congratulated the Corporation. What were the contents of the road safety report? What control measures had the Corporation put in place in terms of procurement and contractual management, as raised by the AG? Had the procedure listed in the Act for the appointment of board members -- that it should be gazetted and involve the committees of Parliament -- been followed?

Mr M de Freitas (DA) also congratulated the Corporation, but told them that there was still room to improve. The road safety programmes did not seem to be working, as there had still been an increase in deaths on the road. 78% of resources going to the national police was not good. There had been no programme aimed at reducing road deaths in the presentation. 

Mr M Maswanganyi (ANC) commended the Corporation on its unqualified audit from the AG, its achievement of employment equity, and on meeting 83% of its target. He told the Corporation to attend to the issues raised by the AG – capacitation of its finance department with appropriate financial skills and attention to the wasteful/irregular expenditure.  It should embark on public awareness of traffic laws and signs, particularly aimed at children, using radio stations and community papers. Traffic training colleges not in use should be closed.

Mr M Sibande (ANC) also commended the Corporation, and told it to embark on public education on road safety. It should build and encourage more safety walls. Mobile alcohol testing machines should be put in place to help traffic officers on the road, instead of having to go to hospitals. More of traffic officials should be trained.

The Chairperson told the Corporation to work on their supply chain staff and ensure that they were meticulous in their work. Fruitless and wasteful expenditure must be looked into.

Ms Lydia Chikunga, Deputy Minister: Department of Transport, said that provinces could not politicise road safety.  It was not true that some provinces were doing better than others. In an accident, 50 people could die and that would shoot up the number of deaths in that province, while in another province only one person might die. However, the Department learnt best practices from the provinces. Road safety should not be looked at from a provincial point of view, but from South Africa’s point of view. The issue was about changing attitudes, which was more difficult than enforcing the law. The Corporation followed procedures and the relevant legislation when appointing board members.  It would also set targets that it was able to achieve.

Mr Zola Majavu, Chairman of the RTMC, said the comments and concerns raised by the Committee would be taken seriously.

Adv Msibi said the Corporation would continue to charge the people involved in irregular/ wasteful expenditure to make sure it did not repeat itself. There were road safety programmes in the curriculum from Grade 1 to Grade 11, but the problem was that teachers were not keen to teach them. Road safety debates had also been introduced in schools. The Corporation continued to partner with taxi associations. Traffic training colleges would remain, as they were still needed. The Corporation was meeting with the Ministry of Justice to reclassify road safety rules and mandatory minimum sentences without the option of bail, especially for drunken and reckless driving. The four Es – Education, Engineering, Evaluation and Enforcement -- would be enforced. The population of cars was increasing in South Africa. The problem was not with the Department, but with peoples’ attitudes. On the internal controls which were related to the contractual management, there were people on the ground focusing on that issue. There had also been progress in the funding model.

Road Traffic Infringement Agency (RTIA) on its annual report for 2014/15

Ms Chikunga said the RTIA had a functional board, and had stabilised its financial report.

Ms Nomini Rapoo, Chairperson of the Board, said the board has been in existence for five years, and had a surplus of R43 million.

Mr Japh Chuwe, Registrar of the Board, said the RTIA had been accepted as a full member of the United Nations Road Safety Collaboration, and as an associate member of the American Association of Motor Vehicle Administrators. It had launched the provincial Administrative Adjudication of Road Traffic Offences (AARTO) road shows to empower road users and spread road safety messages.

One of the greatest challenges of South Africa was a reduction in road carnage. The number of road traffic crashes and fatalities were directly proportional to the level of lawlessness and driver misbehaviour, continuous visible and efficient law enforcement, effective public awareness and communication programmes. The RTIA assisted various road traffic departments as issuing authorities to monitor adherence with road safety programmes, and to develop plans and targets through the provision of performance information collected by means of the AARTO process. A total of 6 025 562 traffic violation notices had been collected. Most had been captured through handwritten notices at the road side, with the majority being light passenger vehicles. The peak collection period had been from 11am to 2pm. Strategic objectives/ programmes embarked on by RTIA included public outreach programmes, suspension of licences, cancellation of licences, serving of courtesy letters, call centre appointments, resource centre development, appointment of staff, contracts and agreements in terms of administration and resourcing. 

Ms Amogelang Matebese, Acting Chief Financial Officer (CFO), said RTIA had received an unqualified audit report. Net infringement receivables had grown by 14% for the year, but this had not hampered the liquidity position. The results were evidenced by an increase in the current asset ratio of 7:5. The overall return on assets had been 30%. Operating cash inflows had improved by 19%. Investment outflows had increased by 77% out of the allocated budget of R 7.8 million, representing an under-spending. 

Mr Chuwe listed the following challenges experienced by RTIA:

• A break in system interfaces.
• Inefficient postal service of documents.
• Lack of a comprehensive National Road Safety Strategy.
• Enforcement of penalties and a credible database.
• Slow progress in finalising an amendment bill for promulgation.

Discussion

Mr Hunsinger said fines were increasing. There had been a gap in November in the average number of AARTO notices collected -- why was that? What was the figure for heavy passenger vehicles? He suggested the use of retired judges or magistrates to help reduce the workload.

Mr Maswanganyi commended the Board on the unqualified audit report and employment equity, but urged the Corporation to improve on the number of disabled people being employed. On what had the 4Es been based, if there was no safety strategy? Why had 0% been achieved on the strategic objectives? What had caused the decline in reports to the executive authority?

Mr De Freitas commended the Corporation on making statistics available to the Committee.

The Chairperson congratulated the board for receiving an unqualified audit report and for the absence of vacancies.

Ms Chikunga said the corporation would consider all the comments of the Committee. The use of retired judges and the cost implications would be looked into. The AG’s concerns would be addressed. The bill with regard to AARTO was on its way to Parliament. There was safety strategy in place, but it had not taken into account the latest developments, hence the lack of a comprehensive national safety strategy.

Mr Chuwe said the Corporation would explore the possibility of using retired judges. On the employment of disabled persons, he said the current building of the corporation did not comply with disability rules. On unallocated receipts, this was a historical matter that had come about as a result of the handover from the RTMC. The Corporation was working on how to record receipts. On the decline, the Corporation needed an assurance and confirmation that the notices had been served before going to the next step. On the status of AARTO, the corporation would continue with implementation as there would be huge negative financial losses if it was stopped.

Ms Matebese confirmed the unallocated receipts were a result of the handover from the RTMC. The Corporation would work on the fruitless/irregular expenditure.

Airports Company of South Africa (ACSA) on its annual report

Ms Bajabulile Luthuli, ACSA director, said the staff members had been rated the best in Africa. The company had received an unqualified audit report. The CEO of the company had also been appointed as the vice president of the Airports Council International.

Mr Tebogo Mekgwe, Acting CEO highlighted the strategic initiatives of the Airport Company:

• Approval of the site development plan for Ortia western precinct.
• Leveraging the existing airports’ locational and traffic profile in order to grow traffic.
• The provision of commercially viable airport management solutions for South African and international airports.

Strategic objectives included improving its reputation through demonstrated business excellence, growth of a demographically representative workforce, and a reduction of operational environmental impacts, especially noise and water usage.

Ms Botlhale Maditse, Acting CFO: ACSA said there has been a 2.4% increase in departing passengers. The unqualified report had been the result of predetermined objectives not being well defined. The company was struggling to determine which regulation it should comply with, and implement the required policies, procedures, and controls to ensure it complied, set clear performance indicators and targets to measure performance against its predetermined objectives, and report reliably on whether it had achieved its performance targets.

Discussion

Mr Hunsinger commended the entity on its financial performance.

Mr De Freitas asked if the new visa regulations had affected ACSA. He recommended they should try to communicate their achievements to the public.

Mr Maswanganyi referred to the irregular/wasteful expenditure, and asked why ACSA had regressed from R82 million to R230 million, while fruitless expenditure had increased from R547 000 to R12 million.  Competitive bidding processes had not been followed, and ACSA should attend to this.

The Chairperson expressed concern at the increase in illegal taxi operators at the OR Tambo and Cape Town international airports. He said ACSA had to make sure that its employees and the people it was outsourcing were doing their work. It should expand the entry gates, especially for the domestic wing, as there seemed to be an increased inflow of passengers.

Ms Chikunga said the company accepted the criticism of not communicating its achievements, and would do that in future. On the issues raised by the AG, it was worth noting that this had been the first time that ACSA was being audited. On the visa regulations, she said the Minister would explain the situation to the Committee.

Ms Luthuli said the company would improve in the areas of concern to the Committee. The gates of entry issue would be considered.

Mr Mekgwe said the company would work on the audit concerns. Illegal taxi operators were a challenge. The company was working to integrate the police and magistrates in terms of what regulations could be used to charge the illegal taxi operators.

The meeting was adjourned.