The Department presented some background on the Road Accident Benefit Scheme Bill, and indicated that as the result of the Satchwell Commission, the following recommendations had been made:
- Measures to promote road safety and accident prevention;
- Eliminate fault as a criterion of entitlement of benefits;
- Periodic payment for loss of income and loss of earning;
- Maximum incentives and aids to rehabilitation;
- Adequate benefits to non-earners sustaining long term loss of earning capacity;
- Benefits for victims who sustained serious and long term disability and incapacity;
- Provision of quality medical care, rehabilitation and life care to accidents victims;
- Scheme should be reasonable, affordable, equitable and sustainable;
- Proper administration;
- An independent review and appeal system retaining access to courts.
As a result, Cabinet approved the Road Accident Benefit Scheme Policy in 2011, which is given effect to by the Road Accident Benefit Scheme Bill.
True South also briefed the Committee on the costing of RABS relative to RAF (Road Accident Fund); the estimated fuel per litre under RAF would be about R169.8 cents per litre, and R136.7 cents under RABS. Although there would be more claims under RABS but the severity of that will be generally lower values of claims. RABS was designed based on the no-fault system and benefits will be received by victims irrespective of their level of income and background including the unemployed. The general damages will, however, not be covered under RABS, but it introduces a new component of rehabilitation, even so the financial analysis and projection reported a 20% saving under RABS.
In terms of operational expenses, for professional fees, the estimated costs would decrease from R4.574 billion under RAF to R1.652 billion under RABS. The administration costs were estimated to remain the same under both dispensations at R1.980 billion. RABS will target victim’s financial needs instead of eligibility to claim general damages which are exclusionary. The rehab costs will amount to R7.280 billion. The total annual costs per annum will be reduced from R37.8 billion (RAF) to R30.4 billion under RABS.
The Department also briefed Members about the turn-around times, and indicated that for represented claims it took slightly more than five years for the victim to receive payment, whilst for direct and non-direct claims it took less in overall. It is difficult to reduce the turn-around times because the current system (RAF) is legalistic, and works as a compensation mechanism (loss basis), but not as a social security safety net (need basis).
Members asked how RABS will have a less average amount of claims if more people are eligible to claim; how RABS will result in a 20% saving for government; why the Department was not considering a hybrid system and why there was no thorough analysis of the RAF rather than proposing a new regime. They further asked about the Department’s stance on the clauses that were deemed unconstitutional; if the Bill could be challenged in court, was the department confident that it would pass the test of time; why many law societies challenged the common law provision; the general damages in RABS and professional fees figures and which of the Satchwell’s Commission recommendations were not taken into account by the Department.
In the afternoon session, the Committee asked the RAF:
- To clarify how petroleum levies contributed to the RAF’s coffers;
- If the RAF currently paid claims by undocumented immigrants? What been the rationale to pay out such claims? What were the reasons that the RAF was proposing that such claims had to be stopped?
- Was the RAF confident that the RABS bill would pass constitutional muster, as the Committee wanted to avoid a situation like that of e-tolls.
- If the Protection of Personal Information Act (POPI) could not be used as an argument in court, to further solidify the case for having RABS instead of the RAF.
- For clarity on a provision that the average annual national income benefit would have a residual income plateau.
- How RAF verified the identity of undocumented persons, and whether that affected claimants’ benefits -- were they limited only to medical benefits, or did they extend beyond that?
Mr Mathaba Mokonyana, Acting Director General, Department of Transport, stated that it was the Department’s turn to respond to some of the issues raised during the public hearings on the Road Accident Benefit Scheme (RABS) Bill.
The Department believed in the new regime and the scheme. The Department had worked very hard for years to come to this point, and there were commissions that were established to investigate the best possible social security scheme. In addition to that, there was the Satchwell Commission whose report encapsulates the issues raised in the Bill as a way forward for a better social security scheme for the victims of road crashes.
The Department would not have come to Parliament if it did not believe in what it is proposing. The proposed system will cover a wider reach. The current system is not sustainable and it needs to be transformed and reformed. The proposed no-fault system has been said to cost more and that it will not be financially sustainable. It is true that more will be paid to victims, and it is also true that the Department will reduce substantially the operating costs of the social security scheme. The involvement of professionals in the entire system will be reduced significantly. This does not mean that people will not have access to medical practises and so on but the point is to ensure that those operational costs will be reduced. If one looks at the current system, they would be able to see where most of the money would go. The proposed system is also introducing a rehabilitation aspect to ensure that victims that recover and go back to work are provided with the necessary rehabilitation facilities, because the system should not continue paying the victim if they are able to go back to work and earn a living.
Those who were advocating against the Bill brought in professional actuaries to justify why the proposed system should not go forward, but Members should note that the Department will do exactly the same thing to justify its position. The Department welcomed the criticism and it cannot fear the unknown forever, it was about time the new system was put to work.
Briefing by the Department of Transport on the RABS Amendment Bill
Mr Mokonyana thanked the Members for the opportunity and provided some background on the RABS Bill, which resulted from the Satchwell Commission. The last Commission that resulted in the current Road Accident Fund dispensation was the Melamet Commission, which ultimately resulted in the Road Accident Fund Act, 1996 (Act No. 56 of 1996). The Melamet Commission amongst others found widespread flaws in the current dispensation such as inefficiencies in some of the role players; restructuring of the Multilateral Motor Vehicle Accidents Fund, improve financial position of the Road Accident Fund and claim procedures. This Commission further advised that a no-fault should not be introduced.
In light of the flawed current dispensation, the Satchwell Commission came into existence, and recommended the following:
-Measures to promote road safety and accident prevention;
-Eliminate fault as a criterion of entitlement of benefits
-Periodic payment for loss of income and loss of earning
-Maximum incentives and aids to rehabilitation;
-Adequate benefits to non-earners sustaining long term loss of earning capacity;
-Benefits for victims who sustained serious and long term disability and incapacity;
-Provision of quality medical care, rehabilitation and life care to accidents victims;
-Scheme should be reasonable, affordable, equitable and sustainable;
-An independent review and appeal system retaining access to courts.
Cabinet approved the Road Accident Benefit Scheme Policy in 2011, which is given effect to by the Road Accident Benefit Scheme Bill.
Briefing by True South on the costing and funding model of RABS
Mr Francois Hugo, Actuary, True South Actuaries, took the Members through the RABS costing and funding report. In terms of costs of RABS relative to RAF, the fuel levy under RAF is about R169.8 cents per litre, and R136.7 cents under RABS. Although there will be more claims under RABS but the severity of that will be generally lower values of claims. RABS is based on the no-fault system and benefits will be received by victims irrespective of their level of income and background including the unemployed. The general damages will, however, not be covered under RABS, but it introduces a new component of rehabilitation, even so the financial analysis and projection report a 20% saving under RABS.
In terms of operational expenses, for professional fees, the estimated costs will decrease from R4 574 million under RAF to R1 652 million under RABS. The administration costs were estimated to remain the same under both dispensations at R1 980 million.
It is clear that the nature of administration expenses under RABS will be very different than under RAF. RABS administration costs will include costs related to medical administration. This will include pre-authorisation, case management, rehabilitation and vocational training. Under RABS there will also be more payments to be processed – in terms of more accidents covered, but also due to structured nature of payments (potentially more payments per one claim). On the other hand, RABS administrative costs will likely be lower than RAF due to the removal of fault, pre-defined benefits and reduced litigation all serving to reduce investigation time and associated costs.
RABS will target victim’s financial needs instead of eligibility to claim general damages which are exclusionary. The rehab costs will amount to R7.280 billion. The total annual costs per annum will be reduced from R37.8 billion (RAF) to R30.4 billion under RABS.
Briefing by the Department of Transport on RABS turnaround times
Mr Charakupa Itayi, Regulation Manager and Actuary, Road Accident Fund, took the Members through the turnaround times to process claims and make payments. He said that for represented claims it takes slightly more than five years for the victim to receive payment, whilst for direct and non-direct claims it takes less in overall. It is difficult to reduce the turn-around times because the current system (RAF) is legalistic, and works as a compensation mechanism (loss basis), but not as a social security safety net (need basis).
Responses from the Department on written submissions and input at public hearings
Mr Chris Willemse, Senior Manager: Regulation, RAF, took Members through the responses
[See relevant document for written responses]
Mr C Hunsinger (DA) said he was disappointed looking at the volume of the submission received but now at the end looking at what should have been absorbed by the Department; there is very little absorption of solutions and alternatives that were submitted. A public participation process is a process by which submissions are made by stakeholders and therefore it was not appropriate for the Department to respond in the manner it did.
Mr Hunsinger said we are in an awkward position and there are elements of speculation around the financial aspect of the comparison between what we have and what RABS represents. There are a lot of assumptions around building financial costing and models on RABS. He proposed that perhaps the Committee could have another session where it looks at specific sections. There is very little time to compare and look at everything that was presented, and he felt he did not have enough time to consider everything. He felt that the Department was rushed to finish up the process, and proposed for another session to look at the sections and construct real workshops to not only tick the boxes but to focus on elements to find solutions. The RAF in its current form needs intervention; it is true that RABS is a solutions but it is not the only solution. Whilst this process goes back so many years, there have been several occasions where input was requested but very little of that input was absorbed by the Department.
To True South, in terms of a thumb suck percentage, what margin of estimation and assumptions was used in doing these calculations, because he could not understand how it was reported that there would be more claims and payments under RABS but the average claims would be less? He asked how the average claim amounts would be less if more people could be eligible to claim. This immediately addresses the preamble that this would be a fair and reasonable scheme.
Secondly, on page 28, one of the assumptions which he was worried about is that in terms of administration, in light of the fact that we will have more claims and rehabilitation process, the financial projection is still the same for the administrative costs. This cannot be true, it cannot stay the same considering that we would have more claims taking into account the rehabilitation process as well. There is a shift predicted from public to private hospitals, what costing model did True South build into in the calculations that RABS will be 20% cheaper? Surely, there will be an extension of rehabilitation. A big understanding is needed to express the affordability of RABS; he did not understand how the system would result in a 20% saving. He also wanted to understand whether he looked at the increases around costs outside RABS which is necessary to make RABS work such as SASSA, medical, etc.
Mr Hunsinger referred to the no-fault system and said it seems that the Department is stuck on that system and employing Namibia as a case study was not sufficient because the road behaviour and accident rates are different to South Africa. The consumer surveys indicated that where there is no-fault system, there was a 25% premium increase on the vehicle insurance, apart from that there are other cost implications that would affect consumer’s pockets. Why is the Department not considering a hybrid system? Surely, there are other options, and what about opt-out or compulsory insurance pay out? There must be another way of capping fees for attorneys and other professionals. So why isn’t there a focus to do a thorough analysis of the RAF and address those issues currently facing RAF in the new amendments in the Bill rather than attempting to wipe off everything?
Mr Mokonyana said that we cannot fear the unknown forever but there are fears on the horizon if we only focus on the RABS as “the solution” instead of “a solution”
He said that he did not want to leave the Committee with the perception that the Department did not consult widely. In one of the presentation the Department indicated how many commissions it went through up until the latest one which provided us with a direction to take. It is incorrect to think that this was not well-thought or researched or that the Department did not absorb public input.
The Department did not workshop for the sake of ticking boxes, and the majority of the people were consulted and some of their inputs are included in the Bill before the Department came to Parliament. Some of the inputs from various stakeholders demonstrated significant desperation which was very surprising about what is there to lose if we cross over to RABS and who will be those losers. When the Bill loomed, people were even forming funds to try and fight this bill tooth and nail. We would not have come here and waste time if we were not sure that this is working and it is going to work.
The current deficit is at R220 billion and it is increasing; it will implode if nothing is done, maybe RAF may not be the only solution but we can build on it. We do not necessarily have to be referred to as a “scheme”, it can be called anything. Let us work together and assist each other on where we find problems but the focus should be on the accident victims. Lawyers in the current situation are the biggest beneficiaries in a claim than the victim.
Mr Hugo responded that on the margin of uncertainty, there is a lot of uncertainty that went into the calculation but they deal with uncertainty in their line of work. They estimate and indicate parts of confidence in those estimations. If the Committee feels it cannot make a decision without a perfect knowledge on the table, that means we won’t be making any decisions because actuarial scientists do not often have complete or perfect knowledge when drawing estimations. The number has no bias and there is no conflict of interest from his part, but the only thing he was worried about was the outcome of implementation. He has intricate knowledge of the RAF system and consulted other people who had extensive knowledge where he lacked.
On the rehabilitation number or cost, you need set up protocols to pay admin costs related to that and an average case costs his company R150 000. He cannot provide a clear certainty of that number and nobody will and there is another calculation that is being done by an academic at the University of Cape Town and there is no conflict of interest there. Hopefully, that analysis will provide some certainty because it is said to cover a wider range of the aspects. With regards to the admin cost question, a lot of thought went into that number and if you look at the trail since 2014 there were changes. Costs will be higher, but for rehabilitation and administration expense may run concurrently. The cost you are looking at is a long term cost, but when we did the crossover we allowed some duplication of costs. Hence, the number is the same.
There will be more claims and payments under RABS– the claims are going to be much simpler. The makeup of the resource component within RAF will change and then a number was determined, and it was decided to leave it the same because there would be a small change. We do allow for extra cost associated with other things, and there is a sensitivity included but that will not change any decision making processes.
On medical costs, this is an uncertain one and we only allowed for 20% additional medical expenses and we know how much medical expense are coming from both public and private hospitals and we did allow for additional costs related to that. The rehab is the larger portion of those costs.
There will be more claims and regular payments and there is also the fact that the claims will be simple and as everyone may know a lot of monies at RAF goes into the professional aspect of it.
Mr Hunsinger said that there are a number of solutions that have been proposed and that it was good to know that they can be explored by the Department as well.
Mr T Mpanza (ANC) said he had a different view in terms of the work that has been done by the Department. The presentation was very helpful. He wanted to know what were the compromises the Department would like to make, and it seems that the Department is leaning towards RABS whilst others towards RAF – we need to identify the gaps between the two systems and find a way to close those gaps between the systems. With regards to the unconstitutionality of the bill regarding the removal of common law, he wanted to hear more about the Department’s stance on the clauses that were deemed unconstitutional. Thirdly, should the bill be challenged in court, as a Department are you confident that it will pass the test of time after looking at all the financial and legal implications of the bill?
Mr Willemse replied that proposals we made for revisions and exclusions; moral hazard has been excluded in the bill. The proposal was that those claims should be excluded. People who have intentionally hurt themselves were excluded in the Bill, and there was a provision made for those that were found guilty for schedule one offences except for emergency medical treatment. In terms of prescription period, there was a proposal to accommodate that.
The period to lodge an appeal, it was proposed that the 30 day period was not sufficient and the proposal submitted 180 days instead. What is fundamental on the objections by many commentators is still an issue; the proposal is based on a cabinet approved policy which provides for a no-fault system. That recommendations came from the Satchwell report, if you introduce faults then you introduce intermediaries and that escalates costs. At no-fault, there have been no concessions made. In terms of the common law claim, there is guidance provided by the Constitutional Court.
Mr L Ramatlakane (ANC) said the presentation from the Department was helpful in that it outlined the process and where it started until there was a policy recommendation of a White Paper. It seems that even from the case studies of other countries we are on the right direction.
On the constitutionality issue, this was addressed and authority of addressing it was provided, but the professor had two views on one issue and that is problematic for him. Why is it that people argued this point of common law when there is a legal Constitutional Court precedent on this matter? Perhaps this can be flagged until the Committee invites the legal or statutory bodies that these law societies and companies ascribe to because they all were opposing the removal of common law application in this Bill when there is legal precedent on the matter from the Constitutional Court.
Mr Ramatlakane asked True South to explain the general damage on RABS and professional fees figures. Thirdly, he wanted to know which of the Satchwell Commission’s recommendations were not taken into account by the Department.
Mr Ramatlakane suggested that the Committee should perhaps consider inviting the Department of Home of Affairs because there are serious allegations against the department regarding resolving people’s statuses, and this poses a problem for RAF or RABS (in the future). He had asked the Deputy Minister about this but he refuted, so before we have a compromise clause, we should first hear from Home Affairs about the turn-around problems. Nobody has submitted a case regarding this issue to the Committee.
Mr Willemse responded that in terms of the Constitutional court judgements, there are various legal views about what the legal position was. One of them is that, RABS proposes a new scheme, therefore; that Constitutional Court decision on the removal of common law in the Bill does not apply to the new scheme. It is a legal argument and if there is substance to it then that is something would have to be tested in court. There was a senior counsel in this regard within the Department, and that opinion confirmed that there is precedent in removing common law claims on the Bill.
If one considers the real financial direct interest on the RAF claims that the attorney, medical professionals and counsels have, there is a conflict. The Department has implemented policies and procedures where it sample tests the claims to ensure that RAF does not under-settle. In terms of professional negligence, it does happen but it is not just with RAF. Victims will now know how much they would be receiving because an offer would have been made, and the money would be paid directly into their bank accounts. There is no certainty about when the victims will receive their money in the current system.
All the intermediaries that presented performed work for the claimants and attorneys and sometimes even for RAF, their livelihood is impacted on maintaining their status quo. So they are conflicted, but the staff of RAF are not conflicted. In terms of section 27(4), the default position in terms of the response should stay as is, but if the Committee feels that leeway should be given then, the Department can work around that.
Mr Hugo responded that there is a general damages component under RAF which disappears under RABS, perhaps pain and suffering, under the new system victims cannot claim pain and suffering under RABS. Currently there is no provision under RAF for rehabilitation expenditure.
There are a lot of losers in the new systems but there will also be more winners, the ones that lose out will most likely be more. People that will require rehab will be the winners, because there is now the provision under RABS which did not exist under RAF. Also poor people will most likely be the winners under RABS, they will still get general damages but they will not be entitled to claim loss of income because they have to demonstrate future loss of income but if you were unemployment you would not really be entitled to make those claims. The rich are going to get less, because the benefit amounts will be capped.
On various actuarial reports, some of the presentation took all the sensitivity aspects of RABS and presented everything that could go wrong. There is nothing wrong with that but it was not a balanced view. The UCT report that is still coming out is a proper actuarial analysis that will take everything into account, all aspects and a wider range of people will be presented in that report. Perhaps, the financial analysis will change as the result thereof, but there are no differential views at this point because pretty much almost the same variables were covered in their analysis.
Mr Ramatlakane said there was a direct accusation in the presentation by the Law Society of the Northern Cape claiming that the poor was going to be worse off on this system. So where is the Department missing the point that this is for the rich as they claim?
Mr Willemse said that firstly a rich person under the current dispensation is the biggest winner because they would be able to demonstrate substantial loss of income, because their losses are capped but not the income. They can prove more, but under RABS the actual income is capped which brings the basis much lower. This has a huge impact on the rich. For those who are unemployed, under RAF it would be difficult to prove a loss of income or earning capacity in many instances, it is a very difficult claim to make. Under RABS there is a deeming income, we deem an income for you. If you earn less than the deeming income, the scheme will lift you up to the deemed income. The main contention is the general damages, such as lifestyle benefits.
From a common law perspective, the challenge would be getting something in this Bill that will require the administrator to make a lump sum that is substantial enough to recoup contingency fees and disbursements. Currently that will be a problem because everything is paid in a structured manner except funeral benefits but that is also marginal. In addition, under the current dispensation children that come from rich families are most likely to receive more benefits because it would be easier to demonstrate possible future loss of income as the child would have had access to higher education. However, for children coming from poor families it would be difficult, because their conditions would have dictated their possible future income. To mitigate these imbalances, under RABS all benefits will be capped regardless of whether children come from a rich or a poor background.
The Committee paused for a lunch break.
On the resumption, Mr Sibande said the RABS Bill sought to redress the unequal treatment of South Africans in the past. The Department of Transport (DoT) had referred to the Attorneys Fidelity Fund (AFF), and he wanted to know who financed that fund.
Seeing that some presentations had spoken to the Departments of Social Development, Health, Home Affairs and International Relations, did that mean that the Committee had to invite those departments?
The stakeholders at the public hearings for the RABS had bemoaned the locations of rehabilitation (rehab) centres, as they had been found to be too far from those they were supposed to assist.
The name of the benefit scheme was really not that important for him, but if there was going to be meaningful redress and reform and accident victims would be assisted, then it could be called anything.
Mr Sibande said that in his constituency, he had observed how the Road Accident Fund (RAF) had attempted to assist road accident victims to have their claims paid directly to them and not through lawyers. There was a piece of legislation that protected attorneys from accountability when dealing with road accident victims’ compensation from the RAF. As the money sat in attorneys’ trust funds, the interest accumulated seemed never to be transferred to the victims. What happened there?
He asked RAF to clarify how petroleum levies contributed to its coffers.
Mr Willemse replied that the AFF was funded through interest earned from trust funds and investment funds.
In terms of payment, a represented claimant received money through his/her attorney, as the RAF paid the claim to the attorney’s trust account as legislated.
There definitely were documented instances where attorneys paid claimants less than the money the RAF had paid into the attorney’s trust account. The RAF had referenced a constitutional court (ConCourt) matter in its presentation to the Committee, where a certain segment of the legal fraternity argued that because there had been an established practice, attorneys had to be allowed to continue to use common law contingency fee agreements, in terms of which the attorneys could agree with claimants to charge any percentage of compensation off the claim. The agreements in dispute had provided for 30% for lawyers’ fees. Following that ConCourt judgment, there had been various attorneys that had continued to use common law contingency fee agreements. Even with a 25% contingency fee agreement, one could find that the party-and-party costs, which were costs in law, went to the claimant and were utilised to defray some expenses. However; contingency fees would still be deducted from claimant’s capital payments, so claimants would never get their full settlement amount. There were costs to using an attorney, an advocate, a medical practitioner and a actuary, and therefore everyone seemed to have a financial interest in the payments made by RAF. The only difference was when there was a direct claimant and the RAF instructed the actuary and the medical officer, and there was no litigation. The RAF saved then, because there would be fewer overheads. The claimant would then receive 100% of the amount directly paid to the claimant.
It was correct that there were a number of rehab centres across the country and that access to them sometimes became problematic, but the medical benefit provided to a beneficiary included transport to a beneficiary to receive healthcare services and accommodation, and even when one needed a caregiver to accompany one, this was also provided for in the benefit.
The fuel levy was set by the Minister of Finance once a year, or as and when circumstances required it. It was not impacted by exchange rates, which did affect oil prices. What the RAF received was fixed, and if fuel prices increased midyear that did not impact the RAF’s fuel levy contributions. The newly approved increases for 2018 had not accrued to the RAF yet.
The R1.70 c was a fuel levy contribution, but the actual levy that accrued to the RAF scheme as of the 2017/18 financial year (FY) had been R1.63c, where the Minister of Finance had approved a 30c increase which had pushed the RAF accrued levy to R1.93c, effective from 1 April 2018. That new levy would reach the RAF only in July, as there was that two to three months’ delay between the time when the levy was collected by the South African Revenue Services (SARS) through National Treasury (NT), and the time it was received by the RAF.
Mr Sibande reiterated that he required a response to the rehab question he had asked. What was the no fault system which, together with the legislation, mandated that claims had to be paid into an attorneys account? Why was there no option for a claimant having a choice between receiving claims directly or having them deposited with a lawyer?
Mr Willemse repeated his earlier response regarding the medical benefit guaranteed to beneficiaries to receive rehabilitation. Possibly that would not always be where the beneficiary stayed, but transport and accommodation would be included in the benefit. That was similar to the benefit of a reference hospital, where beneficiaries were sometimes referred to for treatment.
Where the claimant elected to receive money directly where there had been an attorney representing a claimant, the RAF had tried to establish such a system historically. The challenge raised by the legal profession had been that the RAF had been interfering with the contractual relationship between the attorney and his client, in that the client mandated the attorney to act on the client’s behalf. Consequently, compensation was then paid via the legislation into the attorney’s trust account, whereafter the attorney accounted to the client. At that time, the RAF had sought to make capital payments directly to the claimant, and party-and-party costs to the attorney. There had been a legal challenge at that point in time in terms of the process followed, and that system had been stopped. The RABS bill was attempting to legislate for direct payments to the beneficiary.
Mr Mpanza sought clarity on the proposal that in terms of the claims by undocumented immigrants, the RAF was proposing that such persons had to be allowed up to three years to get their paperwork in order as asylum seekers in South Africa (SA) at the Department of Home Affairs (DHA). Did the RAF currently pay claims from undocumented immigrants? What had been the rationale to pay out such claims? What were the reasons that the RAF was proposing that such claims had to be stopped?
Was the RAF confident that the RABS bill would pass constitutional muster, as the Committee wanted to avoid a situation like that of e-tolls?
Mr Willemse said the current system for a claim by an undocumented person was that the claim was referred to as a claim in derelict. What the RAF was proposing was that the common law right for a derelictual claim be removed completely and substituted with a social security benefit scheme (SSBS). In such a scheme, different rules could be applied and the ConCourt had indicated that with an SSBS, not everyone in the same country could be afforded the same benefits. The difference was what currently was in use, which was a common law right where the RAF did not differentiate based on residence, and undocumented immigrants would have a claim up to what could be proven in terms of the rules of the scheme. In RABS, there was no longer a common law derelictual claim, but a social security benefit provided and because it would be SSBS, the rules could be amended where there was ConCourt precedence, and it currently was enforced by the South African Social Security Agency (SASSA).
Mr Willemse said that RABS -- in whatever form -- would be challenged as long as intermediaries would receive less, and certainly the outcome of that challenge would be a ConCourt determination. The RAF was comforted by the precedents which supported what RABS was attempting to do. What had been previously challenged in 2008 about the constitutionality of the medical benefit had been addressed in the RABS.
Mr Mpanza asked how the RAF would know that some claimants were undocumented immigrants.
Mr Willemse replied that one of the requirements to claim from the RAF was proof of identity, not only where a number of documents were needed to prove identity, but the RAF form had a section for that proof. The RAF also did a proof of life exercise through a DHA database. RABS would require the same proof of residence and life through linking with various other databases. RABS was also accommodated in the Protection of Personal Information Act (POPI).
Mr Mpanza asked if POPI could not be used as argument in court to further solidify the case for having RABS instead of the RAF.
Mr Willemse said RABS empowered the administrator more and went further than the current RAF Act, but fraud would always be there. However, RABS would enable better management of processes and minimise fraudulent activities.
Mr Ramatlakane recalled that previously the discussion around sub-clause 24 (4). He said that if, at the time of the road accident, an injured person or deceased breadwinner was not a citizen or permanent resident of the Republic or the holder of a valid permit or visa issued in terms of the Immigration Act or the Refugees Act, the liability of the Administrator was limited to payment for the provision of emergency health care services, provided such injured person or deceased breadwinner, while he or she was alive. This had been about the rights of children resident in Zimbabwe, having been fathered by a South African, not being able to stand in perpetuate in terms of the RABS. Could the RAF elaborate on that exclusion and the rationale behind that and submit a written response as well?
Mr Willemse said the RAF would submit a written response, but the ConCourt had referred to matters in the RAF’s response which had dealt with a social development matter. The current legislative framework for social development provided for certain exclusions for certain categories of persons, and the ConCourt had indicated that it was not open for everyone in SA to benefit from social security benefits in SA. Therefore, from a constitutional perspective, there was confirmation that a system such as RABS, which was no longer derelictual but a SSBS, did not have to be open to everyone. The middle ground proposed had been that if there would be a challenge to clause 24 of RABS on the basis that other departments were not living up to their obligations to provide access, or were not processing adequately, which could result in prejudice to a claimant in terms of accessing benefits in terms of the RABS dispensation. The defence of clause 24 was better served if the RAF said that it would not be timing the residential status of a claimant from the time of the occurrence of the event, which was what the clause provided currently. The middle ground removed the time of occurrence in terms of determining a claimant’s residence status, and allowed a prescription period of three years in which a claim could be lodged. If at the time the claim had been lodged a claimant’s residence status had not been resolved there would be no claim. In that sense, there was three years for a claimant to take whatever legal recourse necessary to force whoever was supposed to provide a service, if that became necessary.
Mr Ramatlakane asked what the RAF would call the RABS bill to ensure that it was in line with the ConCourt judgment and would have few constitutional challenges.
Mr Willemse said the name of the SSBS would not determine the nature of the scheme. If it was a no fault scheme, which was central to a derelictual claim, then it would no longer be common law but a benefits scheme. The legal challenge would deal with the issue of fault, and specifically a common law residual claim. The court would then have to decide whether the SSBS would achieve a legitimate government purpose by making RABS affordable, expanding access and other requirements.
Mr Sibande wanted clarity on a provision that the average annual national income benefit would have a residual income plateau.
Mr Willemse replied RABS provided for a flat deemed income for everyone who in the previous three years preceding the road accident had not been employed; if the victim had been employed, the victim would receive the highest income benefit over that period as a basis of the calculation. Unfortunately, for everyone else who was a student, scholar or had not been in employment three years prior to the accident, the benefits were calculated based on the average annual national income. The average annual national income served as a minimum safety net, because there could also be instances of persons that were very well-off, who would be road accident victims. They would also default to the same minimum level, even though their earnings were a lot more. The RABS would not compensate a victim for their residual income, and that was the difference between a derelictual scheme and an SSBS. The SSBS was not intended to address what had been lost, but addressed a need as opposed to a loss.
Mr Ramatlakane wanted to know how the RAF verified the identity of undocumented persons. How did that affect a claimant’s benefits -- were they limited only to medical benefits, or did they extend beyond that?
Mr Willemse repeated his earlier response that one of the requirements to claim from the RAF was proof of identity. Not only where there a number of documents needed to prove identity, but the RAF form had a section for that proof. The RAF also did a proof of life exercise through a DHA database. RABS was also accommodated in the Protection of Personal Information Act (POPI). Undocumented persons would receive emergency medical attention if the claim had not prescribed, because the administrator had an obligation to assist undocumented claimants.
The Chairperson asked whether the RAF paid benefits for undocumented persons currently.
Mr Willemse replied that indeed RAF paid the full claim, because status had nothing to do with a derelictual claim. RABS, by virtue of being a SSBS, did away with derelictual claims where the SSBS rules provided for limited benefit coverage.
Ms Xego asked whether, if RABS were to become law the following week, claims submitted under RAF would still be processed through the RAF dispensation, or through RABS.
Mr Willemse said RABS had a transitional provision. Everyone who met with a road accident on the day, their rights vested in terms of the operable law, so all claims submitted before the time of enactment of RABS would be finalised in terms of the current law, which was the RAF. Even under the RAF, there were claims that were being processed through the dispensation that had preceded the RAF.
Mr Mpanza said undocumented persons paid all indirect taxes in SA, and he wanted to know the RAF’s view on the opt-out option.
Mr Willemse said the opt-out option would mean the RAF would maintain the common law right for certain claimants injured by road accidents. That would create a constitutional issue.
The Chairperson requested the RAF to submit a detailed response on what full benefits the RAF gave to undocumented persons involved in road accidents, and what limitations RABS would involve compared to the RAF.
She asked whether the Committee believed RABS was desirable or not.
Mr Ramatlakane submitted that RABS was desirable.
Mr Hunsinger said that intervention was necessary with the RAF, but regarding the RABS in its current form, he was not convinced about the calculations as they were projection-based. The fact was that RABS would be health institution dependent -- there were two concurrent schemes running parallel without a clear calculation, and the uncertainty in costing the scheme concerned him greatly. He pleaded for other options to be considered, and said he was not supporting the desirability of RABS.
Mr Mpanza agreed to the desirability of RABS.
The Chairperson then accepted and read the motion of desirability of RABS for the record. She asked for a mover for the motion of desirability.
Mr Hunsinger requested that the Committee postpone the decision on desirability, subject to consultation with political party caucuses.
Mr Ramatlakane said the desirability of the RABS did not exclude an opportunity for Mr Hunsinger to consult his constituency, and therefore the Committee could note Mr Hunsinger’s request to consult his caucus, as he was not opposing the desirability. He then moved for the desirability of RABS.
Mr Mpanza seconded the motion of desirability for RABS to proceed.
Mr Hunsinger said although he was not opposed to intervention into the RAF, his problems were the two features of RABS, including ‘no fault’ or ‘common law’ being part of the motion of desirability.
The Chairperson said the ‘no fault’ and ‘common law’ issues were objects of the RABS. Therefore it would be difficult to remove those from desirability.
She noted the dissenting voice of Mr Hunsinger, and said she would submit that the Committee had agreed to the desirability of RABS.
She informed the Committee about the proposed process which the Committee would use for public hearings on RABS. Additionally, she read out the dates of public hearings and the towns where they would be held.
The Committee then deliberated the venues of the public hearings in the nine provinces. When the venues had been finalised, the meeting was adjourned.
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