Transport Budget: briefing

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08 March 2000
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Meeting report


8 March 2000

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Transport Budget: Vote 33

Ninety four percent of the R409 billion budget for the Department of Transport represents transfer amounts to entities such as rail, bus and civil aviation authorities in the form of subsidies. The Department has a business
plan which centres around a number of priorities. These are: safety in transport, advancing various taxi related processes, establishing a road management system, law enforcement and the development of a programme for infrastructure development.

The Committee was briefed by the Minister of Transport, Mr Dullar Omar and a delegation from the Department which included the Acting Director General, Mr Sipho Msikina and Deputy Director General, Mr Harald Harvey.

The Minister briefly outlined his summary of the budget’s important implications after sketching the bottomline figures.
The budgetary allocation for the year 2000/2001, an amount of R 409 billion, represents a slight increase on the baseline budget. The bulk of the budget (94%) is allocated for the payment of subsidies to rail, bus and civil aviation authorities. This leaves 6% of which 19.2% represents personnel expenditure.

Over the past months the Department has formulated a business plan of which certain issues must take priority:
The first of these priorities is safety in transport. However, the Minister did envisage some problems with the small budget allocation for this activity. Secondly, the Department will work towards advancing various taxi related processes such as the legalisation, formalisation and recapitalisation of the taxi industry. Minister Omar noted that the recapitalisation process also fell under the Department of Trade and Industry and therefore the Department had no budgetary allocation for recapitalisation. Thirdly, South Africa’s road traffic management system was an important priority. Fourthly, law enforcement. The main agenda would be the implementation of the Administrative Adjudication of Traffic Offences Act which, according to the Minister, would impact on road safety and result in better driver behaviour. Fifthly, they would be working on developing a programme for infrastructure development in respect of all modes of transport; roads, roads, harbours. A Committee of Ministers was looking at infrastructure development specifically. The Minister saw this a serious problem for provinces. There is no allocation from the National Department to provinces. Funding comes from the provincial budget but usually the province has more pressing problems. Local governments have no funds for infrastructure development. They also face the added problem of non-payment for services.

The Acting-Director General of the Department, Mr Msikina, gave a brief input. He outlined three programmes for the year to which the budget would be geared: Policy Development, Strategy and Implementation, Safety. The challenges faced with regard to safety was the implementation of two Acts, the Administration Adjudication of Traffic Offences Act (AATO) and the National Land Transport Transition Bill (NLTT), but there were ongoing consultations with the Department of Finance.

Rev K Meshoe (ANC) asked what happens to our fuel levy?

Minister Omar said that the levy goes into the general pool. Whether or not a portion of the levy should go into a dedicated fund for infrastructure was open for debate.

Rev Meshoe followed up his question by asking whether all ministries have access to the general pool and whether the Ministry of Transport should not benefit more?

The Minister said that the policy in the Department of Finance was that there should be one pool from which allocations are made. It was another matter whether or not the Department would not benefit from a different approach. Mr Harvey added that the fuel levy was a general tax and part of government's general revenue fund.

Ms Mnumzana (ANC) commented that infrastructure is a problem at provincial level. In the Department there are persons trained to deal with revenue. She asked how the National Department helps provinces to formulate guidelines to manage funds.

Mr Msikina replied that the Department only relates to national roads through the National Roads Agency. There is an interaction between some national and provincial members but this assistance is mainly technical. It is neither fiscal nor is it formalised.

The Chairperson, Mr Cronin (ANC), asked whether the NLTT was another attempt to ensure greater coherence in the transport infrastructure. The type of guidance referred to would therefore come through legislation.

Mr Harvey agreed. He mentioned two pilot projects headed by the National Roads Agency which will oversee the building of roads, putting in networks and so forth. The Four-by-Four was a committee of which both the Ministry of Transport and Finance was a part. Four Transport officials from national and provincial government were working together to manage a fiscal programme for road transport.

Mr Abrahams (UDM) said he regarded taxi recapitalisation as important but he needed a clear delineation of where the responsibilities of the Transport and the Trade and Industry Department’s began and ended with this project.

Mr Msikina replied that the Department of Trade and Industry (DTI) were responsible for delivering the vehicle. Transport must establish mechanisms to run and facilitate the process.

Mr Abrahams followed up by enquiring what the budget for the take-over of the process by the Department was. Mr Harvey responded by saying that at the time of the budget the final figures had not yet been finalised. They were in ongoing negotiations with the Department of Finance. The DTI would definitely be responsible for the scrapping allowance. Minister Omar added that a steering committee comprised of the Directors General of Finance, Trade and Industry, Transport and Mineral and Energy had been established to advance the process.

Mr Louw asked whether the recent floods had been budgeted for and noted that the existing infrastructure problems would have been compounded.

Mr Msikina replied that the infrastructure disaster is featuring high on the agenda for members of the governmental team. The CEO of the Roads Agency was asked to serve on this team. While the rehabilitation of infrastructure was important it had to be linked with the infrastructure development programme. The Poverty Relief Fund had allocated R100 Million for the Eastern Cape and the Northern Cape to be integrated with the rural programme. There was a need for the programmes to be synchronised.

The Chairperson asked the Committee to think about the role which the Portfolio Committee can play with regard to the budget. He said that while they could not amend the current budget they could impact on the ongoing negotiations with the Department of Finance and improve the budget in the future. Minister Omar agreed, saying that the Committee was not to be a rubber stamp but had to be critical. He said he respected the separation of powers.

Mr Niemann (NNP) expressed concern about freight traffic on South African roads. He said that the railway system was not being used effectively and that the large numbers of freight trucks led to road damage. He asked what work was being done with, for instance, Spoornet, to remedy this.

Minister Omar said that rail had to be made the preferred mode of transport for freight and passengers. However, he said that the playing field for competition between road and rail was not level. There was overloading and other illegal practices with road transport. Penalties and other aspects of law enforcement were being looked at.

Mr Niemann (NNP) noted that bus subsidisation was still a practice although busses are no longer a viable mode of transport.

Mr Harvey responded to this comment saying that in fact subsidies were increasing each year. He said that the Department has had to reprioritise due mainly to the crisis in the commuter rail system. In terms of an agreement with the South African Railway Commuter Corporation its debts would be taken over by government and a capital portion would be written into the budget. He said that creative alternatives to subsidies would have to be found. These might include sale and leasebacks and concessions. Regarding bus subsidies, interim contracts have been signed with operators to give up lifetime contracts in place of tendered contracts.

Mr Slabbert (IFP) supported Mr Niemann’s concerns but asked what would happen to trucks if freight was moved from road to rail.

Mr Rajoo (IFP) interjected asking whether there could be a surcharge on trucks that were destroying roads.

The Minister said that since June last year the Department had been redefining their priorities. Mr Harvey added that roads are cheaper and more efficient. However, the network in South Africa was inappropriate to where the spatial patterns are developing. He said that you cannot sustain a rail system where rusted rails need to be cross subsidised - it was too expensive and inefficient. The government is also a shareholder of the rail industry therefore from a strategic point of view the State needed to have control over infrastructure, costs and where it is set up. Rail must be made attractive.

Rev Meshoe (ACDP) referred to the R100 million allocated to the Poverty Relief Fund for the Department of Transport for road-building projects. Could not the funds be redirected at an infrastructural level?

Minister Omar said that, prior to the disasters, the Poverty Relief Fund had been allocated to road development. The National Road Agency had visited the Northern Province and Eastern Cape to establish what their priorities were with regard to road-building as the Department was seeking job creation opportunities. The disasters have however necessitated a reassessment as to how the programme fits in with larger needs.

The meeting was adjourned.


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