Taxi Recapitalisation Project: briefing and hearings

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
20 SEPTEMBER 2006
TAXI RECAPITALISATION PROJECT: BRIEFING AND HEARINGS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Department presentation on the Taxi Recapitalisation Project
SANTACO submission
KwaZulu-Natal Transport Alliance (KZNTA)
Western Cape Taxi Association

SUMMARY
The Committee was briefed by the Department on the Taxi Recapitalisation Project. It was noted that the Programme has been revised to include three bands of taxi vehicles that will be permitted to operate. The scrapping allowance has also been finalised, being set at R50 000. This scrapping allowance is also an incentive for those operators who wish to exit the industry. The Department has planned to scrap 10 000 old taxi vehicles by the end of December 2006. The new project includes all the safety specifications relevant to the New Taxi Vehicle, noting that the project would be launched in October.

Presentations by SANTACO, KZNTA, and the Western Cape Taxi Association all highlighted that there was a lack of communication between the Department and taxi associations. It was pointed out that the claim that the taxi fleets were all either ageing or unroadworthy was misleading and that information was not being filtered through to the bottom. The issue of operating licences was also raised, with all three associations highlighting this as a problem that was not being solved by the Department. The idea of government subsidising the taxi industry was also mentioned by the parties.

Members' concerns were about the R50 000 scrapping allowance, the Department's communication problem with information not reaching the ground and there being too little consultation with stakeholders.

The Committee supported the scrapping process for those who wished to exit the industry. Of key importance to the Committee, was that the Taxi Recapitalisation Project be part of an integrated transport system and the Committee suggested that the Department take more time to try to integrate the Project into the system as a whole.

Taxi Recapitalisation Project: briefing by the Department of Transport
Mr Maishe Bopape (Chief Director: Taxi Recapitalisation Programme, Department of Transport) explained that the taxi recapitalisation programme has been re-configured from the original programme where the tender process sought only to introduce 18 and 35 seater New Taxi Vehicles (NTVs). The new process terminates the tenders for the 18 and 35 seater vehicles and now introduces three bands of taxi vehicles, namely 9 to 16, 17 to 23 and 23 to 34 seater taxis. The new process also includes the development, introduction and publication of compulsory safety requirements for the new taxi vehicles in the Government Gazette. The new process would provide certainty as to the scrapping allowance, which is now set at R50 000. The payment of this allowance was no longer conditional for its use as a deposit for the new taxi vehicle, but an incentive for those operators who wish to exit the industry upon receiving the scrapping allowance. Finally, the new plan establishes the scrapping agency that is tasked with scrapping the old taxi vehicles on behalf of Government.

With regard to how this process would be implemented, Mr Bopape explained that the Taxi Recapitalisation Project is premised on six pillars (see presentation). Of these six pillars, he highlighted the importance of effective law enforcement and noted that there needs to be the relevant economic empowerment of the industry, if implementation is going to be successful. Compulsory safety requirements for the NTVs were first introduced in September 2005. However, these have recently been revised to address issues such as the differentiation between ordinary minibuses and those operating as taxis. The South African Bureau of Standards (SABS) did not have national standards against which some of the requirements for the New Taxi Vehicles could be measured and that this had resulted in delays. The minibus category needed to be re-engineered so as to comply with the compulsory safety requirements, with as little delay as possible.

Mr Bopape said that there had been progress in addressing some of the challenges faced, noting that the Department of Trade and Industry had met with all key stakeholders and had agreed on a way forward with regard to the New Taxi Vehicles. Rollover bars, the removal of the mechanical driver operated door, one passenger seat in the front, and the introduction of the colour coding process were now all features of New Taxi Vehicles. There were only two safety requirements to follow, the anti-tyre burst stabiliser and the tamper proof speed governors. Mr Bopape explained that the colour coding and safety requirements forming the compulsory specifications for the New Taxi Vehicles are contained in Government Gazette Numbers 29194 and 2919.

A full summary of the safety specifications for the New Taxi Vehicles was explained with pictures indicating how the new vehicles would look (see presentation). Mr Bopape noted that 10 000 old taxi vehicles were targeted for scrapping by December 2006. The Department was targeting those taxis that are unroadworthy and unsafe and also vehicles belonging to operators who wish to exit the industry. Law enforcement would play an integral part of the rollout plan. Manufacturers were advised to take their vehicles to the SABS for certification as Taxi Recapitalisation Project compliant vehicles. The scrapping process was to be conducted over a period of seven years, and only unroadworthy vehicles would be immediately targeted for scrapping. Fairly new vehicles would be scrapped at the later stages of the project but only once they reach an unroadworthy, unsafe stage.

In explaining the scrapping administration process, Mr Bopape said that facilities and resources had been identified in the provinces and that this was done with the consultation of both provinces and the taxi industry. There would be fixed facilities which will be located next to the Offices of the Operating Licensing Boards in major towns and cities, while mobile scrapping facilities would service the remote areas. He noted that three issues were central to the scrapping process: the proximity of the agency to the operators, the user-friendliness of the system, and the issue of fraud mitigation.

The launch of the Taxi Recapitalisation Project would be part of the October Transport month which will see the Department hosting a Transport Indaba where an exhibition of the New Taxi Vehicles, certified by the SABS as compliant, would be on display. Since the new categories (9 to 16 and 17 to 23) are late inclusions to the process, there would be expected delays in availability of these NVTs. The minibus sector is responding to these delays, with a number of vehicles being urged to go for SABS certification (see presentation). The Department was in favour of a smooth application and system process flow with regard to operating licences and the New Taxi Vehicles (see presentation for flow charts). The Department needed to look at various issues, such as the issue of operators currently in the system but operating without legal permits - either because of the long-imposed moratorium on the issuing of new permits of for whatever reasons.

On project sustainability, Mr Bopape said that the project on its own would not solve all public transport problems and challenges, but that the project did provide capital assistance to allow operators to source newer and more efficient vehicles. The Government was to expedite public transport modal-integration to assist the industry to enter the mainstream public transport system. Also the taxi industry should have a stake in the bus companies at both local and operational levels. The modal tender process required participation and partnering with industry and government assistance was to be directed to the user who will ultimately decide which transport mode to use. The taxi industry would be given a shareholding in the scrapping agency as part of the sustainability of the industry. Mr Bopape noted that the taxi industry should consider forming business units and entities to advance bulk purchasing and to form a strong negotiating front.

SANTACO's views on Taxi Recapitalisation Project
Mr Philip Taaibosch (Secretary-General, SANTACO) explained that SANTACO wants to remove the perception that taxi operators did not support the Department's Taxi Recapitalisation Project. This perception was a fallacy but there were, however, concerns with the process. He noted that such concerns were tabled in this Committee seven years before in May 1999. Seven years later, nothing had been done yet with regard to the Taxi Recapitalisation Project. He commented that the Project was a ‘talk show’ and that slow progress was due to a number of Departments being involved in the process (of which the DTI was included). SANTACO was pleased that the Department of Transport was taking over the process. However there have still been missed deadlines, none of which have resulted in actual implementation on the ground. Also, there have been no comments from Government on these missed deadlines. SANTACO had a duty to its members, Government, and the public to make these flaws known and if they were not looked at, the Recapitalisation Project would be unsuccessful.

With regard to vehicle specification, he noted that the process of defining the specification of the new taxi vehicles had been one of "complete and utter confusion" because of the lack of communication with the parties involved. Bigger vehicles have been mooted but smaller vehicles have not been suggested. Mr Taaibosch questioned whether such vehicles were part of the plan or not, how much the 18 to 35 seater vehicles would cost and also whether they were actually available. If the cost were too high, fares would most certainly be raised, making bus and rail seem more affordable, to the detriment of the taxi industry. The taxi industry was not subsidised while the other transport sectors were. This seemed unfair, since 60 percent of transport users use taxis as their means of commuting. It was not true that taxi fleets were all old and that operators were continually buying new vehicles. Various policy concerns such as the operating licences, were also raised. Mr Taaibosch concluded that stakeholders in the taxi industry wanted to be treated fairly.

KwaZulu-Natal Transport Alliance (KZNTA) views on Taxi Recapitalisation Project
Mr Bafana Mhlongo (General Secretary, KZNTA) said that the end of September 2006 marked the third month since the National Assembly had announced that the due date for the conversion of permits to operating licences should be extended so that those who could not comply due to circumstances beyond their control, should be assisted. Presently, operators still remain unregistered and did not have permits or licences. Instead operators are given receipts with no authority to carry passengers. KZNTA has warned the department that claims arising out of accidents involving vehicles with no permits or licences, especially where receipts were given, will be directed to the Operating Licence Board. Mr Mhlongo noted that 70 percent of operators in KZN did not have operating licences and were thus operating illegally. Also the government statement that the current fleet of taxis is unsafe is misleading. He asked for proof on this issue.

Mr Mhlongo explained the KZNTA position on the Taxi Recapitalisation Programme (see presentation), and that it would cause massive job losses in the industry. The issue of access to information was also highlighted as Mr Mhlongo said that because government had consulted the South African National Taxi Council and the National Taxi Alliance, it felt that it had consulted with all operators in all provinces. This was misleading because these two structures represented only their members, but not all operators. He suggested that part of the R7.7 billion for the Taxi Recapitalisation Project be used to subsidise the taxi industry in South Africa. The KZNTA proposed that the registration and permit issue be finalised without delay. It also proposed that the Taxi Recapitalisation Programme be reviewed with a view to financial assistance in order to empower the taxi industry. Without operators, drivers and conductors losing their sole livelihood, Education and training should be provided for operators and employees. Lastly, Mr Mhlongo said that the KZNTA would remain committed to a smooth transitional process.

Western Cape Taxi Association views on Taxi Recapitalisation Project
The Western Cape Taxi Association noted that their presentation reiterated that of SANTACO and KZNTA (see presentation). Due to time constraints, it would thus not present.

Discussion
The Chair commented that he wondered whether modal integration in the transport system was actually happening as negative competition between the taxi industry and the bus and rail sectors was still the case.

Mr S Farrow (DA) highlighted the issue of effective law enforcement and asked what type of communication system that was.

Mr Bopape responded that law enforcement did not imply the use of threats but that it involved using the law effectively so that the Taxi Recapitalisation Project ran smoothly.

Ms N Khunou (ANC) asked, with regard to the scrapping allowance, how exactly operators would exit. She asked how the Department would make sure information given to taxi associations would be disseminated to people on the ground. She also asked if the Department had a database with regard to unroadworthy vehicles.

Mr Bopape responded that the allowance was an incentive for operators, through the scrapping of their vehicles, to exit the industry, or to use the R50 000 as a deposit on a New Taxi Vehicle.

Ms Khunou noted, with regard to Black Economic Empowerment, that because of the past, the taxi industry was sometimes the only form of business for black people. She asked what would happen to those people who had only one taxi.

Ms L Moss (ANC) asked whether there would be a follow up to the Transport Indaba in October 2006.

Mr S Mshudulu (ANC) commented that the programme needs to operate in partnership with other parties such as business, the police and the Department of Trade and Industry. The issue of backyard mechanics was also raised, as many taxis in both rural and urban areas were being serviced by these mechanics. Institutions need to be in place to support these mechanics. Many black people were in debt because of the ‘trade-in’ mechanism, and this needed to be simplified.

Ms D Morobi (ANC) questioned whether information about the process had really been explained to people at the ground level. She also asked whether the Department had considered the effect of inflation on the scrapping allowance in seven years' time. She commented on the numbering of taxi routes, noting that this could spark violence in some areas; Soweto was used as an example.

Ms W Ngwenya (ANC) asked, with regard to the colour coding of taxis, what would happen to those taxis that had been sponsored to advertise on their taxis.

Ms L Moss (ANC) commented that she hoped people in the rural areas got the right information with regard to the programme. The roll-out programme and the communication channel must be the same for both rural and urban authorities, and that it must reach local authorities on the ground so that they in turn can relate the information to the people on the ground. She asked if there was a roll-out programme in the rural areas.

Ms Moss asked if the New Taxi Vehicles would be petrol or diesel fuelled vehicles and whether there would be an electronic payment system in the taxis.

Mr M Swathe (DA) asked if SABS would charge taxi operators for vehicle testing. He also wanted to know how long the scrapping process would take and whether the Department had any contingency plan should more operators decide to exit the industry.

Mr M Moss (ANC) asked if the Taxi Recapitalisation Project made reference to or made arrangements for disabled access into such vehicles.

Mr B Pule (UCDP) commented that what is heard from the Department is not the same as that from the taxi operators and that there is a lack of communication. The Department must be sure that the operators understand the process fully. In terms of the scrapping allowance, he asked whether it was an allowance or an incentive and whether it applied to all sizes of vehicles, given the three categories.

Mr O Mogale raised the issue of affordability. He wanted to know what would happen in a situation where an operator did not want to exit the industry but whose vehicle had been identified as needing to be scrapped. He also asked how banks would be able to evaluate whether an operator would be able to meet payments on a new vehicle.

Mr Mogale asked, with reference to the Sunday Times article (17/09/2006), whether that vehicle mentioned was part of the Department's plans for new vehicles.

Due to time constraints, the Chair noted that more time would be needed, on a different day, for the Department to answer these questions. Based on that day's inputs, he stressed the issue of communication as being paramount. There were a handful of officials carrying the burden of communicating to all the operators. This programme could not be carried out at a national level only, but had to be carried out at a local level. He commented that although the Committee supported them, he thought that the Department was on a "mission impossible" and that the problem was the architecture of the process.

Mr Collen Msibi (Ministerial Liaison Officer, Department of Transport) responded that the broader plan was going to Cabinet in January and that the Transport Indaba was prior to this in October and that active input by all parties would be needed.

Mr Mogale noted, with reference to the SANTACO presentation, that there was no synergy between the Department and SANTACO. They were not "talking to each other". Both parties need to engage more with one another.

Ms Khunou commented that all parties need to be on board in terms of the programme.

Mr Mshudulu stated that another day of public hearings was needed for clarity on all the issues raised. He noted that all documents handed out should be accessible on one website.

Mr L Mashile(ANC) asked if SANTACO was representing the whole of South Africa and how many members were in their committee from each Province.

Mr Arthur Jabulani Mthembu (President: SANTACO) responded that SANTACO did not keep data on the number of members. There were 90 members in the executive: nine office bearers and one official from each province. There was also a management committee with five members from each committee, and that this committee was the highest decision making body in the organisation and not the executive.

Ms Morobi asked how SANTACO consulted with their members.

Mr Mthembu responded that consultation occurred through liaising committees in the different provinces.

Mr Swathe (DA) commented that he supported decentralisation to the lower levels.

The Chair noted that the sector presented huge challenges and that everybody needed to be realistic about this. Information was good for business and a lack of information was thus not beneficial. He commented that there were a lot of frustrations that SANTACO was a business and a representative structure.

The Chair continued that the Committee supported the Department's scrapping allowance for those who want to get out of the industry, and this should go ahead. The conversion process had its challenges but this must be consolidated and processed. However, with regard to the actual Taxi Recapitalisation Programme, the Committee was worried that too much focus had been placed on the vehicle and too little on consultation with the various stakeholders.

He said that the Committee urged the Department to take a little bit more time with the project, which would work better if it is an integrated transport plan. The scrapping allowance of R50 000 was not the issue, but the Committee was concerned with the sustainability of the project. Taxi operators should see trains and busses not as competitors in the strict sense, but as a whole system, where a system that works well, would be beneficial to all. The Portfolio Committee was in favour of intelligible regulation and enforcement. Infrastructure needed to be reclaimed by the public sector as belonging to the public of South Africa and not taxi operators and associations. The Chair urged operators to engage with their local authorities and metros on their integrated transport plans. He noted that the Committee looked forward to the coming Transport Indaba.

The meeting was adjourned.