Road Accident Fund Commission Amd Bill: voting

NCOP Public Services

21 May 2000
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Meeting report

ROAD ACCIDENT FUND COMMISSION AMENDMENT BILL [B12-2000]: REPORT

PUBLIC SERVICES SELECT COMMITTEE
22 May 2000
ROAD ACCIDENT FUND COMMISSION AMENDMENT BILL [B12-2000]: REPORT

Documents handed out
Road Accident Fund Commission Amendment Bill
Report by the Road Accident Fund Commission (See Appendix 1)

SUMMARY
After being briefed on the work of the Commission, the committee agreed to the Bill which will extend the life of the Commission for another year.

MINUTES
The Chairperson, Ms Majodina, explained the purpose of the Road Accident Fund Commission Amendment Bill which will extend the life of the Commission. The Commission has requested that an extension of time be granted to the Road Accident Fund Commission in order that it may properly fulfil its statutory duties and complete its work. This Section 75 Bill had been passed in the National Assembly the previous week.

The Commission had apologised for not being able to attend this meeting and present the report, as they had other commitments to attend to. Mr Letebele from the Department, presented the Commission's report (see Appendix 1) which describes the work the Commission has done to date.

Act 71 of 1998 had envisaged that the Commission would require only nine months to inquire into all issues set out in Section 5 of that Act and that the Report would be presented to the State President within twelve months of appointment of the Commission. It became apparent that the absence of data and information and the necessity to commission research into vital areas made it impossible for the Commission to complete its work within this time period. In November 1999 the chairperson wrote to the Minister of Transport advising that it would be necessary to request an extension of time to the life of the Commission. The Commission is dependent upon progress of the research and of the actuarial costing. The Report can only be finalised once the actuaries have reported as to the actuarial costing of the various options under consideration. This amendment Bill will extend the life of the Commission by one year.

Questions and answers
- The Chairperson asked what are the financial implications in extending the life span of the Commission.
- Mr Sulliman (ANC) asked if these Commissioners should be remunerated in terms of the principal act.
- Mr Mokoena (ANC) asked how these commissioners are remunerated.

Mr Letebele informed the committee that the Commission occupies rooms in the Department of Transport at no cost. Notwithstanding the provision that the Chairperson of the Commission may receive remuneration higher than determined for other members, the Chairperson continues to receive only her salary as a Judge of the High Court. The Commissioners are remunerated in accordance with the rate set by the Auditor-General. The staff comprises an administrative secretary and two typists who are employees of the Road Accident Fund (RAF) and whose salaries are paid there from and a messenger employed by and paid by the Commission. The first budget prepared for and on behalf of the Commission was necessarily an estimate of the work to be done by the Commission and the costs thereof. As at June 1999 the Commission could not envisage the nature and extent of submissions, developments in debate, which would indicate further avenues to be explored, or the issues on which further research would have to be commissioned. A further budget has now been prepared with greatly increased estimates for research cost allocation.

Mr Marais (ANC) recommended that the Bill be passed, and requested that the Commission complete the work within the extended time period. The committee accepted this motion. The Chairperson read the motion of desirability. The Bill will be voted on in the plenary on 25/2/2000.

Appendix 1
Road Accident Fund Commission
Report to Parliamentary Portfolio Committee on Transport

TERMS OF REFERENCE
1.The Road Accident Fund Commission Act, 71 of 1998, established a Commission of Inquiry with the object "… to inquire into and to make recommendations regarding a reasonable, equitable, affordable and sustainable system for the payment by the Road Accident Fund of compensation or benefits, or a combination of compensation and benefits, in the event of the injury or death of persons in road accidents in the Republic".

2.The Commission has been granted a period of nine months within which to conduct its inquiries and a further period of three months within which to prepare a Report for submission to the State President, Section 7(1) of the Act.

3.The Commission was appointed with effect from 1st June 1999: Judge Kathleen Satchwell (Chairperson), Mrs Riah Phiyega and Mr Zakhele Sithole. Judge Satchwell was previously seconded from the High Court (WLD) on a fulltime basis whilst Mrs Phiyega and Mr Sithole continue with their current employment duties and render services to the Commission on a part-time basis.

PROCESS
4.Fundamental to the enquiries of the Commission have been:
engagement and dialogue with all persons and organisations who have an interest in or concern with payment of compensation or benefits to the victims of road accidents in the Republic;
solicitation of information and procurement of expertise, data and advice to the Commission.

5.Accordingly, the Commission issued invitations to make representations to and/or attend at public hearings of the Commission some 185 individuals and organisations who had previously shown an interest in the debate surrounding the White Papers or whom the Commission believed could be of assistance or who might wish to be heard. The Commission placed certain advertisements inviting the public to make representations. Public hearings were convened over the months August to November 1999 inclusive when the Commission received written submissions from and heard the views of a wide variety of approximately 210 individuals and organisations. (See annexures "A" and "B" hereto).

6.The Commission perused a selection of those documents which were prepared (over the period mid 1993 to mid 1998) during the process of production of the White Papers.

7.The Commission has attended at and addressed meetings of SAAPIL, the Johannesburg Attorneys Association and RAF employees (Pretoria and Randburg branches) reporting on the process followed by the Commission and the issues under consideration and debate.

ISSUES FOR CONSIDERATION
8.The approach adopted by the Commission was not one of amendment to or panelbeating of the various White Papers but to proceed to zero base all issues for consideration. Certain issues of principle immediately present themselves: what is the rationale for the intervention of the State in the fate of the victims of road accidents in a manner more advantageous than the victims of violent crime, birth defects or household accidents? For whose benefit does the State intervene? Should intervention by the State encompass facilitation of funding of a system to benefit the victims of road accidents or establishment of a structure to administer same or provision of compensation or benefits? What is the nature of any compensation or benefits to be made available to the victims of road accidents and what should be the extent thereof?

9.Amongst the issues on which the Commission has received written submissions or has discussed with interested parties are:
Which road accident victims should be eligible for compensation or benefits i.e. a fault based versus no-fault based system?
Should there be exclusions from eligibility or limitation on benefits paid to certain road accident victims, e.g. drivers of vehicles whose blood-alcohol content exceeds the legal limit, unlicensed drivers, the drivers of unregistered motor vehicles?
Should there be entry thresholds to be eligible for benefits or compensation by reason of injuries sustained in road accidents, e.g. the number of days off work by reason of injury, the period in hospital by reason of injury, medical costs expended, the degree of severity of injuries, the degree of and nature of disability by reason of injuries, the appropriate tool for measurement of injury or impairment or disability?
What is the nature of and which are the benefits or compensation which could or should be received by road accident victims, i.e. past and future medical and hospital expenses, past and future loss of earnings, general damages for pain and suffering, funeral expenses, loss of support by dependants?
Should all compensation or benefits be equally available or should there be differentiation between road accident victims, e.g. certain benefits only available to the more seriously or catastrophically injured, certain benefits or compensation only available to the "innocent" victim?
Should there be financial limits placed upon the compensation or benefits paid to or for and on behalf of the victims of road accidents, e.g. should the RAF pay medical and hospital expenses according to a tariff rather than unlimited expenses, should there be a maximum income in respect of which road accident victims could claim loss of earnings, should there be a cap on the amount of general damages paid for pain and suffering, loss of amenities of and enjoyment of life?
Should compensation or benefits paid to road accident victims be made in one lump sum or by way of periodic payments, e.g. a lump sum for anticipated future loss of earnings based on a guesstimate of the claimant's life expectancy or a monthly pension or annuity during a proven lifetime, should a lump sum in respect of anticipated future medical expenses based on a guess estimate of future medical needs and the cost thereof be paid as opposed to provision of medical and rehabilitative care as and when it is actually required, should structured settlements be introduced?
What structure is most appropriate for the delivery of compensation or benefits to the victims of road accidents, i.e. what is the capacity of the present RAF to deliver, should there be and to what extent should there be a restructuring of the RAF, to what extent should there be outsourcing of the delivery of services, what is the role of the Board of the RAF?
What activities other than the payment of compensation or benefits to the victims of road accidents should be the concern of the RAF, e.g. involvement in and facilitation of road safety programs, research into rehabilitation, support for trauma and emergency medical services care?

10.In addition there has been many other ancillary aspects which the Commission has been obliged to pursue either in public hearings or in private discussions. These range from socio-economic issues associated with the fuel levy through to calculation of discount rates when making payment of benefits in one lump sum.

11.The Commission has held several days of public hearings into the current financial condition of the Road Accident Fund and has heard presentations from actuaries, the RAF, legal representatives and other persons who have comments on the alleged insolvency of the RAF, the extent of its deficit in respect of the outstanding claims liability as also the question of full or partial funding thereof.

INFORMATION
12.In the course of 1999 the Commission commenced its search for information which appeared not to be encompassed in the documentation already collated or in the representations made during the hearings process. The Commission met with further individuals and organisations (some of whom had already made representations) to discuss certain issues or to obtain specific information.

13. As issues were clarified in the latter half of 1999 it became apparent that it was necessary for the Commission to itself commission certain research. Inter alia this includes:
• To what use and for what purposes are the lump sum monies paid to road accident victims by the RAF (which are intended to cover loss of earnings and medical costs) actually expended.
• Public awareness of the RAF; public understanding of road accident compensation (including protection of injured parties, liability of drivers, who is covered in the event of injury from a motor vehicle accident, for what they are so covered, awareness of the current cost of such compensation); public expectations of a road accident compensation system.
• The macroeconomic effects of increases in the fuel levy.
• A needs based analysis of the demographic issues and statistics which determine the impact of a no-fault system on the RAF.
• Costing analysis of the impact on the RAF of provincial billing by state hospitals in respect of treatment afforded road accident victims.
• Costing of trauma units and associated services in the public sector.
• Tariffs currently applicable in the provision of healthcare and analysis as to what tariff would be most appropriate for the RAF.
• Insurance premiums which provide cover in respect of damage to motor vehicles and first party personal injury and which would provide cover in respect of third party personal injury.

14.The Commission has also been concerned to evaluate and learn from the systems for road accident compensation operative in other jurisdictions. Accordingly, the Commission prepared a questionnaire which was sent to the relevant authorities in approximately 23 countries. The Commission has also obtained written reviews of road accident compensation systems throughout the world. The Commission has visited Botswana to meet with the Motor Vehicle Accident (MVA) Fund and visited five of the States in Australia. (See annexures "C" hereto).

DATA
15.The recommendations to be made by the Commission are subject to the criteria of "reasonable, equitable, affordable and sustainable". In addition, these recommendations must take into account and be made with reference to the solvency of the RAF.

16.In order to give proper effect to these statutory duties, it is essential that the recommendations which the Commission may consider to be "equitable" and "reasonable" must also be actuarially costed in order that the criteria of "affordability" and "sustainability" are met. For this purpose, the Commission has met with actuaries who will, on receipt of the preliminary recommendations of the Commission, prepare an actuarial model and thereafter perform the appropriate analysis.

17.To assess the recommendations of the Commission against the four statutory criteria, the Commission requires certain data pertaining to the current claims and other operations of the RAF. Over a period of months the Commission addressed requests to the RAF for certain data from its own records which the RAF was unable to provide. In the main, the data required by the Road Accident Fund Commission from the RAF's own files fall under the following headings:
• accident giving rise to claim (rural or urban location, single or multiple vehicles, private vehicles or minibus taxis)
• profile of claimant (age, gender, employment, pedestrian or driver, passenger)
• injuries of claimant (non specific soft tissue, fractures, brain damage, paraplegia, treatment in provincial or private hospitals, length of hospitalisation)
• details of claim (medical expenses at provincial or private hospitals, loss of income expenses within income category group, period of inability to work)
• claims to settlement process (time lapse from accident to claim, from claim to first offer by RAF, from claim to issue of summons, number of matters going to litigation, comparison of claim against RAF offer of settlement and ultimate court order or settlement, proportion of court orders of settlements)
A schedule of the unavailable data is annexed hereto (see annexure "D" hereto).

18.Two examples of the absence of data and the inability of the Commission to proceed without same are:
(a) In the White Papers it was proposed that "foreigners" be excluded from the present system of road accident compensation by reason of the high costs involved. The Commission requested of the RAF the number of "foreign" claimants who had lodged claims, the amount of such claims under the various headings and the total amounts paid out to foreigners over a period of years. The RAF does not capture such data separately and was unable to provide it.
(b) Certain passengers are denied the same compensation or benefits as other non-negligent victims of road accidents: passengers conveyed for reward and employees of the driver/owner may receive no more than R25 000 whilst other passengers may receive no more than R25 000 in respect of loss of income or support and hospital and medical expenses but may still receive an additional sum in respect of general damages. No one has been able to advance any reason for the retention therefore. The White Papers and all submissions to the Commission have recommended removal of such discrimination. The Commission requested data from the RAF as to the number of road accident victims who were passengers who had claimed from the RAF, the nature of the injuries suffered by these passengers, whether these passengers were limited in their compensation because they were travelling in taxis or whether they were employees. The RAF does not have this data available to the Commission.

19. Accordingly, the Commission has arranged with HSRC to prepare a detailed analysis of the demographic characteristics and the nature and size of claims received by the RAF. This study will involve HSRC compiling a database relating to a sample of RAF claimants over the period 01/05/1996 to 30/04/1997, and analysis of the information to determine trends in terms of claims (biographic profiles of claimants, nature of injuries, compensation received, etc.). The project will be executed in close collaboration with the RAF whose staff will do the scanning of the paperwork and the capturing of data.

20.Central to this research project are the identification and classification of the injuries sustained by the victims of road accidents and, possibly, capture and coding of diagnoses and disabilities. Associated with this area of research is the capturing of information pertaining to historical medical costs, length of stay in hospital, level of care, type of facility, estimated future costs of treatment and future medical costs as a component of settlement amount obtained from the RAF. The Commission has sought advice from experts (both in Australia and South Africa) as to the most appropriate system to capture and code such data.

21.Finalisation of the questionnaire, training of RAF staff, capture of data in each RAF branch under supervision of the HSRC and then analysis of the data by the HSRC will take several months.

COSTS
22.The first budget prepared for and on behalf of the Commission was necessarily an estimate of the work to be done by the Commission and the costs thereof. As at June 1999 the Commission could not envisage the nature and extent of submissions, developments in debate which would indicate further avenues to be explored or the issues on which further research would have to be commissioned. A further budget has now been prepared with greatly increased estimates for research cost allocation. (See annexure "E" hereto).

23.The Commission occupies rooms in the Department of Transport at no cost. Notwithstanding the provision that the Chairperson of the Commission may receive remuneration higher than determined for other members, the Chairperson continues to receive only her salary as a Judge of the High Court. The Commissioners are remunerated in accordance with the rate set by the Auditor-General. The staff comprise an administrative secretary and two typists who are employees of the RAF and whose salaries are paid therefrom and a messenger employed by and paid by the Commission.

TIME PERIODS
24. Act 71 of 1998 envisaged that the Commission would require only nine months to inquire into all issues set out in Section 5 of that Act and that the Report would be presented to the State President within twelve months of appointment of the Commission. It became apparent that the absence of data and information and the necessity to commission research into vital areas would render it impossible for the Commission to complete its work within the time period specified. Accordingly, in November 1999 the Chairperson wrote to the Minister of Transport advising that it would be necessary to request an extension of time to the life of the Commission. (See annexure "F" hereto).

25. The Commission is dependent, in the main, upon progress of the research and of the actuarial costing. The Report can only be finalised once the actuaries have reported as to the actuarial costings of the various options under consideration.

26. Accordingly, the Commission has requested that an extension of time be granted to the Road Accident Fund Commission in order that it may properly fulfil its statutory duties and complete its work to the best of its ability.

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