Economic Regulation of Transport Bill: public hearings day 2

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21 October 2020
Chairperson: Mr M Zwane (ANC)
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Meeting Summary

Video: Portfolio Committee on Transport, (National Assembly) 21 Oct 2020

The Portfolio Committee met on a virtual platform to consider oral submissions on the Economic Regulation of Transport Bill [B1-2020]. The Committee heard from the City of Cape Town and the Gautrain Management Agency.

The City of Cape Town noted that it was unclear whether the Bill was intended to apply to local authorities. If it was intended to apply to local authorities, the Bill conflicted with Section 229 of the Constitution, which required them to be consulted, as local authorities were not mentioned as stakeholders to be consulted. On the other hand, if it was not intended to apply to local authorities, the City of Cape Town recommended an amendment to the Bill to clarify its application.

Committee Members were of the view that the intention was that the Bill would apply to local authorities, and had hoped that the City of Cape Town would have indicated how the Bill could help it address its public transport challenges.

The Gautrain Management Agency outlined the successes and prospects of the Gautrain as a public-private partnership and recommended several specific changes to the Bill concerning the extent of the Regulator’s power and the accommodating of public-private partnerships, among other comments.

Committee Members discussed the safety and security of the Gautrain and its attitude to competing services, the economics of running a metropolitan transport system and its integration with other modes of public transport, as well as the possibility of making the Gautrain accessible to poorer commuters.

Meeting report

City of Cape Town presentation
Mr Dawie Bosch, Manager: Business Development and Integration – Integrated Rapid Transit Operations Department, CoCT, explained that as a Category A municipality, CoCT was constitutionally responsible for municipal public transport. The Economic Regulation of Transport (ERT) Bill could therefore have a significant impact on it. It was not clear, however, whether the Bill was intended to apply to local authorities. If it was intended to apply to local authorities, the Bill conflicted with Section 229 of the Constitution, which required them to be consulted, as local authorities were not mentioned as stakeholders to be consulted. On the other hand, if it was not intended to apply to local authorities, CoCT recommended an amendment to the Bill to clarify its application. Among the municipal transport functions that could be affected by the Bill were contracted services such as MyCiti buses and Dial-a-Ride services for people with mobility difficulties, roads infrastructure and management, parking and long-distance bus terminals.

Mr C Hunsinger (DA) noted the concerns expressed by CoCT. He would have appreciated if CoCT had made suggestions as to how the Bill might assist CoCT in overcoming its public transport challenges.

Mr L MacDonald (ANC) agreed with Mr Hunsinger. CoCT clearly needed help with the planning and regulation of public transport, but the presentation had only given reasons to exclude CoCT and did not consider how it could help. Could CoCT be more specific on how the Bill might address the shortcomings that it had mentioned? For example, the Bill might help to address the problems between minibus taxis and Golden Arrow buses.

The Chairperson noted that the CoCT presentation had concerned whether or not local authorities would be affected by the Bill and that there should be thorough consultation if they were affected, as he expected they would be.

Mr L Mangcu (ANC) thought that the intention was for the Bill to affect local authorities such as CoCT. The current hearings were part of the consultation process. Further, he expected that the Bill would be a Section 76 Bill and would therefore also be considered by the National Council of Provinces. South Africa was a unitary state and it was disappointing that CoCT seemed to be suggesting that it should be treated differently.

Mr K Sithole (IFP) also stressed that South Africa was a unitary state. He thanked CoCT for raising its concerns but asked for clarity on whether it was speaking on its own behalf or on behalf of local authorities generally. Could CoCT share its proposal for how the Bill should affect it?

Mr M Chabangu (EFF) asked for clarity on how the municipal transport functions mentioned in the presentation would be affected by the Bill. He did not think the intention of the Bill was to exclude local authorities.

Mr Bosch said that CoCT did have general comments on the Bill. The intention of the Bill was to address “semi-monopolies,” such as the Airports Company of South Africa and the port authority, which may have negative effects, and CoCT supported this intention. However, the Bill was unclear as to how it would achieve this intention. There was no doubt that public transport in Cape Town required substantial support from national government and this support was appreciated. CoCT was just a bit concerned about some remnants of legislation regarding the responsibility for public transport functions. For example, Golden Arrow buses were currently regulated at the provincial level. CoCT had been applying to have it allocated to CoCT since 2012. CoCT was not asking for exclusive powers but it had to be noted that the commuter rail system had been deteriorating for years and was now barely functioning at all. Such functions needed to be managed very closely by the City. CoCT was speaking for itself as a local authority, but the points it made had general applicability. It had no objection in principle to local authorities being covered by the Bill but if they were, the powers of the Minister with respect to the Constitution needed to be clarified. He noted that the problems between Golden Arrow buses and minibus taxis did not seem to fall within the ambit of the Bill.

Ms Felicity Purchase, Mayoral Committee Member: Transport, CoCT, added that working together with the minibus taxi industry would be beneficial to everybody, and CoCT had implemented pilot projects to look at integrating minibuses into the transport system.

The Chairperson thanked CoCT for its contributions, and called for ongoing co-operation in the formulation of the Bill.

Gautrain Management Agency presentation
Mr William Dachs, Chief Executive Officer (CEO), Gautrain Management Agency (GMA), gave a substantial overview of the GMA and the history, aims and operations of the Gautrain before making specific recommendations. He explained that GMA was one of very few public-private partnerships (PPPs) active in public transport. The Gautrain was designed to yield appreciable economic, social and environmental outcomes in the immediate and long term and according to an independent study conducted in 2018 it had been successful. A feasibility study completed in 2016 had concluded that there would be significant benefits to expanding the Gautrain network as the population of the province expanded beyond the current capacity of the transport network. A 2018 World Bank study had concluded that the capital cost of a new metro line could not generally be recovered through fares, although operational and renewal costs could be covered if there was a good level of non-fare revenue. In the case of the Gautrain, its revenue over the three years until 2020 had been between 90-105% of its operating costs. Its fares had been set to compete with private cars and not other public transport systems.

GMA’s view was that the Bill was a very important step toward efficient public transport but it should do more to devolve the planning, funding and implementation of public transport to the lowest possible level of government and should consider how it would function in relation to PPPs. Some of the more important suggested changes were to Sections 5(3) and 11 on the accommodating of PPPs, Section 8(7) on the power of the Regulator to reassign unused capacity, Section 9(5) on the power of the Regulator to intervene between access seekers and owners of infrastructure, and Section 38(g) read with 43(2)(b) on possible duplication of powers held by the Competition Commission. The removal of Section 9(2), which would allow the Regulator to grant access to infrastructure based only on a written agreement to fund any necessary infrastructure was also suggested.

[Please see attached presentation for specific comments on the sections of the Bill]

Mr Mangcu thanked Mr Dachs for his positive news and detailed proposals. He did not want to get into technical submissions but he noted that safety around Gautrain stations could be improved. For example, at the Hatfield station, metered taxi hooligans roamed around the station causing problems for e-hailing customers. He asked to what extent the Gauteng Transport Authority Act could alleviate some of the GMA’s concerns about the ERT Bill. He wondered why the GMA seemed so concerned about the Competition Commission. Was it afraid that it would face serious competition of the ERT opened up the market? Was the suggestion not to require more than a written agreement for granting access a form of protectionism? He suggested that the Committee arrange a visit to the GMA and congratulated it for keeping its infrastructure intact through the lockdown.

Mr Hunsinger also thanked Mr Dachs for his positive news and detailed proposals. He appreciated the findings of the World Bank study, and asked Mr Dachs to comment on the fact that after some time, operational costs tended to increase to match revenue, thereby putting the cart before the horse. He interpreted the GMA’s submission as positioning the Regulator within a triangle of subsidisation, fare regulation and price stability. Could he expand on GMA’s vision of the Regulator in these terms? He also asked for clarity on the relationship of the Gautrain with its competitors.

Mr T Mabhena (DA) welcomed the suggested additions to Section 6 on the role of the Railway Safety Regulator. This was the only body responsible for safety and security in the rail sector and it should always be consulted when granting access to rail infrastructure. He agreed that Section 7(2) needed to specify whether the terms of access agreements were submitted to the Regulator for approval or for information only. He asked how the Gautrain’s feeder bus service was doing. Was it sustainable and was it well used? How many buses were in operation? He also asked about the dress code for the Gautrain, after two men in traditional attire had been denied access to the platform. If someone could wear traditional attire in the august Houses of Parliament, it was ridiculous that they could not wear the same thing on a train platform.

Mr Chabangu asked about the possibility of providing special tickets in certain months in order to allow the poor to use the Gautrain as well as the rich and middle classes. Would it be possible to bring the Gautrain to every city in Gauteng? Were any of the shareholders in the Gautrain ordinary individuals, as opposed to big companies? How did GMA intend to protect its infrastructure against scavengers?

Mr Dachs replied that GMA had planned physical measures to improve the safety at its stations, and it was engaging with the Tshwane, Johannesburg and Ekurhuleni municipalities. More broadly, the Gautrain could not be thought of as an island, however. Hatfield station, for example, could become a safe and secure integrated public transport node but GMA did not have policing power outside its own station perimeter. The Gauteng Transport Authority Act would establish a centralised provincial entity to fund and plan transport across the province, and the Committee would be enriched if it met the new CEO. GMA was not afraid of competition of the Competition Commission - it was simply worried that costly, multi-year market investigations might be duplicated by the Regulator. He reiterated the view that access seekers should require more than a written commitment to fund required infrastructure. He agreed that operating costs could rise to meet revenue, and that they should therefore be set in advance and not based on over-specification. Gautrain was sometimes accused of over-specification but this was not accurate. He also agreed with Mr Hunsinger’s interpretation of GMA’s position on the Regulator, adding that the Bill seemed to overlook the price stability factor. GMA was not afraid of competition. Its main competitor was the private car; it was not competing with other modes of public transport. E-hailing services had posed a threat, especially on the airport routes, and GMA had had to respond. The Gautrain bus service was not an optimal solution to the problem of getting people to and from stations outside of central business district routes. Therefore no further expansion of bus routes was planned and partnerships with minibus taxi associations would be preferred. There were already eight very successful partnerships in place. He admitted that a mistake had been made in the handling of the dress code incident. However, the security guard involved had acted according to his training by not allowing customers onto the platform without shoes. GMA was currently running a pilot programme for student discounts, and would look at other vulnerable sectors too. The Strategic Partners Group was a consortium of more than 100 individual shareholders in the Gautrain. He admitted that it was very difficult to protect infrastructure from looters. During the level 5 lockdown there had been daily intrusions into the rail reserve. The best protection was in fact to run the trains. The easiest thing to vandalise was an empty station or railway line.

The Chairperson thanked CoCT and GMA for their contributions. The public hearings would continue on Friday, 23 October.

Consideration of Committee oversight programme
The Committee Secretary said that the Committee needed to confirm its oversight visits to Mangaung on 13-14 November and to Gauteng on 27-28 November and the list of activities.

Ms Ramadwa noted that the Moloto rail corridor in Limpopo, Mpumalanga and Gauteng was a burning issue that needed urgent oversight. Kwazulu-Natal was also important on account of the accidents occurring there.

Mr MacDonald supported the inclusion of oversight on the Moloto rail corridor.

Mr Mabhena also supported the inclusion of oversight on the Moloto rail corridor. He noted that the Public Protector had decided to launch a full inquiry into the disputes there, and that the Committee must remember that it represented the community and needed to ensure that it received quality services. It had an opportunity to engage with the community and test the views that had been expressed on the matter.

The Chairperson noted that the committee would look at driver’s license testing centres and might be able to use this space to deal with the Moloto rail corridor issues. 

Mr Chabangu suggested that the Mangaung visit should include a visit to the taxi rank.

The Chairperson said it could be included if there was time.

Mr Hunsinger asked for two changes to the terms of reference for the conversion of Toyota Quantum taxis, firstly to cover their use as ambulances and secondly to cover other vehicle models such as Ford Rangers, which were sometimes converted to transport workers.

The Chairperson noted that this matter would not be dealt with this week

The meeting was adjourned.


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