Future of Public Transport: Discussion with SANTACO and CSIR Transportek

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18 August 2004
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Meeting Summary

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Meeting report

18 August 2004

Mr J Cronin

Documents handed out:
CSIR Transportek presentation: Taking Public Transport Forward to 2010
The Future of the Taxi Industry: briefing by SANTACO

The South African National Taxi Council (SANTACO) presented their concerns relating to future changes in the taxi industry, and the need for legislation to empower it and possible subsidisation. Council for Scientifc and Industrial Research (CSIR) Transportek then made a presentation focusing on the integration of modes of transport, outlining current challenges and offering potential solutions. The Committee asked questions about taxis in rural areas and on mine compounds, the impact of restructuring on other related industries, the proposed transfer from interim to tender contracts, as well as the need to research more into the actual value of the industry.


SANTACO submission
Mr T Muofhe's (SANTACO President) presentation dealt with the future of the taxi industry, with emphasis on empowerment and legislation. The taxi industry was one of the last industries to be empowered, and yet it was largely comprised of individuals from previously disadvantaged communities. The industry operated much as it did thirty years ago, although recent legislation aimed to change it into a broad-based transport business. To capitalise on such opportunities, it was important to ensure the transition did not lessen the investment of taxi operators.

Mr P Browning (SANTACO Consultant) accepted that change was inevitable within the taxi industry, but it was important to minimise the threats inherent in change and maximise the opportunities. Public transport was regulated under the National Land Transport Transition Act (2000) that originated from the White Paper of 1996. The White Paper stipulated that transportation be controlled by "regulated competition" which, when requiring government funding, was to take the form of tendered contracts. All major traffic routes were characterised by subsidised bus or rail transport and unsubsidised taxis. According to the White Paper, taxis would not be allowed on such routes unless they were also subsidised. He was concerned that taxis would be forced off the more lucrative routes into peripheral areas.

Mr Browning argued the Act's emphasis on planning authorities posed another threat. By allowing planning authorities to define and license "preferred modes of transport," the industry risked significant reduction in numbers. The decline of the industry was not in the long-term interest of government, as its estimated value was R15 billion and it was owned by approximately 80 000 individuals from previously disadvantaged communities. It was thus an excellent opportunity for broad-based black economic empowerment.

The White Paper had outlined a new role for taxis within the public transportation framework but the industry had not yet experienced the financial and technical assistance promised. Still, he was pleased that transport policy and the subsidy system were under review, especially since taxi operators received nothing under the current subsidy system. He recommended that an interim plan be enacted while a fairer system was being developed. The benefits of any subsidy programme should go to commuters. It would be necessary for operators to form an association, a company, or a co-operative that could act as an intermediary between government and the individual operators.

Mr S Farrow (DA) asked whether SANTACO had analysed the cost of subsidising the taxi industry. He questioned the industry's value of R15 billion, as other sources had indicated the value at R10 billion. The benefits of subsidisation should go to commuters, rather than taxi owners and operators.

Mr R Mutsi (SANTACO Managing Director) stated that SANTACO's recommended subsidy of 20% of the scrapping allowance was intended as an interim strategy, since it would take a while to determine the best way to subsidise such a complex industry. The suggested 20% would cost R4 billion over four years. However, it was necessary to separate scrapping allowances from subsidies, since operators needed to trade in old vehicles for new ones. It was important to ensure that any subsidies provided to operators did not result in fare increases.

A Member (ANC) asked if SANTACO's vision included rural public transportation, which often took the form of bakkies, rather than mini-bus taxis, due to the poor road conditions. Mr Muofhe said SANTACO was exploring alternative means of rural public transportation, since bakkies were unsafe and mini-bus taxis were incapable of handling rural road conditions. One possible solution was four-wheel drive taxis that were higher from the ground than bakkies.

Mr A Ainslie (ANC) noted that transformation into a broad-based transport industry often included expansion into other related industries. He asked whether there had been any attempt to expand into industries such as petrol and tires and, if so, what problems they had confronted. Mr Browning agreed but said it would be difficult to harness the buying power of the industry without some form of association or co-operative. Successfully working together to receive government subsidies might cause operators to form co-operatives to exploit their bulk buying power.

Mrs D Morobi (ANC) asked if mining areas were allowed to have taxi ranks. Mr Muofhe asserted that 'pirates' operated illegally there and threatened the business of legal operators. Such problems could only be solved by law enforcement agencies. Mining areas were problematic since they were private property and therefore mine managers determined which operators could form ranks. This meant that several illegal operators worked in and around the mines. The Department of Transportation had not been able to resolve the situation and, therefore, Mr Muofhe suggested that the problem be addressed at the national level.

Mr L Montana (Department Chief Director) questioned how best to avoid reproducing the inefficiencies of the current system in an interim subsidy system. Mr Browning said that SANTACO did not have the solution but a possible approach would be to provide a "top-up" subsidy for new vehicles.

CSIR Transportek submission
Mr T Lamprecht (CSIR Transportek) asserted that public transportation had improved little over the last ten years. The presentation aimed to identify possible bottlenecks and measures to improve integrated public transport service delivery. The cycle of public transport service delivery was outlined, as well as the national challenges facing the bus, mini-bus, rail, and integrated transportation systems. Short-term and long-term interventions to streamline service delivery were recommended.

Mr Montana asked why they suggested converting interim bus contracts now as this could reinforce some of the negative aspects of the system. Mr Lamprecht said it was not an issue of cancelling bus contracts and bringing in another mode of transportation. That would not be feasible and, therefore, bus contracts still needed to be honoured.

A Member (ANC) asked if local government was the best way to channel subsidies. Mr Lamprecht asserted that local government provided a good mechanism through which to channel subsidies. Municipalities should be allowed to divide subsidies according to particular needs.

Mrs N Mbombo (ANC) asked what kind of performance measures should be used to assess taxis. Mr Lamprecht suggested they assess service from the passengers' viewpoint.

The Chairperson noted there was some unease with moving from interim contracts to tender contracts, as tender contracts could lock the transport sector into a set of arrangements. Research was needed to establish the actual number of taxis and taxi operators. It was also important to understand the profiles of individuals in the industry so that policies did not negatively affect their livelihoods. He also mentioned the importance of involving municipalities in public transportation subsidy schemes. He admitted that the Department had not delivered public transport to the people in the last ten years, but were better positioned to do so during the next five years.

The meeting was adjourned.


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