Gautrain Project: briefing

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
9 November 2005
GAUTRAIN PROJECT: BRIEFINGS

Chairperson:

Gautrain – issues to be raised by Transport Portfolio Committee at public hearings (8th – 9th November 2005) PowerPoint presentation
Gautrain – Can it make a sustainable difference to public transport? Dr Andrew Shaw
Gurtrain – issues to be raised by Portfolio Committee on Transport (see Appendix)

SUMMARY
The Committee was briefed by Prof del Mistro and Dr Shaw on the Gautrain project. Their briefings sparked lively debate which demonstrated serious reservations about many aspects of the project. The wisdom of such a huge initial and expected ongoing subsidisation by the central government of this one project was questioned. The focus on relieving the congestion burden of relatively affluent commuters while many poor people were served by a low quality Metro and bus and dangerous taxi service would reinforce the social exclusion of those who could not even afford a car. Integration into an existing spatial and transport pattern was not adequately studied. The Gautrain project could lay down an unfavourable and unredeemable spatial legacy. The choice of a rail gauge different from the standard in South Africa necessitated importation of the vital wheel bogeys to the detriment of the capable local industry. The high risks were not only financial but also political.

The Chief Executive Officer of the Gautrain Project, Mr J van der Merwe defended the wisdom of embarking on this technically superior project.

MINUTES

Professor Del Mistro presentation
Prof R del Mistro (Associate Professor of Civil Engineering, University of Cape Town) asked whether the twelve to twenty billion Rand Gautrain project was the solution to the congestion at peak hours along the Ben Schoeman highway between Johannesburg and Tshwane (Pretoria).

He was of the opinion that alternatives had not been discussed enough. In choosing an alternative the following aspects merited study: capacity, cost per passenger, capital cost, speed of service, appropriate technology, safety, comfort, convenience and image (e.g. national pride). Road-based systems in other parts of the world worth studying were in Seoul, Mexico City, Curitiba, and Eindhoven.

A lower quality bus–based solution for the 62 km trip would amount to R 24 per trip, higher quality bus R 36 and the Gautrain R 51 per trip. Capital costs would be R 1,5 billion, R 3,5 billion and R 10 billion respectively for those three options. More alternatives should have been tested. High-speed rail transport would cut only nine minutes off the 69-minute trip duration, and it was doubtful whether this had any significance. Capital expenditure carried opportunity cost, and should not be deemed as sunk cost, because there were many attractive alternatives on which to spend the money. One way of assessing the cost of the risks of the Gautrain project could be to ask the private sector at what price it would be prepared to take 100% of the risk. It would appear that the Gautrain project was directed towards benefiting the relatively affluent middle class and not the poorer masses. A wider range of alternatives needed to be considered.

Discussion
Mr S Farrow (DA) pointed to the large number of assumptions that were made in the studies and agreed that the capital cost should not be considered as sunk costs even though the bill was footed by the state. In the similar case of toll roads the capital cost had to be redeemed.

Mr L Mashile (ANC) was sceptical about the project. It catered to the middle class, whereas transportation from Soweto to Johannesburg had to be improved.

Prof del Mistro agreed and added that the Gautrain project was encouraging long-distance travel to the workplace which was a legacy of the Apartheid era and which should rather be eliminated.

Ms B Thompson (ANC) asked whether the damage done to roads by bus traffic was included in the calculations, to which Prof del Mistro replied that it was. Was the Gautrain project still negotiable? A good bus service would cater for the majority of the people. A bigger debate was needed.

Mr Mshudulu (ANC) enquired about the social benefits of the proposed project and felt that there was still a gap in information and perhaps more reasons than what were presented to the Committee. The project could bring benefit or misery.

Mr B Pule (UCDP) thought that, added to the recapitalisation of the taxi industry, there were too many "irons in the fire", and wondered whether they would complement each other. Were the taxi people involved, and what was going to happen after the 2010 Soccer World Cup?

The Chair thought that much of the controversy about the Gautrain project was a location issue.

Mr Farrow asked whether the Gautrain would also accommodate freight traffic (which caused so much damage to roads) at off-peak times. Road construction was highly labour intensive and for that reason should be preferred for job creation.

Mr Mashile felt that the project would be catering for the "haves", could turn out to be a white elephant, and that densification along the Johannesburg-Tshwane corridor was imperative to generate ridership.

The Chair surmised that the government might have an attitude of "we have the money, let’s spend it". A major development like the Gautrain laid down a spatial legacy which could conceivably turn into a barrier to development.

Prof del Mistro said that the attraction to the motorist of a dedicated bus lane was not so much the time saving but not sitting in your car and seeing the bus "whiz" by. It was quicker to get the bus operation option going. A city changes to suit the system and it will change.

Mr J van der Merwe (Chief Executive Officer: Gautrain Project) mentioned that even in Coritiba, which was considered the showpiece of urban bus transport, a light rail system was being considered. It was not unusual for an initial cost estimate to be considerably exceeded at implementation stage. An option of adding another lane to the Ben Schoeman highway right into town would entail expropriating properties. The limited time difference quoted earlier was not correct because of the impact of traffic lights in Pretoria on the travel time of buses. Politicians in Gauteng were involved in lengthy debates on the Gautrain project and 147 public meetings were held.

Mr Farrow commended Mr van der Merwe for being a good salesman. Why were the proposals of Metro Councils on alternative routes not considered but totally ignored? Was it really necessary to go for a different gauge than the standard in South Africa which implied that the rolling stock be imported? Was a speed of 160 km/h not attainable on the existing gauge?

Mr van der Merwe replied that a mayoral commission had agreed to support the Gautrain project. The Ben Schoeman highway carried eight to nine per cent trucks. The South African standard gauge of 1067 mm was out of line with the world standard of 1435 mm, and was not suited to high-speed travel. The existing signalling system was 40 years old and outdated. In the new systems all signalling was inside the cab, and voltage was considerably higher. Many factors were considered, such as safety, low operational cost, densification around stations, transporting freight to the airport, etc.

Mr Farrow insisted that the construction of carriages in South Africa be considered and referred to the Union Carriage Works in Cape Town.

Ms N Khunou (ANC) asked how much the private sector would invest in the project, and how connections at stations would be effected. The average middle class worker still needed his or her car to travel from the office to meetings, for instance.

Mr O Mogale (ANC) asked whether legislation to force vehicle owners to not drive alone was considered. He doubted that the Gautrain would provide affordable public transport.

Mr Van der Merwe said that Union Carriage in Nigel had built 600 railway carriages for Taiwan with a labour force of 3000 at the time, which had subsequently diminished to only 500. All the insides of the Gautrain would be done in South Africa, but the bogeys (subsections carrying the wheels) were imported package technology. Nowhere in the world was public transport financed by the private sector, and in the Gauteng case the contribution from them was expected to be small. Currency risks were massive. In Paris businesses contributed, by way of service levies, one third of the cost of operating the public transport system. Planning was done carefully, and connections to other public transport would be effected at combined stations. Planning was based on attracting 20% of office-bound workers to the new facility. As far as legislation to discourage one person per car was concerned, in San Francisco drivers carrying at least two passengers were freed from the toll levy.

Mr Mashile was concerned that the ANC slogan: "Giving people a better life for all" was not furthered by the Gautrain project.

The Chair asked what were the implications if the Gautrain project were not built, with an annual 7% increase in peak hour traffic on the Ben Schoeman highway. Many aspects of the project were still unclear such as costs, liabilities, and projected numbers of passengers. The project constituted a huge drain on available resources, and would have the effect of locking development options into one thing. The Cabinet insisted on more integration.

Mr van der Merwe explained that if the project were aborted it would have an effect on the whole economy, and would be a financial embarrassment.

Dr Shaw presentation
Dr A Shaw (Development Bank of South Africa (DBSA)) pointed out the positive implications of the proposed Gautrain project as its strong integrating role and the beginning of an effective public transport system, and also the negative aspect of high risk. Meeting increasing private traffic demands by the provision of additional roads strengthened a vicious circle with no end to congestion. The major risk of the Gautrain project was the fact that trip origins and destinations were not located within the corridor. Private car owners, if forced to use public transport, preferred rail to bus. The project appraisal methodology failed to examine any other options, e.g. dedicated bus lanes.

Discussion
Mr Mashile stressed the high risk involved in creating a facility which was to cost R 20 billion and would serve a relatively small number of commuters. Was it not unreasonable for the private sector to demand guarantees from the government while the government was providing the financing? Investment was sorely needed for improving taxis, buses and Metrorail.

Mr Farrow stressed that, as indicated worldwide, projected utilisation of new rail facilities did not materialise in 80% of the cases studied. Congestion, as measured by the Road Congestion Index (RCI), was not reduced at all but, on the contrary, increased. Riderships had to be subsidised.

Mr L Montana (Deputy Director-General: Department of Transport) expressed concern about increased social exclusion of people without cars, and the doubt as to integration of Gautrain into the public transport system and its role as a catalyst for public transport integration. Was the existing Metrorail line to be closed?

Dr Shaw agreed that social integration called for serving the poor, whereas Gautrain was aimed at higher classes. The challenge was to unpack the land-use legacy of outlying residential areas, whereas the DBSA was even then still sponsoring a continuation of this pattern for residential development. The DBSA had not been supporting public transport development nearly as much as other kinds of infrastructure like water supply and electricity, and it was high time for it to spend money there. Metrorail had been declining, and the Johannesburg-Soweto corridor presented a huge opportunity. All cities suffered from intense congestion, and it would appear that congestion was a necessary evil to force traffic into public transport, of which London was a good example. Integrated ticketing was a crucial requirement for success. The private sector was too astute to take on excessively high risk.

Mr E Seedat (Department of Transport) felt that possibilities were overstated and too optimistic. The specific land use pattern was already a physical reality and what was being proposed was to retrofit onto a suburban car-oriented environment. The planning process gave scant attention to planned land use and included nothing concrete. Freeway expansion was already on the cards.

Mr Mogale concluded that the project was a high-risk quality public transport system, and asked what the financial cost would be if it was decided not to go through with it.

Mr Farrow was of the opinion that if the huge sum of money were rather spent on improving Metrorail the returns would be superior.

Dr Shaw agreed that the local taxi service had to be integrated and that it was an unknown factor. Information on taxis as feeders was important. Johannesburg and Tshwane were caught on the back foot. He admitted to overstating the possibilities, but for the DBSA this involvement was a first and was seen as a demonstrator for other public transport development projects. The significant road development in the Pretoria-Witwatersrand-Vereeniging area was cause for concern.

Mr W Dachs (Public Private Projects: National Treasury) advanced that the Government could mitigate risk. The Gauteng project did not crowd out other projects, to which an additional R 4,1 billion had been allocated.

The Chair pointed out that the challenges and risks were not only financial but also political; and both if it turned out to be a white elephant and if it brought no benefit to marginalised people who could only stand and watch the "flashy train whizzing past them". It was an important debate because there still remained substantial vagueness.

The meeting was adjourned.

While the Transport PC has been following the Gautrain project with great interest (and concern) for several years, we have not become involved in detailed oversight or direct engagement on the grounds that hitherto the project has been run by the Gauteng province and presented as essentially a provincial project.

On 25 October 2005, the Minister of Finance, however, announced in parliament that the Gautrain project had a "national" status, and that it would be costing the national fiscus an estimated R20 billion. It has also been indicated that a final cabinet decision will be made in mid-December. If cabinet agrees, the roll-out of the project will commence m January 2006. We now have only two weeks of the final parliamentary session of the year remaining. This means that Parliament will have a few hours in which to assess what will be (if the project goes ahead) the largest ever budgetary allocation by a considerable amount) to a public transport project.

In the present budget 2004/5, for instance, we have allocated a total amount of R4.67 billion to all public transport modes (trains, buses, and taxis) throughout the country. These modes presently carry some 6 to 7 million regular passengers every single week-day in seriously under-capitalised, often unsafe and uncomfortable conditions. This should be compared with the projected (and perhaps optimistic) daily ridership of 120,000 passengers in 2010 for the Gautrain.

While these comparisons do not in themselves necessarily call into question the Gautrain project, they do underline the sense of seriousness and responsibility with which the Transport PC (and indeed national government) should approach the Gautrain proposal. We cannot lightly give approval for such a costly project that will be directed at the wealthier upper segments of the market in the wealthiest province, against the background of such pressing needs. Two mornings of public hearings are totally inadequate.

Appendix: Gurtrain – issues to be raised by Portfolio Committee on Transport

GAUTRAIN - ISSUES TO BE RAISED BY TRANSPORT PORTFOLIO COMMITTEE AT PUBLIC HEARINGS

(8th - 9th November 2005)

1.1 A project of "national interest"