National Land Transport Amendment Bill [B7-2016]: public hearings day 1

Meeting report

National Land Transport Amendment Bill [B7-2016] Public Hearings:
Uber South Africa (Uber) submissions
Mr Alon Lits, General Manager, Uber Sub Saharan Africa, said Uber was a smartphone application that connected professional drivers and riders instantly. Uber made it easy for people to move around cities and increased economic opportunities for driver-partners using the platform. Drivers and riders used the platform because it was reliable, affordable, transparent, safe and accountable. Uber pricing was extremely affordable and transparent, and was accessible to everyone and everywhere. The platform operated on the basis of mutual respect. There was a 24/7 support team available to riders and drivers in the event of any emergencies and an emergency number which was linked to armed response in the event that drivers felt unsafe in any shape or form.

He said that Uber did not own any cars and did not employ any drivers. Drivers set their own hours and chose where and when to work. Uber provided an additional economic and earning opportunity. There were many meter taxi operators who continued to operate in the manner they did before Uber launched into the market but used Uber to minimise their downtime and maximise their earnings.

He said that Uber took a 25% service fee for trips booked on the platform. There are no joining or membership fees. There was no cost to being on the platform. All Uber drivers needed to have professional driver’s permits, drivers went through additional third party AFIS background checks and vehicles were inspected by a third party independent company to ensure highest vehicle quality.

He spoke to key partnerships. Uber was a technology and anyone meeting the prescribed requirements could join the platform. There were two main groups of partners. The fleet partners were individuals who owned a number of vehicles and employed a number of drivers directly. This structure was gradually changing in favor of independent operators, who owned their own vehicles that were under vehicle finance partnerships. Uber currently focused on increasing the number of independent operators on the platform.

Another partnership was with Wesbank, which served to increase access to individual operators, which was the core of Uber's business strategy. On the back of driver partners' rating on Uber platform, drivers could gain access to vehicle finance by way of a full maintenance lease, regardless of their personal credit record. Over R200 million had been invested to support over 1000 driver partners who started their own business on the back of their partnerships with Uber.

He said that over 500 000 South Africans had used the application and taken rides by February 2016. Uber was beginning to change the way people moved around South Africa. There were over 4 000 driver partners on the platform. This had become an engine for economic opportunity. From a tourism perspective, over 70 different nationalities had taken rides with Uber in South Africa. There had been a demand growth for Uber across cities of operation since 2013.

Ms Yoliswa Mashilwane, Public Policy Head, Uber South Africa, said there had been some known challenges between Uber and meter/mini-bus taxis, although Uber made efforts to consult with meter/mini-bus taxi operators. Challenges included a resistance to change, intimidation and violence, volatile industry structures, the backlog with issuing of operating licenses, and vehicles that did not meet Uber quality standards, in which case there was also a problem with access to finance where vehicle owners did not have vehicles that qualified under the agreements.

She described Uber's strategy to meet the challenges. Uber had set up consultations with meter taxi and mini-bus operators which happened at different levels. There were individual level consultations with associations such as South African National Taxi Council (SANTACO), to try to better understand operating models of both Uber and meter/mini-bus taxi operators. Uber appreciated the concerns that it might be unsettling to see things happen instantly over a phone but that was the nature of modern day business. Uber had to explain that it was an open technological platform accessible to anyone who qualified. Uber had created financial assistance to those who had vehicles where they met standards.

She said that there had been a move to some of the meter taxi businesses signing up for Uber, with a lesser degree of progress in reaching agreements from the minibus taxi operators. In KwaZulu Natal (KZN) meter taxis had solicited the support of SANTACO in KZN, and there were not particularly fruitful discussions there. 29 meter taxi operators had been trained by Uber as of the previous week, had joined the platform and were going through background checks. Uber was looking at over 300 vehicles coming on board from KZN meter taxi operators. This was similar to what happened in Centurion, OR Tambo and Western Cape Meter Taxi Operators. Uber had signed a Memorandum of Agreement with Western Cape Meter Council which set out the process of operation with Uber. Discussions were continuing.

Having given that background, Ms Mashilwane then outlined the Uber submissions on the Bill, broken down into categories:

1) The introduction of e-hailing into the definition of section 1 of the act. Instead of this being defined as a subcategory under meter taxi, the e-hailing definition should be a standalone definition. This was not intended in any way to bypass regulations. Uber did not know what would happen in the future in regard to public transport operators. It was feasible to expect, however, that in the near future minibus operators would use more innovation in their models. With the current definitions, operators in tourism who wanted to join the platform had to reapply for an operating license for the same vehicle, which was double jeopardy. Finally, the market for e-hailing within the system was growing. A standalone definition would allowed other modes of public transport in the future to incorporate their innovation on to the platform.

2) Uber asked for any moratorium on the issuing of operating licenses to be done within the Promotion for Administrative Justice Act (PAJA). If the process was fair and open it made it much easier for people to plan accordingly. Two cities had imposed moratoriums with no consultations or proper communication to affected people, and no written documents confirming moratorium were established.  Any moratorium must follow an open and fair process.

3) The third issue pertained to regulations. Section 8.2 of the current Act rightly obliged a Minister, before making regulations, to publish a draft for comment. The same requirement should be extended to the Members of the Executive Council (MECs). This was to ensure that MEC's public participation was open and robust.

4) Under specification of vehicles, in the clauses that spoke to section 54(4), she suggested that instead of specifying the exact type of vehicle the regulation should only make reference to specific categories of vehicles.

5) She then noted that in relation to the amendments on section 59(3), Uber was proposing that when no objections had been received on applications they “must be” disposed of, not “may be” disposed of. From an administrative point of view, if there were no objections, regulators should have to dispose of the application immediately.

Finally she made the point that in regard to all public transport documents, laws and regulations produced within the country, Uber was asking to be accepted and recognised as part of the public transport ecosystem and integrated public transport network.

Discussion
Mr M Sibande (ANC) asked if Uber could define itself better and he asked if Uber was not in fact acting as a labour broker? He asked how Uber could increase platforms while not creating jobs. He asked if all active Uber driver partners and partners who employed drivers were legally compliant, and whether all Uber drivers had valid operating licences. He asked if the operating licenses were issued for charter services, and under which mode they were licensed. The National Department of Transport (DOT) had stated that operating licenses must be under charter service

Mr Sibande also asked how many operators used by Uber had operating license in each province of operation. He pointed out that one of the most serious problems in South Africa was that there were different taxi organisations; government had even at one point tried to intervene and mobilise one taxi union, SANTACO, but that had not succeeded. Mr Sibande thought Uber's recruitment drive was “questionable” and asked who its partners were. He was worried that it was taking advantage of loopholes. He wanted to hear the answers and reserved his right to ask more questions having heard what the response was.

Mr M Maswanganyi (ANC) said that there had been protests internationally and locally pertaining to Uber. He asked what problems there were with operators who linked their cars to Uber. Among other issues, taxi operators thought the Uber had unfettered powers, whereas taxis had to follow set routes. He said  some people had no licenses even though they were accredited by Uber, and this was seen as a problem and Uber must explain how it would deal with this.

He further noted that some operators said that at the end joining Uber had impoverished them, if they could not repay their monthly car loan instalments. He wanted more information on how drivers and Uber shared money and whether there was a calculated percentage. South Africa was not the same as the developed countries where Uber had been created, and therefore it should operate differently. The Portfolio Committee would not welcome any violence associated with Uber.

Answering the proposed change from “may” to “must”, Mr Maswanganyi said that the Portfolio Committee would ask its legal advisers to comment and discuss the implications of this change.  The PC was not opposed to innovation but was looking for a system that catered to all.

Mr C Hunsinger (DA) suggested that next time Uber spend more time on the Bill rather than attempting to see the Uber product, of which the Committee was well aware. He also commented that Uber's comments were directed to the Act rather than the Bill. He wondered why Uber was making reference to the Promotion of Administrative Justice Act. He noted that section 8(1) of the Act already referred to the Minister's powers as “may” and he questioned why Uber wanted to see “must” in section 59(3) relating to disposal of applications, and whether this was backed up by any experience.

Mr L Ramatlakane (ANC) noted the comment on the stand alone definition, but said that Uber did not make a particular case for it. He wondered how Uber thought it was disadvantaged by the current Act. He questioned why exactly Uber wanted more added to the moratorium issues; and pointed out that this was not something that was in the Bill. However, he did agree that Uber had made a valid point in respect of the regulations and said it made sense that the MECs follow the same route as the Minister for consistency. However, regulations were an executive function in which the legislature did not really become much involved. With regards to specification, he wanted to understand and wanted to know what was the problem with the original Act, and why Uber wanted to see categories rather than specific types; was this based on any problem? He agreed with his colleagues' reservations on the change from “may” to “must”.

Mr G Radebe (ANC) asked what kind of barometer did Uber use in assessing a particular individual, and how it would ensure that the operator was able to pay back any money borrowed. He pointed out that financial institutions could also fall into trouble if people did not repay. He asked how safe Uber drivers were, and pointed out that if Uber operated 24 hours, how would it ensure that drivers were not too sleepy to work. He asked what safety precautions were in place to protect both drivers and passengers.

Ms Mashilwane said that Uber was not a labour broker, but was a technology company that owned the technology used in the taxi industry. Uber owned the platform, drivers worked for themselves but would make use of the platform. Some examples of those who were using the technology to get business were unemployed youth, an electrical engineer, a woman who had been running a salon but who wanted to augment business. Vehicles were manufactured in the country and service companies were being used, so this created a value chain by Uber in the country.

She answered that some Uber drivers did have operating licenses, and some did not. When Uber started there was no reference to e-hailing in the legislation, and a practice note was issued to Uber which was later rescinded. The process of getting operating licenses was not quick. Only 267 licenses were processed, so not all vehicles operating via Uber had operating licences. In Gauteng, licenses were being processed after 2 500 licence applications had been submitted. In Cape Town Uber had 1 035 applications allowed and 267 had been processed. This was unfolding as it went on. It was not that Uber chose to operate without an operating license, but it was hoping that the process could be made faster.  The Uber recruitment process was open to every meter taxi operator, but there was issues and tensions and not all operators were on board.

Mr Lits said no one could ignore negative headlines around Uber globally. There had been a changing trend on push back and Uber was now being adopted and accepted in the market. Uber's perspective was not “Uber or Taxis” but “Uber and Taxis”. On the African continent there had been adoption of important sharing regulations as cities saw the need for Uber and the benefits which Uber brought about. This was a global trend. Ghana, Kenya and Nigeria had approved important regulations and statements of understanding. The push-back from long established taxi associations had come from a sense of extensive association ownership within the industry, and Uber had tried to speak with them, recognised that there was more to be done and was working on this.

Ms Mashilwane said that if the definition of e-hailing resided under the definition of metered taxis, this left a gap for other forms of transport. Uber was suggesting that the gap in the definition needed to be addressed. The question was whether, looking forward to the future, the e-hailing necessarily only belonged with metered taxis, and Uber believed that it did not, based on Uber's own experience. A stand alone definition would allow any public transport mode to use innovation in the system.

Mr Lits added that the intention behind this suggestion was to ensure a level playing field across all operators. By limiting the definition to metered taxis, this potentially gave only meter taxi operators and not other forms of transport  an advantage in the technology.

Ms Mashilwane added that Uber had learnt that when it came to e-hailing there was a host of other companies involved and they too were not covered by the Bill.

Ms Mashilwane explained why Uber had made reference to PAJA; the moratorium being placed would have an adverse effect on people's business, and thus must be communicated properly. The pillars already set up in PAJA assured that the process would be fair and open and gave citizens the right to access courts. In practice, she had heard some hearsay mentions of moratoriums, but was not sure whether there was anything on paper.

Mr Jonathan Ayache, General Manager: Cape Town, Uber South Africa, said that request around vehicle specification was to avoid a situation where an operator needed to have purchased a vehicle before an operating license could be applied for – in some cases, registration details were called for.

Mr Lits explained that for every trip booked through Uber, the fare was split with 75% to operator, 25% to Uber, and this was paid out weekly, plus cash tips. Uber is a business model, and any operator took on a risk through that business. Independent operators had choices, and some might not qualify for all the benefits. In regard to the vehicles, he confirmed that Uber would not wish to see reckless lending by financial institution. There was a R200 million fund that Wesbank had made available to driver partners, and Vumela had a R20 million guarantee for that fund. In the event of loss, there was a 10% underpinning; Wesbank could go to Vumela and recover the first loss fee and vehicle. In fact, the loss ratio was very low. He emphasised that this was smart and not reckless lending. Drivers had access to capital through the Uber structure.

Mr Mashilwane said that if anything, Uber over-emphasized safety. It had a telematics system and could check drivers who were on the system for too long. Drivers could be called to Uber offices for retraining. It did not wanted to be treated differently and asked to be seen as a contributor to the taxi industry in the country, and one that was trying to improve the transport space in South Africa.

Mr Sibande said he would discourage the PC from promoting any entities that did not comply with the law, as the Committee would clearly not be interested in any businesses that were illegal. He repeated a previous comment that the Portfolio Committee should not be seen as a platform for marketing Uber.

Uber Drivers Guild submission
Mr Joseph Munzvenga, Head of Communication, Uber Drivers Guild, said it was important to first understand what Uber was, based on the ground facts from people who worked in Uber. He represented a group of about over 700 Uber Drivers who had decided to unionize after feeling disgruntled by Uber. He said that gatekeepers had come into the country in the name of employment creation and economic empowerment in South Africa, but the Uber Drivers Guild had felt that Uber was exploiting drivers in their own country and wanted to make sure that the poor people would benefit.

He said that Uber was a European company owned by a very controversial Chief Executive Officer, Travis Kalanick, and its financial management internationally was done by the Gupta group. In fact, Uber did not simply establish the platform; it made decisions over the drivers. Drivers were not allowed to propose ideas, Uber had 99% economic power over them and made all the polices that affected their lives. Uber was dealing with multiple court cases globally because people had noted a trend that the company was a scam. In regard to the so called partnerships, he said that drivers had been fooled by Uber into believing that they were in partnership, but that was not so. It did not surprise him that Uber had disregarded the law and breached agreements, because of the Gupta-appointed individual who managed it. The Drivers Guild felt that government had let them down by allowing Uber to operate. Some drivers had died or been injured.

Mr Ramatlakane interjected at this point. He was struggling to follow the presentation and said that what had been presented was not connected to the Bill. The Drivers Guild was raising matters now that were properly dealt with outside of Parliament. He asked the Guild to focus and tell the Committee if it had any comments on the Bill.

Mr Munzvenga said that he was speaking to sections 5 and 8 of the Act, which empowered the Minister to make regulations. The Guild was suggesting that the Minister should set up a task team to asses figures from Uber and to ascertain a fair model based on and with full respect for labour relations and the Constitution. Uber Drivers Guild could not speak about legislation if the Committee did not understand where the Guild was coming from and whether Uber in fact had the interests of the drivers at heart.

The Chairperson interjected again, saying that the Committee was here to deal with the amending legislation only at this meeting.

Mr Hunsinger added that whilst he appreciated Uber Drivers' unique experience was important, and the Committee was not unsympathetic to their discomfort and concerns, the Committee must deal with the technicalities of the meeting. The Committee was here to ensure that good legislation was passed and so he asked the Guild to speak specifically to whether it would support or propose changes to the Bill before the Committee.

The Chairperson said that this was specifically the time for the public to share concerns on the Amendment Bill, and wanted to hear comments on specific clauses. 

Mr Munzvenga thought that the Guild was to be given the opportunity to speak about itself, seeing that Uber had had an opportunity to present itself and had essentially tried to market itself. The Guild was trying to give an indication of what was actually happening on the ground and people needed to understand the challenges that Uber presented. This company did not benefit anyone other than a few elites.

The Chairperson interjected to point out again that what had so far been presented did not speak to any amendments that were being proposed. The Committee could only allow ten minutes to each submission, and the Guild should speak to amendments and the Bill.

Mr Munzvenga said that the Uber Drivers Guild came to speak on the experiences with Uber on the ground. He asked that Uber be nationally regulated, or cease to exist.

The Chairperson said that the Guild could have hopefully raised some important matters on the Bill itself; for instance over-saturation of the market, and data were some of the issues that were linked to e-hailing. She asked that anyone wishing to speak to the Committee must deal with the Bill and be specific rather than general.

Discussion
Mr M De Freitas (DA) said he had listened very carefully to the Guild, but felt that the remarks were being made in the wrong forum. He had not found anything that was related to, or that proposed any amendments specifically to this Bill.

Mr Hunsinger said that Uber Drivers Guild had executed its mandate, but had not clearly explained the impact of the Bill. He requested that the Guild should study the Act and the Bill, and tell the Committee, in writing, whether there was anything that the Bill was doing that fuelled their general unhappiness. The Committee was not a complaints department and he was sorry that they had missed the opportunity to make input on the Bill.

Mr Sibande said that Uber Drivers Guild had made a valid point in that South Africa was seeing more community unrest. He asked whether, when drivers were recruited to Uber, they were clearly told of the terms, conditions and safety standards, and whether they had any opportunities through Uber for ongoing education. He asked the Guild whether operating licences were in place, or whether drivers were in fact operating illegally. He too asked that the Guild continue to present specific amendments requested to the Bill.

Mr Ramatlakane agreed that it was unfortunate that the Guild had missed the opportunity to make real and substantial input, but the matters raised in their letter would be looked into. He agreed that the Committee could not be seen as a labour department and this Committee could not undertake any investigations into labour issues.

Mr Munzvenga answered the question on licences by saying that no one present as representatives of the Guild had an operating licence. He personally had been lied to when he joined the Uber platform. Uber disregarded the law and did not inform him of that fact. Drivers were not safe and there was nothing which Uber did to ensure their safety.

The Chairperson said that the concerns about labour relations with Uber could be raised with the Portfolio Committee on Labour.

South African Meter Association (SAMTA) submission
Mr Ayub Baker, Representative, South African Metered Taxi Association, Cape Town, said that SAMTA’s presentation would touch on Uber, as it was a dominant player in the market. SAMTA had concerns about the disruptive technologies with e-hailing and Uber. SAMTA said that 2 500 jobs were threatened with the advent of e-hailing. He pointed out that under the current NTL Act, 80% of Uber & e-hailing drivers were currently illegal. In the current dispensation of the NTL Act he made the point that Uber should not have even been allowed to operate, and that it was and continued to operate illegally.

SAMTA objected to the proposed amendments to the NTLA which related to Metered Taxis. He noted that physical meters were key to the SAMTA business and e-hailing did not have physical meters.

SAMTA feared that if the amendments were passed in their current form, South Africa would be flooded with unregulated private vehicles transporting the public for reward. Thousands of local South African jobs would be lost. A further point was that the DOT had not consulted with SAMTA  on the amendments. SAMTA acknowledged that Uber and e-hailing had become a fact of life, but felt that they needed to be regulated, and should not be allowed to take over to the point where they destroyed the metered taxi infrastructure. Uber and all other e-hailing services needed to abide by the same rules and regulations which metered taxis were required to conform to. Uber had to refrain from price undercutting, as that could cause economic difficulties. SAMTA saw the need for technology in the industry but said that it should not encompass and overtake the industry but rather should fall within the industry.

SAMTA had some specific objections on the Bill – and the first point was on page 4, under (c) and (d). He said that electronic hailing, using a smartphone, was not the same as a taxi meter in terms of International and National Standards, because a smartphone app could not be sealed, therefore the price per kilometre could be increased or decreased at a whim. SAMTA recommended that all e-hailing applications be required to be used together with a sealed meter, as were used within the regulated Metered Taxi Industry.

He added that at the moment there were limitations to the number of cabs operating under each company banner. National consultations were required if Uber was going to legalise as a Metered Taxi business, and in that case, SAMTA felt that Uber needed to comply fully with all metered taxi regulations. Finally, SAMTA suggested that all e-hailing companies needed to be forced to stop operating until they had been legalised, as had happened in other countries.

Furthermore, SAMTA also raised objections to the amendments set out to section 66 of the Act, on page 40 of the Bill. No countries had defined a smartphone application as a Taxi Meter. SAMTA was thus asking how and why this was suggested here. He noted that SAMTA was also asking how such amendments had been allowed to be lobbied for and forced through in twelve months, when it was surely known that any implementation of these amendments would have far reaching detrimental effects for meter taxis in South Africa and the workforce in this industry.

He repeated that SAMTA was now requesting that it be allowed to give input into any future regulation around e-hailing. SAMTA hoped that its objections would be considered and acted upon. SAMTA further wanted to be consulted on a way forward. SAMTA urged that the Committee should not allow “a Silicon Valley giant” to come into South Africa and achieve changes to laws that would have a a negative impact on local companies and individual Metered Taxi Organisations. SAMTA was not opposed in principle to technological advancement or e-hailing apps, but felt that the method of implementation must be tighter, and there was too much scope for abuse and over-flooding of the market, a point that Uber itself had acknowledged. 

Discussion
Mr Hunsinger said that SAMTA's recommendations were still rather vague and he asked that SAMTA expand on its points about the protection of the economy and environment, and say what exactly the Committee needed to do to consider these elements.

Mr Ramatlakane said it seemed that SAMTA took a view that national consultation was needed before anything could be done, but asked who it suggested should be doing that consultation? The Committee's public participation forum had already been set up, and he asked if SAMTA was suggesting that the Committee should suspend the proceedings to consider the Bill until SAMTA had held consultations; he further asked if the consultations were to be done internally within SAMTA, or if it was suggesting that national consultations were needed? .

Mr Ramatlakane said that he was not sure how the Committee would be able to deal with the pricing issues raised, as that was not something within the reach or mandate of this Committee. The Committee was already holding discussions how e-hailing could be done properly. SAMTA had raised objections but had not said how it would like to see issues being handled differently.

Mr Ramatlakane noted that SAMTA had said that it was not opposed to innovation but asked then why it had not been innovative in its own thinking? Innovation was needed to keep business afloat and there clearly was a market for Uber. He suggested that companies needed to opt either to join the new markets or remain outside them and perhaps SAMTA needed to think of innovation for itself.

Mr Sibande said that the reports on the numbers of unlicensed people must be noted. He asked if it would help if e-hailing was separated from meter taxi services, and became treated as a totally standalone mode in the Bill. He pointed out that it was unfortunate that metered taxi drivers were often those who were found to be infringing the law themselves yet were the first to complain when someone else did so. He too asked that SAMTA present some alternatives for consideration, seeing that it had felt that there were loopholes in the current legislation.

Mr Baker said that SAMTA clearly had an interest in protecting the industry and all its recommendations were directed to that. SAMTA recognised the reality of e-hailing but wanted to co-exist with companies who chose to use that method. The metered taxi service had innovated, and the minibus industry had developed from the metered taxis, so that they were open to further evolution still.

SAMTA had indeed felt that it had not been properly involved on the national consultation process, until now. The spheres of government do not always speak the same language. SATMA wanted one sphere to look at the issues, and would like to see commonality on enforcement.

Mr Baker noted that the law currently allowed people to determine the pricing of their services, based on their own cost. However, he claimed that Uber  did not know the costs and therefore could not determine price. Pricing was regulated by provincial government.

He agreed that alternatives would be presented next time. SAMTA was not suggesting that e-hailing be treated entirely separately: there is no alternative.

The meeting was adjourned.