A summary of this committee meeting is not yet available.
TRANSPORT PORTFOLIO COMMITTEE
28 February 2007
ROAD ACCIDENT FUND; SOUTH AFRICAN RAIL COMMUTER CORPORATION: BUDGET & STRATEGIC PLAN 2007/08
Chairperson: Mr JP Cronin (ANC)
Documents handed out:
Road Accident Fund Strategic Plan 2008 - 2010
SARCC Budget and Strategic Plan 2007/08
PC Transport Draft Minutes of 21 February
The Road Accident Fund was technically insolvent but the situation was being turned around slowly. An increased number of backlog claims had been processed. However, there were still many outstanding claims and the processing time was too long. Too high a proportion of funds were being spent on administration. Stabilisation was the first priority. The RAF had set a goal of clearing the backlog within a five year period although Treasury had suggested that five to ten years would be a more appropriate term.
Members questioned the liquidity of the Fund. Questions were asked about staffing and the efficiency of the personnel.
The South African Rail Commuter Corporation outlined its budget and strategic plans. Its main emphasis was the upgrading of rolling stock and stations, while other projects included new routes and the upgrading of signalling and communications systems.
Members asked questions about the results of the merger with Metrorail and the Shosholoza Meyl operations. Security was a major concern. Integration of rail services with the Gautrain and other components of the public service transport sector.
The Chairperson said that the Committee would not be able to complete all its budget hearings before the session ended on 30 March. A meeting would be held with the Department of Transport (DoT) on 14 March.
Road Accident Fund (RAF) presentation
Mr Veli Mahlangu (RAF Deputy Chairperson) introduced his delegation.
Mr Jacob Modise (RAF Chief Executive Officer) said that his presentation would contain no surprises. There had been a big turnaround at the RAF, and there was a need for consistency in the strategic plan. There would be a continuation of the 2006 rescue plan, with an emphasis on action and implementation. The RAF needed to deliver on its mandate. The Minister’s expectations were unchanged. The first priority was to stabilise the RAF. Care was required with the RAF’s capacity, which needed to be appropriate to the business model.
He said that 70% of the RAF’s staff members were attorneys while the fund needed to be essentially an administrative engine. Delivery mechanisms were being put in place. Communications with stakeholders should be part of the plan.
He said that targets had been achieved by and large. The target of processing 110 000 claims had been exceeded, and 180 000 had been cleared. The cost-to-compensation ratio was a concern. At present, only half of the funds received from the fuel levy went to the payment of compensation to victims of accidents. The relative cost of administration had to be reduced substantially. He expected that claimant legal costs could be reduced if there was a change of mindset.
Revenue for the current financial year (FY) was approximately R 8 billion. Of this, R 5.2 billion had come from the fuel levy and R 2.7 billion as a grant from National Treasury. Of the Treasury grant, R 200 million had been used for new systems. Solvency was still a problem, but this could not be turned around overnight. The fund had a negative liability of only R 18 billion, though it could have been R 30 billion.
Mr Modise said that the RAF was beginning to halt the growth in the backlog of claims. People were now reporting accidents sooner after the event. Figures from 1999 indicated an average of eighteen months before claims were even lodged. This was now less than twelve months, and the RAF was arresting the delay in settlement. It was taking up to 38 months between the accident and the settlement, so the average processing time was 26 months. High value claims could take even longer. He wanted to see the situation where payments to hospitals and ambulance services could be expedited, perhaps even settled in 24 to 48 hours.
He said that the amount of cash compensation had grown to about R 5 billion. Of this, general damages represented the major problem, being way over R 2 billion. This was still a huge proportion. The process followed by the RAF was first to restore accident victims back to health, and then, where necessary, to re-integrate them back into society on an economic basis. Payments regarding loss to the economy were less than R 1 billion. In fact, direct medical costs to the fund were less than R 400 million. General damages still showed the most volume, and this was where the most systematic fraud occurred.
Between 2005 and 2006, Mr Modise said that payments were being made more quickly. There was some marginal improvement, and he expected further significant improvement. The RAF needed to compare itself to private sector performance, and would benchmark itself against the private sector.
There had been an increase in large claims, although these accounted for less than 1 % of claims. The bulk of these were from foreigners. There was one outstanding claim from an individual for R 1.6 billion. This was from a Swiss national who had suffered a motorcycle accident in Cape Town. The problem with such claims was that the victims were paid in their own currency. The RAF had cover for excessive claims, but their re-insurers were worried. He felt that these excessive claims were criminal.
Mr Modise said that the RAF had made 66 000 undertakings for continued medical care. This service operated similar to a medical aid. Of these, only 2 600 were currently active, and the costs were only R 58 million per annum. He conceded that overpayments were sometimes made in lump sum settlements. There were a number of factors involved. The RAF’s actuaries did not expect a change to this pattern. The planning made provision for an estimate of the number of accidents which had occurred but had not yet been reported.
He said that some costs had stabilised. The RAF was focussing on reducing legal costs. Most of the beneficiaries were economically active people in their mid-forties. Efforts were being made to improve efficiency. The staff component had increased by about 2 %, and the Fund now had 1 800 employees. The staff were processing more claims than the increase in their numbers.
The Treasury grant of R 2.7 billion had helped with the Fund’s liquidity. However it would not be able to pay all its creditors if immediate demands were made, so it was technically insolvent. A small surplus had been recorded, but this should be used to pay benefits. There was a high provision for outstanding liabilities, in excess of R 20 billion. The number of reported claims was increasing and the trend suggested that 2007 would be one of the highest. Many payments related to accidents that had happened in previous years.
Regarding the undertakings, the actuaries projected that R 7.6 billion would be needed to settle future claims. This included the inactive undertakings. However, this was a future expense and would probably only be equivalent to R 2 billion in current terms. Liability for other claims was expected to be R 24 billion, based on both known claims and incidents which were still to be reported. There were also costs to be met, especially for legal fees.
Mr Modise said that at the end of the financial year , the Fund had outstanding liabilities to the tune of R 21 billion. The fuel levy was still just enough, bringing in approximately R 6 billion, but all of this was being spent on processing claims. The RAF needed to be more efficient if it wished to eat into the backlog. At 31 cents to the litre, the levy was still a small proportion of the price. In Gauteng, the fuel price had reached approximately R 7 per litre in July 2006. It was not even the largest levy imposed on fuel.
Mr Modise said that the R 2.7 billion from Treasury had been spent before it had been received. R 1.2 billion had to be paid back to the Receiver of Revenue for a diesel levy, which was for diesel users who were not road users such as shipping, power generators and so on. A structured settlement had been negotiated, but this could be seen as borrowing funds from the accident victims for whom it was intended. This had now been completely eliminated.
The balance of the Treasury grant had been spent on acquiring systems. The business design in this regard was ongoing. Some cash injections were still needed. The change in the Revenue law had not been helpful. The Fund was short of R 500 million which the SA Revenue Service was collecting on its behalf.
It was still early days, but the RAF was stabilising. New systems were improving the claims process. Administrative costs were high, fraud was a factor and there was poor financial health in the organisation.
Mr Modise said that the strategic objectives remained unchanged. The principal objectives were to reduce the backlog of claims, and to reduce the cost-to-compensation ratio. The RAF wanted to set a goal of clearing the backlog in three years, but significant funding would be needed to achieve this. Treasury had suggested that five to ten years would be a more appropriate term, and the RAF had revised its goal to a five year period. The cost-to-compensation ratio should be reduced to 33%. The RAF needed to return to financial health, and an action-orientated plan was being followed. There would be specific activities and projects to achieve this involving integrated technology systems and rebranding of the RAF. Nineteen thrust areas had been identified. Some would be quick hits and some medium term, such as a complete change of the organisation, while others were on the long term. Dates had been set.
Mr Modise said that a holistic approach had been adopted in 2006. Broad based organisation transformation was needed requiring a cultural and behaviour change. Legislation would be needed to achieve this. A business model was needed in the RAF Act, but the Amendments to the Act were not yet effective. The DoT’s strategy included moving to a no-fault system. The RAF could not afford to continue to spend the increased levy of 36c per litre on intermediaries. A non-adversarial system was needed in South Africa. The RAF could not act alone on this, as it had legal constraints.
Most of the dashboard elements of the plan were implemented. A performance management system was now in place, which had never been the case in the past. The turnaround process would still take years to complete, and a concerted effort was required. New systems would help to continue the new claims management system. A potential no-fault model should be used. However, there was a financing backlog. The organisation would be split into two focus areas, namely the transformation of the business side and the maintenance of operations.
Mr Modise presented the financial plan. There were some underlying assumptions. One was a growth rate of 4.8 %. More fuel sales would result in accordance with the growth in Gross Domestic Product (GDP). The income per litre had been increased by 5 c as announced in the Budget Speech of 21 February, and an assumption was that it would be increased by 5 c each year. This related to an increase in funding of about 10%. The assumptions on claims was that they would be related to the number of accidents, which traditionally increased at a higher rate than the GDP. Another assumption was that the backlog would be cleared in five years. It was assumed that negotiations on the regulations for the RAF Amendment Act would conclude in the next few weeks leading up to the Amendment Act being fully brought into operation by 1 April 2007.
He expected that there would be a change in the RAF’s business activities. More efficiency was needed. The RAF needed to create a presence in all provinces. The cost-to-claim ratio should be reduced to 33% by 2010. The financial plan relied on greater efficiency reducing the deficit. Because of the adversarial nature of the current claims system, a lot of money was spent on fighting cases.
Mr Modise said that the income statement did not indicate a huge surplus. In fact, a deficit was still expected with a break-even situation possible by 2010. Actions to date included the Amendment Act being signed on 5 January 2006. Some provisions of the Act had come into force during July 2006. Draft regulations had been published on 29 May 2006, regarding such matters as the assessment of serious injuries. The balance had been published in December 2006 and public hearings had been held in January 2007.
Mr Marius Luyt (Chief Director: Public Entity Oversight and Economic Regulation, DoT) added that 20 February had been the closing date for comments. Consultation was needed with the Minister of Health. Key challenges had been experienced, and the target date for completion of the regulations was 1 April 2007.
Mr Modise said that the RAF would be helping the DoT to publish these as soon as possible.
Mr S Farrow (DA) interrupted the presentation. He noted that a portion of the Act had been approved in July 2006. If only the regulations were outstanding, why could the Act not come into force immediately?
Mr Modise explained that some of the provisions were quite complicated. A limit for loss of income of R 160 000 should have been brought in some time ago. There were interpretation issues. The RAF was following a new business model, and wanted to act pro-actively. When claimants waited a long time to lodge their claim, details became vague over time. This was often a source of fraud. In fact, the RAF was looking at initiating some claims themselves. The increased geographic footprint would aid this plan.
He said that some fraud was systematic, which would be fixed by legislation. Other fraud was opportunistic and this would be targeted by the RAF.
He said that building blocks to greater efficiency would include the establishment of centralised call centres. These would have links to hospitals and service providers. Integrated technology architecture would enable an improved claims management system. This would be accessible through the internet which would enable quicker payments. A tender had been issued for the development of such a system. Some of this architecture would be centralised.
Mr Modise said that there was only so much that the RAF could do to combat fraud. Improved systems would help to discourage the opportunistic fraud, but some legal support would be needed. New systems would help.
The Chairperson complimented the RAF on an improved report compared to previous years.
Mr Farrow congratulated the CEO on his presentation. However, he was still disturbed by the current situation. Legislation was making an impact, but would not have helped to address the backlog. The amended Act would apply retrospectively to the date on which accidents had occurred. He was concerned by the number of outstanding claims. He assumed that interest would be levied on accrued claims. He was frightened by the equity and liquidity targets. He asked if any calculations had been done to determine what was needed. Another disturbing aspect was the structure. The majority of the RAF’s employees had legal qualifications, and earned salaries above market values. An increase of costs was projected, which was due to the mass of litigation in store. He had hoped that the procedure would have been streamlined, but this was not happening. The Swiss national’s claim of R 1.6 billion should be paid in Rand and not in foreign currency. That part of the Amendment Act was not yet in place. The RAF should be consolidating its base.
Mr Cronin was happy to see impressive progress on the issue of the backlog at last.
Mr O Mogale (ANC) said that important information was being communicated. However he was disturbed to be receiving it only now. The current staff complement was 1 789, and he asked for the vacancy rate. He asked if the new systems would assist with the backlog issue.
The Chairperson hoped that the progress was not just a case of cherry-picking.
Mr M Moss (ANC) had a problem with the staff complement. His own experiences showed that it was important to have disabled persons involved in the RAF, as they would have personal understanding of the needs of accident victims. He asked for the percentage of disabled persons in the RAF, and what was being done to recruit such people.
Mr Modise confirmed that the Amendment Act would apply retrospectively to the accidents on the date when the Act became law. R 160 million was going to be used to address this issue. The limit of loss-of-income compensation would be R 160 000 per annum, even if this was calculated in foreign exchange and paid in Rand. Regarding the backlog, there were a number of things which had to be understood regarding the source of problems. Some 180 000 claims had been processed during the year, but the volume was even higher. Of the 500 000 claims in the backlog some were of different types. Some were high volume but low value, while others were low volume and high value. There were also fraudulent claims.
He said that the legal costs were sometimes higher than the claims awarded. Whiplash injures were a particular source of fraud. The RAF had stratified the 500 000 claims and huge inroads had been made into the backlog. It was not a staff issue. Productivity was very low as the wrong people were doing the wrong jobs. Staff members were trying to be an expert in everything but did not have the tools to deal with specific problems and could thus not work effectively. The job structure needed redesign. There were also excessive staff numbers in some areas. In many cases LLB graduates were doing administrative work.
Mr Modise said that about 1 % of the RAF staff were disabled persons, which equated to 18 people. This was the target in the strategic plan. It was a focus area, as accident victims had to be re-integrated into service. Over twenty disable persons were working for the RAF, and they were looking to increase these numbers.
Mr Mogale asked if a high vacancy rate was not the reason for claims taking a three year cycle to be completed.
Mr Modise said there was not a high vacancy rate. In fact, the RAF could operate with half the staff if they were suitably equipped for their jobs. They had engaged with labour bodies to address the problem. The balance sheet did indicate a liquidity problem. The RAF was not operated like a pension fund, which would also have an estimate of future liabilities but also an estimate of the build-up of assets over team. The RAF’s balance indicated that it had no assets but R 18 billion in liabilities. Including the incurred but not reported accidents took the figure to R 21 billion which would be required to settle all debts immediately.
Mr M Swathe (DA) asked if the new model would focus on backlog claimants. He asked if the new model would be used to process old claims or only newly reported accidents. The fuel levy increase of 31 to 36 cents would help this.
Ms N Khunou (ANC) asked if there was a different compensation ratio, as the graphs presented were unclear. She asked why it took twelve months to process claims and the reasons for low productivity.
Ms B Thompson (ANC) found it hard to see why the RAF was unable to deal with the backlog. She also queried the twelve month processing period.
Mr S Mshudulu (ANC) had gained experience on a visit to the CCMA. He did not understand how the RAF had arrived in the current financial position. The reason for backlogs was not necessary due to old manual systems which could be replaced by Integrated Technology. Backlogs often started at the front desk. Accidents at the workplace resulted in a cumbersome administrative process. Accidents should be categorised. Preventative methods should discussed between the RAF and all other concerned entitities. He suggested an annual seminar. Money could be invested in such a campaign.
The Chairperson had seen no mention of accident prevention in the presentation, but in a way he was pleased that this was not included. In the previous report there had been mention of money diverted to the Arrive Alive campaign. The RAF should however concentrate on its mandate, which was to cover the medical costs of accident victims and to re-integrate them into society. It was the DoT’s role to interface between the family of entities concerned with road safety. The RAF could monitor accident trends, but it should stay focussed on its mandate.
Mr Modise replied that he was not proud of the existing systems, hence the need for modernisation. He would welcome a visit by the Committee to the RAF offices. The question was how to deal with the different type of claim. The turnaround process was dynamic. Archaic compensation systems required a lot of paperwork to be processed. He wanted to see a change to this. The RAF was investing in a work flow solution system. The first stage would rely on a paper document whereafter all further processing would be electronic.
Three things involved were the differences before and after the Amendment Act, data being based on the old and new systems, and claims coming from possible new systems. He hoped to see the backlog ringfenced, but this would be a separate exercise.
The fuel levy would be 31 c until the end of the current FY, and would then be increased to 36 c per litre. He expected that this would produce an income of around R 6 billion which would be used for administration and claims. All income would be used, but this would not reduce the amount of the backlog as much as he would like to see. The levy increase would not be enough.
Mr Modise said that the cost-to-compensation ratio would be broken into sub-components. The RAF had specific legal constraints, and 13% of the target had been achieved. The RAF made use of their own as well as panel attorneys. His own staff had human resource and administrative costs, which had been reduced from 14 to 13 %. The RAF must cover all of the claimants’ costs, including legal fees. The ratio was not being reduced, and 43 % was the target. The actual figure was 48%. This was a marginal improvement on the previous year. Complainants’ legal costs were increasing, but this trend was being arrested.
Mr Moss asked what the time frame was for the realisation of the RAF’s vision and mission. He asked if there was any negligence involved in the accident leading to the R 1.6 billion claim.
Ms MD Nxumalo (ANC) asked how the claims would be funded if the RAF had no money.
Mr Mogale asked how the questions were being resolved by the growth of the Fund.
Mr Modise replied that payments made during 2006 were for accidents which occurred in previous years. Lawyers said that some claims took up to three years to complete. Furthermore, where minors were victims of accidents, the claim would stay open until they reached their majority. One of the major causes of the backlog was the adversarial model that was the current status quo. The victim was seen both as a client and as an enemy. They were forging links with Home Affairs, the SA Police Services and Department of Health which would help to expedite payments. They were striving to offer a world class service, but this would not happen overnight. It would take at least three years to reach their world class ideal. In the case of the Swiss claimant, he had been on holiday in Cape Town and had been riding a Harley Davidson motorcycle in the Stellenbosch area when a car drove into him from behind. The preliminary assessment indicated that the driver of the car had been negligent.
The Chairman apologised for rushing ahead with the discussion and not allowing further questions. A full morning was needed to do the RAF justice. It would up to the Committee and the DoT to help the RAF achieve world class status. Until such time as it could become a functional benefit fund it would always be lagging behind in its claims.
South African Rail Commuter Corporation (SARCC): presentation
Mr Lucky Montana, CEO: SARCC, said that the process of consolidation between Metrorail and SARCC had been completed on 1 May 2006. There had been integration issues resulting in a lot of uncertainty. In recent times there had been increased investment in rail infrastructure and there would be an extra 30% in the three years leading up to 2010. SARCC had a mandate to turn their situation around and to improve services. Their mission was to halt the deterioration in passenger services. SARCC was experiencing a skills shortage and its services were balanced on a knife-edge. Problems were being experienced with rolling stock and there were challenges in the industry.
Mr Montana said that SARCC’s strategy was to reposition the organisation in the mainstream of public transport, and to improve its service. When coaches were sent for refurbishment they were taken out of service, which affected the quality of service to customers. Security was a major concern and skills were being lost. The benefits of the strategy plan would not be felt within a year, but long term issues were at play.
He said that their mandate fell under the Legal Succession to the South African Transport Services Act, 1989. The business plan and budget were due to be presented on 22 March. The documents were still subject to change. A general directive was being presented at this meeting. The vision and mission of the organisation were changing. The vision was to make SARCC a safe and reliable service of choice.
There were several corporate objectives. Firstly, they planned to boost revenue. Fare evasion was a major issue. SARCC conducted 2.2 million passenger trips per day, but this was only 14.9 % of the daily public transport trips on an average day. This was not good enough. New corridors were being developed in all provinces. Investment was being made in human capital. There was a focus on customers. Assets were being valued optimally. Corporate governance was being strengthened.
Mr Montana said that there was a focus on commuter rail in the various urban centres. However, SARCC was also looking at developing regional routes such as Cape Town to George and to the West Coast. The strategic programme concentrated on service delivery and punctuality. Cleanliness, safety and security were also major issues. In the next three years, 50 stations were due to be upgraded. Rolling stock was also a concern. A programme to upgrade and refurbish the existing fleet would see two thousand coaches. Enhanced operational safety would also be achieved.
In terms of revenue management, rail should be positioned as the cheapest mode of public transport. Quality management had the goal of achieving a culture of efficient management. Risks were the safety of passengers as SARCC carried a huge insurance portfolio.
There were several key business initiatives. The first was to improve the availability of trains due to improved maintenance. Railway police had been trained and were being deployed in Cape Town, Gauteng and Durban. In-service learnerships had been presented with the aid of some private companies, and platform marshals were now being deployed to ensure security at stations and the safe closing of doors before the departure of trains as well as assisting the elderly and infirm. Routes were to be extended and new routes created. He mentioned the example of the route between Pretoria and Hammanskraal where road transport took two hours to complete a 40 km trip. Passenger services would be introduced on this route shortly. Station upgrades would be carried out at some stations which were in poor repair. An upgrade was needed to signal and telecommunications networks. Communications with customers also had to be improved.
Mr Montana detailed some of the measures that would be used to assess the improvement to services. Train availability would be increased to 96%. Fifty stations would be upgraded. The predictability of services would improve to 90 %. Customer satisfaction would be raised to 65 %. Fare revenue would be increased by 6 %. Fare evasion would be reduced to below 5 %, and this was already on target in the Western Cape and Durban. The safety levels would be increased by 30 %, including safety at level crossings. Crime would be reduced by 15 %, a process which would be aided by the introduction of railway police. Current crimes included murder, robbery and rape. An efficient quality management system would also be introduced.
Turning to the financial plan, Mr Montana said that there was less money on the budget than in the past year. He hoped that this would not impact on service delivery. The increased allocation from national government was welcome. He was seeing movement in the right direction, but to a large degree SARCC would have to make better use of existing resources.
He said that the capital subsidy was increasing faster than the operational subsidy. This had started at a low level but was being steadily increased. The Public Transport Infrastructure Fund (PTIF) would go towards the upgrading of various stations around the country. Various property transactions had not been approved as SARCC would have to fund these from their own sources. Signalling, rolling stock and stations would enjoy priority. SARCC had been looking at an upgrade of the Cape Town station and a connection between the city and the airport. They were working with Treasury to fund the Hammanskraal to Pretoria route. There was a growth in the capital budget, but the right solutions had to be found.
Mr Montana said that fare income was stable, and SARCC had budgeted for an increase of 3.5 %. They were sensitive on the issue of price increases, and were rather looking to boost fare revenue by attracting more passengers. There would be a major construction and maintenance programme. The ratio between the various projects had to be fair. A five year upgrade plan would cost R 23 billion, and not all of this had been funded. A consultative process would be followed with local and provincial authorities. Movement of people was the responsibility of transport authorities, and aligned plans were needed.
He said that the bulk of SARCC’s money would be spent on rolling stock. Key performance indicators had been set out by the Minister of Transport in the form of a shareholder compact. There was a conservative estimate that passenger trips would be increased. Improved service was not an isolated aspect. Discussions would be held on the acquisition of new rolling stock between DoT, SARCC and Treasury. Modern trains were needed, and 540 new coaches would have to be acquired in the next fifteen years. Some experience had been shared with Germany.
He added that BEE targets would be a percentage of the value of work. He concluded that SARCC had received an unqualified audit report.
Mr Farrow noted that the merger of SARCC and Metrorail had been concluded in May, and was now into the next phase. The duplication of services should now be eliminated, but this did not seem to be reflected in the costs. There was a need to look at salary parity. He asked if there was any flexibility in the rolling stock plan, and if any other coach manufacturers had been considered.
The Chairperson raised the issue of the Shosholoza Meyl trains. He asked if they had a negative or positive effect on SARCC’s financial sustainability.
Mr Montana replied that the process of merger was not yet completed. No noticeable gain had been anticipated in the short term. Negotiations had been held with the trade unions and eighteen month guarantees had been given. He acknowledged that there was a degree of infrastructure duplication. Redeployment of personnel would take place rather retrenchment.
The rolling stock issue was one of capacity. The Chief Operating Officer (COO) had been given an undertaking to look at the issued. Historically contracts had been given for one year, but now were for three to five years. Contactors had to deliver on time in the refurbishment programme or face penalties. Quality, quantity and pricing were all considerations in the selection of contractors. Two additional suppliers had been appointed recently, taking the total of suppliers to seven.
Mr Montana said that Shosholoza Meyl was within the current budget. The current cost of the programme was R 1 billion. Of this, R 600 million was for capital costs such as coaches, locomotives and stations. He felt that it was possible for SARCC to turn their situation around. Access for passenger trains to the network was a problem as freight trains had a priority. Shosholoza Meyl was paying for all sorts of services. There were corridors were these services were in huge demand. However, there was only one train set available at present. An upgrade would cost R 960 million. He hoped there would be a positive response. However, the lead time on commuter coach delivery was three years. These would go on tender, but only refurbishment would be considered in the meantime. It might be better to scrap some of the old coaches, but this was impractical at present.
Mr Mogale asked if the MetroPlus programme would assist people and if it was affordable. He also asked about the Gautrain project. Treasury said that capacity must be funded through the PTIF. He asked if this fund did have the capacity to deliver. The railway police would be expanded to other areas. He asked if and when this service had started. He asked how far the station upgrading process was, and how business activities could be accommodated at stations.
Mr Swathe asked if Pretoria to Hammanskraal was the only extended service being considered by SARCC. He asked if any other areas would be targeted as 2010 approached. He asked how many coaches had gone through the refurbishment and upgrade programme since the previous year.
Mr Montana replied that apart from the Pretoria – Hammanskraal service, there was also an extended service being developed between Port Elizabeth and Motherwell, and in the Molata extension. Railway planning had identified twenty new routes which would be constructed in the next five to ten years. Factors to be considered were economic developments and new settlements. In the case of the Pretoria – Hammanskraal route, there were already some facilities in place so it would not be a totally new line. Intensive labour methods and a good employment approach would be followed in constructing new lines. The Molata extension should be finished by 2009, and 100 km of new line would be laid. In the current FY, 189 coaches had been done, and this annual figure would increase to 350.
Ms N Zubane (Group Executive, Risk and Legal Services, SARCC) said that there was progress with the intersite process. Programmes were being integrated with communities. Stations had been linked to the 2010 programme.
Mr A Harrison (COO, SARCC) said that MetroPlus usage had declined significantly except in the Cape Town area. There the service carried 12.5 % of passengers, which was an increase of 24 %. This figure was only 2 to 3 % in other areas, which was at an eighteen month low point. However, there was now growing demand because of overcrowding in the other class. This was relieving some of the pressure on SARCC as it produced increased income. There was little difference in the coaches except for seating arrangements. Image was an issue, but passengers had to pay a premium price for this. MetroPlus fares went towards the coverage of operational costs, and were not subsidised. There was growing pressure for these services, and they would be accommodated where possible. Capacity could not be reduced.
He said that railway police had first been deployed in Cape Town in response to crime. Exceptionally good results had been achieved. The incidence of crime was now 0.25 per 100 000 passenger journeys, but was still considered unacceptably high. Half of the programme had now been rolled out in Cape Town. A small contingent had been rolled out in Gauteng although many of those policemen were still under training. The same situation prevailed in KwaZulu-Natal (KZN). The programme had not yet been extended to Eastern Cape.
Mr Montana added that there were many structures within the railway police.
Ms Thompson asked how the customer satisfaction rating of 65 % had been achieved. It was not safe to travel on the trains from Acacia Park to Cape Town. Existing lines had to be upgraded. There were many unused lines in KZN.
Mr Moss noted that the SARCC CEO had the passion to improve the lives of the poor. He suspected that the station upgrade programme, however, made no provision for disabled people. Stations in the Cape Town area were not friendly to disable people, especially those confined to wheelchairs. Many stations had no facilities.
Mr Farrow said that R 20 million had been allocated for a pilot process. He asked if this was a once-off amount He asked if the mandate of the Constitution Court to improve train safety was being met. He asked if any other programmes were being initiated from other financial sources. Metros and municipalities should be working in partnership with SARCC. He asked if there would be any integration between SARCC services and the Gautrain.
Mr Montana replied that the latest customer satisfaction survey had been conducted by Markinor. The figures on that occasion were in the upper 50 % bracket. They had been linked to a range of attitudes, both through experience and perception. Improvements could be considered. If safety improved, then service should be improved accordingly. The figure of 65 % satisfaction was a target, and was a subjective rating in any event.
Mr Montana said that integration with Gautrain had been discussed. The President had spoken about this issue in a number of areas of his State of the Nation address. The DoT was the primary driver, and more debate would be held. Perhaps access to the network could be negotiated. The Gautrain would run on a wider gauge, and new rolling stock would be needed to make this possible. However, it was not stretching the possibilities to consider this. There was a high volume of traffic in this corridor.
The Chairperson said that alignment was particularly necessary in the Centurion area.
Mr Montana said negotiations were being held at both provincial and local level. There would be enormous benefits it the systems could be integrated. This theory was based on sound and scientific ideas. There was a commitment from Gauteng to make this possible as well as DoT. Government would have to resolve the issue as it was beyond the scope of SARCC as an operator. The clear conclusion was that such a linkage would be both viable and desirable.
Mr Cronin heard this point. The operator has the skills to run its service but perhaps not the profession perspective. Cabinet was pushing to making integration possible. The Committee would ensure that DoT, other government departments and the Gauteng project would be subject to the same pressure to advance the programme.
Mr Montana said that there were many disused railway lines in KZN, the Free State and North West. Consideration could be given to re-opening some of these. In other areas, business had corresponded with SARCC and suggested that rail transport was not viable and these routes would rather be operated by buses or taxis.
He agreed that some stations were not doing enough to cater for the disabled. Parliamentary questions had been raised, and SARCC had been found wanting. Infrastructure teams would put this aspect high on their agenda. Platform marshals should also assist the disabled. A meeting had been held about making access lifts available for the disabled. A transport indaba, on which various organisations had been represented, had found that it was not only the wheelchair bound that experienced problems. The blind and hearing impaired also faced problems. Very few stations, in fact less than ten, met access standard. This situation would have to change before the next Parliamentary questions were raised.
Mr Montana said the issue surrounding other finance sources had been raised. In some cases, municipalities and provinces were prepared to assist financially with rail projects. Other players might be needed to assist. Legally, SARCC was not allowed to raise money through loans. It might be necessary to explore other options. If money was to be spent well, Treasury might assist. The current arrangement was bad. Many projects, some of them safety related, had had to be postponed.
Ms Khunou said that care of the disabled was a difficult issue. Public address systems could be installed in trains to announce the names of the stations. When solving the rolling stock problem, the overcrowding problem could also be relaxed. She asked that, if the target in three years was 96 % availability, what the current figure was.
Ms Nxumalo congratulated their advertising campaign, saying it was a good contribution in saving children by highlighting the dangers associated with trains.
Ms L Moss commented on the distances between regions. The plans to extend rail services into the regions was welcome. Most major routes into a city like Cape Town were totally congested, even on weekends. The Committee would help to get railway lines re-opened. The long distance sector would be important during 2010. Rail tourism ventures were needed, such as along the West Coast.
The Chairperson said that the public transport strategy was moving away from single operator control to a multiple control set-up. In a sense, the old SA Railways had been a pioneer in the field of control rooms. He asked that, in the current framework, there was any space for Metrorail to integrate with the Gautrain. There was also scope for integrating with the new bus network in Johannesburg. Metrorail was the only company with the experience of operator control, and had established a control room in Cape Town many years previously. There was no public regulation in any other public transport sector. It was important for operators to be able to tap into the knowledge bases. It was possible that revenue would take an interest in developments. However, it seemed that Treasure regulations conspired against an integrated transport vision.
Mr Luyt said that future thinking should revolve around a total policy. A phased process could be introduced.
The Chairperson replied that, when looking at rail, there was a policy of integrated modality already. This question must stay on the agenda. Bus subsidy contracts would soon be issued in Gauteng. Things were happening but integration was lacking. Phases had to be locked into arrangements. Legislation was unintentionally reproducing a disintegrated system.
Mr Montana thanked the Committee for its very positive feedback. He agreed with most of what had been said. Stakeholders had provided possibilities. They were not looking at the full picture, however. The West Coast and Eastern Cape were interesting areas for expansion. Shutting down current routes would create more mobility problems with a resultant huge impact on the roads. Transport was all about access to opportunities.
He said that fare evasion normally occurred amongst the unemployment. Concession could be provided. Train availability was currently 85 %, but was not as good in some regions. Progress must be accelerated. Spare train sets were also needed.
Mr Montana answered the question on the Constitutional Court Ruling. They had done a lot in the previous eight months to abide by the ruling. He was satisfied with train safety. SARCC was running on a temporary licence because of this. Overall, security programs, marshals and security leadership programmes had all taken reasonable steps. They would soon reach a point where they could guarantee passenger safety. The question was how these police officers would be employed. Organised crime was a problem.
He said that choices must be made now before major investment could be made. Certain constraints on investment existed. The total transport system should be considered. In a sense the debate should be both in and outside of government. Money would solve the problem. The policy environment must change. Transport was at the heart of the economy.
The Chairperson said that the meeting had been a very useful engagement. The time was now for transport to advance, and the window was open.
The meeting was adjourned.
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