Economic Regulation of Transport Bill: briefing & motion of desirability; with Minister

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09 June 2020
Chairperson: Mr M Zwane (ANC)
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Meeting Summary

Audio: Economic Regulation of Transport Bill: Department briefing & motion of desirability

The Committee received a briefing from the Department of Transport on the Economic Regulation of Transport Bill. The rationale of the Bill was in line with the President’s State of Nation Address which said it aims to make South Africa a competitive destination for investors.

Economic regulation in transport is currently fragmented, inconsistent and in some cases non-existent. South Africa needs to ensure the efficiency and cost-effectiveness of its transport system to meet its economic and social goals. The preconditions for efficiency and cost-effectiveness do not as yet exist in the sector:
- Potential conflicts of interest (especially where state-owned entities have been given monopoly and regulatory powers);
- Significant gaps in the regulatory framework inhibit government’s ability to provide consistent and comprehensive economic oversight;
- Scarce skills and a lack of capacity in economic regulation;
- Limitations in the availability of recent and detailed performance and pricing data;
- The absence of a clear appeals process for regulated entities.

During the discussion, Members asked about the motion of desirability process to fast track the Bill, the objectives of the Bill, the consolidation of all regulators, pricing at South African National Roads Agency Limited, the inclusion of taxi transport and the impact of the Bill on private companies in the transport sector.

Meeting report

The Chairperson indicated to Members that Parliament has gradually phased in as he was in Parliament earlier that day. He welcomed the Minister and Director-General and handed over to them to make the briefing on the Economic Regulation of Transport Bill.

Minister of Transport opening remarks
Mr Fikile Mbalula, Minister of Transport, said that the rationale for Economic Regulation of Transport Bill is in line with what the President had said in the State of Nation Address on making South Africa become internationally competitive and attract foreign investment. The government must reduce the high cost of doing business. This is the premise on which the Economic Regulation of Transport Bill is grounded.

The aim is to consolidate the economic regulation of transport within a single framework. Effective economic regulation is needed to ensure technical operation and pricing efficiency in the transport sector. The Bill addresses the regulatory capacity gaps to meet South Africa’s need to build an efficient and cost-effective transport system to advance economic growth and meet its social goals.

The Minister highlighted the linkage between the transport system’s role and alleviating poverty, unemployment and inequality.

The economic regulation of some of the Department’s entities will be transferred to this new regulator.

The Minister emphasised that this Bill will be touching on previously unexplored areas which require the Department to emphasise innovation in order to stimulate the new economy the country is building. The COVID-19 pandemic coincidentally provided the transport sector with this opportunity to build this new economy. The Minister expressed his hope that the transport of the future would become the catalyst of this new economy.

The Minister explained the economic regulation in the transport sector aims to control pricing to create positive spin-offs to the economy.

The Minister spoke about the fruitful stakeholder consultation process. It has informed the formulation of the Bill. The Department has dealt with stakeholder recommendations in a serious manner. He hoped the parliamentary process will provide more inputs to this Bill.

The Minister emphasised that economic regulation should apply not only to the public sector but also the private sector. This has of vital importance for policy certainty. There had been concerns raised about certain private companies that have monopolised the market. Under the economic regulation in the transport sector, they would not be allowed to do so.

Economic Regulation of Transport Bill [B 1-2020]: briefing by Department of Transport (DoT)
Mr Alec Moemi, DoT Director-General, provided background and spoke about current matters to do with economic regulation in transport. There has been a whole range of engagements with stakeholders on the Bill. The objectives of the Bill to address the current shortcomings are:
• Consolidation of the economic regulation of transport within a single framework
• Establishment of the Transport Economic Regulator
• Establishment of the Transport Economic Council
• Make consequential amendments to related Acts
• Allow municipalities to extend jurisdiction over private operated market entities for services under specific conditions.

Due to time constraints, the Director-General said that he would not go through the Bill clause by clause. He highlighted the impact the Bill will have on current legislation such as the National Ports Act, Airport Company Act, Air Traffic and Navigation Services Company Act, the National Transport Act, South African National Roads Agency Ltd Act and National Roads Act.

The Director-General provided the Committee with key inputs that the Department has gathered from consultations with stakeholders as well as provided with a list of stakeholders that the Department had consulted around the Bill (see document).

Mr Hunsinger (DA) thanked the Minister and Director-General for being at the meeting. He noted that the presentation the Committee had just received was different to the one sent to Members via email. He said that the Democratic Alliance endorsed all the points with the exception of the last objective in the presentation. The last bullet point was too open ended and he suggested DoT drop this.

Mr K Sithole (IFP) asked if the Department would consolidate all regulators into one single entity. He asked DoT about pricing at the South African National Roads Agency Limited (SANRAL). He asked if DoT was going to deal with SANRAL as an entity. He asked if DoT is going to include public transport such as taxis in the new regulation or does it fall outside of the regulation?

Mr L McDonald (ANC) mostly agreed with Mr Hunsinger’s view but he disagreed with him on the last bullet point in the presentation. He acknowledged that although there is still further work to be done on the Bill, he endorsed the desirability of the Bill.

The Committee Secretary informed members that the last bullet point can stay over for Members to deliberate on and make amendments at a later stage. However, the important point is that the Bill must be tabled for public comment.

Mr Hunsinger disagreed with the Secretary. He pointed out that the motion of desirability is far more important than what she had just suggested because it provided the direction of the Bill. He still believed that the last bullet point of the objectives of the Bill is too open-ended with no specific direction. He suggested the Committee to go ahead with the motion of desirability for the first four bullet points of the objectives.

Mr P Mey (FF+) asked the Minister if he saw private companies as the extension of the Department to help South African people or as an opposition party that DoT is fighting. He believed that the private sector can play a major role.

The Chairperson reminded Mr Mey to support the motion of desirability.

Mr Mey said he supported the motion of desirability.

The Chairperson summarised that all parties had agreed to the motion of desirability. The DA indicated that the last bullet point should not be left open-ended. He thus asked the Minister and Director-General if the last bullet point could be amended.

The Director-General replied that only the regulatory entities will be consolidated. These included the Regulating Committee for aviation and the two Air Services Licensing Councils, the ports regulator, the National Public Transport Regulator and Cross-Border Transport Agency but not all of them. Some functions of South African National Roads Agency Limited (SANRAL) will also be consolidated. These will become one single entity.

He explained that in terms of the National Land Transport Act, the taxi industry falls into the regulated sectors and entities. Economic regulations on tariffs / fares will apply to the taxi industry.

The Director-General explained to Mr Mey that DoT had included the private sector, as shown in the presentation slides, in the stakeholder consultation process. There are private companies operating in the transport sector which are playing a major role. Private companies in the transport sector will be impacted by the Bill. Under the Bill, DoT will determine the tariffs for maritime which would affect Richards Bay Coal Terminal (RBCT) which is privately owned as well as a terminal owned by Transnet but which was vested with huge private sector interests. So the Bill will definitely affect private companies' investment and their operational activities. Among other things, DoT will prohibit excessive pricing and illegal profiteering.

The Minister did not offer further input and thanked Members for the constructive feedback.

The Committee adopted the motion of desirability for the Economic Regulation of Transport Bill.

Committee programme for 3rd term
The Committee Secretary outlined the programme for the third term which included the processing of the Civil Aviation Bill, the decision by members on the Road Accident Benefit Scheme, the Public Protector’s Report and Airport Company South Africa’s investment programmes in India and Brazil.

There were two oversight periods. One is the end of July and the second period is from 4 to 7 August. She asked Members’ inputs for the oversight periods.

The Chairperson asked Members to write to Committee Secretary to provide their suggestions for oversight visits and the Committee programme.

The meeting minutes for 2 June 2020 was adopted.

Mr M Chabangu (EFF) arrived at the meeting late and asked the Secretary to send a summary of the meeting.

The meeting was adjourned.


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