The Road Accident Fund (RAF), the Road Traffic Infringement Agency (RTIA), the Road Traffic Management Corporation (RTMC), the Cross-Border Road Transport Agency (C-BRTA) and the Ports Regulator of South Africa briefed the Committee on their 2018/19 APPs, budgets and strategic plans.
The RAF said it was challenged by two main problems: financial sustainability and the inherently adversarial ‘fault-based’ compensation system. Its final approved 2018/19 APP had been based on a fuel levy of 163 cents a litre, but this had been increased by 30 cents during the 2018 budget speech, and this would provide it with an estimated additional R7 billion in revenue for the year. Inflows from the additional 30c should be received from July or August and would assist in reducing the volume of settled claims awaiting payments. The current shortfall in claims payments was R8.5 billion. The increase would provide much needed relief to the victims of road accidents and their families, while addressing the RAF’s immediate challenges. By the end of 2017/18, the RAF’s net deficit was R215.1 billion.
Members had mixed feelings about the RAF’s performance. Some felt that it was not doing enough to pay all claims, resulting in the litigation which led to attachment of RAF assets. Others felt that the Board and management were working in unison to turn the entity around. There were concerns about leaks of confidential information, which was hurting employee morale and bringing the entity into disrepute.
The RTMC said it had achieved a clean audit for the past two years. Since 2013, the Corporation had grown immensely. It had managed the Electronic National Administration Traffic Information System (e-NaTIS) since April 2017, which had created an opportunity to integrate road traffic information. The Corporation’s key challenges included sustainability, additional functions, the harmonisation of all functions and the integration of road traffic information.
Members asked how the outcome of the published research into the effect of alcohol consumption on road crashes would be utilised for the achievement of the RTMC’s mandate. They said perceptions existed that the it was focusing on increasing revenue instead of delivering on its mandate. They also raised concern that it had been unable to meet its targets since 2010. Clarity was sought on how the RTMC intended to change road users’ behaviour.
The RTIA said it intended to create employment for youth, people living with disabilities and women through enterprise development projects for the 2018/19 financial year in order to enhance operational service delivery. It had targeted 50 communities through its corporate social investment (CSI) programmes. Its challenges included lack of financial stability, an inhibitive and prescriptive legislative framework and the reluctance of implementing agents and local government to align systems for Agency readiness. Solutions pursued included a review of the existing legislation, expansion of its geographical footprint, and system harmonisation and capacitation
Members felt that the Agency had many services to deliver, and it looked like some of them were duplicated. They asked whether the intention of hiding speed-trap cameras was so that tickets could be sent to offenders. They were of the view that the visibility of traffic personnel was more important in reducing accidents.
The C-BRTA said its four strategic goals were the facilitation of an unimpeded flow of cross-border transport, strategic positioning to promote integration of the African continent; promotion of safe and reliable cross-border transport, and enhancement of organisational performance in order to improve sustainability. There were 53 land border posts between South Africa and neighbouring countries, of which 19 border posts were designated as commercial border posts. There were four main border posts -- Beitbridge, Lebombo, Maseru and Skilpadshek -- which carried significant traffic volumes.
Members indicated that the Agency’s presentation did not correspond with what was in its APP. They also contended that the expenditure figures provided in the presentation were not consistent with those of the National Treasury. They expressed concern that Namibia was seen to be more progressive than South Africa, and asked what could be done to maintain or improve the status quo.
The Ports Regulator said it intended to expand its role in transformation and the Broad Based Black Economic Empowerment (B-BBEE) participation of the sector; the analysis of lease and rental pricing in ports; to apply greater scrutiny and prudent assessment of capital investments; and implementation of the assets valuation methodology, arising out of the valuation of a sample of National Ports Authority (NPA) assets. All these issues would be attended to while it continued with its other on-going analytical, tribunal and compliance work. Of concern was achievement of its targets in the face of budgetary constraints. Legislative amendments were needed to capacitate the Regulator to implement programmes successfully and sustainably.
Members applauded the entity for moving from an 85% performance level to achieve 100%, and that it had recorded a clean audit for the last three years. They raised concern over how targets would be achieved without sufficient funds and adequate resources, as well as the current legislative barriers.
Annual Performance Plans:
Road Accident Fund (RAF)
Ms Lindezwa Jabavu, Acting Chief Executive Officer, said that in terms of section 17 of the Road Accident Fund Act, claimants were entitled to general damages (serious injury), past medical expenses, future medical expenses (undertaking), past loss of earnings, future loss of earnings, past loss of support and future loss of support. In terms of section 18 of the Road Accident Fund Act, claimants were entitled to the cost of a funeral or cremation.
Reporting on preliminary 2017/18 business results, she highlighted the following: Claims registered were 271 933. Number of claims settled was 234 701. Number of open claims was 207 461. 316 749 claims were individually paid. 19 827 claims were general damages payments. Funeral payments stood at 8 875, and 181 358 medical claims had been paid. Revenue had increased by 13% to R37.5 billion (including other income). Claim payments had grown by 6.6% to R34.1 billion. There had been a surplus of R813 million from the net fuel levy (R37.4 billion versus cash expenditure ofR36.6 billion) The RAF had achieved a 90% performance against its targets in 2015/16 and 2016/17. The RAF was challenged by two main problems -- financial sustainability and an inherently adversarial ‘fault-based’ compensation system.
The RAF Board had approved the 2018/19 APP and submitted it to the Department of Transport (DoT) on 31 January 2018. The final approval had been based on a fuel levy of 163 cents per litre, but the Minister of Finance had announced an increase by an additional 30c, from 163c to 193c, during the budget speech on 21 February. This increase would provide the RAF with an estimated additional R7 billion in revenue for the year, bringing the total estimated annual fuel levy revenue to about R42 billion. Inflows from the additional 30c should be received from July or August, and would assist in reducing the volumes of settled claims awaiting payments. The current shortfall in claims payments was R8.5 billion. The increase would provide much needed relief to the victims of road accidents and their families, while addressing the RAF’s immediate challenges.
She added that in 2018, the RAF’s total assets were R9.58 billion, total liabilities were R224.7 billion, and the net deficit was R215.1 billion.
Mr G Radebe (ANC) commented that the Board was full of men. He asked what the challenges to implement the key performance indicators (KPIs) were, and how the RAF was planning to address them. He expressed concern over the inside information that had been leaked to the newspapers, and asked who the “mole” was. He did not understand why certain items, such as chairs, were leased. Did the RAF not have its own resources? He said that financial information provided by the National Treasury did not match with the figures provided by the RAF, and asked why there were contradictions.
Mr T Mpanza (ANC) echoed Mr Radebe’s concerns about having a Board composed of men. He appreciated that the RAF had achieved 90% in the financial year, but said there was room for improvement. It appeared that there was a teamwork between the board and management, and he appreciated the team spirit. He asked whether enough budgets had been allocated to the KPIs, and wanted to get that assurance in regard to both the RAF’s financial and human capacities. Was the organisation well structured to enable it to achieve what it was mandated to achieve? He raised a concern about paying bonuses, and asked on what basis or formula they were being paid.
Mr M Sibande (ANC) said that the RAF had been insolvent in 1981. However, a turnaround strategy had brought about a remarkable transformation. He asked what challenges were preventing the RAF from paying claims. He remarked that in the State of Nation Address (SONA), the President had emphasised that suppliers should be paid within 30 days, and asked if was being complied with. In the APP, the RAF had raised the issue that it worked in an environment in which it was targeted by fraudsters. How many cases were there of this nature? Was it able to pay claims in terms of the legislated requirements? Were there gaps that were needed to be closed to empower the RAF to do its work better? Who were the people who were giving the RAF a problem? Referring to information communication technology (ICT), he said that it had a five-year plan, but had not clarified when it would be started.
Ms S Xego (ANC) asked what damage could be caused by the leaks of information, and how were employees monitored. She was interested in checking on how employees performed their social responsibilities, and how incidents of leaks could be avoided. She had noted that there was a billion rand shortfall, and asked what bearing that would have on the following APP.
Mr C Hussinger (DA) referred to the business model, and asked whether the claims indicated were only those that had been registered, and whether there was a shortfall in claims to be settled. He asked whether there was no spelling mistake with regard to open claims. Why had percentages, instead of a number of targets, been used in the strategic plan? How would the achievement of a percentage be measured? Monitoring and evaluation would be difficult. He said there were five regional processing centres, and that there had been remarkable increase in the staff complement. He asked why the RAF was outsourcing, and to justify the increase in the staff complement. How much was being paid on outsourcing? Referring on the challenge of financial sustainability, he appreciated that the RAF was trying to cope with that challenge. What did the legal costs look like? He wanted to know how much was spent on litigation.
Mr M de Freitas (DA) said expressed concern over the high number of claims, and asked what the average payment of a claim would be. If there were no specific statistics, he should respond in writing. The RAF’s performance was not improving, but was getting worse, mainly because the number of claims was increasing. While there were exorbitant increases in payments and bonuses, the RAF was stating that its financial stability was being challenged. Clearly, the RAF’s performance was getting worse. Employees were getting huge bonuses and these things were being kept secret. Why? He suspected corruption and fraud. He pointed out that 400 people had been appointed in one financial year, but despite such appointments, the RAF had performed badly. What research had been done to look at all possible solutions? Claims were made, but not paid. In his view, there was nothing being done to make the organisation perform better. He did not see an improvement. There were still a large number of vacancies, and this had an implication of making the RAF difficult to run.
The Chairperson said that there were several deficiencies in the use of percentages. What was the equivalent of 10% in respect of targets, for example? One her observations was that the RAF’s financial figures were different from those of the National Treasury. She expected the figures of the RAF and National Treasury to speak to each other. What did the expenditure on outsourcing look like? She requested the Board to obtain statistics from hospitals, and asked what procedure should be followed to detect what was happening in the hospitals. Those who were capturing hospital claims could have not provided the correct number, since they looked as if they had been tampered with. She suggested that the RAF should report to the Committee on what the challenges were.
Ms Jabavu responded most of questions would be responded to in writing. She said that the Board had five women, and was not composed only of men. With regard to achieving targets, she said that three out of 30 targets had not been achieved, and the non-achieved targets had been approved by Parliament and the Minister around October 2017. The increase in the registration of claims was due to the fact that the RAF was visible and had opened offices in rural areas. The reason for outsourcing resources was due to the fact that the sheriff was attaching their furniture or cars, and was going to auction them. This usually happened when claims payments were delayed, and attorneys took the RAF to court. The difference between the RAF and National Treasury projections was due to the calculation on the basis of the 30 cents increase. All finances had to go to the Treasury for approval.
Dr Ntuthuko Bhengu, Chairperson: RAF Board, referred to the issue of owning cars or leasing them, and said that there had been board meetings where it had been asked whether outsourcing was a viable option. This question had been directed to the executive for a solution, and the executive was in a good position to answer this question. On the question of leaks, he responded that RAF was a public entity whose work could be covered in the media. However, there were certain confidential matters. There had been a meeting between the Board and the Executive, and between the Board and Ministers. The outcomes of these meetings had been leaked to the Mail and Guardian. All this had been done simply for political gain. It was about qualifications, and the Board had asked that qualifications be evaluated. At the Board level, it was difficult to recruit members with integrity, as this could not be determined through interviews.
On the matter of fraud, Ms Jabavu said R1 billion in claims had been repudiated, and there had been 11 convictions. However, the RAF was challenged by difficulties in finding experts. The RAF had engaged with the hospital fraternity to discuss challenges.
Referring to the R215 billion net deficit, she said that these were successful claims, but people were still queuing for payment because there was insufficient money in the RAF account. Impatient attorneys could approach a court of law to force the court to pay, so a sheriff could come and attach the RAF’s resources and auction them to recover claims. Regarding the increase of staff, she said there had been a moratorium in 2013. There had been a large increase in the staff complement, and that was the reason for the increase in productivity. Leaks, however, had impacted on the morale and the potential to attract new recruits, and had affected the integrity of the RAF. She added that about R10 billion had been paid for legal litigations.
Mr Chris Hlabisa, Deputy Director General: Road Transport, DoT, said on behalf of the Department, that comments of Members should be constructive, and asked that the comment which compared the RAF to “a sluggish horse that could not run,” should be withdrawn.
The Chairperson apologised on behalf of the Member who had made the comment. She did not remember who had made it.
Mr De Freitas admitted that he was the one who had made the comment, but said that it was not a sluggish horse, but an elephant.
The Chairperson said that Mr De Freitas’s comments was intended to demoralise those who were committed to turning the organisation around. She had no option but to withdraw such comment on his behalf, too. She encouraged the RAF to work as a unit and to put the interests of the public first. The RAF would be invited to clarify issues that were still unclear. She also asked why the former Minister had not appointed a CEO, and wondered whether the incumbent Minister would be able to make the appointment.
Ms Jabavu said that the bonuses were being paid in accordance with labour law.
Mr Bhengu said he had taken note of Mr De Freitas’s comments, and pointed out that the statement asserting that the staff complement had been increased fivefold was not true. The non-payment of claims was a risk to the country, and not only to the organisation. He said that the RAF would do its best to deliver.
Road Traffic Management Corporation (RTMC)
Adv Makhosini Msibi, CEO: RTMC, alluded to the performance of the Corporation for the last three years, and said that it had achieved a clean audit for the past two years. He highlighted some of the key achievements towards the implementation of 2015-2020 strategy. Since 2013, the Corporation had grown immensely which was due to the integration of the RTI and Boekenhoutkloof Traffic College. The Corporation had managed the Electronic National Administration Traffic Information System (e-NaTIS) system since 5 April 2017, which had resulted in KPIs that had created the opportunity to integrate road traffic information.
The targets had been devised in accordance with five programmes. The 2018/19 MTEF budget had been allocated per programme with a view to supporting services such as the e-NaTIS budget. The operation budget included the training of traffic personnel at Boekenhoutkloof College, and the law enforcement budget included new functions from the Cross-Border Road Transport Agency (CBRTA). The 2018/19 budget was R1.232 billion. The Corporation’s key challenges included sustainability, additional functions, harmonisation of all functions and integration of Road Traffic Information.
Mr Hussinger referred to research published on the effect of alcohol consumption in road crashes, and asked what the Corporation wanted to achieve with this particular research project. How would outcomes of the research be incorporated in the programmes? There were a lot of criticisms and perceptions that the RTMC was focussing on increasing revenue instead of delivering on its mandate. This should be clarified. He noticed that there was no target for educational programmes. What was the RTMC was doing about schools? What were learners being taught? What was the perception of people regarding the report released by the Minister? From the report, people were thinking that what the RTMC was doing was not working. What was apparent was that the Department of Transport was stuck in terms of innovative ideas. He asked how the RTMC was getting the people to comply. Would there be difference in the behaviour of the people if the outcome of research came out and was implemented?
Mr Sibande said that since the RTMC had taken over in April 2010, targets were not being achieved. How many cases were still pending due to the fact that they were being investigated by the Public Protector? How many wrongdoers had been apprehended and booked? He asked how many students had been trained and from which provinces they had come. The RTMC needed to elaborate further on issues of youth, women and people with disabilities.
Mr Mbanza asked whether the KPIs were developed in terms of “SMART” principles and were aligned with the Ministry’s KPIs and key performance areas ( KPA)s. There should be a synergy, and the KPIs should speak to each other. He recognised Members of Executive Committees (MECs) as shareholders, and therefore asked whether the RTMC interacted with municipalities only through the South African Local Government Association (SALGA) ,or whether there were other mechanisms to interact with them. Was the community involved in the programmes? Were there structures and platforms to be used to involve members of the public? Was enough budget allocated to resource capacity to carry the mandate out? How far was the process of integrating officers, and what could be the challenges in integrating them? He raised a concern that from 2014, the RTMC had not achieved a 100% performance against targets, and what asked what the reasons could be. He was, however, pleased that it had achieved a clean audit.
The Chairperson asked what the RTMC was actually anticipating to gain from the research. Were driving licences being checked to ensure that there were no forged licences? She added that the road fatalities cost the government billions of rand.
Adv Mcibi remarked that the observations made by the Committee were accepted without qualification. He commented that serious road offences were a major issue, and raised the question of consequence management. There was a question of whether a fatal accident should be dealt in terms of schedule 5 or 6 of the Criminal Procedure Act, or which punishment should be imposed. When people were speeding or driving drunk and got arrested, they had to pay a bail amount and were then released. There was a question on how far the RTMC was in dealing with this. They were engaging with different stakeholders to ensure that everything worked well. Most of budget was spent on litigation. Every month they could be at the courts twice -- the court had almost become the RTMC’s physical address.
He referred to the legal battle between the Corporation and TASIMA, from whom the RTMC took over e-NaTIS. There were three investigations. The first investigation had been heard in the media. Eventually, what the RTMC had done was to ask whether it could contribute towards finalising the investigation. There was a second investigation which the RTMC was contributing to.
Adv. Mcibi said that many interventions had been introduced to address certain issues. How did the RTMC get people to comply? They employed educational mechanisms by partnering with schools, and running road safety campaigns. An educational mechanism was included in the curriculum of primary schools.
Traffic students were recruited from Gauteng and North West. For gender and disability equity, the RTMC had partnered with schools for disabilities to ensure that they were aware of road safety rules. There was a need to shift to a single traffic law enforcement. There was a review committee that was looking into these issues to ensure that all of them were addressed.
The Chairperson remarked that the Committee should start to talk about the challenges, as these problems could not be resolved only by the Minister. The Committee believed that there was a new beginning for good things that the public could benefit from.
Road Traffic Infringement Agency (RTIA)
The Chairperson asked where members of the Board were.
The Department advised that Board members’ tenure had expired and they were waiting for the Minister to appoint the new board.
Mr Japh Chuwe, CEO: RTIA said that there were four strategic objectives that had been divided into quarterly and annual targets. They included effective administration and resourcing of the Agency to deliver on its mandate; discouraging the contravention of road traffic laws; co-ordinating and facilitating readiness for national rollout; and influencing changes in road user behaviour. With regard to key projects and socio-economic impact, the Agency intended to create employment for youth, people living with disabilities and women through enterprise development projects for the 2018/19 financial year in order to enhance operational service delivery. It targeted 50 communities through the Agency’s corporate social investment (CSI) programmes, and it agreed with partners for enterprise development (ED) implementation.
The Agency reported that in 2017/18 its income was R387 million, expenditure was R387 million, and total assets and liabilities were R88 million. For the 2018/19, it was forecast income would be R318 million, expenditure would be R318 million, and total assets and liabilities R94 million.
The challenges experienced included the Agency’s financial stability, an inhibitive and prescriptive legislative framework, and the reluctance of implementing agent (IAs) and local governments to align systems for Agency readiness. Solutions pursued included the review of the existing legislation, expansion of its geographical footprint, and system harmonisation and capacitation
Mr Radebe felt that the Agency had many services to deliver and it looked like these services were duplicated. He asked why the Agency’s offices were placed in the malls. Taking all the services into account, it appeared that the Agency would be spending more money, and he asked why it was not focusing on saving money. He had a challenge with the communication strategy, as it could not make the Agency visible. He asked what intention of hiding cameras was, so that a ticket could be sent to offender. He said visibility was more important in reducing accidents. The return of hidden cameras was problematic, because they were used to generate money and not to caution drivers to reduce speed. Safety campaigns should focus on those areas where accidents could take place. He asked why the Agency could not utilise the eNaTIS system, and how much it was going to cost in terms of Integrated Resource Plan (IRP) services.
Mr Mbanza remarked that the use of percentages was good sometimes, but was not good at others. He recommended that the number of targets should be there, along with the percentages, so one knew what they represented. He remarked that the targets were not talking to performance indicators, and asked what was informing 27 workshops. The agency’s targets ought to be clear and unambiguous so that everyone who read them would understand them.
Mr Hussinger commented on road user behaviours, and asked whether responsibility should be directed to the owner of vehicle. He further remarked that skills needs varied, and were at different levels. He asked how the Agency had determined its skills plan. What would the workshops do? Who were they intended for?
Mr Sibande said that the Agency’s performance was dependent on the Traffic Impact Assessment (TIA) implementation. The full implementation of legislation went hand in hand with the increase in the staff complement. Considering the challenges faced, he asked how the legislation could be implemented. He was of the view that all challenges arose out from the difficulties in implementing legislation.
Mr Chuwe stated that responses would be provided in writing due to time constraints.
On placing mobile offices at malls, he said that the Agency was dealing with the public of the country. It dealt with different people with different attitudes. Young people could respond to digital interventions, but would not resonate well with adults. In respect of violating road rules, younger drivers could drive when drunk, whereas older people could not. There were different types of infringements. These infringements were committed due to certain behaviours. This was the reason why there was a diversity of approaches to changing behaviours. These approaches should not be viewed as simply throwing a new net wide and expecting to catch more fish.
The hiding of cameras was so that an individual could be caught at any time, and therefore the road users should maintain their low speeds. He agreed that they should know why and where accidents were taking place in a particular area. On the question of percentages, he said that the reason the Agency used an 80% intake was that it did not want people to focus on skills development. The Agency wanted people to focus on their work. It had been an operational decision.
The Agency was expecting to start with workshops so that they could inform people about expected changes in the amendment bill. It had engaged with other stakeholders to make sure that they also had an interest.
The Agency had noted the comments that had been made about percentages. The work place skills plan had not been determined by the Agency, but rather by the employees who would indicate where they wanted to improve. It would also depend on the period of time acourse would take.
Cross-Border Road Transport Agency (C-BRTA)
Mr Sipho Khumalo, CEO: C-BRTA, said the agency had four strategic goals:
facilitation of an unimpeded flow of cross-border transport;
strategic positioning to promote integration of the African continent;
promotion of safe and reliable cross border transport; and
enhancement of organisational performance in order to improve sustainability.
There were 53 land border posts between South Africa and neighbouring countries, of which 19 border posts were designated as commercial border posts. There were four main border posts -- Beitbridge, Lebombo, Maseru and Skilpadshek -- which carried a significant volume of traffic. There were borders located in the busiest corridors linking South Africa to the Southern African Development Community (SADC) region -- the North-South corridor, the Trans-Kalahari corridor, and the Maputo/N4 corridor.
Costs of doing business were impacted on by delays at the border posts, inadequate infrastructure (road and parking) and frequency of stoppages for law enforcement along a transport corridor. The cross border industry was affected by what happened in the region and globally -- for example, the United Kingdom’s decision to leave the European Union.
Reporting on the C-BRTA’s performance against its APP, he said that the 2017/18 figures had not yet been audited, but the projected performance was 92.31%. The KPIs had not been achieved. They had developed and implemented cross border charges as an additional revenue stream. However, the Agency had achieved a clean audit in both 2015/16 and 2016/17.
Mr Khumalo said the key strategic focus areas for 2017/18 were based on three pillars: strategic positioning, financial sustainability and regulatory reforms. A research agenda was geared towards supporting the achievement of key strategic focus areas. He illustrated the linkage between the mandate, strategic objectives and key performance indicators.
Mr Khumalo highlighted MTEF revenue and expenditure estimates. As at 31 March 2017, actual total revenue had been R236.4 million, whereas the projected current total revenue for 31 March 2018 was R199.8 million. Budgeted revenue for the 2018/19 and 2019/20 financial years was R228.1 million and R243.8 million, respectively. Possible risks impacting on the performance were identified as the financial sustainability of the Agency; possible non-approval of the 2018 permit fee increase, litigation related to the 2014 permit fee increases; regulatory challenges on the Free State/Lesotho corridor to cross border passenger operations; and the Agency’s Board not properly constituted as per the C-BRT Act.
Mr Radebe remarked that the time period of six months was too long. It should be at the most three months. The period should be shortened to avoid an escalation of conflict. The APP book talked about hosting an indaba, but this had not been covered in the presentation. Had there been a change of mind? He asked whether the industry development strategy had been approved by the Board and whether it had been submitted to the Minister. He remarked that there was a notable contradiction between the APP book and actual presentation. These documents should talk to each other, because both were public documents. It was not clear what the Corporation would be doing in quarters three and four. He noticed that there were initiatives to be rolled out in Albert Luthuli district, and asked tfor detail on these initiatives. Should he get involved in these initiatives as they would be implemented in his constituency, and he would be able to monitor them? He said that the expenditure figures provided in the presentation were not consistent with those of the Treasury. There was a particular gap under expenditure. They should compare figures with those in the Treasury document.
Mr Sibande remarked that there were persistent problems that could be traced back to 1999. There had been an agreement signed under SADC, and nothing had happened. There were multilateral cross border agreements signed between South Africa and neighbouring countries. He asked whether neighbouring countries were ready. Did these countries have the capacity to implement these agreements? He was concerned that Namibia was seen to be more progressive than South Africa and asked what could be done to maintain the status quo. Referring to the non-audited performance, he asked if the financial performance was internally audited. He remarked that the Corporation had lost an important constitutional case in 2015 and asked whether it was achieving its goals, or if there was anything tangible could be put on the table to turn around the Agency?
Mr De Freitas commented that when Mr Khumalo had been appointed, the institution had been in bad shape, but he had managed to turn it around. The Committee had seen an improvement year by year. He applauded him for managing to turn it around despite the financial constraints.
The Chairperson said that the Committee had engaged in cross-border issues within the SADC from time to time. However, Mr Khumalo should be the leader to ensure that South Africans would have joy once they crossed the border. When he was in a meeting, he should speak about these matters. However, these matters had to be aired in collaboration with the Department of Home Affairs (DHA). The DHA should be made to understand what these imitatives meant for South Africa.
Mr Khumalo elaborated on the Lesotho and Free State issue, and said that people in the taxi business dropped passengers at the border. There were issues of security and other protocols that they had to comply with. They had people on the ground to monitor the situation so that an informed decision could be taken with regard to implementing multilateral agreements.
On the contradictions, he responded that the wording in the APP and presentation were no different or inconsistent, but the brief had been shortened in the presentation. Everything could not be reflected in the presentation, but the indaba was not excluded.
He would be happy if Mr Radebe could engage in the initiatives in the Chief Albert Lithuli district. A political meaning would be added to these activities.
The issue of the stakeholders was taken seriously. He stressed that the approach of the Agency was to focus on what would work, instead of saying that they would focus on implementing legislation.
On developments in the SADC, he said that all countries were on an equal footing in the SADC context. An approach was that those countries capable of implementing agreements should go ahead and do it. Some countries were lagging behind because they were poor. For example, the representative from Swaziland was not being funded for attending the SADC meetings, so he could hardly attend them. Some countries were not ready. There were certain issues that needed an effort from other stakeholders in order to be addressed.
The status quo could not be maintained if all departments did not come on board. In Namibia, the issue of transportation had been supported by the government and all departments were behind the matter to ensure that it was successfully driven. It was an issue that the country needed to focus on collectively if they did not want Namibia to be ahead of them.
On the auditing question, he responded that it had been called a non-audited performance because it had only been audited internally.
The Chairperson said that the Committee was waiting to see inter-trade between neighbouring countries and within SADC be a success.
Mr Mahesh Fakir, Chief Executive Officer: Ports Regulator, said many important initiatives were being undertaken which would improve the efficiency of the ports and positively effect the South African economy. They were:
the development and implementation of the Port Tariff Incentive Programme (PTIP);
the development and implementation of a regulatory base valuation methodology; and
the development and implementation of an operational efficiency incentive as a part of tariff setting process -- the Weighted Efficiency Gains from Operations (WAGO).
In 2019, the Regulator intended to expand its role in transformation and broad-based black economic empowerment (B-BBEE) participation of the sector; the analysis of lease and rental pricing in ports; greater scrutiny and prudency assessment of capital investments; and implementation of the assets valuation methodology, arising out of the valuation of a sample of National Ports Authority (NPA) assets. All these issues would be attended to while the Regulator still continued with its other on-going analytical, tribunal and compliance work. The Regulator hoped to be able to embrace the capacity of the Regulator as required by the NDP for all economic regulators, to fill key unfunded posts and strive to retain the skills it had assembled as greater financial resources became available.
Mr Fakir reported that there were 18 targets in the 2018/19 APP, but the Regulator was challenged by budgetary constraints. A new legislation model as per legislative amendments was needed to capacitate the Regulator to implement programmes successfully and sustainably. Its human resource capacity was very small compared to the mandate to be achieved. Amendment of the Act was essential to capacitate the Regulator. In terms of funding, it relied solely on transfers from the fiscus to finance its operations as per the provisions of the National Ports Act. The Regulator had presented a new funding proposal to alleviate the funding constraints. However, the new funding proposal would require amendments to the existing Act to allow it to collect a regulatory fee from the regulated entities.
Mr Mbanda commented that the entity had moved from an 85% performance level, and had achieved 100%. This illustrated that the mandate was achievable although other entities were struggling. This achievement should be maintained. He remarked that he had an impression that all entities were using the same presentation format, but this one had been in a different format as it did not break targets into quarters. How would Members know what targets were to be achieved quarterly or annually? The entity looked as if it was supporting other entities, and it was difficult to determine how services would be delivered. The Committee was not going to send the Regulator back because it had not complied with the reporting format, but it should break the targets down into quarters. On the challenges of human resources and financial constraints, he asked whether they believed that the targets would be achieved. Where would the funds come from? It had been stated that the Regulator would be relying on funds from the Department -- what would happen if the Department did not provide it with funds?
Mr Sibande applauded the achievement of receiving a clean audit for three years in row. In respect of the BBBEE, who were the beneficiaries? Did the beneficiaries include youths and women? Had the Regulator had made a request for amending the enabling legislation so that it could carry out its mandate effectively? What did the Regulator mean when it stated that it was facing financial constraints? Commenting on developing infrastructure, he said he wanted to link it with the State of Nations Address regarding creating jobs and delivering services to the people. Was infrastructure helping or not? On studies, he asked whether the Regulator was focusing on taking the youth from the entire country or was it looking in specific areas? How was the Regulator marketing itself?
Mr Hussinger said the Regulator should provide the Committee with publications that it had worked on. He cautioned that the entity should not lose its competitive urge. He also urged that the incentives appearing on slide 4 should be focused on. Referring to slide eight, he asked how the Regulator’s goals would be aligned with the NDP. What would the planning deadlines be? The Regulator had done its work and had introduced structures, strategic objectives and the needed budget. The Department had to play its role to ensure that the entity was functioning.
Mr Radebe made a request for the Regulatory to expand its relationship with other stakeholders. He asked for an update on skills development projects, including Operation Pakisa. He asked why engagements were not reflecting in the APP.
The Chairperson said that Mr Hlabisi should take a message to the Minister that the entity should be corporatised, and that the National Ports Act should be reviewed. The entity should send the reports it had published to the Committee so that they could speak to the Department. At the previous meeting, the Minister had promised to look into these challenges and see how they could be addressed for entities to function better. There was no need to have an entity which could not function due to certain legislative problems, or a lack of funds.
Port Regulator’s response
Mr Thaba Mufamadi, Chairperson of the Board, Ports Regulator, welcomed the comments and inputs, and said the question of corporatisation had been on the table for quite some time.
Mr Fakir said that targets were not in percentages, because they were about writing and developing reports or documents for publications. On funding, the National Treasury had allowed the Regulator to have some reserves in order to meet unforeseen expenditure. They had not overspent beyond their means. On BBBEE, he responded that it was a regulatory entity. It was a small entity. However, it was making sure that 80% was in line with BBBEE. The entity looked mainly at whether others were complying, and not on whether it was complying.
On the budgetary constraints, the Regulator had spoken to the relevant authorities about the funding model. The relevant authorities were the Committee and the DoT. The entity was equal to the task, although the budget was constrained. It regulated the ports’ infrastructure to ensure that they were up to date, that they were not a cost to the country, and that they were used to benefit the country. The mandate also included the question of making sure that South Africa was competitive at the international level. In this respect, South African products, for example, had to be bought, not at a loss, but at a profit so that the cost of living in South Africa could remain affordable.
They had no funds to market themselves, but they were doing their best to do so. Reports and documents developed were available on their website, but they would be shared with the Committee. He finally indicated that the Committee could assist by giving a favourable consideration to the Bill amending the legislation and the proposed budget. That was crucial support which was needed from the Committee.
Mr Mufamadi said that the main problem was that the Regulator was regulating a monopolised sector, yet there was no legal mechanism empowering it to institute an inquiry or impose punishment if rules were not adhered to. It was dealing with the self-regulation of the industry and self-regulation led to economic crisis. They could not continue to live in a situation such as this. The Committee should be aware so that it could hold the Department to account. The issue of corporatisation had been there and the entity had been asked to ensure that the corporatisation should be operational. The legislation should be amended. Although it had been stated that the entity was small, the sector being regulated was big. Regarding the self-funding, the baseline increment was necessary for infrastructure. The infrastructure should be there, and should be competitive.
Mr Dumisani Ntuli, Acting Deputy Director General: Maritime, DoT, responded to the question of enhancement of funding. He said that there was no crisis because of a shortage of funds. Rather, the funds would be increased in order to achieve the mandate. The Department had concluded discussions with the entity and they had agreed that the National Ports Act would be reviewed and amended. The amendments would be taken to the Cabinet by June 2018. The amendment was part of the business plan of the Department.
The Chairperson said that the amendment of the legislation was not in the APP for 2018/2019, and stressed that what Mr Ntuli was stating was a mere abstract.
Mr Ntuli agreed. He stressed that this was merely in the Department’s business plan, which was an internal document.
The Chairperson said that Mr Ntuli was talking in parables, as what he was saying was not part of the APP.
Mr Hlabisa said that he could see the frustration of the entity. He said that the entity had submitted its proposal to the Department and that it would be submitted to the cluster prior to being submitted to the Cabinet. He asked whether the Department’s business plan could be submitted to the Committee in order to be on the same page. There was a danger that if the legislation was not amended, the entity could not operate without a clear mandate and clear powers. All founding legal institutions would be reviewed to ensure that all entities had clear mandates.
Mr Fakir said that he had been invited to speak to the cluster, and would inform the Chairperson about the outcome of the meeting.
Mr Mufamadi said that he did not agree with the statement that there was no crisis. The DoT should move quickly to amend the Act in order to address the crisis that the entity was experiencing.
The meeting was adjourned.
- Department of Transport, RAF, RTMC, RTIA, C-BRTA, Ports Regulator 2018/19 Annual Performance Plan 5
- Department of Transport, RAF, RTMC, RTIA, C-BRTA, Ports Regulator 2018/19 Annual Performance Plan 3
- Department of Transport, RAF, RTMC, RTIA, C-BRTA, Ports Regulator 2018/19 Annual Performance Plan 4
- Department of Transport, RAF, RTMC, RTIA, C-BRTA, Ports Regulator 2018/19 Annual Performance Plan 1
- Department of Transport, RAF, RTMC, RTIA, C-BRTA, Ports Regulator 2018/19 Annual Performance Plan 2
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