Road Accident Fund Amendment Bill: briefing on Department’s Proposed Amendments

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
2 March 2005
ROAD ACCIDENT FUND AMENDMENT BILL: BRIEFING ON DEPARTMENT’S PROPOSED AMENDMENTS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Proposed amendments to Road Accident Fund Amendment Bill – proposed changes by the Department as gazetted on 26/11/04
Original Road Accident Fund Amendment Bill [B64-03] as tabled in 2003
Road Accident Fund Act, No 56 of 1996

SUMMARY
The Department of Transport presented their proposed changes to the Road Accident Fund Amendment Bill to the Committee. The Committee agreed that phrases in the proposed amendments which had the potential to open up drivers to legal liability were not reasonable. There was concern that the board appointment mechanism now excluded this parliamentary committee from the process. It was noted that the Minister would play a more active role regarding the appointment of the Chief Executive Officer. The Committee welcomed clear definitions for "serious injury" and ‘general damages’ . The Committee were also interested in having the regulations emerging from this Bill submitted for its scrutiny.

MINUTES
Ms Nonkululeko Msomi (Deputy Director General: Regulator and Public Entity Oversight) summarised the history of the Road Accident Fund Amendment Bill . She said that it had been first introduced in 2003. Public comment had been made on the Bill and the Department had incorporated these into the changes. The Bill was strong in certain areas, but some areas would still have to be revisited. The Bill looked at issues of equity, fairness, access and transparency and aimed to improve these.

Long Title
Ms Msomi said the amended Long Title posed constitutional questions. She referred the Committee’s attention to lines 10 and 11 which read: "to extend the application of the provision in terms of which a claim for compensation lies against the Fund or an agent only." They had had substantial discussion regarding this. The phrase had the potential to open up drivers to legal liability. This would need much financial ability on the part of the driver and was therefore limited by the financial status of the driver. There might be another way of looking at it other than exposing drivers Ways should be found to protect the driver, but a ‘balancing act’ was needed in order for the victim to be compensated under circumstances where the RAF was unable to provide this. She admitted that this issue needed some rethinking. If they were to limit the rights of victims, which would close the door to common law, this issue would require looking into with regards to the Constitution, since rights would be limited. If the Act was to limit the rights of victims to sue the Road Accident Fund, it would be necessary to test it in the Constitutional Court. The real economic impact was on the poor to middle-class citizens, for whom it would be problematic to be sued. The Department wanted to reconsider this. She asked the Committee to allow the Department to reconsider this aspect

The Chairperson agreed that those lines should be dropped. The Bill’s objectives would stay the same by and large. The Committee would note that the objectives remained the same, and would pretend that lines 10 and 11 were not there and leave them for later.

Ms Msomi said the fundamentals of everything else in the Long Ttitle, apart from lines 10 and 11, had not changed. They still sought to include the previously excluded and to introduce assessment centres, which would ensure that people received the correct treatment.

Clause 1: Amendment of section 4 of Act 56 of 1996, as amended by section 1 of Act 15 of 2001
Ms Msomi said they had included a provision for the conclusion of agreements.

The Chairperson asked for an example to illustrate the need for these changes.

Ms Msomi said in certain areas of an investigative nature, they would find it necessary to investigate, and they could then outsource the necessary expertise by entering into an agreement with relevant government agencies, such as the Scorpions.

Mr S Farrow (DA) said he understood the need for government agencies, but there was much controversy about contracting out to outside agencies and the Bill still catered for this. He asked if the Bill should not constrict the outsourcing of outside agencies.

Ms Msomi replied that they were not saying that they should outsource on a large scale. Information technology was an example of where outsourcing might be needed. It should be done in a transparent manner, and the Bill allowed them to do very specific things. They had safeguarding mechanisms in place that would avoid unknown contracts.

The Chairperson noted that they would go into the substance of clauses at a later time during deliberations.

Clause 2: Amendment of section 6 of Act 56 of 1996
Ms Msomi said this change was merely making the Road Accident Fund’s financial year consistent with that of other agencies.

Clause 3: Amendment of section 10 of Act 56 of 1996, as amended by section 1 of Act 43 of 2002
Ms Msomi told the Committee that the heading had undergone a substitution in order to make the language clear. They have dropped the wording that referred to subsection (9) in 3(b). The board of the Fund would consist of no less than eight, and no more than 12 members. With regards to the appointment of the board, the Minister would now appoint the Chairperson, as well as the Vice-chairperson.

Mr Farrow said the Committee as part of its oversight role, was traditionally part of the process of appointing the board to ensure representation of people from all sectors. Taking out subsection (9) limited this process. He asked where the Committee’s oversight role was.

Ms Msomi replied that most of the boards in the Department of Transport were not treated in this manner, and there was a need for consistency. They are in the process of standardising the procedure for appointing boards so that they can all be uniform. She was not saying that the Committee’s powers should be taken away. With regard to the Committee exercising an oversight role, the Department’s view was that it helped to oversee the process. It would be better to allow the Committee to critique the board that is already in place. The process was not "pure".

The Chairperson intervened and said that there should be a positive description in the Act of how the board is appointed. He did not see a clear description if subsection (9) was removed.

Ms Msomi said that this would be considered.

The Chairperson said that they would flag the issue, as they would not go into details at the moment. He said Mr Farrow’s question was appropriate, and they would debate it at a later time. They had to find an effective appointment mechanism without writing out the Committee in the process.

Clause 4: Amendment of section 11 of Act 56 of 1996
This clause contained the removal of Section 11(1)(a)(iv) which was needed in order to align it with other legislation.

Clause 5: Amendment of section 12 of Act 56 of 1996
Ms Msomi noted that the amendment of this section was a reiteration of the previous section.

The Chair indicated that the result of the amendment would lead to the Minister playing a more active role regarding the appointment of the Chief Executive Officer. The role of the Chief Executive Officer will also be enhanced by the amendment.

Clause 6: Substitution of section 17 of Act 56 of 1996
Ms Msomi indicated that the entire section 17 of the Principal Act would be substituted. She made special reference to the substitution of the definition of "serious injury". It was noted that this definition still had to be finalised. The definition should be clearly defined in the definitions section by the next portfolio committee meeting.

The term ‘general damages’ had not been previously defined. It had since been defined. Ms Msomi explained that they had looked at the statistics to see the impact of total claims. Those numbers were able to provide guidance. The essence of the provision was looking at compensating people for general damages. The limit would be R100 000. They had looked at the numbers over the last four years to arrive at this amount. Some 84% of claims were under R20 000, and only 1% were above R100 000. Ms Du Toit said all the figures used for capping amounts in the Bill were where 99% of the claims were under these amounts.

The Chairperson said that general damages was a contentious issue. He hoped that it would be streamlined in the body of the Act.

Section 17(1)
Ms Msomi said that this gives an indication of how injuries would be assessed. They had inserted (d) to allow the Minister to set up a peer review mechanism, for more objectivity.

Section 17(2)
This would be deleted completely. They had received many comments on this and they would look at it again.

The Chairperson hoped that they would have a sense of the wording when they met again.

Section 17(4)
Ms Msomi referred the Committee to the wording that had been dropped.

The Chairperson noted that they were directing compensation to the service provider rather than the third party.

Ms Msomi said they might have to enhance it further. These were practical areas they would need to look at.

Ms M du Toit (Director: Policy Advocacy and Co-ordination) indicated that a big problem was that RAF undertakings were not being used. Once a person had paid the attending doctor, that person could claim their money back from the RAF, but sometimes did not do so. Thus the instrument was not yet working, they must still grapple with it to correct it. This was done to ensure that a person would go to a doctor. They would then try to get doctors to claim from the Fund. They were trying to get it right on both sides of the situation, but there were still some legal issues.

The Chairperson added that the operation of the legislation was also in need of attention.

The Chairperson asked why (4A)(a)(ii)(b) were there. Ms Du Toit said it provided structure for the coding of tariffs.

Mr Mashile asked if the reference to "consultation with medical service providers" referred to organisations or individuals.

Ms Du Toit replied that it was a reference to wider bodies. She said they were careful not to step on the toes of the Competition Commission.

Section 17(4A)
The Chairperson questioned the relevance of Section 17(4A)(b).

Ms du Toit answered that it is not a prescriptive tariff and negotiations could take place regarding its expansion and amount.

Section 17(4B)
Ms Msomi said this dealt with the issue of future loss of income or support. They were still looking at it very carefully, especially the words "the death of a third party", and they were anticipating that the payment would be in instalments.

Section 17(7)
This section dealt with tariffs and the definition of emergency medical treatment.

The Chairperson said it could be elevated to the definitions section. He noted that it was progressive and positive. He inquired about the definition of emergency medical treatment.

Ms Msomi said that there were still a few areas that they needed to tighten up, but the basic principle would remain.

The Chairperson asked why they would need to deal with emergency medical conditions.

Ms Du Toit said that the definition of treatment spoke of a specific condition, therefore they had to define this condition.

The Chairperson said as it stood, it opened up too many other issues.

Mr Mashile asked why this subsection used the term "prescribed service provider." He wanted to see that the Bill was appropriate in the rural situation.

Ms Du Toit said that if there was not a reference to a "service provider", an onlooker who helped a person could claim from the Fund. They needed to find a balance, and they had a problem that there are no formal definitions.

The Chairperson suggested that the words "reasonable and appropriate" would be more appropriate. He did not want to see a situation where people went out to look for accidents so that they would be able to claim from the Fund, but people should be encouraged not to hang back when a person was injured.

Ms Msomi said they would address the issue.

Mr L Mashile (ANC) asked if the regulations that would flow from this amendment bill would be submitted to the Committee.

The Chairperson said that that was a good point and that they would need to take up this issue. The Committee’s intention was not to interfere, but to popularise the regulations.

Clause 7: Amendment of section 18 of Act 56 of 1996
Ms Msomi said 7(a) deleted subsection (1) of section 18 of the Act to align it with the sentiments expressed in the Long Title.

Ms Msomi described how 7(b) replaced the wording in subsection (4) of the Act with a figure of R5 000.

The Chairperson said this amendment was socially very important.

Clause 8: Amendment of section 19 of Act 56 of 1996
Ms Msomi said that they were substituting 8(a)(iii).

The Chairperson said it was very difficult for rural people to access the fund. He asked why the amendment was made.

Ms Msomi said that the earlier Bill looked for co-operative agreements. They still had to look at the details. She said the Fund can enter into agreements.

The Chairperson asked how much the Fund was spending and if this clause would really be a saving measure.

Ms Du Toit said that the amendment specifically spoke about fraud and aimed to combat fraud. As claimants employed lawyers, the Fund could not always access the victims. The amendment would make it possible for the fund to see the claimants. The Fund really needed to know with whom they were dealing. They were aware of the issues regarding access and they did not want to take away the rights of claimants.

The Chairperson said it would be problematic if the claimants would not be compensated. He encouraged the ironing out of fraud, but they had to be careful not to discriminate regarding access.

Clause 9: Substitution of section 21 of Act 56 of 1996
Ms Msomi directed the Committee’s attention to the substitution of words in section 21(a).

Mr A Ainslie (ANC) inquired about the balance in payment.

Ms Du Toit said this clause would be revisited.

In answer to Mr Ainslie saying that it was not direct enough, Ms Du Toit said they were worried about the consequences of the provision.

The Chairperson asked that it be flagged and commented that it was a complicated area.

Mr Mashile asked for clarification of the circumstances when the Fund would be unable to pay.

Ms Du Toit said it referred to agencies of the Fund. The practicalities of the clause were zero. They wanted to pull out the clause, but they felt uncomfortable leaving it out. It did not refer to instances when the Fund would be unwilling to pay. They would revisit it.

Ms Msomi said that they had attempted to give a broad sense of tariffs and to set out the regulatory framework. It was not perfect, as they needed to revise it more and she proposed to enhance it.

Mr Farrow asked what limitations there are in the law. He asked for some guidelines regarding regulations and law. The Chairperson agreed that it needed to be better described.

Mr Farrow believed that the amendments were primarily looking at cost savings. He asked if somebody had done projections on these. He also asked if issues of good governance had been addressed.

The Chairperson noted his questions, and said they would be fed into the public hearings. He commented that the Bill looked much better developed than earlier versions.

Mr Farrow said there was quite an emphasis in the original bill on foreign claims.

Ms Du Toit said that it constituted a very small percentage and that their caps would be taken into consideration.

Mr Mashile asked if the Bill would provide any recourse for claimants if they were unhappy with the handling of their claims.

The Chairperson said that this was a critical issue, but suggested that it should be deferred until a future meeting.

The meeting was adjourned.