Road Accident Fund Interim & Future Processes: briefing; Committee Annual Report & Budget: adoption

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
18 February 2004
ROAD ACCIDENT FUND INTERIM AND FUTURE PROCESSES: BRIEFING; COMMITTEE ANNUAL REPORT AND BUDGET: ADOPTION

Chairperson: Mr J Cronin

Documents handed out:
Road Accident Fund Interim and Future Processes
Draft Annual Committee Report (Cannot be released)

SUMMARY
The Committee was briefed by the RAF on its future prospects and the interim measures to be implemented until a new organisation can be established. The Department was also questioned regarding the National Rail Safety Regulator. Members were concerned that there was a lack of transparency over the outcome of investigations into rail accidents, particularly the Charlottesdale disaster. The Chair urged the Department to play a more hands-on role. The Committee also briefly considered its annual report and budget and voted to adopt both.

MINUTES
Road Accident Fund (RAF) Interim and Future Processes
The Departmental delegation comprised of the Director-General, Ms R Stander; Deputy Director Generals, Mr S Khumalo and Mr J Makokoane, as well as Ms M Du Toit.

Mr Khumalo gave a brief overview on the RAF Amendment Bill. The Bill's objective was to alleviate the financial burdens of the RAF until such time that a suitable successor could be established. Some measures included limiting RAF liability in respect of claims of non-residents and non-citizens.

Mr Khumalo also noted that that the Road Accident Fund Commission of Inquiry (RAFC) had formulated a report with a detailed assessment and 179 recommendations for the reform of the current road accident compensation system. Cabinet had instructed the Department to convene an InterDepartmental Committee (IDC) to consider the contents of the RAFC report and to formulate a position on it. The work of the Committee was however inconclusive in that recommendations were not comprehensive enough to allow for a specific implementation programme. Mr Khumalo attributed the failure to severe time constraints. The findings of the Committee did however highlight major social, legal and institutional implications. The process identified commonalities between the proposals of the RAFC and the IDC. They included shifts from a "fault" to a "no fault" basis; from a legal to a medical basis, and from a compensation fund to a social security benefit scheme.
The Cabinet Committee on Governance and Administration had considered the IDC report and had recommended that Cabinet approve the IDC's recommendations in principle subject to further recommendations made by the Committee. On 20 August 2003, Cabinet approved the recommendations.

Mr Khumalo concluded by outlining the way forward for the RAF for 2004: to ensure diligence in the process of consultation; to reconvene the IDC and to develop a vision for a future benefit scheme for road accident victims; to appoint a group of experts to assist the IDC, and to consult with National Treasury on the current financial crisis of the RAF. (For detail, please refer to the attachment.)

Discussion
Mr S Farrow (DA) said the Committee was fully aware of the RAF's financial difficulties. They had previously been bogged down by the findings of the Satchwell report. Mr Farrow recommended that the problems of the RAF be looked at holistically.

Mr A Ainslie (ANC) asked how the amendment to the RAF Act would take place timeously. He also asked what timeframes were foreseen for implementation - was it over-ambitious to follow both processes simultaneaously.

Ms Stander said there were a number of processes taking place, such as review, consultation and legislative processes. Once all the processes were complete, a new organisation could be set up. Ms Stander foresaw that the process would take 2-3 years to complete.

Mr Khumalo said that interim measures had been put in place to keep the fund afloat until a new organisation could be established.

The Chair remarked that the Committee seemed sceptical about taking the RAF Amendment Bill forward. He would be less sceptical if issues were dealt with in a much broader manner although he appreciated the complexities of the issues. The Committee had tried to contribute meaningfully to the process on the recommendations. The issue of prescribed medical tariffs was a battle on its own. He hoped the Committee was still of the view that the 'ballpark' tariffs should be retained.

Mr Farrow asked what could be done to enable petrol levies to move faster into the RAF. He also felt that there should be greater interaction from the IDC.

Mr Ainslie asked what benefit the RAF Amendment Bill would have on the performance of the RAF.

A RAF financial officer said that RAF actuaries had confirmed that the amendments would be beneficial to the financial wellbeing of the RAF.

Both Mr Farrow and the Chair had concerns over the pricing of prescribed medical tariffs. The Chair suggested that the Committee submit a report to Parliament containing:∙a brief history on the interactions that had taken place on the RAF Amendment Bill; recommendations in principle on what should be retained and what should be omitted; a recommendation to take the process forward subject to two issues (ie the positive financial impact on the Fund and the pursuit of broader restructuring); that the incoming parliament consider the recommendations made on prescribed medical tariffs. The Chair also said that recommendations on specific issues ie financial assistance, levies and the restructuring of management, should be included in the report. The Committee agreed.

Ms Stander agreed that the RAF Board and the Department would have to look at ways to best address the problems associated with it. National Treasury was looking into the prospect of increasing petrol levies over the next few years.

Mr Dave Mitchell, a non-executive director of the RAF, pointed out that the following issues were being addressed: the improvement of the RAF organisational structure; the improvement of financial management; improving the cash flow of the fund (i.e. levies); looking at the effectiveness of the Audit Committee

The Chair stated that the 'health' of the RAF was directly related to the number of road accidents in SA. The Committee report would reflect this sentiment as well. He asked the Department to shed some light on rail safety issues in a discussion.

Mr Farrow asked what had happened since the passing of the rail safety legislation. Rail accidents were becoming more common and yet the Committee had not been briefed on the issue. The Committee and the public should be informed on the outcomes on investigations into the causes of rail disasters. He also asked about the status of the rail safety regulator.

Mr Makokoane conceded that there had been several rail accidents during 2003 and the Department of Public Enterprises had set up commissions of enquiry. Transnet had been asked to lead the process. A commission had submitted a report to the Minister of Public Enterprises on the Charlottesdale rail disaster. The South African Police Services (SAPS) had identified the need to increase safety measures on trains and the Department was working closely with them to monitor the process.

The Chair emphasised that rail safety was a matter of public interest and that there should be greater access to information and greater transparency over the outcomes of investigations. He did however appreciate that, in many instances, legal issues hampered transparency. Mr Farrow agreed.

Mr Khumalo said the National Rail Safety Regulator (NRSR) had been established to improve the level of safety on trains. Minimum operational standards had been established to which operators had to adhere. A board and chairperson had been appointed in June 2003. The appointment of a CEO was still being finalised as candidates felt the salary offered was too low.

Mr Khumalo continued that the legislation had been gazetted in February 2004 but that its attestation had been delayed until April 2005. The budget for the National Rail Safety Regulator had already been approved. A memorandum of agreement had been entered into between the SAPS and the NRSR to deal with safety issues.

The Chair felt that the Department could have performed the functions of the NRSR. He was still concerned about the transparency of rail safety information and the outcome of investigations, particularly regarding the Charlottesdale disaster.

Mr Farrow asked that the Department furnish the Committee with copies of the Charlottesdale report, and Ms Stander agreed.

The Chair said that the Department should play a more active role in the performance of its core function. The NRSR should not be overseen by Transnet and the Department of Public Enterprises, but by this Department - rail was still a transport issue.

Annual Committee Report and Budget
The Committee went through the annual report page by page, amending as was needed. The changes were of a minor technical nature, such as spelling and grammar, and the report was adopted. (Please refer to the attached document for details.)

The Chair very briefly presented the Committee budget to members and this was accepted.

The meeting was adjourned.