The Department of Transport (DoT) responded to the concerns raised by the Committee at the 29 August meeting such as Board voting powers, the fuel levy and deviation from the no-fault policy.
DoT proposed an amendment to 7(1)(b) and (c) so the composition of the Board was aligned with the principles of the King IV Code to ensure there was direct interaction between management and the Board. In clause 7(1)(c) the number of the Members has been reduced and the experience required was altered to five years to ensure that the process of appointment was inclusive and not prejudicial. DoT proposed that all Board Members can vote in meetings, and to address government officials outvoting Board Members, the quorum of the Board was adjusted to 50% plus 1 of the appointed Members, excluding the representative officials.
On the fuel levy, DoT responded that the RAF levy becomes the RABS levy. It flows into the Benefit Account to pay for the Benefits, and any surplus in the account is transferred to the Transaction Account for the payment of RAF claims and additional appropriations will be paid into the Transition Account.
Members asked if the Bill stated that the scheme would be fully funded in the long term; whether DoT consulted the King IV on board quorum and the powers of the officials deployed to the Board; how DoT would deal with the appointments in the context of the SABC court case.
Some matters that were still not settled for some Members were:
- Whether RABS would be cheaper than the current dispensation;
- Medical and legal tariffs
- Common law on third party claims.
The Department would return with written responses to the concerns raised during the meeting about appointments in the context of the SABC court case and board quorum and the powers of the officials deployed to the Board.
The Chairperson said the Committee would continue with the discussions from the previous meeting and deal with any outstanding flagged items. The Committee would also consider a desirability motion on the Bill. The Committee wished to move forward and deal with other transport sector matters. He noted that the Committee would need to compile a report on the RABS Bill.
Mr L Ramatlakane (ANC) said that in the previous deliberations with the Department there were some deviations in the policy so he wanted to debate that. Had DoT reflected on some of the concerns that were raised about the deviation in policy? Some of those matters were about the governance structure and he would like to hear from DoT before the Committee jumps into the business of the day.
DoT proposals to alleviate Committee concerns
Adv Johannes Makgotho, DoT Director: Corporate Legal Services, responded that DoT had reflected on those concerns and had put together a proposal document on that.
The Chairperson asked DoT to highlight these proposals.
Adv Makgotho referred to the fault versus no-fault concern and said that DoT had worked on the Bill to align it with the policy, more specifically in clause 27(4). The second item was the composition of the Board in clause 7 and based on Committee considerations, clause 7(1)(b) and (c) was amended. The concern was whether the composition of the Board was aligned with the principles of the King IV Code. The response is that it is has been aligned and it ensured direct interaction between management and the Board. With regards to 7(1)(c), the number of the Board Members and the experience was questioned and five years was then effected to ensure that it was inclusive. DoT proposed that “all Board Members can vote in meetings”. To address government officials outvoting Board Members, the quorum of the Board was adjusted to 50% plus 1 of the appointed Members, excluding the representative officials.
There was an amendment dealing with clauses 26 to 33 in response to the question about the fuel levy. DoT response was that the RAF levy becomes the RABS levy. It flows into the Benefit Account to pay for the benefits, and any surplus in the account is transferred to the Transaction Account for the payment of RAF claims and additional appropriations will be paid into the Transition Account.
On longevity concerns, he read out clause 32(3). As for actuarial valuations, there will be no unilateral adjustments done by the Minister and he read out clause 33 and 34 proposals.
The Chairperson asked if the Rand fluctuations or CPI variations meant that government would need to legislate every time this happens.
Ms S Xego (ANC) wanted to check that a specific clause stated that ‘the scheme will be fully funded in the long run". Was this concern responded to?
Mr Chris Willemse, Senior Manager: Regulation, Road Accident Fund, replied that the purpose of the actuarial valuation was to establish if the Fund meets the funding ratio of 90% and it is done on an annual basis. If the fund falls below the 90% ratio, the Minister needs to make a decision about potential amendments to this legislation or other legislation to either adjust benefits downward or create new funding streams for the scheme. The addition of funding streams in the scheme would require a legislative process.
On an annual basis the Minister must consider upward adjustments for every benefit in the scheme. The income and family support benefits are flat benefits, there is no automatic entitlement for an increase subject to inflation. However, it is required that when there are additional funds in the Fund, the Minister consider upward adjusting those benefits. For the upwards adjustment model, the Minister does not necessarily require any consultation.
Adv Makgotho pointed out the relevant clause was clause 32(3).
Mr M Sibande (ANC) asked whether DoT consulted the King IV on the quorum and the powers of the officials deployed to the Board.
Adv Makgotho replied that the board quorum was aligned with King IV in terms of the voting but in the proposed amendments it ensured direct interaction between management and the Board.
Mr N Seabi (ANC) said that at the 29 August meeting the personnel appointed by the Minister was raised in respect to the SABC case. In DoT’s response today, it was not indicated how DoT would deal with the matter of appointment in the context of the SABC case.
Adv Makgotho replied that he had not applied his mind to the SABC judgment but focused on the process which would unfold as per the Bill.
The Chairperson said that DoT should apply its mind on this matter and report back to the Committee.
Mr Ramatlakane said that the Legal Advisor had indicated that the Committee or rather DoT should ensure that appointment processes must be in line with the Public Finance Management Act as well as the King IV Code. The King IV Code places a lot of responsibility on the Board particularly with appointments. It states that appointment is in respect to the Compact that has been agreed to and the Board would take responsibility as the Accounting Body. It is not the responsibility of the Minister to appoint. The Minister cannot say that the Board cannot make a specific appointment.
Ms Xego said that she believed that all Board members were appointees of the Minister. Therefore, she was not quite in favour of DoT’s amendment of the 50% plus 1 of the Board Members.
The Committee suggested that DoT peruse the SABC judgment, the PFMA, and King IV Code.
Mr Ramatlakane said during the June public hearings there were concerns about the fault/no-fault system as well as the constitutionality of certain Bill provisions. The Committee was presented with several Constitutional Court judgments and it seems that this matter has been settled. He was satisfied with how the matter of constitutionality had been dealt with. Common law provisions were also raised during the public hearings, but no suggestions have been brought forward on how to deal with this matter, even though this suggestion was made by the Committee during the public hearings.
On the funding of the Bill, it was not clear if RABS would be cheaper or not. During the public hearings, various actuaries made submissions that stated RABS would be more expensive than RAF. However, DoT's actuary demonstrated a saving. There was still uncertainty on whether RABS would be more expensive or cheaper.
Tariffs came up as one of the funding concerns and it overlapped with constitutionality. During discussions with the doctors and the lawyers, they indicated that there is an independent body of the Department of Health that makes tariff recommendations. Mr Ramatlakane suggested that there should perhaps be a provision on tariffs. The provision should also speak to the constitutionality of the tariffs.
Lastly, Mr Ramatlakane said generally people were unhappy with the current situation and they want to see change because the current dispensation is not working. A submission was made that it takes up to five years for payments to be made. There were a number of lawyers that participated in the provincial hearings but he was uncomfortable with the fact that the lawyers had participated in those provincial hearings, they abused the platform. They sought to mobilise communities to revolt against the new dispensation using the language that people have no capacity to claim directly. There were certain lawyers claiming to have authority in those areas and it was indeed unfortunate that happened.
Mr Sibande said that certain lawyers take people for granted. In the current system a lawyer is allowed to apply on behalf of people and there is a lack of mechanism to protect people from unscrupulous lawyers. He suggested that these unscrupulous lawyers need to be named and shamed.
Ms Xego said that the constitutionality of the Bill may be tested in a court of law, but she was satisfied that the matter of constitutionality had been clarified and dealt with appropriately by the Department. Therefore, this Bill needs to be expedited.
Adv Makgotho said that DoT would submit written responses to the Members' questions at the next meeting and Members can engage further with the Department.
The meeting was adjourned.
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