Department of Transport: Budget and Strategic Plan 2007/08

TRANSPORT PORTFOLIO COMMITTEE
20 March 2007
DEPARTMENT OF TRANSPORT: BUDGET AND STRATEGIC PLAN 2007/08

Documents handed out:
Presentation on Department of Transport (DOT): Strategic Plan 2007/08 to 2009/10

Audio Recording of the Meeting

SUMMARY
The Department of Transport presented the Committee with its Strategic Plan for 2007/08 to 2009/10. This Action Plan was planned to merge with the preparations that were required for 2010 FIFA Soccer World Cup. Committee members sought reassurance repeatedly on whether the DOT had the necessary capacity for the successful outcome of the 2010 World Cup. They also asked questions about budget roll-overs, the Department’s skills capacity, in view of the disturbing incidence of 41% vacancy in the Department, and taxi recapitalisation.

The Director General suggested a separate presentation by the Department in order to unpack in far greater detail the preparations for 2010, which she was absolutely confident were comprehensive, detailed and sufficient to meet the transport needs for 2010, as well as providing a legacy subsequent to the event. Concerns regarding the viability of the taxi recapitalisation programme she also met with confidence and said although the programme was taking a while to gain momentum, it would be on track for the end of this year. Further questions on the financial incentive of R50 000 per scrapped taxi, she fielded by assuring members that the figure of R50 000 had been based on thorough financial investigation. The model on which this figure was based would be provided to the Committee.

MINUTES
Ms Mpumi Mpofu, DOT Director General, presented the new structure of the Department, which included posts yet to be activated and posts for which funding had not yet been received. Their vision and mission had changed slightly to include the social dynamic of responsibility towards the second economy and poverty alleviation. Some of the Strategic overview and key policy developments included addressing the needs of transport users and the general public and building capacity to oversee public entities reporting to the Minister. Transformation of the taxi industry through the Taxi Recapitalisation programme, restructuring passenger rail services, including oversight of the Gautrain Development, were among the key developments for the Department. Overall aims in all areas were the improvement of security, reduction of infrastructure backlogs, improved access and affordability and reduction in time in transit.

Service delivery challenges highlighted public transport as the biggest challenge. Service delivery and regulation would occur though various agencies. The Cross Border Transport Agency, which regulated cross border transport was largely housed inside the Department. The Railway Safety Regulator (RSR) focussed on safety enforcement in rail transport.

Substantial increases in budget in all sectors of transport had seen an overall increase by 22.9% per annum, standing at R15.857 billion for 2007/08. Expected major under expenditure and rollovers had occurred in the Taxi scrapping process, as this had only started in October last year. Reasons were provided for all under expenditures. Short-term quick win strategies included the development of a single Transport Economic Regulator by June 2008, development of new policies for taxi recap after the first seven years and increasing access to social and public amenities through the Scholars Transport Strategy. The Department had to take cognisance of climate change and the environmental implications of its plans. South Africa was expected to play a lead role in this regard. The Commission for Sustainable Development would be meeting in June in New York this year. Private sector investment was sought in the development of rail and road infrastructure. Transport Regulation and accident and incident investigation included the deployment of traffic patrol vehicles on 151 notorious roads and enhancing civil aviation security. An Intelligent Transport System was envisaged for all national roads. Bus Rapid Transport Systems were envisaged for priority rail corridors. Substantial injection of funds for improved rail security had seen a 70% reduction in crime in the Western Cape. This programme would be expanded. Comprehensive programmes for Public Transport and Public Entity Oversight and Economic Regulation were presented.

Discussion
The Chairperson thanked Ms Mpofu for a very detailed and comprehensive Plan. He asked for more information on how the Department intended dealing with the challenges of preparing for the 2010 FIFA Soccer World Cup. This was an opportunity to provide the country with a public transport system it desperately needed anyway - and this was simply forcing the issue. Looking at the document it seemed to him that the entirety of this preparation fell to the deputy director-general for Integrated Planning and Intersphere Coordination, Mr Mathabatha Mokonyama. He asked whether an acting DDG could be loaded with such a huge responsibility.

He referred to the panel of experts which according to the Plan would be appointed by April 2007 and for which R15 million had been allocated. He asked whether this was in process. He said that the Committee had embarked on some fact finding themselves on preparation for such an event. They had found out that in the case of Germany, it had appointed some eighty full time experts to sort out their transport problems for the Soccer World Cup, and their transport needs were by far not as extensive as in the case of South Africa, since it already had a fully functional public transport system. He asked whether the Department was structurally geared up to fulfil these needs and had the aviation plan also recognized the increased demands the 2010 event would place on their systems with some 150 000 additional people entering the country and needing to be transported within the country within the space of one or two days.

Mr S Farrow (DA) commented that 32% of the organogram was in effect still not filled. He questioned the ability of the Department to deliver on its target if it did not have the necessary capacity. He felt this was linked with the occurrence and continued roll-over of funds which were not being spent. He remarked that since large amounts of funds were simply being transferred out of the Department apart from the amount of R836 million, the Department was delegating responsibility because it did not have the capacity to take the projects on themselves. He asked for further feedback on the taxi recapitalization programme.

Ms Mpofu said that the Department had merged their Public Transport Strategy and their plans for 2010 and they were effectively one Plan. The instrument through which this would be manifested was the Public Transport Infrastructure Fund (PTIF), which provided a funding source, in addition to supplementary public transport funds. She assured the committee that the Department had a comprehensive, thorough and formidable plan in place for 2010, which would require a separate meeting or presentation to elaborate upon.

Mr Cronin agreed that the Committee would take her up on the opportunity.

Ms Mpofu said that in adopting the Action Plan for 2010, they had set up an inter-governmental arrangement involving the National DoT, National Treasury, Provinces and Municipalities of the host cities. This would ensure proper coordination and communication between them. It was chaired by the DG herself and included treasury officials, provincial Heads of Departments for Transport and their municipal counterparts. The outlining of operational plans was already underway and would ensure the integration between national and provincial levels on a transport plan. The Action Plan spoke to the municipal plans, although they were not yet entirely satisfied with the plans for some cities, such as Nelspruit, Pholokwane, and Rustenburg.

She continued that consultants had been appointed in project management and management capacities and they were in the process of tendering. The process would be run not by a panel but by a consortium, which would be responsible for being the arms and legs of the process of interaction and coordination between all the players. Further coordination between the modals of transport was also being facilitated through a different task team for every mode of transport. These teams were responsible for ensuring the necessary manufacturing and production capacity in order to fulfil the targets.

Ms Mpofu said Mr Mathabata Mokonyama would be assisted by another person. The 210 World Cup Local Organising Committee (LOC) would second a person. The DG herself would be leading the process, including heading up the inter-governmental arrangement. Operational plans would be ready by September for the municipalities to start moving on and the LOC was responsible for ensuring that priorities converge on national and municipal levels. Certain priorities had already been questioned in this forum and were being aligned with the national agenda. The Department would be embarking on a road show to the various cities in order to facilitate this alignment, looking at such things as high volume corridors.

She said rollovers were being dealt with incrementally every year and were not located in critical strategic areas. The under expenditure of the Public Transport Infrastructure Fund was hardly surprising since their allocation had only been released in September last year which left them with R241 million to spend in a few months. She was however confident that the necessary plans for implementation were in place to meet the needs for their hosting the 2010 Soccer World Cup and that any concerns to be raised in this area would be around the supply of materials. The refurbishment of 2000 rail coaches was on track, all calculations had been made for the manufacturing of enough buses, which would be facilitated by the doubling of production capacities. The production of new fleet rail coaches would still be addressed. She was confident that at factory floor level, the country was ready to provide and that all necessary research had been completed in this regard.

Ms Mpofu said that transfers out of the budget, to Gautrain in this instance, did not absolve the Department of responsibility. On the contrary it meant a huge responsibility on their part to ensure that there was delivery against those payments. Neither did she have any concern regarding the roll-out of the Taxi Recap Programme, although there still seemed to be a lack of support for the programme in some areas. Where there was support, everything was going according to plan.

She said vacancy issues in the Department were related partly to funding which was incremental and which had enabled them to fill about half of the 41% vacancies in the Department. This was currently in process. The Department had also instituted a programme whereby posts had to be filled within a period of six months or those posts would be lost and transferred to other areas.

Mr Mashile reiterated his concern regarding the capacity required at all levels to implement the plans for 2010.

Mr D Schneeman (ANC) expressed concern about the continued vacancies, even if 50% of 41% of the vacancy were in the process of being filled, and what the impact this might have on the roll-out of plans. He also questioned the decision to bring in outside consultants as this would this leave the Department without the necessary skills once those consultants finished.

Mr S Farrow (DA) also questioned the extensive use of consultants and said that this seemed to be forming a parallel department, which did not bode well for accountability. He was concerned that the audit report by the Auditor General was qualified.

Ms Mpofu admitted that the incidence of vacancies did have an impact on their capacity, but that they had made progress in this direction. The Department had in fact achieved 70% of the targets it had set for itself for the year 2005/06 and in some instances they had achieved beyond. These could be considered valid “Quick-Wins”. The issue of capacity was not a symptom of the Department alone, but one shared by the entire country, the government and municipalities. This left little option but to "pull in" the necessary skills in order to ensure implementation of the plans necessary to upgrade transport for 2010. Furthermore, a concerted effort was being made to draw provinces into the process, something which had been lacking until now. Provincial assistance was vital to prepare the host cities as municipalities could not be expected to carry all this responsibility, especially the weaker municipalities. Therefore provinces had been drawn into the framework between national and municipal levels. The DoT had to import the necessary skills, but they were partnering people within the Department in order to facilitate skills transfer, thus building a legacy. The consultants had not taken over any projects as such, but were placed within teams bringing technical and expert knowledge where it was lacking within the Department and were expected to deliver on very specific items. There was thus no danger of accountability falling by the wayside or into the wrong hands and neither was there the shaping of a so-called parallel department.

Regarding road infrastructure, Ms Mpofu said that allocation for this purpose had been made late and without forewarning and whereas the SA National Roads Agency (SANRA) could respond more quickly, provinces had only now received their allocations through the Extended Public Works programme (EPWP). Pilot projects in this area would just be expanded.

She said the audit report had been qualified on one issue alone and that was due to the credit card drivers licence saga, which they had been struggling with for the past six years. This one issue had been separated out of the report for 31 July 2006, a solution had been determined and they were in the process of reporting to Standing Committee on Public Accounts on this issue, in the hope that it would finally be put to rest.

Mr Farrow said he was still concerned that there did not seem to be adequate management and control in the Department and that approximately ten items which had been questioned at the previous report-back had not really been addressed. One of those was the target the Department had set for itself to scrap 10 000 taxis by the end of this year, whereas thus far only 2000 had been scrapped.

Mr Cronin asked how many of those vehicles already scrapped were of operators who were exiting the industry and how many intended to recapitalise. He asked whether the target of 80 000 vehicles over the next three years was still attainable and how many of those scrapped were coming from major cities. He asked whether the programme was sustainable. He also questioned the representation of the South African National Taxi Council (SANTACO) since most of its members had business interests themselves, so how could they begin to relate to grassroots problems. There seemed to reside a great deal of suspicion and distrust between operators and only those on the inside track could hope to benefit from the system. He did not see SANTACO being successful as a national interlocutor for operators on the ground. Information did not seem to be penetrating to the necessary level.

Ms N Mbombo (ANC) claimed that most taxi drivers believed that they were scrapping solely for 2010 and the taxis would have to be numbered whilst being controlled by the department and given areas

Mr Mashile asked what benefit operators derived from the recapitalisation programme. Those that had gone on to purchase an acceptable vehicle were still waiting for the bus subsidies to be paid out to them, while others operated on routes that were not serviced by buses at all. Some had purchased their vehicles a year ago.

Mr Farrow asked whether any research had been done on this.

Ms Mpofu stated that the Financial Safety Regulations as submitted by the South African Bureau of Standards (SABS) and the Department had only been gazetted on 4 September 2006. This should have occurred much earlier, which would have allowed the Department to launch the scrapping programme sooner. It started in October 2006. Since then applications for the scrapping of 10 000 vehicles had been received. This amount was fragmented across the entire country and the provinces had launched their programmes in a staggered approach: the Free State in October, Eastern Cape in December, Limpopo in February and Western Cape in March, while Gauteng would only be joining the ranks at the end of this month. Their programme had been more thoroughly prepared since their challenges were also greater. Whereas other provinces were scheduling scrapping once a week. Gauteng would be running their scrapping unit every day of the week. Therefore once they were on line, the number of scrapped vehicles would increase more quickly. The conversion of permits to operating licences was also linked to this process. Once all provinces were running smoothly, the number of scrapped vehicles would increase rapidly as it took only four minutes to scrap a vehicle.

It had to be understood that the process was driven by two things: the Department’s age analysis of registered vehicles, which had revealed 8000 vehicles being of an age that would deem them unroadworthy, unless otherwise proven through testing. These vehicles would have to be scrapped in order to avoid risking the lives of passengers. There was one scrapping agency coordinating this process across the country with various agencies in every province and mobile units that could provide the service as well. She said 80% were exiting the industry while about 20% were recapitalising. Eventually these numbers would taper off as most of the unroadworthy vehicles were scrapped. The second aspect of the process was driven by the law enforcement agencies, which referred vehicles for testing and if necessary for scrapping. According to the age analysis aspect there had been three categories identified for scrapping and the onus was on of the owners of the vehicles in these categories to prove their vehicles roadworthy. This was envisaged to be a seven year programme starting with the vehicles registered in 1980 and then following with those registered in every year after that. Eventually the process would slow down and that the industry itself would manage it. Regarding the question of recap affordability, she said the Department had done a thorough investigation of the commitments an operator had to meet versus the income they could make on certain lucrative routes. Together with financial institutions, the amount of R50 000 had been arrived at as a feasible amount. Only one issue had arisen in this instance and that was that those running long distance routes were better off acquiring higher capacity vehicles. A copy of this financial model would be made available to the members.

Mr Cronin asked whether other expenses such as levies and extortion monies were also taken into account, since a certain amount of ‘war-lordism’ was the order of the day.

Ms Mpofu said the government did not support illegal activities and could not been seen to condone or accept them as valid. It was their aim to regulate the industry and thereby eradicate these tendencies. Entrenched intervention would eventually succeed in achieving this. She added that the SABS had certified ten vehicles for the new taxis and that the list was readily available. The Department had gone through a special process of certification as opposed to promulgation in order to get this list passed. The bus subsidisation programme was not a full solution as the bus and taxi routes mostly did not coincide. The finalisation of the taxi subsidy would address this issue and would link into the taxi industry. The financial model that had been the basis of the recap programme, was also being used to determine the taxi subsidisation. The motor industry had seen newcomers that had never been in the market before and issues around mass production would be cleared up once the market preferences had been determined and production could be increased to meet those demands. Initially these companies had to test the waters with caution. The financial model had addressed the issue of VAT as well.

Mr Mzondeki commented that taxis were still not accommodating the disabled and that any legacy the Department wished to build would have to include this sector of the population.

Mr Cronin mentioned the current service available for disabled people as being wholly inadequate to address the needs of all in this sector of the population.

Mr M I Moss (ANC) mentioned that in years past a bus going from Cape Town to Bellville and to the Southern Suburbs had facilities for the lifting of wheel chairs and prams. Such a service should be made available again and should be available on every bus.

A Department of Transport official replied that there were first class and second class disability issues and the first class issue that did not deal with structural change would be handled first, such as those that were visually impaired and those with hearing problems.

Ms N Khunou advocated the improvement of disability access to trains, and added that there was a lack of communication with people on the ground, as they did not want to see the industry suffer. Safe and reliable transport for people in townships and rural areas was provided by taxis. People needed to know what was going on with the new routes. The question of whether the Department had a long term goal was asked.

Ms Mpofu replied that there were programmes set up in the Department that appointed people to do extensive research and communication, some directly with taxi ranks.

Ms Mpofu said that the Shova Kalula initiative was deliberately taking one of the key aspects of the programme, which was that of creating access in rural areas to deal with impoverished areas and people. The aim was to create cycle routes and produce bicycles that would play into second economy interests. The challenge would be the production capacity and not the financial capacity. Shova Kalula was the department's equivalent of a grant system.

Mr Mogale asked how strong the management abilities of the Department were in order to tackle the scarce skills issue in relation to the Transport Education and Training Authority (TETA).

Ms Mpofu stated that TETA was working with the Department on strategic issues and had hopes of brothering with TETA in order to provide short-term training courses which would focus on operational training. The existence of tertiary programs was also mentioned and the department had identified areas in transport interests such as modeling, civil engineering and economics. The focus of the Department was to strengthen skills within the Department.

Mr Mogale also asked when the Transport Charter that was taken to Cabinet for approval last year was going to be rolled out?

Ms Mpofu replied that in 2005 the Transport Charter was submitted but there was a decision not conclude it until the codes were finalised and aligned. The codes would be finalised and launched in June.

Mr Cronin brought up issues about taxi reformation and the questions asked by taxi owners about how quickly they would get their money.

Ms Mpofu stated that there was a difference between taxi reformation and taxi scrapping.

Mr Cronin asked for more engagement between the Department and the Committee on taxi issues and 2010 World Cup preparations.

The meeting was adjourned.