The Minister of Transport said that when he was appointed Minister most of the board terms of DoT entities were about to expire, whilst others did not have their full board complement. This was bad because the Ministry had to do everything all at the same time; but perhaps it was also a chance to put some stability into those entities. The post of Director General had been advertised and it had gone through the process of short listing, along with the five Deputy Directors General vacancies. Although DoT is at the point of short listing, he was considering starting with the DG appointment first so that the new DG can participate in the appointment of the DDGs without advertising the posts again.
The PRASA Interim Board had been appointed for a period of up to 12 months but that had not been the original idea. However, the speed at which things happened including the resignation of the previous board members meant he had to act and make interim measures. The challenges at PRASA were vast and a full term Board was required. PRASA seemed intent on doing anything but fulfilling its mandate of providing passengers with safe transport. This was why he had not been prepared to appoint a permanent board. He needed further engagements with the Interim Board before he could settle on a permanent Board. However, the Interim Board is a board and they must establish stability. He has chosen people that have a track record of ethical behaviour and commitment to transformation. The role of the Interim Board was to bring stability to PRASA. The Board might not have to operate for the full 12 months, depending on his assessment as time unfolds. PRASA has been losing money like an ATM and he is now sitting with a pile of papers from creditors who have not been paid by PRASA. Some seemed genuine but others were not, so the Board was instructed to defend PRASA against illegitimate claims.
The Road Traffic Management Corporation did not have board vacancies. The Road Accident Fund (RAF) Board had five vacancies and it had enormous challenges as it was fighting badly amongst itself, even in front of the Portfolio Committee. He had decided to call an AGM which would take place on 8 June to engage the RAF. The Minister suggested that perhaps the board members should resign and the Board be reconstituted because it is dysfunctional. The Minister said he was being reported to the Public Protector by the RAF board chairperson for failing to dismiss another board member because they did not see eye to eye. RAF is in an utterly bad shape.
The South African National Roads Agency Limited (SANRAL) Board term expired in February 2018 but it has been extended until the end of June. He hoped he would have appointed the SANRAL Board by that time.
The Airports Company of SA (ACSA) Board appointment would be finalised hopefully by the end of June. Board members had resigned about a month ago and it now does not meet the requirements of a functional board. It exists but there are certain functions that it cannot perform at the moment.
The South African Civil Aviation Authority (SACAA), Air Traffic Navigation Service (ATNS), and Railway Safety Regulator Boards were fine. As for the South African Maritime Safety Authority (SAMSA) Board, the vacancies have been advertised and the Minister intends to appoint the board soon.
Members asked the Minister had been hesitant to appoint a permanent PRASA board which was badly needed and why appoint an Interim Board; what was being done to improve PRASA systems while investigations were ongoing; on what grounds was the new Acting PRASA CEO appointed as his financial standing was poor; what was being done to hold previous PRASA board members to account, especially those responsible for driving PRASA into the ground; what was being done about the allegations against the ACSA CEO; what were the timelines for filling board vacancies and senior management positions; how can Members gain access to the shareholder compacts of DoT entities; how does one legalise the decisions taken by non-quorate boards; how are the allegations of conflict of interest in the RAF Board going to be resolved; when would a new RAF Board be appointed to eliminate its unnecessary challenges.
The Department outlined its Quarter 4 Report stating it achieved 89% of its quarter 4 targets. It gave a financial report: It underspent by R7.8 million on Compensation of Employees due to posts that could not be filled. It overspent by R7.2 million on Office Accommodation. The Integrated Transport Planning programme slightly over spent its budget for Compensation of Employees. The programme saved R5.7 million due to underspending R1.1 million on Goods and Services due to projects completed in-house (Roll out of National Transport Master Plan Interventions, White Paper on National Transport Policy, Regional Transport Market Access Strategy , and Single Transport Economic Regulator Bill) and because delays in the Road Freight Strategy could not be competed. On Rail Transport, DoT underspent its budget by R4.8 billion. This was due to the last transfer payment to PRASA being withheld due to low capital expenditure by PRASA.
Members asked about monitoring of provinces to ensure value for money for expenditure of budgets; if DoT was going forward with the Taxi Recapitalisation programme; if integrated public transport was applicable to metros or local municipalities as well; how far DoT was with integrated modes of transport; where the underspent money went for the Public Transport Network Grant; if the DG was privy to the signed tripartite agreement between the taxi industry, Golden Arrow and the Western Cape Province; what measures have been taken to mitigate North West and PRASA expenditure concerns; why DoT was continuing to hand out money to the 13 cities when there was clearly no value for money spent in some cities; the progress on the scholar transport; if DoT has complied with the audit findings and recommendations; progress on the many pending court cases DoT was facing; if DoT has minimised the card licence challenges.
Minister's briefing on Board vacancies in Department of Transport (DoT)
Minister of Transport, Dr Blade Nzimande, said that when he was appointed Minister most of the board terms of DoT entities were about to expire, whilst others did not have their full board complement. This was bad because the Ministry had to do everything all at the same time; but perhaps it was also a chance to put some stability into those entities.
The post of Director General had been advertised and it had gone through the process of short listing, along with the five Deputy Directors General vacancies. Although DoT is at the point of short listing, he was considering starting with the DG appointment first so that the new DG can participate in the appointment of the DDGs without advertising the posts again.
The PRASA Interim Board had been appointed for a period of up to 12 months. The Minister was uncomfortable appointing an interim board as, given the enormity of the challenges at PRASA, a full term board was required. However, it was due to the speed at which things had happened including the resignation of board members. The Board would not have to operate for the full 12 months depending on his assessment as time unfolds. The hearings in Parliament would have shed some light on how some of the challenges at PRASA could be addressed. The Passenger Rail Agency of South Africa (PRASA) was not providing reliable transport to the public. PRASA has been losing money like an ATM and he is now sitting with a pile of papers from creditors who have not been paid by PRASA. When he arrived he had to deal with a big claim from the company called Siyaya. He then suggested to the Board that it must challenge everything that could be challenged in court because there was reason to believe that it did not perform the duties that it said it had performed.
The Road Traffic Management Corporation Board did not have board vacancies.
The Road Accident Fund Board had five vacancies, but there were enormous challenges as it was fighting badly amongst itself before the Portfolio Committee. He decided to call an RAF Annual General Meeting (AGM) which is taking place on 8 June to engage them. He suggested that perhaps they should resign and the Board be reconstituted because it is dysfunctional. If he decides to dissolve the Board that is not good for people’s CVs, but he has not yet made up his mind about which direction to take. The Minister is being taken to the Public Protector by the RAF board chairperson because he claims the Minister is failing to act against another board member he does not see eye to eye with. The Minister did not think the role of the Public Protector was to assist a board member to get rid of another board member, but he would not judge. RAF is utterly in a bad shape.
The South African National Roads Agency Limited (SANRAL) Board term expired in February 2018 but it has been extended until the end of June. He hoped he would have appointed the SANRAL Board by that time.
The Airports Company of South Africa (ACSA) Board appointment would be finalised hopefully by the end of June. Some board members had resigned a month ago and the Board does not meet the requirements of a functional board. It exists but there are certain functions that it cannot perform at the moment.
The South African Civil Aviation Authority (SACAA), Air Traffic Navigation Service (ATNS), and Railway Safety Regulator Boards were fine. As for the South African Maritime Safety Authority (SAMSA) Board, the vacancies have been advertised and the Minister intends to appoint the Board soon.
Mr C Hunsinger (DA) thanked the Minister for the overview and providing insight on his views on the current status at DoT entities. With regards to PRASA, the Minister stated that he was uncomfortable about installing an interim board, but it seems that the Minister is reluctant to act. It seems that only after the investigations have been concluded, the Minister would then make an informed decision on a permanent Board. How will that make any difference because PRASA is already paralysed? He asked why the Minister was hesitant to act now; he should go ahead and appoint the full-term Board.
Mr M De Freitas (DA) appreciated the Minister’s honesty and candidness about the DoT entities. However, he was concerned about the lack of speed on PRASA. Why is it so easy to appoint an interim Board but not a permanent Board? There are some good people on the Interim Board that could be a good fit for the permanent Board. Secondly, what is being done to try to improve PRASA systems while the investigations are ongoing? The new PRASA Group Chief Executive was appointed this morning for a period of 12 months. On what grounds was he appointed as it is reported that he has got into trouble financially, both personally and professionally. For a company like PRASA, what was the rationale behind that decision as PRASA itself is confronted by its own financial woes? He asked what was being done to hold previous board members to account. He asked for some light about the issuing of the outstanding 2016/17 PRASA Annual Report.
Mr De Freitas said SANRAL had become inefficient in its spending patterns when one of the executives left. There are many officials that are not happy with the way the entity is now being managed. Perhaps, the Minister can look into this.
He commented that what happened at the Committee meeting with RAF was very embarrassing. The Board cannot even put up a fake united front because the divisions are so bad. He agreed with the Minister that they should be fired if they have not resigned or refuse to do so. He said there have been allegations against the ACSA CEO, and whether they are true or not, they appear to be ignored. He asked for comment on the allegations.
Mr T Mpanza (ANC) asked about the timelines for filling the vacancies of the boards and senior management positions. He emphasized the urgency in filling them in.
Ms S Xego (ANC) appreciated the commitment shown by the Minister and prioritising filling the DG post so that the DG can participate in the appointment process. Hopefully, RAF will sort out its issues.
Mr L Ramatlakane (ANC) asked the Minister to share some light on the shareholder compacts with the entities. There are concerns that have been going on for two years about the inadequacy of the shareholder compacts. He asked if Members can be privy to the compact or how Members can gain access to it. It is difficult to hold the agencies to account according to what they have committed to implement if the shareholder compact is not accessible.
Secondly, once you have a board that is not quorate, you run the risk of illegal activities taking place, as seen at PRASA; and then nothing moves. He asked about the vacancies and non quorate boards. It is now June and one would think that boards have to sign off on the Annual Financial Statements and Annual Report but that can only happen when a board is quorate. How do you legalise the decisions of a non-quorate board? This needs to be looked into in terms of company law.
There have been a lot of allegations about conflict of interest about some RAF board members. He asked how this would be resolved. Some of these conflicts of interest have been put before Acting Director General Mr Mathabatha Mokonyane but nothing has happened. Members are beginning to think that there is some level of protection that is happening.
Mr M Sibande (ANC) asked when the RAF appointments are going to be finalised to eliminate all its unnecessary challenges. He was concerned that the current Board is dysfunctional and had embarrassed itself before the Committee. There is a RAF Bill unfolding in Parliament now, so what are the timelines? Secondly, it is not only about filling the vacancies but we must develop an instrument to monitor the entities because some of the entities always send junior people to Parliament, and that makes it difficult for Parliament to deal with pertinent issues. He shared his concerns about the allegations of collusion because when people mess up in the boards and there is no consequence management, they get appointed again on other boards. He complained that it was taking a very long time for PRASA to submit its Annual Report and this makes Parliament’s work very difficult.
The Chairperson stated that the Committee would be very happy if the RAF matters could be dealt with expeditiously. Some of the items in the Annual Performance Plan did not gel and the Committee recommended that it re-do it to ensure that its targets were SMART. In addition, the Board was instructed to institute a forensic audit, but somehow we cannot put our finger on whether some of the claims were truthful. It is good that there is now progress with the boards, because last year we saw that the non-quorate PRASA Board could not sign off on important documents and plans. The role of PRASA is to provide passenger rail for South Africa. We anticipate that they focus on ensuring that it happens. There are deep operational challenges that need to be looked at.
For the past two years, Members have discussed Transnet and PRASA, and it cannot be accepted that PRASA must pay Transnet for using its rail works. The Minister must look into this because these entities operate within the same lines and it must be dealt with expeditiously.
The Minister responded that there is no hesitance on his part about the PRASA Board, they must move expeditiously. Technically, there is nothing that can be done about the Public Protector Report because it is facing a court review. Various investigations have reported that there are six reports and those must be studied and then DoT can act. He indicated that PRASA was not adequately defended in some of the court battles and claims; hence, it became an ATM. Therefore, he instructed the Board to defend PRASA. Members must take note that some of these claims and battles stemmed from internal disagreements. He told PRASA to submit the Annual Report to Parliament, perhaps Members can ask them this afternoon when are they going to submit it along with security at railway stations.
The Minister said the appointment of the PRASA Interim Board is to lay the basis to turn PRASA around to do what it is supposed to do. In his Budget Vote speech, he said that he would play his own role to ensure that stakeholders are engaged, with the priority being Cape Town. PRASA is giving out millions to security companies but there is hardly any impact, and it cannot be business as usual. Without pre-empting things, he has asked the Minister of Police to sit down and discuss security not only for rail but also airports. He is not hesitant but he was being frank. PRASA seemed intent on doing anything but fulfilling its mandate of providing passengers with safe transport. This was why he had not been prepared to appoint a permanent board. This was a dilemma. He needed further engagements with the board before he could settle on a permanent Board. However, the Interim Board is a board and they must establish stability. He has chosen people that have a track record of ethical behaviour and commitment to transformation.
On the appointment of Sibusiso Sithole as PRASA CEO, he replied that the Board had approached him about the person it identified for the Acting CEO position. The reason it was so urgent is because there was actually no Group CEO. It had been the Company Secretary who was Acting CEO and the Minister was not happy with that arrangement because it was a desperate situation. It is bad to get an outsider to come in and act whilst preparations are ongoing to get a permanent CEO. The legal advice he had received on vetting the new CEO was that the person has not been charged with anything and has never appeared before court for his personal and professional financial difficulties. He emphatically said to Mr De Freitas that you will find it very hard for any black South African who grew up under apartheid whose name did not appear on a credit bureau list, including the Minister himself. Therefore, we should not punish people for that. We need to look at the nature of the debts to see if it was recklessness and so on, but really these are difficulties that people sometimes face. He understands the seriousness of such but unless there is a court order against that person saying that he is not fit and proper, he was hesitant to punish the person. This is not tolerance of corruption. For non historically disadvantaged South Africans it is a shame to have a debt but for the majority of South Africans it is normal. However, if he was wrong and he picked up other things against the individual in question, he would raise them with the Board. He found it embarrassing as well that PRASA had not submitted an Annual Report.
He did not have a problem calling SANRAL to Parliament and he would also be present so that members can ask those questions directly. With that being said, SANRAL is one of the best entities of DoT, even though it is not perfect. It has challenges now, especially on the e-toll. The President was telling him that on his first state visit, all the SADC presidents were asking the President when he was going to help their countries with their roads because South Africa has the best highways. The President had asked the Minister of Transport how they can better cooperate using transport to support regional integration. He acknowledged that there are challenges at SANRAL, but it has earned itself a good reputation with regional counterparts.
The Minister was reluctant to comment on any details about ACSA, particularly on the CEO. None of the previous boards had dealt adequately with the allegations against the CEO. There were disagreements about how this matter can be dealt with. The CEO must be given a chance to respond to the allegations and not be subjected to a kangaroo court process. The Acting Board Chairperson, Mr Botha, approached the Minister and said the CEO contract is coming to an end but they cannot leave such uncertainty. The Board proposed that the CEO contract is extended for a few months whilst the Board was being appointed. Then the new Board can go into the matter of allegations against the CEO. The Minister agreed that Mr Maseko must be given an opportunity to properly answer for himself.
The timelines for the appointment of the boards would partly determined by their terms. Some are needed expeditiously, whilst others he still has time to appoint. He has now developed the confidence to appoint boards permanently to eliminate the interim boards but it is not an easy task. Now that he has come to understand the sector quite well, he will ensure that this is done properly.
He indicated that he did not want to talk about matters that were not in his purview as he is not the President. And he must not be misunderstood to be saying that he wants to remain Minister of Transport. He was not judging anyone by what he was about to say. This endless reshuffling of cabinet ministers has had a devastating negative impact on departments and their entities. The constant vacancies of DGs and DDGs largely are to do with that. The last two Ministers were in the middle of that process but now they are gone. Hopefully, he would not be seen as judging or challenging presidential prerogative but he can see the negative impact the cabinet reshuffles. There may be good reason for reshuffling but there are definitely negative impacts.
On shareholder compacts, he understood that all entities have their shareholder compacts and performance agreements especially 2017/18 and they are now working on 2018/19. This relates to the effective oversight over entities by departments in the first instance, and by Parliament which is necessary. There is a very shaky relationship between department officials and entities and that is why he is now establishing a branch that will deal with effective oversight over these entities. This is because you do not want to deal with matters when there are problems. Matters need to be dealt with as they emerge.
With PRASA, the Board is now quorate. There may be a few challenges and he had spoken to Finance Minister Nhlanhla Nene that they get a Treasury representative on the PRASA Board. It is quorate even without that representative.
The allegations of conflict of interest at RAF have been raised, but there are counter-accusations. The new Board must go into those matters. The current Board is not addressing those matters because it is dysfunctional. Hopefully, the 8 June AGM is going to assist in taking a step further but he did not want to pre-empt that. We will not be able to deal with all those issues in one meeting, but let us hope that something will come up from that meeting.
Minister Nzimande has asked his office to arrange a meeting between himself and the Ministers of Public Enterprises and Finance to discuss SAA and Transnet. It is important to note that SAA does not fall under Transport, but he would like to discuss such issues with the relevant Ministers. SAA is now under Treasury and no longer with DPE due to its financial constraints. He wanted to discuss with Minister Gordhan the relationship between Transnet and PRASA.
Mr Mathabatha Mokonyane, DoT Acting Director General, explained the difference between a quorate board and a properly constituted board. A quorate board has a certain minimum number of members required to take legal decisions. A properly constituted board adheres to the prescripts of legislation such as the PFMA and the enabling legislation on the formation of the board. The board of directors is the accounting authority for discharging the responsibilities of the PFMA. If the board is not functional, that responsibility falls to the CEO automatically or any other person appointed by Treasury to be the Accounting Officer. The signing off of annual reports and other relevant documents for last year has been dealt with; but not for this year.
Mr Mokonyane said that the very first letter by the RAF Board Chairperson about conflicts of interest went straight to the Minister not Mr Mokonyane but he was brought in when the Chairperson felt that he was not getting a response from the Minister. It has always been the Chairperson of the Board against a Member of the Board, not the Board against a Member.
The Minister said that in one or two boards he is on “extra time” but he will act with speed. Normally when that happens you would ask the next properly constituted board to re-look or endorse some of the decisions taken by the previous board that was not properly constituted or quorate. It is not ideal because that poses serious risks and threats.
Mr Hunsinger said that he would suggest that the Minister engage with the Minister of Justice as well because he recently came across credible statistics indicating an 80% conviction rate in Gauteng on vandalism charges, but only 5% in Western Cape. This is very concerning. The Minister could perhaps engage Justice on this to ascertain why there is such a vast variance between the provinces.
Mr De Freitas emphasised that one of the biggest impediments is the war between Transnet and PRASA, and it appears that it stems from officials and powerful individuals within these institutions who are trying to protect their turf. This is not helping South Africa. When he spoke to people in PRASA, he said they are very frustrated because they are unable to discharge their duties because of powerful people in Transnet. Perhaps the Minister can look into this.
Mr Ramatlakane said that when there is a conflict of interest and there are allegations in an established body. This matter needs to be seen as a stand-alone issue so that it can be properly dealt with. This should not wait for a reconfiguration of the Board, and so a process should be established to deal with it. This needs to be re-looked at on how it can be dealt with by the Minister. He referenced the Companies Act and said that if the company at its establishment does not have a board, the accounting officer who is the CEO becomes the accounting authority.
There were a lot of issues about the legality of decisions taken by people who were not eligible to be part of the PRASA Board, and that puts the Board in a position were its decisions are questionable. Appointing an external Group CEO, the Minister must ensure that this does not come back to complicate things. He was worried about this because it seems as if the person is head-hunted, and we do not want the Minister to be at the centre of controversy. If you look at the system of appointment, the Board has the responsibility to recommend, and now it seems to be the other way round. The Minister will have to check its legal implications. It may well be a problem and that there will be a decision that the right procedure was not followed. We must try to avoid a situation where while trying to fix something, we concurrently create another problem.
Ms Xego said the Minister has highlighted that in the next few weeks he will be looking at CVs as the process of appointing board members unfolds, perhaps he can consider looking at balancing out boards in terms of gender.
The Minister welcomed the comments from Mr Hunsinger and Mr De Freitas on interacting with DPE. On the CFO and the PRASA Board, he said the CFO was very reluctant to accept the position but the Minister was advised appropriately and the issue had been addressed. He was very aware of appointment decisions and the role of the Minister but he has not yet heard about the issue of insider and external appointments. His key consideration was that they have seen a lot of problems in PRASA and he decided that it was best that they do not appoint someone from inside the company. Even the Company Secretary being appointed as the Acting CEO is not very elegant. With that being said, for an acting position anyone can be appointed as long as it is within the legal prescripts.
He welcomed the point on balanced gender on boards as well as people with disabilities. On the legality of decisions by previous boards, this is something he acted on when he assumed office. One of the reasons why he told the PRASA Interim Board to challenge some of the decisions was because there were a lot of things that were being said about the authorisation of payments.
Mr Mokonyane continued about the RAF and the conflict of interest, saying there were board members that had been retained from the previous board when new board members came in. The problem was that board members wanted to have a say on who should come in as a board member. Secondly, many things have been done about the allegations of conflict of interest. It is only that the alleger wanted a different outcome. It looks like the alleger will not rest to the extent that the alleger has said that the shareholder is not doing anything about it and asked Mr Mokonyane to assist. DoT can provide a report on what it has done but there are two raging bulls in the same kraal that cannot stand each other, to summarise the core of this issue.
Mr Ramatlakane said someone from the Board was trying to interdict the Committee from hearing RAF.
Department of Transport (DoT) Quarter 4 performance
Mr Mathabatha Mokonyane, DoT Acting Director General, focused on the key highlights and challenges.
Overall, DoT achieved 89% of Quarter 4 targets. Unachieved targets include the:
• Finalising implementation plan of the Road Freight Strategy. This was due to delays in internal processes but finalisation is prioritised in 2018/19.
• National Rail Draft Bill developed and submitted to the Economic Sectors, Employment and Infrastructure Development (ESEID) Cluster. This was due to delays in submission of the White Paper on the National Rail Policy to Cabinet. The Bill process will be fast-tracked in 2018/19 in line with progress made in finalising the White Paper on National Rail Policy.
• Merchant Shipping Bill submitted to Cabinet by March 2018. Stakeholder consultation have commenced but there were delays in finalising the draft Bill. However, the Socio Economic Impact Assessment System (SEIAS) process, consultations with the ESEID Cluster and a submission to Cabinet will be prioritised in 2018/19.
• Integrated Public Transport Network (IPTN) funded and monitored in selected cities. So far bilateral project meetings have been conducted; mid-year budget and performance assessment visits for 2017/18 conducted; and workshop conducted (7-8 March 2018).
The financial performance report included these points:
• Administration programme: DoT underspent R7.8 million on Compensation of Employees due to posts that could not be filled, after shifting R434 000 to cover shortfall in Integrated Transport Planning. Due to invoices received late, R7.2 million overspent on Office Accommodation, this was covered by shifting funds from Public Transport.
• Integrated Transport Planning programme: slightly overspent its budget for Compensation of Employees, for which R434 000 was shifted from Administration to cover the shortfall. The programme saved R5.7 million and underspent R1.1 million on Goods and Services due to projects completed in-house (Roll out of National Transport Master Plan Interventions, White Paper on National Transport Policy, Regional Transport Market Access Strategy, and Single Transport Economic Regulator Bill) and the Road Freight Strategy that could not be competed .
• Rail Transport programme: DoT underspent its budget by R4.8 billion because the last transfer payment to Passenger Rail Agency of South Africa (PRASA) was withheld due to low expenditure on CAPEX. It also underspent R1.8 million on Compensation of Employees due to posts that could not be filled. It saved R3.8 million and underspent R2 million on Goods and Services due to projects completed in-house or below budget (White Paper on National Rail Policy, Interim Rail Economic Regulatory Capacity, National Rail Safety Amendment Bill, Implementation of the Branchline Model for Private Sector Participation) and the National Rail Bill consultative processes that was negatively impacted by delays in the submission of the White Paper on the National Rail Policy to Cabinet.
• Road Transport programme: DoT underspent R4 million on Compensation of Employees due to posts that could not be filled. Savings on Goods and Services amounted to a net R16 million due to projects completed in-house or below budget. Savings were recorded for the Development of the White Paper on Roads Policy, Construction and Maintenance of Provincial Roads Monitored, Access Road Development Plan, Review of Founding Legislations of Road Entities, Monitoring implementation of the Road Safety Strategy and Development of an Anti-Fraud and Corruption Strategy for Driving Licence Testing Centres, Vehicles Testing Centres and Registration Authorities. Road Safety Projects were however overspent.
• Civil Aviation programme: DoT underspent R3.4 million on Compensation of Employees due to posts that could not be filled and saved R1.6 million on Goods and Services on projects completed in house (National Airport Development Plan, Aviation Development Plan implementation, Review of Airlift Strategy and National Air Transport Strategy).
• Transfers and subsidies: R24.3 million was shifted from Public Transport to increase the Transfer Payment to the Railway Safety Regulator to fund its unfunded commitments.
Mr Sibande said on slide 37, six provinces spent 100% of their budgets but Eastern Cape spent 102% and two provinces underspent. Can we get clarity as they speak about spending the budget yet the roads are not in good condition. For example, in Mpumalanga, a lot of trucks use those roads and they are damaged. What is the intervention for this and how do you monitor if the money is used in the proper way? Is the taxi recap process going forward? Do you have data on taxi recap? Otherwise, this process will not finish.
We have a problem with integrated public transport in the country. The question is where integrated public transport is applicable? Is it only in the metros? Has DoT started to decentralise integrated public transport functions elsewhere? How far is DoT with integrated transportation modes?
Mr Mpanza said under-spending was as bad as over-spending. It was one thing to under-spend and achieve the targets and get things done. However it is nonsense not to get things done when the money is available. Funds are not being utilised for the Public Transport Network Grant, so where does the underspent money go to?
Mr Ramatlakane referred to the withheld funds transfer. The Public Finance Management Act (PFMA) makes provision for withholding funds but that provision is nuanced. In this instance, there is no functional transfer, the function remains at PRASA so one is compelled to transfer. He asked when the money will be transferred to PRASA for the intended programme. Perhaps now the new Board has been appointed?
He recalled the discussion with 13 cities on the Bus Rapid Transit (BRT) system where the question arose about whether the MOUs (as per the DORA) was sufficient as there were concerns about the expenditure patterns that do not necessarily get spent on the predetermined objectives. When you look at slide 39, there is a clear under-expenditure in that grant in some municipalities. Members were very unhappy about the under-expenditure and the slowness of expenditure of those grants and the BRT system.
One of the problems that came up when the Committee was engaging the taxi industry on the conflict in the Western Cape was the scrapping allowance for taxis and the ability to obtain new taxis with that scrapping allowance. The taxi industry mentioned the legislative limitation but that has not yet been raised with the Committee. The limitation predetermined the date of the scrapping. The year (2007 – predetermined scrapping date) has constrained them from submitting vehicles but some of those vehicles are much older than the predetermined limitation date. Secondly, the sufficiency of the amount in rand value since the elapsed predetermined date of 2007 was raised. Perhaps, this is something DoT can look into.
SANTACO (South African National Taxi Council) has come up as a concern for the taxi industry. One of the problems in the Western Cape was that they are unable to get information on the scrapping allowance. There is now a court case between the SANTACO mother body and the regional body. If DoT is not privy to that court case, he could provide more detail after the meeting.
Mr Ramatlakane said that another concern is the BRT integrated public transport and its expenditure. It is a “hot potato” with the tripartite agreement with the taxi industry, Golden Arrow and the City of Cape Town. There is an agreement that they will work as an integrated venture. For the last three years they have been undercut by one million. He asked if the DG was privy to the signed agreement. This is a source of conflict because if there is no agreement today, it means the complete withdrawal of the taxis and if the taxis decide to stop operating that means the buses will have to stop as well. DoT is critical in trying to unlock that agreement in terms of the BRT and the subsidy; perhaps DoT can try and intervene. We cannot have a conflict again after people have died in last two weeks.
SANTACO comes into the spotlight on the basis of representing the mother body in the province and withholding the information on the scrapping allowance or funding. Perhaps it would be useful if DoT can comment on this. DoT mentioned that the City of Cape Town has not yet submitted updated information on transport. He asked what that meant.
Mr Hunsinger said the R5.1 billion under-expenditure by PRASA was a big concern. Under DoT Programme 3, there is only 70% expenditure. He asked DoT to describe North West expenditure. What measures have been taken to mitigate the under- and over-expenditure, particularly PRASA and North West. He noted in Programme 7 on BRT, the voluntary surrender by Msunduzi Municipality. He said it is one thing to achieve 100% but what if there is no value for money. On what basis are we continuing to hand out money to the 13 cities when there is clearly no value for the money spent? What is the value add in it and how do the people benefit from it?
Mr Sibande asked about the progress and process on scholar transport. He asked DoT to inform them about the audit findings and if DoT has been able to implement the recommendations by Auditor General South Africa (AGSA). He asked for a progress report on the many pending court cases that DoT had the previous year. Had DoT finalised and minimised the card licence challenges?
Mr Ramatlakane asked if DoT has received any audited reports from SANTACO.
The Chairperson said that the Taxi Recapitalisation programme has been talking about the issues the Committee has been upbeat about in the value chain. We would appreciate if DoT can check if the taxi industry was establishing cooperatives. As we are talking about integrated transport networks, part of the observations were that it is no longer an integrated transport network because taxis are being removed. Therefore, it does not talk to integration. If the taxi is removed and the permits are taken or expired, it seems that automatically the taxis must give way to the City’s mode of transport.
PRASA has had very serious challenges; hopefully the Interim Board will furnish a plan on how they will be dealing with these. On slide 11 on Integrated Transport Planning (ITP), the Committee would appreciate it if DoT can furnish it with the consolidated monitoring report because monitoring and evaluation are crucial. During the oversight visit, Members saw that it is not working in the North West. On paper, money is allocated and utilised but on the ground nothing has happened. We have requested DoT to conduct an audit since the oversight visit. Lastly, it becomes very important that we look at marine issues. The Committee had a presentation from the Rescue Service in the Western Cape. It indicated that there was a lack of tools of trade which is a challenge at sea as they run the risk of a lack of appropriate boats. The Committee suggested that they engage with the Departments of Agriculture, Fisheries and Forestry and Defence because the shores need to be safeguarded. There are criminal activities taking place on our shores and those need to be mitigated.
Mr Mokonyane replied that some of the questions will be responded to in writing due to time constraints, which the Chairperson granted.
Mr Mokonyane responded that DoT is part of the North West intervention and assessments taken to Cabinet about roads. Road works in the North West is under the Department of Public Works as lead department but it will be working together with DoT. The assessment looked into audit reports and annual reports. Hopefully we can assist in that space. We are having a discussion this afternoon with the intervention team.
PRASA is sitting with cash reserves of about R14 billion and it would have been a challenge to make further transfers to it; hence, the under-expenditure is outlined on DoT’s financials. The Minister of Finance said that DoT has saved the country from a deficit by withholding the money, and it not being spent immediately by PRASA. Government was able to maintain its expenditure ceiling and DoT was cited as the department that contributed to that. Hopefully, now that there is new blood at PRASA, CAPEX will pick up because spending on infrastructure does contribute to economic growth.
DoT shares responsibility with the relevant departments on the protection of the shores.
We do not give SANTACO a cent without receiving audited financial statements. The R21 million is separated from the Trust Fund money which are the proceeds from scrapping, when it was established it had specific areas where it can assist. In the main it was renting of offices, stationery and other necessities for the provincial regional offices. It had specific areas where it can assist, not even SANTACO national gets a cent from the Trust Fund money but only the provinces and it is the province members that allocate the money.
The revised Taxi Recapitalisation Programme, the new approach, does emphasise other services in the value chain. Priority will be given to financial services within the whole programme. Last year the taxi people blocked the freeways, they complained about being charged high interest rates by the banks. We asked them why they blocked the streets and did not establish their own cooperative bank. So should they be in the process to form financial services, they will no longer have the problem of being levelled high risk.
We do not have a budget item for scholar transport when it comes to provision the national department. It is a function of provinces. At national, we only do coordination and monitoring. Now that the policy has been finalised, DoT can only monitor the implementation; hence, there is less expenditure on this item.
The 13 cities were identified in the 2007 Public Transport Strategy, it has been ten years down line and it perhaps needs to be reviewed. It coincided with the fact that since the start of the Public Transport Network Grant (PTNG) to date we have spent about R40 billion. This calls for a review on how cities are supported, so DoT produced a Public Transport Transformation Plan which talks about the differentiated approach. DoT wants to intervene in areas that do not need BRT but rather quality public transport services. The Minister has agreed with the MECs to a special MINMEC where all public transport matters will be discussed. The date for the MINMEC is still being determined, it may be before the end of June. The research that we have done is that it should be BRTs but not the BRT in the sense that it is known, which may be confined to the five metros. Other areas need good quality public transport.
On minibus taxis, there is no national blueprint on how the model should be. In terms of cities disagreeing with operators, the law says that if you introduce integrated public transport networks, the operators that are affected must be engaged and have a role in the new system. It will affect different areas and structures and services. Unfortunately the cities have been left on their own to negotiate with the taxis but they are always supported by a person of their choice to come into the negotiations. The majority of the cases we have investigated is that they would have agreed to the proposed agreement because they are seeing the money. In Cape Town, the higher level team is talking to the taxi industry to understand the local issues and then bring the parties together to resolve the issues. Incidentally, it was in George where those allegations first surfaced and a forensic investigation was done and it was discovered that a model was proposed and the taxi people agreed and signed.
The quantum of the scrapping will be addressed. When this started in 2007, we were paying R50 000 but the price of a new taxi was around R110 000 to R120 000. It was around 45% which was enough for a deposit. Now the new vehicles have increased to about R500 000 but the scrapping allowance has only increased according to the consumer price index (CPI). The prices of new vehicles became very expensive and there was no incentive to buy new vehicles. This is being improved on with the new agreement; hopefully it will be in a position to assist. This programme will not end soon because in 2009 we went to Cabinet and said that the money being provided will not deal with the 135 000 taxis on the database at the time. Cabinet said that the programme will not receive any more money at that time but the programme should be extended and no longer be a seven year programme. Cabinet instructed DoT to continue to scrap based on the money that has been allocated annually until the last taxi has been scrapped. Unfortunately, depending on how the taxis are covered, the taxis you scrapped in the first year, they become scrap again after three years. We are addressing the cut off date in the new approach.
Minister Nzimande said one of the biggest challenges is support systems to the public sector, and it is not sustainable if we are not investing at the same time on R&D and innovation in the public transport sector. The points raised here relate to the support system we need if we are to have good transport in the country. The taxi recap is very serious matter. The broader question he posed to SANTACO is where it sees itself over the next ten years – does it see itself going higher? This cannot be a question for just the taxi industry but for the entire public transport industry. We need to look into who are we putting the money into exactly. We need to look at what we do when there is little progress where DoT has invested money. Supervision and monitoring should be considered a serious matter. Lastly, he is very concerned about the R14 billion that PRASA underspent when the country needs investment and jobs. This is something the Ministry will have to focus on alongside Parliament. We need to have serious engagements with the PRASA Board.
The Chairperson thanked the Minister for his presence.
The meeting was adjourned.
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