Intergovernmental Fiscal Review: Infrastructure, Transport & Roads

NCOP Finance

14 October 2001
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Meeting report

SELECT COMMITTEES ON FINANCE AND PUBLIC WORKS: JOINT MEETING

SELECT COMMITTEES ON FINANCE AND PUBLIC SERVICES: JOINT MEETING
15 October 2001
INTERGOVERNMENTAL FISCAL REVIEW: INFRASTRUCTURE, TRANSPORT & ROADS

Chairpersons: Ms Q D Mahlangu (Finance) and Ms B Thompson (Public Services)

Documents handed out
Intergovernmental Fiscal Review 2001: Infrastructure development (Powerpoint presentation)
Intergovernmental Fiscal Review 2001 [see Roads & Transport: Chapter 6: page 86; Infrastructure Development: Chapter 7: page 104]

SUMMARY
The Intergovernmental Fiscal Review (IGFR) 2001 prepared by the Treasury was a major focus of the meeting. It provided many of the speakers with the statistical and budgetary information for their respective provinces.

A number of key points emerged from the provincial presentations and subsequent discussions:
- The need to clarify institutional arrangements. For example, which ministry (national, provincial or local) is responsible for the maintenance of various road networks.
- The need for public-private partnerships (PPPs) to ensure value for money.
- The need for proper planning of buildings to ensure quality infrastructure that lasts.
- More integrated planning between different government departments.
- To ensure that law enforcement procedures are carried out particularly in the case of overloaded trucks.

It was acknowledged that joint meetings of this nature were still in the experimental phase and that the competing budgetary priorities meant that capacity was a problem at all levels.

Input by Minister of Transport
Minister D Omar acknowledged that the meeting was a very important one. The country was lagging behind in terms of the development and maintenance of roads, railways and minibuses. He congratulated Treasury for completion of the IGFR. He referred briefly to as the areas of relevance for the Department of Transport and outlined the need for a broad perspective or understanding of the issues. His first area of focus was road and railway infrastructure. Rail transport needed to be made more attractive by replacing old infrastructure and improving safety. Secondly, he referred to the taxi industry. 60% of South Africans are dependent on taxis. Despite this, the infrastructure is inadequate, particularly in terms of catering for women, the aged and disabled people.

The Minister acknowledged that law enforcement and policing needed to be an important focus of the department. Overloading was identified as a major problem as it causes substantial damage to the road networks. He also acknowledged how the transport department had an important role to play regionally i.e. with the development of roads within SADC.

Input by Minister of Public Works
Minister S Sigcau began by clarifying the responsibilities of the Department of Public Works. Primarily the department deals with the purchase and maintenance of government property and buildings, as well as the provision of accommodation for government officials and the provision of services for clients of government.

The Minister was clear to point out that her department had little to do with the general road infrastructure within the country. She emphasised that the creation of state assets allowed the department to assist in poverty relief. This was done through the job creation and the building of multipurpose centres, which provided many different social services.

The Minister outlined a number of problems that the department faced. Firstly, the fact that some buildings were not sustainable which led to the growth of ‘white elephants’. Secondly, the health department builds a clinic but does not communicate with other departments to ensure other services such as roads and water, are provided.

She concluded by highlighting the important point about infrastructure is that it had to understand the needs of the community. The money spent had to be on worthwhile projects.

Briefing by National Treasury on Infrastructure development
During a preface to the presentation it was pointed out that within the provinces the financial situation was bad in many areas, including roads infrastructure. See Powerpoint presentation given by Mr. L Fuzile.

Questions by committee members, provincial MECs and representatives
The following questions were raised:
- Who is responsible for the rural roads within particular provinces?
- Why are the roads in the former homelands in the worst state?
- Why should the provincial governments pay for the maintenance of roads that are of national significance e.g. Richards Bay highway?

Some other important points which emerged during the discussion were:
- A concern about the growth in ‘ghost towns’ which are the direct result of railway stations closing down e.g. Noupoort
- Massive problem of taxi overloading as well as trucks.
- The need for thorough mechanisms to identify unroadworthy vehicles.
- Overloaded trucks causing potholes which then cause accidents, particularly at night.
- Impractical to keep resurfacing roads. Need to regenerate rail transportation.

General responses from Minister Omar
The Minister pointed out that it was easier to plan road development strategies as now there
were only six metros. This would help resolve some of the institutional planning problems.
- The Minister discussed in length the problems with the rail transport system. He mentioned that a discussion on the Spoornet service was happening shortly. The problem with the general freight service was that it was working at a loss which naturally put off many businesses. The government was debating as to whether subsidies or outsourcing would assist in reversing the rail decline. The goal was to provide a good competitive environment between road and rail transport.
- In terms of overloading, law enforcement was crucial. The provincial departments had to deal with the enforcement of overloading and unroadworthy vehicles. One of the problems with decreasing maximum truckloads is that it negatively affects the economy.
- On a positive note, it was now law that reflective material be placed at the back of all trucks.

Provincial Reports from MECs or department representatives:

Eastern Cape representative for Transport, Roads and Public Works
- Acknowledgment that there was a huge backlog in road building and maintenance. Overall the road network in the province still favoured previously advantaged communities.
- The biggest problem was rural roads, especially when one considers that 60% of the province was rurally based.
- To rectify the situation it was estimated that R1 billion was needed over the next year.
- One of the major problems was the lack of investment in road construction. The lack of availability of funds meant that very little planning was being done.

Free State- Sekhopi Malebo MEC: Public Works, Roads and Transport
Roads and Infrastructure
- It was mentioned that the biggest problem was the general deterioration of the road network in the last five years
- There are basically four reasons for the deterioration of provincial roads:
1 Declining budget. Dramatic decrease in budget since 1975.
2 Lack of resealing and rehabilitation of roads. Intensive rains in first quarter of 2001 caused increased damage. Backlog of roads that need rebuilding or rehabilitation is in order of 787 kms. At cost of R .7 million this per km this amounts to backlog of R638 million in monetary terms.
3 The growth of heavy freight traffic on the provincial road network. Growth estimate of between 2% and 5%.
4 Overloading. The increase in abnormal and above limit loads caused major road damage.

The provincial department developed a strategic plan to address the backlog in road maintenance. This entailed the following:
1 Ensuring efficient, sound and sustainable transport solutions for regional, urban and rural areas. Engineering principles must facilitate economic, environmental, value for money and social outcomes.
2 Providing and maintaining road and other transport infrastructure that support the above.
3 Developing, establishing and managing an efficient and effective public transport system in the province.
4 The promotion of traffic safety and appropriate regulating of transport system.

Works infrastructure
·
Since the mid-1990s the state of repair in Provincial Government has decreased at an increasingly accelerated pace. It is currently estimated that approximately 45% to 55% of all buildings are in a good state of repair. It is estimated that R6 billion is needed to bring all buildings back to the state of repair that prevailed in the mid nineties.
· The department is in the process of developing plans to address the backlog. This entailed:
- Creation and management of an inventory database of all fixed assets
- The verification of the accuracy of this database
- The provision of all management facilities in a single integrated environment
- Determining the viability of specific properties
- Determining the need of developing new properties
- Determining whether redundant properties should be renovated or disposed of or and then channeling the funds into infrastructure maintenance.
- This type of situation will lead to a reduced property portfolio free of redundant properties and also in a relative better state of repair. This process will also generate funds that can be utilized to assist in maintaining the existing portfolio.

Mpumalanga – MEC for Public Works, Roads and Transport
- The vision of the province is the desire to create a "better life for all" and ensure that any infrastructure developed benefits the "poorest of the poor."
- The condition of the roads in the province is an obstacle to the growth of the tourism industry.
- Budgetary constraints are the most significant problem. Recently R100 million earmarked for roads was transferred to the education, health and social services.
A number of roads in the province need immediate attention. During the rainy season some roads become impassable which meant some communities could not get access to services.
- The revenue from the N4 Maputo corridor goes to national government. Many of the local communities cannot afford to travel on this road because of the high tolls.
- In terms of public works, the department feels that government should lease rather than own buildings, as it will be cheaper.
- In conclusion the MEC proposed that more money be earmarked for roads by the national government.

Northern Province – MEC for Roads and Transport
- The focus of the department is to assist in creating a safe and reliable transport for its citizens.
- Another major focus is the bicycle project that was launched recently. The Northern Province department hopes to introduce 15 000 bicycles in the next three years. Furthermore, by the end of 2001 bicycles will be in all six areas of the province. The department also hopes to assist in creating 2000kms of bicycle tracks in the province. The benefits of the bicycle project include increased personal health and mobility.
- Within the province there is a need for infrastructure in the taxi industry. This includes R160 million for the building of four new taxi ranks.
- The MEC mentioned the success the province had in eradicating taxi violence. In 1998, 83 people died in taxi violence. This had now been reduced to two deaths in 1999 and 2000.
- In terms of road accident mortality the province made rapid strides in decreasing deaths on the N1 stretch. In 1999, there were 36 deaths. In 2000, there were eleven. In 2001, no deaths have been recorded on this stretch.

Northern Province – MEC for Public Works
- The MEC began by pointing out the problems being experienced in his department. These included; the lack of trust between provincial and national departments; the general lack of capacity at provincial level; the length of time it took to get disaster funds following last years floods.
- In total the MEC estimated that R638 million was needed to upgrade and maintain roads in the province. Less than 50% of this had been budgeted. The MEC did thank the national government for the issuing of grants that assisted in building roads and buildings.
- In conclusion the MEC pointed out that the objective of the road network in the province was to provide infrastructure which responded to the needs of the community. Secondly, the goal was to address the social backlogs in the rural areas.

Western Cape – MEC for Transport, Roads and Public Works
- The MEC opened by commenting that the department had been unable to adequately upgrade and maintain roads throughout the province. This in turn was retarding rural development.
- The department did implement a number of urban renewal projects e.g. Cape Town, Chapmans Peak and Knysna.
- The general budgetary constraints meant that timeous road rehabilitation was not always possible. Furthermore, the recent rains meant that some roads were completely destroyed. This in turn resulted in R35 million that had been earmarked for normal rehabilitation, having to go towards emergency maintenance.
- The focus of the department is on resealing many roads. The cost of resealing is R160 000 per km. If you do not reseal roads the cost of maintenance can escalate between seven and sixteen times the cost of the original resealing.
- The provincial department has a financial backlog of R1,3 billion. The backlog can be rectified if the department gets a budget of R250 million for the next five years for road maintenance.
- Another major problem for the province has been the N7 national road. This road has provincial, national and international significance yet no money has been received from national government to assist in its maintenance.

Northern Cape – Chairperson: Portfolio Committee of Transport, Roads & Public Works
- Focus areas within the department included: development of sustainable training programmes for staff; service delivery for the public and clients, maintenance of employment equity.
- The challenges facing the department included: reduction of death toll and increased safety on the roads; collection of license fees and fines; enforcement of overloading laws.
- In terms of public works the chairperson mentioned that the completion of the new legislature building was a top priority. He disagreed with the MEC from Mpumalanga who stated that it would be cheaper to lease. The Northern Cape government paid a lease of R21 million per annum for the lease of its legislature building.
- In conclusion the Chairperson mentioned that another major goal of the department was to make all government buildings accessible to the disabled.

Discussion
The Chairperson began the discussion by commenting that many of the provincial departments faced the challenge of increasing expectations. Further, it was clearly proving difficult to satisfy some of the expectations without neglecting others.

Some important points that emerged were:
· The fact that spending has stabilised for social needs, health and education. This now meant that more could be spent on road maintenance. Spending on road maintenance created a ripple effect times six for the rest of the economy.
· In terms of enforcement of overloading laws it was mentioned that law enforcement officials should implement on the spot fining, which was being done successfully in the Free State.
· It was pointed out that roads were of critical importance in all provinces. It was recommended that the NCOP should spend sometime in each province to check what type of infrastructure was found in each province.
· It was recommended that Statistics South Africa sit in on these types of meetings in future.
· It was also recommended that a standardised tender process be implemented across all provinces. This would assist immeasurably in the planning and prioritising of certain projects.

Meeting was then adjourned.

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