Public Transport Strategy & National Land Transport Strategy: briefing; South African Bus Operators Association submission

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29 July 2008
Chairperson: Mr J Cronin (ANC)
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Meeting Summary

The Department of Transport briefed the Committee on the status of the Public Transport Strategy and the National Land Transport Strategy. Summaries were given in both presentations of the purpose behind the strategy and of implementation initiatives and plans. Both presentations would be borne in mind when the Committee considered the Bill.

The South African Bus Operators Association made a submission concerning the National Land Transport Bill in which it raised the removal of the right of first refusal for incumbent bus route operators, indicating that this was believed to be unconstitutional. The committee acknowledged this, but sought a way to balance transformation with the retention of skilled operators. Further comments were then made on clauses 24, 25, 66 (1), 76 (3), 90 (7), 91 (3) and 92 (3) of the Bill. Issues included the compensation of operators that hade to be removed, permits, non-contracting services and whether operating licenses were transferable. The Association asked that the transgressions mentioned in Section 66 (1) be spelled out. The Chairperson pointed out South Africa's underdeveloped metered taxi system with relation to Section 76 (3).An important clarification was made by the Chairperson when he pointed out that this was an independent Act and not an Amendment Bill. The Portfolio Committee agreed with the Association’s comment that a new Section 92 (3) on the cancellation of accreditation be added to the legislation.

The South African Tourism Services Association, presented comments on Bill. It was noted that the process leading to the comments was very inclusive and included input from the various departments, associations and small enterprises and provincial authorities. The most notable outcome of the Bill was the creation of the National Public Transport Regulator (NPTR) and its accreditation. This Association noted the dual disadvantage of  having to make a submission when there were various versions of the Bill and having to comment on the structural legislative skeleton without  sight of the accompanying regulations.  One of the most beneficial outcomes had been the move toward letting the operating entity become a known entity. The Association’s vision for the process was reviewed. Detailed comment on the Bill was given, with specific reference to clauses 20 (1), 24, 62 (1), 90 (7), 92 (3). Issues that arose from the discussion included: operating licences, stringent criteria for vehicles, the affordability and form of tokens and whether tourists would still be able to access the Road Accident Fund. A Committee Member expressed the view that the tourism sector was dominated by the previously advantaged, and noted the danger of passing legislation that would make transformation difficult. The Chairperson agreed that this was a possibility but saw the identity of the supplier of the transportation as secondary to the fact that transport must be safe and available.

Meeting report

Public Transport Strategy: Department of Transport (DoT) briefing
Mr K Pillay,  Deputy Director General: Public Transport, DoT gave a presentation on the Public Transport Strategy. He started of with the process behind the strategy, highlighting the move to a more user-friendly system. Of note was the goal to make public transport available within a one kilometer radius of 85% of the population, in urban areas, by 2020. Mr Pillay stated that the Department was moving to an integrated payment system. He stated that the strategy and the plan for a National Transport Fund was not formulated in isolation, but in conjunction with the National Land Transport Transition Amendment Bill, Rural Transport Strategy and the rail plan. He noted that the DoT had assessed where each of the major metropolitan areas were. Johannesburg was in the process of implementing its plan; Cape Town had a plan, but was busy with funding issues; and Nelson Mandela Metro had a plan and was ready to start rolling out public rail transport. The potential in other areas was also outlined.

The current initiatives were outlined in detail in the presentation (see attached document), with a focus on enabling integrated implementation, and the content of the action plans across the phases of delivery. 

The Chairperson reminded the delegates and members that this was a refresher and status update. He suggested that the Committee take note of the report that was tabled. 

National Land Transport Strategy: Department of Transport Briefing
Mr H Patel, Acting Chief Director: Integrated Public Transport, DoT tabled a power point presentation, noting that the strategy of the Department in relation to National Land Transport were not substantially different from the 1996 White Paper on National Transport Policy. The Strategy attempted to meet the need for more uniform laws and procedures across the country, noting that functions should wherever possible be consolidated and interprovincial and tourist transport regulated nationally. The strategy also addressed the need for dedicated funds in each sphere, planning authorities to contract for services and issue operating licences, registration and the fact that freight should not be included, but be dealt with separately. The current concerns around the current legislation were set out, and it was noted that fragmentation of functions was a problem. Planning, service delivery, regulation and market entry and monitoring should ideally be placed at the municipal sphere. Considerations around metros were set out and funding for subsidized service contracts should be transferred directly to metropolitan municipalities. The recommendations in respect of funding were set out, namely that transport authorities and certain municipalities should be able to raise user charges, that funds be established across all three sphere and that public transport and its promotion and subsidization must be increased substantially. The inefficiencies of the existing public transport system were outlined. Various recommendations were made to counteract these.

The presentation went on to address the regulation system art present, noting that it was not functioning properly and required to be streamlined, with national uniform systems and standards. A national regulatory entity should be established. Detailed recommendations in respect of regulation were also made (see attached presentation). Registration was dealt with in a similar fashion.

In respect of rail, it was noted that changes in the rail sector now required a new regulatory regime. A new Rail Act was proposed to deal with the proposed Rail Economic Regulator and infrastructure issues. Freight should be dealt with by disallowing freight in some areas, establishing principles for moving freight, and including route networks for certain loads.

It was finally recommended that the National Transport Appeal Tribunal should be retained for all appeals and that provincial appeal bodies should no longer apply.

The Chairperson stated that as the Committee finalised the National Land Transport Bill, they needed to evaluate whether the amendments took into account the issues that were raised. He added that there may be more issues in light of what stakeholders would add. The Chairperson noted that this was a reference point for the Committee and suggested that it be regarded as such.

National Land Transport Bill (the Bill): Public submissions

The Chairperson noted that there would be a challenge in having the Bill completed by 15 August, to allow the NCOP to process it before parliament ended.

For the sake of clarity he added that all present should note the copy of the bill being used currently was B51-2008 and that this was the base document. The Chairperson stated that the Committee had received quite a few submissions, and not all would be able to make presentations. The Committee Members should study all submissions and group the issues. 

South African Bus Operators Association (SABOA) Submission
Prof J Walters, Strategic Adviser to SABOA Strategic Advisor from University of Johannesburg,  submitted a document outlining the legal issues, and another document providing comment on the bill (SABOA 1). He stated that SABOA embraced the strategy and felt that it was moving the industry in the right direction. He stated that transformation began in 1996 with the DoT engaging in interim contracts with operators, the purpose being to aid in transformation to the tender system. He stated that a transitional right of a 5% leeway figure was built into the contracts of incumbent operators for when the tender system came into effect; and this figure was later changed to 10%.  Prof Walters noted that in terms of clauses 50 and 55 of the Bill this transitional right was being written out. This was a cause for concern as it would jeopardise the ability of any operator to get funding. Furthermore the removal of this agreement would affect job security and raise issues with labour. He added that the DoT was breaking a position of trust that it held with the industry.

Adv P Levenberg, Legal Advisor, SABOA, stated that the purpose of the submission of around the legality of these changes was in order to prevent legal action and solve the issues before they became problems. The central issue hinged round the right of first refusal. If the incumbent operator was not the most suitable tender, then it was allowed to come in at the lower price and match. This right was then set at a variability allowance of 5 % to the most suitable bid, (later it was changed to 10 %). He added that labour supported this right and that they would have similar grievances if it was revoked. Adv Levenberg stated that government had agreed to this right in exchange for operators giving up their “lifetime” contracts. Adv Levenberg then submitted another document outlining the legal disputes.

Prof Walters then tabled the document outlining the comment on specific amendments to the Bill.

The Chairperson stated that the document outlining the legal challenges indicated that if the Bill were to proceed in its current form, then there would be a challenge to it on constitutional grounds. He thanked SABOA for trying to prevent this. He added that the legal detail was not so much of interest, but rather asked for positive inputs and concrete proposals on exactly what should be amended. He stated that SABOA’s position was valid and took note of it. The forthcoming challenge would be on how to fix these issues.

Mr B Mashile (ANC) stated that there had now been plenty of time for transformation and that the masses needed change. He felt it was unfortunate that these documents were trying to retain the status quo.

Adv Levenberg stated that the point of the submission was to give the committee an indication of the problems. It did not need absolute priority; he stated that change would happen, but it was preferable that this take place through negotiation. He asked the Committee to take into account role-players’ vested rights. Adv Levenberg suggested that the Committee should perhaps devise criteria that balanced transformation with existing skills and expertise.

The Chairperson acknowledged this point. He noted that in regard to vested right, taxi operating licences also fell under this issue, not just contracts. He added that one way to deal with this would be to make an alternative offer to the operator, and if the operator was not satisfied then the DoT could forge ahead. This was the problem area. The Chairperson voiced his favour for the deadlock breaking mechanism of negotiation.

Mr Mashile questioned how it was expected that new operators could break into the industry if incumbents had a right of first refusal.

Mr Patel stated that the DoT would need to look into the issue in order to provide input. He stated that he had no problem with the suggested deadlock-breaking mechanism.

Adv Levenberg stated that the SABOA  were not holding the government to ransom as government had signed contracts stipulating these rights with the operators.

Mr Pillay asked that if there was a bus contract between two points and then a decision was taken to implement a rail service, would there be a need to put out a bus tender.

The Chairperson asked if there was an insurmountable problem in recognising the right of first refusal.

Mr Pillay added that the aim was to change the mechanism to allow for transformation.

Prof Walters stated that Section 50 of the National Land Transport Transition Act (the NLTTA), dealing with  regulated contracts, made a provision to go back to tender. He advised that this could be used as a deadlock breaking mechanism.

The Chairperson noted this comment.

Further submissions by SABOA

Professor Walters then also referred to the proposed section 56 (1) and commented that the permit lapsing after seven years was unacceptable because the Integrated Transport Plan (ITP) might not be in place and operators might have commercial contracts (not part of ITP) and it would be unconstitutional to deny them that income.

Mr S Shalang, Deputy Director: Integrated Transport Planning, DoT, responded that this applied only to operators who failed to convert. They would lose their right to an indefinite permit. It would become a 7 year operating license.

Prof Walters then reviewed Section 25.

Mr Shalang noted that the permits did not align with the contracts of the DoT bus operators who had expanded permits. Any routes included would have to be removed to make the permit specific to the contract.

Prof Walters referred to Clause 66(1) dealing with non-contracting services. The comment from SABOA was that the clause was not acceptable and not legally sound for reasons listed in the submission.

Mr Shalang responded that this only applied to interprovincial transport

A Committee member interjected to ask if the operating license was transferable

Mr Shalang responded that the license could be transferred to another person but must be approved by the entity.

In relation to Clause 66 (1) (e), Prof Walters made a request  that the specific transgressions in the public transport service be clearly spelled out. He noted that the wording of clause 66(10)(f), was very wide as to what was good for the public

Mr Shalang  responded that this wording had not caused problems in the past. He said that in the case of a scheduled bus service, the Department had wanted to be sure that the operator could have a sustainable operation. This gives the entity the right to enquire into that.

Prof Walters then noted that Clause 76(3) was queried as  SABOA felt that the entity granting the operating license should not have such wide  discretion, particularly with regard to metered taxis.

Mr Shalang responded that it was easy to evade that system. The Department had given the discretion to the entity so as to disallow people from abusing the system by not having meters in these taxis.

The Chairperson commented on South Africa's underdeveloped metered taxi system. He said this was a transportation impediment in situations where a metered taxi was the appropriate mode of transport.

Prof Walters asked for clarity on Clause 90 (7).

Mr Shalang responded that this must be read with Clause 91 and that the idea was that all tour operators would have to apply, whether they had permits or not, and this was what the Department understood the industry wanted.

The Chair favoured this tendency and said it was making it open to all for operation.

A Committee Member asked if operating licenses were being used instead of permits.

Mr Shalang replied that this only applied to tourist operators.

A Committee Member queried the role of provinces in this process.

The Chairperson made it clear that this was an independent Bill, not an Amendment Bill.

Mr Shalang responded that part of the process may require a recommendation by the provincial power

Prof Walters queried the provisions of Clauses 91 (3) and 92 (3).

Mr Shalang replied that the reason for the provision was to accommodate a future tourist operator accreditor.

The Chairperson and Committee agreed that the comment on Clause 92 (3), concerning the cancellation  of accreditation, should be added to the legislation.

South African Tourism Services Association (
SATSA)  Submissions
The “Preference to Tourism Industry” comment was presented by Mr Michael Tatalias, CEO,SATSA. He noted that the process leading to the comments was very inclusive and included input from several departments, the SATSA, the Bus Operators Association, and others, including representation also from small and medium enterprises and the provincial authorities. The outcome was the final SATSA report.

The most notable part of the Bill was the creation of the National Public Transport Regulator (NPTR) to regulate all transport services within the Republic. He said that tourism was a national competency. The NPTR was envisaged to perform his function through an accreditation process for tour operators. He referred to the dual disadvantage the industry currently faced in having to make a submission whenever there were various versions of the Bill and to comment on the structural legislative skeleton without sight of the accompanying regulations. Interactions with the DoT had revealed that the bulk of the issues should be dealt with in regulations and not in the Act. SATSA's provisional concern was that the regulations would be extensive and as such would concur with the Bill, working on the assumption that the writers of the Bill would have read and accepted the principles of the Report.

SATSA was encouraged by the general agreement to change the licensing process from one of licensing inanimate vehicles, to one of licensing responsible operators. This would allow the operator to become a known entity.

Mr Tatalias then outlined the vision for the process, beginning with the accreditation of tourism operators. Accreditation procedures covered technical and operational procedures. The technical accreditation could be regarded as set out in the document. The operational accreditation referred to the possibility of a Tourism Grading Council. This was not set in stone and therefore should be regarded as provisional as it might have relevance in future.

The issue of the Tourism Charter was raised, with the CEO noting that some tourism vehicles were also used for operations and were not covered by limiting definitions of tourism transport services.

Mr K Pillay,  DoT, commented that there were some useful pointers arising from the SATSA report.

The Chairperson pointed out that the question of whether the accreditation applied to vehicles or operators was the main point here. He wondered if the two matters were not being muddled up in the legislation and said that there would probably be detail examined when the contracts were drawn up.

Mr Tatalias was concerned that too narrow a definition would lead to problems in future.

Mr Tatalias then proceeded with the presentation and the detailed comments on the Bill.

He referred to the written comment on clause 8 (1), referring to the Regulations by the Minister, noting that this should be read with the comment on clause 20(1), which referred to the use of the term stakeholder.

The Chairperson responded that the use of the term would stand. Stakeholders, as used in this Bill, needed to be defined in this context. It was not possible to list every body that the legislation concerned.

Mr Tatalias said that with reference to clause 24, SATSA wondered if tourism transport experience was lacking as a component in the specialised knowledge requirement for appointment to the NPTR.

The Chairperson queried the number of members of the NPTR, being only five.

Mr Pillay responded those five would be the directors of the NPTR and that the intention was to appoint supportive administrative staff.

The Chair requested a more detailed description of the new entity with regard to the composition, staff and functions. He said that there would ultimately have to be a body that conducted inspections and submitted reports and on basis of those reports,  the decision to accredit or not would be made by a panel.

The Chairperson said that there was a need to integrate planning at municipal level, thereby centralising this, and creating a dispensation recognising the importance of Tourism to South Africa.

Mr Shalang noted that he thought the Bill needed more debate, as they were getting further from the core issue of tourism as the transport needs of the same group changed.

Mr David Munton, National Transport Advisor: SATSA, said an important consideration was that the tour operators were the only ones with luxury 24 seater vehicles to accommodate these changes, especially when it came to business groups. He tendered the idea of an inter-provincial transport permit.

The Chairperson asked the Department to continue this debate to improve the Bill. He did not want to undermine the transport authority's planning capacity.

Mr Tatalias referred to Clause 62(1) of the Bill as a way of hampering the creation of a level playing field as many small operators would be put in competition with hotel courtesy services.

Mr Munton suggested that hotels simply should do the technical accreditation, for the safety and insurance of the tourist, as they were not doing tours.

Several parts of Clause 90 presented concerns to SATSA. From the wording it appeared that technical and operational procedures were unequal in importance. The focus seemed to be primarily on technical procedures. SATSA wanted to ensure that the Act would not allow for misinterpretation, and that operational procedure was not in any way inferior.

The Chairperson clarified the differences between operational and technical procedure. The former referred to the capacity to conduct tours and the latter referred to transport capacity.

Mr Shalang responded that three things had equal status: namely operational and technical procedures and access to acceptable vehicles and services.

The use of the phrase “national or provincial” in Clause 91(3) was a move in a worrying direction, according to SATSA. They felt that “national: alone would be most appropriate in the legislation.

In Clause 90 (7) SATSA queried why the time allotted was five years instead of seven years.

The Chairperson replied that the Portfolio Committee would look into the possibility of seven years.

The comment on Clause 92(3)  was that upon cancellation the operator should do more than simply be removed from the registers. The operator should be required to return the certificate of accreditation, vehicle tokens and any other relevant documentation.

The Portfolio Committee agreed with SATSA's position.

The comment on Clause 93 was set out in writing in their document.

Mr Shalang commented that the operating license for a vehicle was supposed to preclude other operators from the use of that vehicle.

Mr Mashile asked for clarity on the stringent criteria for vehicles. He also asked how small operators would be able to afford the tokens mentioned.

Mr Tatalias responded that it would be an electronic tag or barcoded.  They did not yet know what the token would look like but the idea was that it be an identifying marker.

The Chairperson noted that the Portfolio Committee recognised that tourism was being mishandled. The key would be the new entity. It would be a costly process that would be burdensome, but the real challenge would lie on the inspectorate side.

Mr Pillay said that according to the usual process, it would not be a burden for the operators and would be borne by the State. He added that it was necessary to guard against the institution having too much power.

Mr M Moss (ANC) felt that the tokens question had not been answered. He said that tourism was dominated by the previously advantaged and that the Committee should not pass legislation that would make transformation difficult.

The Chairperson agreed that the key priorities were to ensure that transport was both safe and available. Who supplied it would be of secondary importance. Regulations could favour the empowered and there was a danger of not creating a transformational dynamic. This was a complex set of challenges and would require a weighing up of rights and interests.

Mr Pillay responded that the purpose of the clause was public liability cover. As to the measure of reasonableness of this cover , industry players themselves could comment on that.

Mr Moss wondered whether tourists would be precluded from accessing the Road Accident Fund (RAF).

The Chairperson responded that tourists would not be excluded but would not be receiving beneficial treatment.

The meeting was adjourned.


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