Public Transport Entities Annual Reports: Department briefing

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
27 October 2004
PUBLIC TRANSPORT ENTITIES ANNUAL REPORTS: DEPARTMENT BRIEFING

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Presentation on Annual Reports of Transport public entities

SUMMARY
The Department of Transport briefed the Committee on its Annual Reports and Financial Statements. Most entities managed to submit their financial statements for 2004 on time and most got unqualified audit reports. The Road Accident Fund’s accumulated deficit had increased by R828 million to R23.9 billion. Although steps had been taken to cut costs and to improve their financial position, the situation was expected to remain unsustainable. The South Africa Railway Commuter Corporation and South Africa National Roads Agency had also made some losses.

In relation to increasing the tariffs of the different entities, the Department recommended that there should be no increase in the case of South African Maritime Safety Authority. With regard to the South Africa Civil Aviation Authority a tariff increase had been recommended. This decision turned out to be wrong as SACAA had a surplus of over R50 million. It was not intended for this regulator to generate a surplus of that size.

MINUTES
The Department briefed the Committee on their Annual Report and Financial Statements. Ms W Stander (Director-General), Mr D Pretorius (Chief Financial Officer) and Mr I Essa (SANRAL: Regulatory Manager) attended the meeting.

The Director-General presented about the following institutions: Airports Company South Africa Limited (ACSA), Air Traffic and Navigation Services (ATNS), South Africa Railway Commuter Corporation Limited (SARCC), South Africa National Roads Agency Limited (SANRAL), Road Accident Fund (RAF), South African Maritime Safety Authority (SAMSA), South Africa Civil Aviation Authority (SACAA), Cross-Border Road Transport Agency (CBRTA), Urban Transport Fund (UTF), Road Traffic Management Corporation (RTMC) and Railway Safety Regulator (RSR).

The Director-General outlined the main activities of the public entities. Most entities managed to submit their financial statement s for 2004 on time and most got unqualified audit reports. The RAF accumulated deficit increased by R828 million to R23.9 billion. Although steps were taken to cut costs and to improve the financial situation, the situation was expected to remain unsustainable. The SARCC and SANRAL also made some losses.

In relation to increasing the tariffs of the different entities the Department recommended that there should be no increase in the case of SAMSA. With regard to SACAA a tariff increase was recommended and the decision turned out to be wrong because SACAA had a surplus of over R50 million. It was not intended for this regulator to generate a surplus of that size.

Discussion
Mr S Farrow (DA) said that it would be preferable to have a briefing on the Dube Trade Port. He asked who dealt with the liberalisation of airspace.

The Director-General replied that the issue was the liberalisation of the market and not the airspace per se and this was done by the Department of Transport (DoT). The Department negotiated traffic rights with other countries. After it had obtained them it would invite all South Africa airlines to compete for the rights. The decision on who should get the rights was based on consumer interest and the need to promote competition. She highlighted that there were still some imbalances in the market. British airliners could freely participate in the South African market but South African airliners found it difficult to participate in British markets.

Ms R Mashigo (ANC) asked how the status of airports was determined. She also asked if there was a rule that said that there should be only one international airport per province.

The Director-General replied that from a Department’s point of view it was better to have as many international ports as possible. Cabinet decided to limit the number of international airports for security reasons. All provinces had one international airport except Gauteng that had two. Some people had suggested that Gauteng should have three international airports.

Ms Mashigo said that local needs might dictate that there should be more than one airport in a province.

Mr Farrow said that the status of train coaches was getting worse. He was scared that the Department might not be able to refurbish them. This issue was critical given the fact that the country would host the Soccer World Cup in 2010.

The Director-General replied that there were 4 500 coaches, of which 60% were operational. The average age of the rolling stock was 30 years. The Department had the necessary capacity but no money to undertake the refurbishment of the coaches.

Mr L Mashile (ANC) observed that the Department was battling to maintain existing stocks. He asked if there was any chance that the Department would get new stocks. Some cities did not have railway links with township. The Department should forget linking the cities with township if it was still struggling with refurbishment. He noted that SANRAL favoured a locally developed Pave Concrete Pavement Design method instead of the "black top" pavements. He thought that concrete pavements were more expensive. One problem was that it used machines and was therefore not labour intensive.

The Director-General agreed that the Department was battling in terms of refurbishing the coaches. She said that the ideal situation would be to be able to maintain the existing stocks and increase the number if possible. Rail transport was not suitable to all cities and townships. Taxis were more suitable to some places than other modes of transport. The high-density population of some metros necessitated the establishment of railway lines. Taxis remained the backbone of transport in the country and it was important that taxi associations got their acts together. 4 500 coaches were not enough. The issue was not about connecting all cities to townships.

Mr Farrow said that levy in the petrol fund set aside for road maintenance was clearly not enough. He asked how the Department would ensure that there were sufficient funds for road maintenance.

Mr Essa hoped that the National Treasury would allocate funds for the maintenance of roads. The maintenance of roads was easier compared to expansion of roads.

A member said that the N12 road between Johannesburg and Kimberly was in bad condition. He asked if there were plans to have a tollgate on the road. He also asked for an outline of the criteria used by municipalities to access UTP funds.

Mr Essa replied that there would be no tollgate on the road. The road did not belong to the Department but was under provincial governments.

Mr N Magubane (ANC) noted that R30 million had been set aside to finance the deployment of police officers on trains. He asked if the Department had approached the Department of Safety and Security to assist on this matter.

The Director-General said that a lot of progress had been made on the deployment of police officers. The Department had funded the R30 million and there were ongoing discussions on the matter. It was essential to deal with the security situation on trains.

Mr Farrow said that the salaries of CEOs of some of the public entities were cause for concern. Some of them were earning more than President Mbeki. There was also a problem of overloaded vehicles. Provinces had difference levels of tolerating overloading and this was causing problems.

The meeting was adjourned.