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TRANSPORT PORTFOLIO COMMITTEE
8 September 2004
REDRAFTED ROAD ACCIDENT FUND AMENDMENT BILL: DEPARTMENT BRIEFING
Chairperson: Mr. J Cronin (ANC)
Documents handed out:
Presentation on Amendment of Road Accident Fund Act
Redrafted Road Accident Fund Amendment Bill (this is not yet available to the public)
Original Road Accident Fund Amendment Bill [B64-03] as tabled in 2003
The Department briefed the Committee on the proposed broad amendments to the Road Accident Fund Act. The amendments addressed issues of equity, fairness, transparency, and governance. In the following discussion, Members questions focused on the payment of compensation and the claimant's right to sue the wrongdoer.
The Chairperson noted the Department would not be presenting the text, as originally planned, but would be presenting the direction in which they were headed. The Department would present the Committee with text to amend the Road Accident Fund Act on Wednesday, 6 October 2004. Staff members of the Department and the Road Accident Fund were welcomed. Hearings will probably be held in the second week of October.
Ms Nonkululeko Msomi (Deputy Director-General: Transport Regulation & Public Entity Oversight) briefed the Committee on the Department's plans for amending the Road Accident Fund Act. She was accompanied by Ms Marissa du Toit (Director: Policy Advocacy and Coordination) and Mr Lucky Montana (Department of Transport, Chief Director for Parliamentary Services).
The key principles underpinning the amendment of the Bill were equity, fairness, transparency and governance. Issues pertaining to equity dealt with making the Act universal in application and increasing the limit for all passengers. The principle of fairness addressed ensuring reasonable compensation for victims and their families in terms of emotional shock, pain and suffering, and contingency payments. Issues pertaining to transparency included compensation, capping general damages and support, providing medical tariffs, and specifying funeral coverage. The principle of governance addressed the structure of the Road Accident Fund, the appointment of its Chairperson and CEO, and abolishing the Executive Committee. The objective of the Road Accident Fund Amendment Bill was to limit the liability of the Road Accident Fund. Corrections to acceptable clauses and improvement to unacceptable clauses were outlined (see document).
Mr A Ainslie (ANC) asked how capping and limitation of liability was going to affect the payment of compensation in installments.
Ms Msomi expressed the need to create a "basket" of options available to the Road Accident Fund, allowing them to choose the best payment strategy given the particular circumstances of individual claimants. Smaller claims might warrant lump sum payments, whereas bigger claims might warrant installment payments. It was also necessary to consider that some individuals might prefer lump sum payments and others might prefer installment payments. Regardless, the Fund needed enough money available to successfully manage all kinds of claims. Capping did not affect the method of payment.
Mr Lucky Montana (Department's Chief Director for Parliamentary Services) added that capping presupposes continuing with lump sum payments. He mentioned that some claims were so small as to make installment payments expensive and inefficient. Therefore, the Fund should be allowed to determine which payment method was best suited to each claim, thereby lowering transaction costs and increasing efficiency.
Mr Ainslie questioned whether payment would be made directly to claimants or whether it would be made via attorneys.
Ms Msomi stated that claimants should be paid directly in undisputed cases. However, there needed to be a clear and transparent process by which services providers were duly compensated.
Mr Ainslie asked if the Department proposed to maintain the common law right to sue the wrongdoer.
Ms Msomi argued for the importance of maintaining the right to sue wrongdoers.
Mr S Farrow (DA) questioned what was going to happen with the Road Accident Fund between now and the drafting of the text. He asked if service providers had been consulted, as doing so would make it easier to pass the Bill.
Mr Montana noted that past submissions to the original tabled Bill in November 2003 had been taken into account. He expressed the importance of consulting with the Board prior to submitting the actual wording of the redrafted amendment bill. After tabling the Bill, stakeholders would be invited to contribute additional input.
Mr Farrow noted that many claimants whose cases had been approved had not been compensated. He asked what the Department was doing to resolve the problem.
Mr Montana mentioned the Minister's commitment to address issues such as corruption, fraud and non-payment in the short-term. The Department was aware that many claimants had not been compensated and the issue had been raised with the Fund. The problem in part stemmed from the large budget deficit.
The Chairperson noted this was an issue of public concern, best addressed at length at a later date.
A member (ANC) asked who would determine the composition of the basket of options.
Ms Msomi replied that a number of situations and stakeholders would inform the basket of options. Cost and efficiency would play a large role in determining the basket of options. Mr Montana added that there should be one system of compensation comprised of different options.
The Chairperson argued that the last Bill had been problematic because most of the proposals addressed cutting costs. He was pleased that the objectives had changed and noted that the issues of equity, fairness, transparency and governance promised to provide a more effective process overall, in which costs would inevitably be lowered due to increased efficiency.
Ms Mbombo argued that the certificates awarded to claimants did not assist them in receiving medical care.
Ms Msomi recognized that certificates were often worthless to claimants. Therefore, she recommended they not be mandatory. When certificates were issued, it was necessary to ensure that there was an array of institutions that would accept the certificates. The Fund needed to negotiate with relevant stakeholders to ensure that certificates were honored.
Ms Mbombo questioned whether wrongdoers who had been sued would still be responsible for paying the petrol levy.
Ms Msomi argued that victims have the common law right to sue wrongdoers and that this right should not be excluded to individuals who chose to pursue additional compensation from the Fund. Wrongdoers who continued to use public roads would still be responsible for paying the petrol levy.
Ms B Thomson (ANC) asked how paying the claimants directly would affect their being charged by service providers.
Mr Montana mentioned that it was important not to undermine the important role played by members of the legal profession. Nevertheless, unscrupulous practitioners needed to be curtailed.
Mr L Green (ACDP) questioned whether the proposed legislation would effectively deal with corruption and fraud.
Mr Montana argued that proper management by the Board would help to address such problems.
The Chairperson raised the issue of collateral, saying that individuals who paid for personal injury insurance should still be allowed to claim from the Fund, as they should not be penalized for having taken such a precaution. He noted that the issue of contingency fees would be problematic to resolve. Professional services must be recompensed but caution must be taken to prevent abuse of the system.
The meeting was adjourned.
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