ATC210525: Report of the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure On Budget Vote 40: Transport, and on the Strategic Plans and Annual Performance Plans 2021-22 of the Department of Transport and Entities Reporting to the Minister of Transport, Dated 25 May 2021

NCOP Transport, Public Service and Administration, Public Works and Infrastructure

REPORT OF THE SELECT COMMITTEE ON TRANSPORT, PUBLIC SERVICE AND ADMINISTRATION, PUBLIC WORKS AND INFRASTRUCTURE ON BUDGET VOTE 40: TRANSPORT, AND ON THE STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS 2021-22 OF THE DEPARTMENT OF TRANSPORT AND ENTITIES REPORTING TO THE MINISTER OF TRANSPORT, DATED 25 MAY 2021

The Select Committee of Transport, Public Service and Administration, Public Works and Infrastructure, having considered Budget Vote 40: Transport, andthe Strategic Plans and Annual Performance Plans of the Department of Transport and the entities reporting to the Minister of Transport, reports as follows:

1.         INTRODUCTION

The Select Committee of Transport, Public Service and Administration, Public Works and Infrastructure (the Select Committee) considered the 2021/22 budget of the Department of Transport (the Department) on 19 May 2021. This report contains a summary of the Department’s budget allocation and the observations and recommendations of the Select Committee on the budget.

The report details an overview of the performance of the Department during 2020/21, policy priorities for 2021/22 and and how they are aligned with national, regional, continental and global developmental agendas. It also analyses the 2021/22 budgets of the Department and its entities. The report further covers the tabled 2021/22 Strategic/Corporate Plans and APPs of the entities. It concludes by capturing the observations and recommendations made by the Select Committee of Transport, Public Service and Administration, Public Works and Infrastructurein this regard.

The report on the budget of the Department is based on information accessed through:

  • The 2021 State of the Nation Address (SONA);
  • The Department of Transport’s APP for 2020/21 and 2021/22 and its Budget Allocation outlined in the Budget Review for 2021/22; and
  • The National Development Plan (NDP).

2.         mandate of the department of transport

The Constitution of the Republic of South Africa, 1996, identifies the legislative responsibilities of different spheresof Government pertaining to airports, roads, traffic management and public transport. At a policy level, the National White Paper on Transport, 1996, defines the infrastructure and operations of rail, pipelines, roads, airports, ports and the intermodal operations of public transport and freight. To this effect, the function of transport, in its entire value chain, is legislated and executed at the three spheresof Government (national, provincial and local (municipal)).

To ensure integrated planning and coordination between the three spheres of Government, the South African Inter-Governmental Relations Framework Act (No. 13 of 2005) emphasises that the three spheres are distinctive, interdependent and interrelated. The three spheresare thus autonomous. Notwithstanding their autonomy, the three spheres must plan together for the utilisation of scarce resources, as well as to ensure the achievement of Government priorities.

 

At a national level, the Department is responsible for the formulation of legislation and policies for all transport sub-sectors. The Department is therefore entrusted with:[1]

  • Conducting sector research;
  • Formulating legislation and policies to set the strategic direction of sub-sectors;
  • Assigning responsibilities to public entities and other spheres of Government;
  • Regulating through setting norms and standards; and
  • Monitoring implementation.

The implementation of transport functions takes place through public entities that have been established to enhance implementation and support service delivery. Each entity has a specific delivery mandate, as specified in its founding legislation. The Department is tasked with exercising oversight on the regulation and delivery of transport through these entities.

The other leg of the implementation of transport functions lies with provinces. In this regard, the Department has concurrent functions of public transport and transport regulation with provinces. Public transport is a concurrent schedule 4A function between national and provincial spheres, and provincial roads and traffic are an exclusive schedule 5A provincial function. To ensure that there is uniformity in planning and reporting towards the achievement of Government and/or sector priorities, the Department needs to coordinate the development and implementation of standardised/customised indicators. These indicators, developed in consultation with all relevant stakeholders, must reflect key applicable deliverables of the sector plan and/or the Medium Term Strategic Framework (MTSF).

Once developed, accounting officers of relevant provincial departments that are responsible for the implementation of these indicators, approve  and include them  in their respective Strategic Plans (SPs) and APPs. Provinces would then gazette and report on standardised indicators on a quarterly and annual basis, with the National Department playing an oversight role over provinces. This is intended to ensure that standardised indicators respond to the legislative and policy direction of the sector.

At a local (municipal) level, coordination and integration takes place through the development of integrated transport plans, which are facilitated through municipalities’ integrated development planning (IDP) processes. Municipal transport is a concurrent schedule 4B function falling in the local government sphere. Municipal roads, traffic and parking are exclusive 5B municipal functions.

2.1organisational structure of the department

In an endeavour to discharge its mandate effectively and efficiently, the Department is structured as follows:[2]

  • Programme 1: Administration;
  • Programme 2: Integrated Transport Planning;
  • Programme 3: Rail Transport;
  • Programme 4: Road Transport;
  • Programme 5: Civil Aviation Transport;
  • Programme 6: Maritime Transport; and
  • Programme 7: Public Transport.

The Department’s organisational structure was approved in September 2011, and  implemented, since November 2011.[3] The structure comprises four transport modes (rail, road, civil aviation and maritime transport), as well as public transport and integrated transport planning. Support functions, particularly in the Office of the Director-General, Office of the Chief Operations Officer and the Office of the Chief Financial Officer fall under the Administration programme.

2.2strategic outcomes oriented goals of the department

The Department has identified the following eight (8) areas that it will prioritise in 2021/22, in response to the MTSF (2019 – 2024):[4]

  1. Safety as an enabler of service delivery;
  2. Public transport that enables social emancipation and an economy that works;
  3. Infrastructure build that stimulates economic growth and job creation;
  4. Building a maritime nation, elevating the oceans economy;
  5. Accelerating transformation towards greater economic participation;
  6. Innovation that advances efficiencies and supports a continuous improvement model;
  7. Environmental protection – Recovering and maintaining a healthy natural environment; and
  8. Governance – Greater efficiency, effectiveness and accountability.

The Department contributes to the realisation of the vision of improved social and economic development articulated in the NDP. Transport infrastructure and services support economic growth and development by connecting people and goods to markets. The development and maintenance of an efficient and competitive transport system is a key objective of the NDP. To this effect, the Department, in partnership with the sector public entities, provincial and local government, will continue to focus on improving mobility and access to social and economic activities.[5]

In addition, the Department gives impetus to priority 1 (economic transformation and job creation) and priority 4 (spatial integration, human settlements and local government) of Government’s 2019-2024 MTSF. Over the medium-term, the Department plans to give effect to these guiding policies by focusing on:[6]

  • Building and maintaining national and provincial road networks;
  • Providing passenger rail infrastructure and services; and
  • Facilitating the provision of integrated public transport networks.

2.3PROGRAMMES

 

2.3.1 Programme 1: Administration

The Administration programme provides leadership, strategic management and administrative support to the Department. It achieves this through continuous refinement of organisational strategy and structure, in line with appropriate legislation and best practice. 

 

2.3.2     Programme 2: Integrated Transport Planning

The Integrated Transport Planning programme seeks to integrate and harmonise key transport sector strategic interventions through continuous development and refining of macro-transport sector policies, strategies and legislation; coordination of development of sector related policies, coordination of sector research activities; coordination of regional and inter-sphere relations; facilitation of sector transformation; and provision of sector economic modelling and analysis.

 

2.3.3     Programme 3: Rail Transport

The Rail Transport programme facilitates and coordinates the development of sustainable rail transport policies, rail economic and safety regulation, infrastructure development strategies; and systems that reduce system costs and improve customer service.

 

2.3.4     Programme 4: Road Transport

The Road Transport programme develops and manages an integrated road infrastructure network.

 

2.3.5     Programme 5: Civil Aviation Transport

The Civil Aviation Transport programme facilitates the development of an economically viable air transport industry that is safe, secure, efficient, environmentally friendly and compliant with international standards through regulations and investigations. It also oversees aviation public entities.

 

2.3.6     Programme 6: Maritime Transport

The Maritime Transport programme implements the Comprehensive Maritime Transport Policy (CMTP) to ensure promotion and coordination; as well as infrastructure and industry development and achieve compliance through monitoring, evaluation and oversight and collaboration with  maritime related public entities

 

2.3.7     Programme 7: Public Transport

The Public Transport programme ensures the provision and regulation of safe, secure, reliable, cost-effective and sustainable public transport services in South Africa through legislation, policies and strategies.

 

 

 

3. OVERVIEW OF THE 2020/21 FINANCIAL YEAR[7]

3.1 First Quarter Expenditure of 2020/21

Table 1: 2020/21 First Quarter Expenditure

Programme

R’ Million

Main Appropriation

1st Quarter Actual Expenditure

Expenditure as % of Main Appropriation

1st Quarter Projected Expenditure

Variance from Projected Expenditure

% Variance from Projected Expenditure

COVID-19 Spending

Administration

491.8

60.5

12.3%

107.8

47.4

43.9%

0.4

Integrated Transport Planning

104.5

13

12.5%

21.4

8.4

39.2%

0.0

Rail Transport

13 195.2

2 901.9

22%

2 907.7

5.8

0.2%

0.0

Road Transport

33 816.7

8 640.6

25.6%

8 658.4

17.8

0.2%

0.0

Civil Aviation Transport

240.7

22.4

9.3%

56.2

33.8

60.1%

0.0

Maritime Transport

149.4

6.5

4.3%

34.1

27.6

81%

0.0

Public Transport

14 038

1 236.7

8.8%

1 358.8

122.1

9%

24.5

Awaiting Classification[8]

 

14.7

 

 

 

 

 

TOTAL

62 036.3

12 896.4

20.8%

13 144.5

248.1

1.9%

24.9

Source: National Treasury (2020a))

In 2020/21, the main allocation of the Department – prior to the delivery of the Supplementary Budget by the Minister of Finance, on 24 June 2020 – stood at R62 billion.  Of this amount, the Department spent R12.9 billion (or 20.8%) against the 2020/21 First Quarter projection of R13.1 billion.  The Department spent R248.1 million (or 1.9%) lower than projected for this period. The lower than projected spending was mainly on transfers and subsidies in the Public Transport, Civil Aviation Transport and Maritime Transport programmes, as well as on goods and services across all programmes.

As at the end of the First Quarter of 2020/21, the Department had spent R115.7 million against the First Quarter projection of R132.2 million on the compensation of employees. The R16.6 million (or 12.5%) lower than projected spending was mainly due to the slow filling of vacant posts. By the end of the First Quarter of 2020/21, the Department had 693 filled posts against a funded establishment of 855 posts.  This translated into a vacancy rate of 18.9% (or 162 vacant posts).

3.2 Second Quarter Expenditure of 2020/21

Table 2:2020/21 Second Quarter Expenditure

Programme

R’ Million

Main Appropriation

Special Adjusted Budget

Available Budget

2nd Quarter Actual Expenditure

Expenditure as % of Available Budget

2nd Quarter Projected Expenditure

Variance from Projected Expenditure

% Variance from Projected Expenditure

COVID-19 Spending

Administration

491.8

482.2

469.8

173.9

37%

231.7

57.8

24.9%

1.2

Integrated Transport Planning

104.5

93.8

90.1

28.6

31.7%

48.8

20.2

41.4%

0.0

Rail Transport

13 195.2

12 183.3

9 599.4

5 495.0

57.2%

5 504.9

10.0

0.2%

0.0

Road Transport

33 816.7

31 266.2

31 471.1

17 218.7

54.7%

17 259.4

40.7

0.2%

0.0

Civil Aviation Transport

240.7

196.7

2 673.7

74.4

2.8%

157.2

82.8

52.7%

0.0

Maritime Transport

149.4

143.4

141.8

65.3

46.1%

66.7

1.4

2.1%

0.0

Public Transport

14 038.0

13 030.4

12 908.9

4 545.8

35.2%

4 897.0

351.2

7.2%

29.7

TOTAL

62 036.3

57 395.8

57 354.7

27 601.6

48.1%

28 165.8

564.1

2%

30.9

(Source: National Treasury, (2020b))

 

In theSpecial Adjusted Budget there was a reduction in the allocation to the Department to R57.4 billion. As at the end of 30 September 2020, the Department had spent R27.6 billion against a Second Quarter projection of R28.2 billion. The Department spent R564.1 million (or 2%) lower than projected.[9] The lower than projected spending was mainly on goods and services in the Administration, Civil Aviation, as well as Public Transport programmes. Moreover, the Department spent lower than projected on transfers and subsidies in the Public Transport programme.

The Department spent R229.3 million against the Second Quarter projection of R276.3 million for compensation of employees. It spent R47.1 million (or 17%) lower than projected largely due to the slow filling of vacant posts. By the end of the Second Quarter of 2020/21, the Department had 689 filled posts against a funded establishment of 855 posts.[10] This represented a vacancy rate of 19.4% (or 166 vacant posts).

 

3.3 Third Quarter Expenditure of 2020/21

Table 3: 2020/21 Third Quarter Expenditure

Programme

R’Million

Main Appropriation

Adjusted Budget

Available Budget

3rd Quarter Actual Expenditure

Expenditure as % of Available Budget

3rd Quarter Projected Expenditure

Variance from Projected Expenditure

% Variance from Projected Expenditure

COVID-19 Spending

Administration

491.8

469.8

469.8

248.6

52.9%

341.7

93.2

27.3%

2.2

Integrated Transport Planning

104.5

90.1

90.1

44.1

49%

72.4

28.3

39.1%

0.0

Rail Transport

13 195.2

9 599.4

9 599.4

6 959.0

72.5%

8 359.6

1 400.7

16.8%

0.0

Road Transport

33 816.7

31 471.1

31 471.1

27 436.8

87.2%

27 485.4

48.6

0.2%

0.0

Civil Aviation Transport

240.7

2 673.7

2 673.7

120.1

4.5%

160.1

39.9

24.9%

0.0

Maritime Transport

149.4

141.8

141.8

102.6

72.4%

118.7

16.2

13.6%

0.0

Public Transport

14 038.0

12 908.9

12 908.9

7 488.5

58%

7 874.3

385.9

4.9%

29.7

TOTAL

62 036.3

57 354.7

57 354.7

42 399.7

73.9%

44 412.4

2 012.7

4.5%

31.9

(Source: National Treasury, (2020c)

 

The Department spent R42.4 billion against a 2020/21 Third Quarter projection of R44.4 billion, i.e., R2 billion (or 4.5%) lower than projected for this period. The lower than projected spending was mainly in transfers and subsidies in the Rail Transport, Civil Aviation and Public Transport programmes. In addition, there was lower than projected spending in goods and services in the Administration, Integrated Transport Planning, Civil Aviation Transport, as well as Public Transport programmes.[11]

The Department spent R353.7 million against the Third Quarter projection of R423.4 million for compensation of employees. Expenditure was R69.7 million (or 16.5%) lower than projected mainly due to the slow filling of vacant posts.[12] The Department had 693 filled posts against a funded establishment of 855 posts by the end of the Third Quarter of 2020/21. This represented a vacancy rate of 18.9% (or 162 vacant posts).

4.         2021/22 POLICY PRIORITIES AND BUDGET OF THE DEPARTMENT

4.1        POLICY PRIORITIES FOR 2021/22 AND ALIGNMENT WITH NATIONAL, REGIONAL, CONTINENTAL AND GLOBAL DEVELOPMENT AGENDAS

4.1.1 National Development Plan (NDP) and the Medium-Term Strategic Framework (MTSF)

The Department has identified the following eight areas that it will prioritise over the next five years, in response to the MTSF (2019 – 2024):

•           Safety as an enabler of service delivery;

•           Public transport that enables social emancipation and an economy that works;

•           Infrastructure build that stimulates economic growth and job creation;

•           Building a maritime nation, elevating the oceans economy;

•           Accelerating transformation towards greater economic participation;

•           Innovation that advances efficiencies and supports a continuous improvement model;

•           Environmental protection –Recovering and maintaining a healthy natural environment; and

•           Governance – Greater efficiency, effectiveness and accountability.

The Department contributes to the realisation of the vision of improved social and economic development articulated in the NDP. Transport infrastructure and services support economic growth and development by connecting people and goods to markets. The development and maintenance of an efficient and competitive transport system is a key objective of the NDP. To this effect, the Department, in partnership with the sector public entities, provincial and local government, will continue to focus on improving mobility and access to social and economic activities. 

In addition, the Department gives impetus to priority 1 (economic transformation and job creation) and priority 4 (spatial integration, human settlements and local government) of Government’s 2019-2024 MTSF. Over the medium-term, the Department plans to give effect to these guiding policies by focusing on:

•           Building and maintaining national and provincial road networks;

•           Providing passenger rail infrastructure and services; and

•           Facilitating the provision of integrated public transport networks.

 

Delivering his 2021 State of the Nation Address (SONA), the President accentuated three areas that the Department will be zeroing in on in 2021/22 as he committed Government to:

•           Constructing and rehabilitating the N1, N2 and N3 highways;

•           Supporting a massive increase in local production; and

•           Using Operation Vulindlela to bring about reforms in the transport sector.

Roads have been depicted as the “arteries through which the economy pulses”.  By linking producers to markets, workers to jobs, pupils to schools, and the sick to hospitals, roads are vital to any development agenda. It is against this backdrop that Government will embark on the construction and rehabilitation of the N1, N2 and N3 highways. Government intends to use these projects to kick-start the economy. Indeed, the President asserted that “these infrastructure projects will lead to the revival of the construction industry and the creation of the much-needed jobs”. 

In addition, the train sets that are manufactured at Dunnottar, Ekurhuleni, in Gauteng, are intended to contribute to “increase in local production”. The factory is assisting to address the crucial challenge facing South Africa today, that is, unemployment, especially among the youth. It is estimated that the rolling stock fleet renewal programme will create over 8 000 direct jobs throughout the Gibela Consortium’s supply chain, with the factory targeting the creation of 1 500 jobs.  Nearly all the jobs in the factory will be occupied by South Africans with the aim to employ 85% historically disadvantaged persons, and at least 25% women. The expectation is that, with time, the factory will increase the proportion of women within its workforce to at least 50%.

A set of structural reforms has been identified in the Economic Reconstruction and Recovery Plan (ERRP) adopted by labour, business, Government and the National Economic Development and Labour Council (NEDLAC).  Through Operation Vulindlela, a joint operation between the Presidency and the National Treasury, Government is facilitating the implementation of structural reforms, which are at the core of the ERRP.

Pertaining to the freight transport sector, the desired outcome of the reforms is competitive and efficient freight transport. The key structural reforms include improving the efficiency and competitiveness of the ports, establishing a transport economic regulator, implementing a third-party access policy on freight rail lines and concessioning rail branch-lines, where feasible.

 

Table 29: Alignment to MTSF

MTSF Pillars

APEX Priorities

DOT Strategic Focus Areas

  1. Achieving a More Capable State

Priority 1: A Capable, Ethical and Developmental State

Improved Efficiency and Effectiveness of Support Services

 

Priority 7: A Better Africa and World

Building a Maritima Nation, Elevating the Oceans Economy

 

 

Environmental Protection – Recovering and Maintaining Healthy Natural Environment

  1. Driving a Strong and Inclusive Economy

Priority 2: Economic Transformation and Job Creation

Infrastructure Build that Stimulates Economic Growth and Job Creation

 

 

Building a Maritime Nation, Elevating the Oceans Economy

 

 

Accelerating Transformation Towards Greater Economic Participation

  1. Building and Strengthening Capabilities of South Africans

Priority 3: Education, Skills and Health

Improved Efficiency and Effectiveness of Support Services

 

Priority 5: Spatial Integration, Human Settlements and Local Government

Public Transport that Enables Social Emancipation and an Economy that Works

 

Priority 6: Social Cohesion and Community Safety

Safety (and Security) as an Enabler of Service Delivery

(Source: Department of Transport Revised Strategic Plan 2021/22 version, p. 26)

 

4.1.2Agenda 2063

The African Union (AU) envisions that by 2063 the necessary infrastructure will be in place to support Africa’s accelerated integration and growth, technological transformation, trade and development. This will include high-speed rail networks, roads, shipping lines, sea and air transport, as well as Information and Communications Technology (ICT) and digital economy. A Pan-African high-speed rail network will connect all the major cities of the continent with adjacent ways and pipelines for gas, oil, water, ICT broadband cables and other infrastructure. This will serve as a catalyst for manufacturing skills development, integration and intra-African trade, investment and tourism. The Department has committed itself to contributing to the aspirations of “an integrated continent, politically united and based on the ideals of Pan Africanism and the vision of Africa’s Renaissance”.

Investment in infrastructure is vital in addressing the challenges encountered in infrastructure maintenance and expansion that are crucial for the stabilisation of the country’s economy and creation of new opportunities for growth, equity and employment. The current socio-economic challenges cannot be resolved utilising only the scope and resources of Government or any single role player. Enduring economic partnerships between Government and the private sector are needed to develop trusting relationships for integrated operations, investments and management of transportation infrastructure.

A perusal of the Department’s budget allocation for 2021/22 lends credence to its commitment to national, regional, continental and global imperatives. This is evidenced by massive investments in Road, Rail and Public Transport programmes respectively.

It is a truism that an efficient transport infrastructure provides social and economic benefits to both advanced and emerging economies by improving market accessibility. In addition, it ensures balanced regional, continental and global economic development. Finally, an efficient transport infrastructure creates employment, promotes labour mobility, and connects communities.

4.1.3 Institutional Policies and Strategies over the five-year planning period

a) National White Paper on Transport Policy, 1996

The vision of the White Paper on National Transport policy is to provide safe, reliable, effective, efficient, and fully integrated transport operations and infrastructure which will best meet the needs of freight and passenger customers at improving levels of service and cost in a fashion which supports government strategies for economic and social development whilst being economically and environmentally sustainable.

b) White Paper on National Policy on Airports and Airspace Management, 1997

This is a national policy response on airports and airspace management as a result of far- reaching changes which have occurred in South Africa in general and in civil aviation in particular. This policy is currently under review to address recent developments and resultant policy gaps.

c) National Commercial Ports Policy, 2002

This aim of this policy is to ensure an internationally competitive port system informed by the knowledge that efficient ports are known to be catalysts for increased trade, and thus provide a comparative advantage for international trade. Thus, this policy aims to ensure affordable, internationally competitive, efficient and safe port services based on the application of commercial rules in a transparent and competitive environment applied consistently across the transport system.

The importance of this policy is further highlighted by the fact that globalisation pressures make it essential that nations integrate their transport systems into the global logistics network. Ports are naturally being incorporated into this changing system and have to adjust to the new challenges and environment.

 

d) Taxi Recapitalisation Policy, 2009

The Taxi Recapitalisation Policy (TRP) is an intervention by Government to bring about safe, effective, reliable, affordable and accessible taxi operations by introducing New Taxi Vehicles (NTVs) designed to undertake public transport functions in the taxi industry.

A revised fiscal framework also accounts for substantial revenue losses emanating from the economic shock of COVID-19 pandemic and the subsequent lockdown. The lockdown significantly delayed planned programmes, projects and expenditure in the sector. As a result, the Department, Provinces and Municipalities, in their revised budget applications, would have to show delayed milestones and targets, the impact on their operational revenue and how they intend to mitigate the risk towards desired recovery and achievement of medium to long term outcomes.

The revision exercise thus focused, amongst others, on downscaling and/or reducing performance targets, particularly where programmes were impacted by budget cuts; and also, on prioritising interventions critical in mitigating the impact of the COVID-19 pandemic, thus saving lives of our people, where necessary. In revising performance targets, the NDP, the seven (7) apex priorities of the 6thAdministration and the MTSF 2019 – 2024 remained the authoritative documents from which the exercise took guidance. For the remainder of the current MTEF, baseline allocations would be used to provide for the rapidly changing economic conditions and enable spending on the COVID-19 response.

This proposed modification would then be in categories.

• Category 1 will see suspension of funds and reallocation, where applicable. In this regard and as stated, the baselines of allocations to sector Departments will be reduced.

• Category 2 will see reprioritisation of funds within the budget votes. To this effect, funds will be shifted across programmes and/or budget items and reprioritised to where there are needs.

As stated, COVID-19 had a negative impact on the plans and operations of the Department and sector entities, particularly for the 2020/21 financial year. The effects of the impact of the pandemic would then have to be mitigated for the medium term through revision of the Strategic Plan and medium-term targets.

 

4.2        OVERVIEW OF THE2021/22 BUGDET OF THE DEPARTMENT

 

The Department contributes to the realisation of the vision of improved social and economic development articulated in the NDP, and priority 1 (economic transformation and job creation) and priority 4 (spatial integration, human settlements and local government) of Government’s 2019-2024 MTSF. Over the medium term, the Department plans to give effect to policies that focus on maintaining national and provincial road networks, addressing passenger rail challenges, and facilitating the provision of integrated public transport networks.

Expenditure is expected to increase at an average annual rate of 8.1 per cent, from R57.3 billion in 2020/21 to R72.5 billion in 2022/24. Although the substantial share of the department’s expenditure is directed towards rail infrastructure, maintenance, operations and inventories, the balance of the budget is reserved for the South African National Roads Agency for the upgrading and maintenance of the national road network; and provinces and municipalities for the construction, operations and maintenance of transport infrastructure and services. Over the MTEF period, transfers account for an estimated 97per cent (R205.2 billion) of the department’s budget.

An amount of R2.55 billion for 2021/22, R1.97 billion for 2022/23 and R2.20 billion for 2023/24 has been reduced from the departmental vote. These amounts comprise budget baseline reductions mainly to be effected on capital transfers to the Passenger Rail Agency of South Africa, operational transfers to public entities, and public transport network grant to municipalities, compensation of employees as well as goods and services. To remain within government’s ceiling for compensation of employees, spending on this item decreases at an average annual rate of 0.3 per cent, from R536.8 million in 2020/21 to R531.5 million in 2023/24.

Spending on goods and services is expected to increase at an average annual rate of 2.3 percent from R849 million in 2020/21 to R909.7 million in 2023/24. This relatively low increase is due to Cabinet approved budget reduction of R180.4 million over the medium term.

The allocations to the Civil Aviation programme are expected to decrease at an average annual rate of 50.8 per cent, from R2.7 billion in 2020/21 to R319.2 million in 2023/23 due to the capitalisation of Airports Company South Africa which needed support due to travel restrictions as a result of the COVID-19 pandemic in the 2020/21 financial year.

With an allocation of R104.1 billion over the medium term, the department’s Road Transport programme facilitates activities related to the maintenance of South Africa’s national and provincial road network. The South African National Roads Agency Limited (SANRAL)plays a crucial role in programmes related to upgrading, maintaining and strengthening national toll and non-toll roads. Transfers to the agency account for 31 per cent (R64.9 billion) of the department’s budget over the medium term. The core focus for the department over the MTEF period with regard to roads is the R573 (Moloto Road) development corridor, which is allocated R2.7 billion Transfers to fund reduced tariffs for the Gauteng freeway improvement project amounting to R1.99 billion over the MTEF period, while R34.8 billion of the allocations to the agency are to maintain the national network of non-toll roads.

The maintenance of provincial roads is largely funded through the provincial roads’ maintenance grant, which receives R37.5 billion over the MTEF period. Funds from the grant are expected to be used for resealing 17 842 lane kilometres, rehabilitating 6 806 lane kilometres, and blacktop-patching 4.49 million square kilometres. Factors such as the condition of roads, weather patterns and traffic volumes determine grant allocations to provinces for the maintenance of provincial roads.

Transfers to PRASA in the Rail Transport programme account for an estimated 27.2 per cent (R56.98 billion) of the department’s budget over the medium term. However, the agency has struggled for many years to deliver on its modernisation programme, which is meant to improve the reliability of services and increase passenger ridership through focused spending on repairs and maintenance as part of the agency’s rolling stock fleet renewal programme, as well as improved security.

Delays in the rolling stock fleet renewal programme, along with poor spending on rail infrastructure and the effects of the COVID-19 pandemic, specifically lockdown restrictions, necessitated the reprioritisation of funds to support other transport sector entities. As such, the agency received no transfers from the department in 2020/21 for the signalling and rolling stock renewal programme. The reprioritisation included a R2.3 billion capitalisation of Airports Company South Africa and the R1.1 billion once-off gratuity to the taxi industry in 2020/21.

The recent appointment of a new board for the Passenger Rail Agency of South Africa is expected to lead to the intensified implementation of its modernisation programme. Over the MTEF period, capital transfers to the agency are expected to increase at an average annual rate 164.3 per cent, from R700.9 million in 2020/21 to R12.9 billion 2023/24. To offset revenue loss during the COVID-19 lockdown, operational transfers were temporarily increased in 2020/21, accommodated by reductions to capital budgets. However, as they normalise over the medium term, operational transfers to the agency are expected to decrease at an average annual rate of 5 per cent, from R8.8 billion in 2020/21 to R7.5 billion in 2023/24.

Efficient public transport networks are important to keep economic hubs functioning optimally. Accordingly, through the Public Transport programme, the department makes allocations to the public transport network grant. These allocations are expected to increase at an average annual rate of 15.7 per cent, from R4.4 billion in 2020/21 to R6.8 billion in 2023/24. The relatively high increase is due to one-off reductions in 2020/21 to fund priorities related the COVID-19 pandemic within the transport industry. The grant fund infrastructure and indirect costs of operating bus rapid transit services in Johannesburg, Tshwane, Cape Town, George, Nelson Mandela Bay and Ekurhuleni. In these cities, funding from the grant is expected to lead to a combined increase in the number of weekday passenger trips on bus rapid transit services from 154 799 in 2020/21 to 323 323 in 2023/24.

The section below analyses the budget allocation for the Department for the 2021/22 financial year.

 

Table 4: Overall Budget – Transport

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Administration

  469.8

  497.0

  27.2

  7.2

5.8%

1.5%

Integrated Transport Planning

  90.1

  92.2

  2.1

-  1.6

2.3%

-1.8%

Rail Transport

 9 599.4

 16 785.8

 7 186.4

 6 509.8

74.9%

67.8%

Road Transport

 31 471.1

 34 166.7

 2 695.6

 1 318.4

8.6%

4.2%

Civil Aviation Transport

 2 673.7

  503.9

- 2 169.8

- 2 190.1

-81.2%

-81.9%

Maritime Transport

  141.8

  157.5

  15.7

  9.4

11.1%

6.6%

Public Transport

 12 908.9

 14 488.6

 1 579.7

  995.7

12.2%

7.7%

TOTAL

 57 354.7

 66 691.8

 9 336.9

 6 648.8

16.3%

11.6%

(Source: National Treasury (2021))

For 2021/22, the Department receives R66.7 billion (excluding direct charges) – constituting 6.8% of the R980.6 billion national budget vote.  Nominally (without inflation), the Department’s budget increases by 16.3% from the previous financial year, and it increases by 11.6% when one takes cognisance of inflation (real terms). The exponential increase is in the Rail Transport programme, which grows significantly by 67.8% (above inflation), and increases nominally by 74.9% (without inflation). It is anticipated that the drastic increase in the Rail Transport programme is in line with the Department’s commitment to “addressing passenger rail challenges”, that it underscores as one of its policy priorities for 2021/22.

In terms of economic classification, transfers and subsidies comprise R65.3 billion (or 97.9%) of the departmental budget, and the bulk is allocated to the following bodies:

•           Provinces and municipalities (R25.7 billion);

•           Departmental agencies and accounts (R22.4 billion); and

•           Public corporations and private enterprises (R16.7 billion).

The overall allocation to compensation of employees decreases from R536.8 million previously to R531.4 million in 2021/22. This year, expenditure on consultants (business and advisory services) is set to increase from R382.8 million in 2020/21 to R430.5 million in 2021/22. The notable increase in the use of consultants (business and advisory services) is in the Maritime Transport programme that increases from R11 million in 2020/21 to R24.2 million in 2021/22, translating into an increase of 54.1%. The Public Transport programme continues to have the biggest funding for the use of consultants, which increases from R243.7 million in the previous financial year to R265.5 million in 2021/22 (or 8.5% in real terms).

4.2.1 Programme Analysis

As stated in the introduction, the Department has seven programmes. What follows below is an analysis of the budget allocation for each programme, and where relevant or necessary, it refers to the programmes’ sub-programmes.

4.2.1.1 Programme 1: Administration

The Administration programme is entrusted with providing strategic leadership, management and support services to the Department. The programme comprises five sub-programmes, as illustrated in the table below:

 

Table 5: Programme 1: Administration

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

       

Ministry

  38.6

  39.5

  0.9

-  0.7

2.3%

-1.8%

Management

  82.0

  100.6

  18.6

  14.5

22.7%

17.7%

Corporate Services

  247.7

  250.7

  3.0

-  7.1

1.2%

-2.9%

Communications

  39.2

  40.4

  1.2

-  0.4

3.1%

-1.1%

Office Accommodation

  62.3

  65.7

  3.4

  0.8

5.5%

1.2%

TOTAL

  469.8

  497.0

  27.1

  7.1

5.8%

1.5%

(Source: National Treasury (2021))

The Administration programme receives R497 million, translating into a 1.5% above inflation increase from the previous financial year. The Ministry, Corporate Services, as well as Communications sub-programmes have below inflation increases, bar the Management, and Office Management sub-programmes that receive 17.7% and 1.2% above inflation increases respectively. The Corporate Services sub-programme receives the biggest share of the Administration programme allocation, i.e., 50.5%. The exponential increase is to the Management sub-programme (an increase of 17.7% above inflation).

4.2.1.2 Programme 2: Integrated Transport Planning

The Integrated Transport planning programme integrates and harmonises macro-transport sector policies, strategies and legislation. In addition, it coordinates and develops sector-related policies, research activities, as well as regional and inter-sphere relations. The programme also facilitates sector information and provides sector economic modelling and analysis.

 

Table 6: Programme 2: Integrated Transport Planning

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Macro-Sector Planning

  16.2

  16.2

  0.0

-  0.7

0%

-4%

Freight Logistics

  16.9

  18.1

  1.2

  0.5

7.1%

2.8%

Modelling and Economic Analysis

  21.9

  20.8

-  1.1

-  1.9

-5%

-8.9%

Regional Integration

  14.0

  11.4

-  2.6

-  3.1

-18.6%

-21.9%

Research and Innovation

  12.6

  17.0

  4.4

  3.7

34.9%

29.5%

Integrated Transport Planning Administration Support

  8.5

  8.7

  0.2

-  0.2

2.4%

-1.8%

TOTAL

  90.1

  92.2

  2.1

-  1.6

2.3%

-1.8%

(Source: National Treasury (2021))

While the budget for the Integrated Transport Planning programme increases nominally by 2.3%, in effect, it decreases by -1.8% below inflation. The allocation totals R92.2 million in 2021/22, up from R90.1 million in the previous financial year. The highest increase is in the Research and Innovation sub-programme whose allocation goes up from R12.6 million in 2020/21 to R17 million in the current financial year. The sub-programme’s allocation increases by 29.5% above inflation (real terms).

Conversely, the allocation to the Regional Integration sub-programme decreases by -21.9% below inflation. This sub-programme is entrusted with managing, coordinating and facilitating “the development of strategies for engagements in the Southern African Development Community and the rest of Africa”.[13] The reduction in the expenditure on this sub-programme begs the question as to how the Department intends to contribute to regional integration and intra-African trade that are catalysts for the ideals of Africa’s Renaissance and Pan Africanism.

4.2.1.3 Programme 3: Rail Transport

The Rail Transport programme facilitates and coordinates the development of sustainable rail transport policies, rail economic and safety regulation, and infrastructure development strategies that reduce system costs and improve customer service. In addition, it oversees rail public entities and the implementation of integrated rail services. Five sub-programmes fall under this programme.

 

Table 7: Programme 3: Rail Transport

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Rail Regulation

  17.8

  21.4

  3.6

  2.7

20.2%

15.4%

Rail Infrastructure and Industry Development

  7.2

  7.2

  0.0

-  0.3

0%

-4%

Rail Operations

  11.8

  12.2

  0.4

-  0.1

3.4%

-0.8

Rail Oversight

 9 556.6

16 739.1

 7 182.5

 6 507.8

75.2%

68.1%

Rail Administration Support

  6.0

  6.0

  0.0

-  0.2

0%

-4%

TOTAL

9 559.4

16 785.8

 7 226.5

 6 549.9

75.6%

68.5%

(Source: National Treasury (2021))

 

Constituting 25.2% of the Department’s budget, the Rail Transport programme is the second largest departmental spending area, after the Road Transport programme. The programme’s budget exponentially goes up from R9.6 billion previously, to R16.8 billion in 2021/22. This translates into an above inflation increase of 68.5% and an increase of 75.6% nominally. The Rail Oversight sub-programme receives the biggest allocation of the programme’s budget, i.e., 99.7%. Moreover, this is the sub-programme whose budget increases markedly, from R9.6 billion in the previous financial year to R16.7 billion in 2021/22. This indicates an above inflation increase of 68.1%. Transfers to PRASA to the value of R16.7 billion and R69.7 million to the RSR are funded from this sub-programme.

Another sub- programme that records an above inflation increase of 15.4%, up from R17.8 million in 2020/21 to R21.4 million in the current financial year is the Rail Regulation sub-programme. This sub-programme “is responsible for the development of rail policies, safety and economic regulations”.[14] Conversely, the allocation to the Rail Administration Support sub-programme remains the same at R6 million. However, this means that has it not kept abreast of inflation and therefore decreases by -1.4% below inflation in 2021/22.

Transfers to PRASA to the tune of R16.7 billion are divided up as per the tables below:

 

Table 8: PRASA Transfers: Current

Entity/Programme

 

R million

                                 Budget

 

2020/21

2021/22

Metrorail (Operations)

R6.7 billion

R4.8 billion

Mainline passenger services (Operations)

R1.2 billion

R1.2 billion

Rail maintenance operations and inventories

R912.9 million

R925.4 million

TOTAL

R8.8 billion

R6.9 billion

(Source: National Treasury (2021))

 

Table 9: PRASA Transfers: Capital

Entity/Programme

 

R million

                                Budget

 

2020/21

2021/22

Other capital programmes

 R395.2 million

R1.4 billion

Rolling Stock Fleet Renewal

 -

R4.8 billion

Signalling

 -

Approx. R2 billion

Metrorail (Refurbishment of coaches)

R200.8 million

R1.4 billion

Mainline Passenger Service (Refurbishment of coaches)

R105 million

R155.6 million

TOTAL

R700.9 million

R9.7 billion

(Source: National Treasury (2021))

 

4.2.1.4 Programme 4: Road Transport

The Road Transport programme is entrusted with developing and managing an integrated road infrastructure network, as well as regulating transport and ensuring safer roads. Moreover, it oversees road transport public entities. The programme is divided into five sub-programmes.

 

Table 10: Programme 4: Road Transport

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Road Regulation

  44.8

  44.8

  0.0

-  1.8

0%

-4%

Road Infrastructure and Industry Development

  35.5

  36.5

  1.0

-  0.5

2.8%

-1.3%

Road Oversight

31 353.0

 34 046.8

 2 693.8

 1 321.5

8.6%

4.2%

Road Administration Support

  9.2

  9.4

  0.2

-  0.2

2.2%

-1.9%

Road Engineering Standards

  28.7

  29.2

  0.5

-  0.7

1.7%

-2.4%

TOTAL

31 471.1

 34 166.7

 2 695.5

 1 318.3

8.6%

4.2%

(Source: National Treasury (2021))

The total expenditure for the Road Transport programme grows from R31.5 billion in 2020/21 to R34.2 billion in 2021/22. This constitutes an above inflation increase of 4.2%, i.e.  a nominal increase of 8.6% from the previous financial year. The highest increase is for the Road Oversight sub-programme whose allocation goes up from R31.4 billion in 2020/21 to R34 billion in 2021/22, resulting in 4.2% above inflation. The Road Oversight sub-programme dominates the programme’s budget, comprising 99.7%.

The Road Oversight sub-programme reviews and analyses the performance of road transport public entities and monitors their compliance with regulations and legislation. It also transfers funds to SANRAL, RTMC, and the RTIA. Moreover, the sub-programme makes provision for the Provincial Roads Maintenance Grant (PRMG).

 

Major transfers from the Road Transport programme are as follows:[15]

 

Table 11: Major Transfers from the Road Transport Programme

Entity/ Programme

 

R million

                          Budget

 

2020/21

2021/22

RTMC

R240.6 million

R217.3 million

SANRAL: Gauteng Freeway Improvement Project (GFIP)

R3.1 billion

R633.1 million

RTIA

R88.2 million

R224.4 million

SANRAL

R7.2 billion

R7.2 billion

SANRAL: Non-toll network

R8.2 billion

R11.7 billion

SANRAL: Moloto Road upgrade

R785 million

R843.9 million

SANRAL: N2 Wild Coast

R1.1 billion

R1.1 billion

Rural Roads Asset Management Systems (RRAMS) Grant

R108.4 million

R109.9 million

PRMG: Roads maintenance component

R10.5 billion

R11.9 billion

(Source: National Treasury (2021))

Expenditure under Programme 4 lends credence to policy priorities for 2021/22. SANRAL is one of the entities that are tasked, over the financial year, with increasing the provision of the necessary opportunities for labour intensive employment, skills development, technological innovation and supply chain management. These will be biased in favour of “women, people with disabilities, and young people in empowered industries”.[16] This is in keeping with Government’s urgent objective of igniting the economy, creating jobs, as well as improving the standard of living of many of the marginalised.

4.2.1.5 Programme 5: Civil Aviation Transport

The Civil Aviation Transport programme facilitates the development of an economically viable air transport industry that is safe, secure, efficient, environmentally friendly and compliant with international standards through regulations and investigations. In addition, it oversees aviation transport public entities.

 

Table 12: Programme 5: Civil Aviation Transport

 

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Aviation Policy and Regulations

 27.8

 28.1

  0.3

-  0.8

1.1%

-3%

Aviation Economic Analysis and Industry Development

  15.2

  14.9

-  0.3

-  0.9

-1.9%

-5.9%

Aviation Safety, Security, Environment, and Search and Rescue

  68.2

  101.4

  33.2

  29.1

48.7

42.7%

Aviation Oversight

 2 556.7

  353.7

- 2 203.0

- 2 217.3

-86.2%

-86.7%

Aviation Administration Support

  5.7

  5.9

  0.2

  0.0

3.5%

-0.7%

TOTAL

 2 673.7

  503.9

- 2 169.6

- 2 189.9

-81.1%

-81.9%

 (Source: National Treasury (2021))

For 2021/22, the allocation to the Civil Aviation Transport programme equals R503.9 million, down from R2.7 billion previously, translating into a decrease of -81.9% below inflation. The major decrease is in the Aviation Oversight sub-programme that constitutes a -86.7% decrease below inflation. The sub-programme’s allocation declines significantly from R2.6 billion in 2020/21 to R353.7 million in 2021/22. The second decrease (-5.9% below inflation) is in the Aviation Economic Analysis and Industry Development sub-programme, going down from R15.2 million in 2020/21 to R14.9 million in 2021/22.

On the contrary, expenditure on the Aviation Safety, Security, Environment, and Search and Rescue sub-programme grows from R68.2 million previously to R101.4 million in 2021/22. This indicates an above inflation increase of 42.7%.

 

4.2.1.6 Programme 6: Maritime Transport

The Maritime Transport programme promotes a safe, reliable and economically maritime transport sector through the development and implementation of policies and strategies. In addition, the programme oversees maritime public entities. Five sub-programmes fall under the Maritime Transport programme.

 

Table 13: Programme 6: Maritime Transport

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Maritime Policy Development

  8.8

  10.6

  1.8

  1.4

20.5%

15.6%

Maritime Infrastructure and Industry Development

  17.8

  22.8

  5.0

  4.1

28.1%

22.9%

Implementation, Monitoring and Evaluation

  67.0

  76.1

  9.1

  6.0

13.6%

9%

Maritime Oversight

  43.6

  43.3

-  0.3

-  2.0

-0.7%

-4.7%

Maritime Administration Support

  4.7

  4.7

  0.0

-  0.2

0%

-4%

TOTAL

  141.8

  157.5

  15.6

  9.3

11%

6.5%

(Source: National Treasury (2021))

The budget allocation for the Maritime Transport programme increases from R141.8 million in 2020/21 to R157.5 million in 2021/22, translating into an increase of 6.5% above inflation. The biggest budget increase is in the Maritime Infrastructure and Industry Development sub-programme that grows from R17.8 million in 2020/21 to R22.8 million in 2021/22. This indicates an above inflation increase of 22.9%. This sub-programme facilitates the development of integrated maritime infrastructure and a maritime industry.

The increase in the expenditure on the Maritime Infrastructure and Industry Development sub-programme augurs well for the attainment of some of the strategic objectives of the Department in 2021/22 financial year in the maritime transport. Of particular relevance in this regard is building on “South Africa’s extensive experience and capabilities in maritime safety and maritime protection, to champion through leadership and shape new global standards in these areas”.[17]

The second above inflation increase of 15.6% is in the Maritime Policy Development sub-programme, up from R8.8 million in the previous financial year to R10.6 million in 2021/22. The reason for the increase in this sub-programme might be in line with the Department’s “accelerated implementation of the Comprehensive Maritime Transport Policy [that] will continue in the MTSF”.[18] While the allocation to the Maritime Administration Support sub-programme remains the same at R4.7 million, it, in fact, declines by -4% below inflation.

 

4.2.1.7 Programme 7: Public Transport

 

The Public Transport programme is tasked with providing and regulating safe, secure, reliable, cost-effective and sustainable public transport services in South Africa through legislation, policies and strategies. The Public Transport programme comprises six sub-programmes.

 

Table 14: Programme 7: Public Transport

Programme

Budget

Nominal Increase / Decrease in 2021/22

Real Increase / Decrease in 2021/22

Nominal Percent change in 2021/22

Real Percent change in 2021/22

R million

2020/21

2021/22

Public Transport Regulation

  50.9

  52.9

  2.0

-  0.1

3.9%

-0.3%

Rural and Scholar Transport

  44.7

  46.5

  1.8

-  0.1

4%

-0.2%

Public Transport Industry Development

  217.4

  228.7

  11.3

  2.1

5.2%

1%

Public Transport Oversight

12 507.3

14 126.4

 1 619.1

 1 049.7

13%

8.4%

Public Transport Administration Support

  74.1

  12.6

-  61.5

-  62.0

-83%

-83.7%

Public Transport Network Development

  14.5

  21.3

  6.8

  5.9

46.9%

41%

TOTAL

12 908.9

14 488.4

 1 579.5

  995.5

12.2%

7.7%

(Source: National Treasury (2021))

 

In 2021/22, Programme 7 receives R14.5 billion, up from R12.9 billion in 2020/21, indicating a 7.7% above inflation increase. The biggest increase in the allocation is in the Public Transport Network Development sub-programme which receives R21.3 million in 2021/22, up from R14.5 million previously, indicating an increase of 41% above inflation. This sub-programme develops norms and standards for integrated public transport systems to assist in providing accessible, reliable and affordable integrated public transport network services in municipalities.

The increase in the Public Transport Network Development sub-programme augurs well for the attainment of one of the Department’s priorities in response to the MTSF (2019-2024) of having a “public transport that enables social emancipation and an economy that works”.[19] Efficient public transport networks are important to keep economic hubs functioning optimally. Accordingly, through the Public Transport programme, the Department makes allocations to the Public Transport Network Grant (PTNG).  An integrated public transport network is key to the South Africa’s economic hubs “as they provide sustainable, affordable and functional transport solutions to urban commuters”.[20]

 

On the contrary, there is a marked decrease in the allocation to the Public Transport Administration Support sub-programme that goes down from R74.1 million in the previous financial year to R12.6 million in the current financial year. This indicates a decrease of -83.7% that does not keep track with the effects of inflation.

 

Selected transfers in the Public Transport programme are as follows:[21]

 

Table 15: Selected Transfers in the Public Transport programme

Entity/Programme

 

R million

                        Budget

 

2020/21

2021/22

Taxi Recapitalisation Programme (TRP)

R208.6 million

464.6 million

South African National Taxi Council (SANTACO)

R25.1 million

R26.5 million

Public Transport Network Grant (PTNG)

R4.4 billion

R6.5 billion

Public Transport Operations Grant (PTOG)

6.7 billion

R7.1 billion

TOTAL

R11.4 billion

R14.1 billion

(Source: National Treasury (2021))

5.         2021/22 ANNUAL PERFORMANCE PLANS, STRATEGIC AND CORPORATE PLANS AS WELL AS ESTIMATES OF NATIONAL EXPENDITURE PER ENTITY

 

This report summarises the Key Performance Indicators presented by the entities in terms of their APPs and Corporate Plans as well as their Budget allocations for the 2021/22 financial year.

 

5.1        AIRPORTS COMPANY SOUTH AFRICA

ACSA’s mandate is to undertake the acquisition, establishment, development, provision, maintenance, and control of any airport, any part of any airport or any facility or service at any airport normally related to the functioning of an airport in terms of the Airports Company South Africa Act (No. 44 of 1993). ACSA is a State-owned company, and a Schedule 2 public entity, in terms of the Public Finance Management Act (PFMA) (No.1 of 1999). The South African Government is the entity’s majority shareholder, with 74.6% stake in the Group.[22] The Group is legally autonomous, and operates within the ambit of the Companies Act (No. 71 of 2008).

ACSA owns and manages nine (9) South African airports. It also participates in equity investments abroad, and provides technical advisory and consultancy services to other airports nationally and internationally. ACSA derives value from aeronautical and non-aeronautical operations.[23]

Shareholder value creation over the long-term is fundamental to ACSA’s ability to be self-sufficient. ACSA’s financial independence enables the continuous delivery of major infrastructure requirements against the demands of the aviation industry, supporting the entity’s vision of being a world-leading airport business. A failure to be self-sufficient would introduce risk for future major infrastructure investments.

ACSA contends that the advent of COVID-19, with its attendant travel restrictions and health screening requirements, has brought about significant threats to shareholder value creation over the Corporate Plan period and beyond.[24] The Company has taken a scenario planning approach to inform responses to firstly address short-term liquidity requirements, then financial sustainability over the longterm.

A 139% traffic volume increase (on the back of a 74.5% reduction in 2020/21) is currently assumed with conservative increases thereafter.[25] Resizing decisions have been taken to safeguard financial sustainability in the form of operating expense reductions of R900 million, as well as an additional R300 million reduction in employee costs in 2021/22.[26] The postponement of the 2021/22 to 2025/26 permission application owing to COVID-19, will also delay the introduction of tariff increases to the 2023/24 financial year. An increase of 35% has been assumed for 2023/24.

 Funding

The entity reports that its cash-generating ability has been severely affected by the COVID-19 induced travel restrictions, and bans implemented by countries across the world to control the spread of the virus. To alleviate short-term liquidity pressures, the Company increased its short-term banking facilities, effectively managed its working capital and introduced operational and capital expenditure cuts.[27] The impact of the pandemic is expected to have a long-lasting effect on the aviation sector, including ACSA. This has prompted the Company to follow a more comprehensive approach to its borrowing plan to ensure long-term financial sustainability.

The COVID-19 pandemic has compelled banks to be more risk-averse when it comes to credit extension to both state-owned companies and corporates. In addition, the terms and conditions of loan agreements have become more stringent, while the pricing of loans is exorbitant. Consequently, ACSA will issue preference shares to raise capital from existing shareholders.[28] As of 12 February 2021, the Company had received indicative subscription amounts totalling approximately R3.8 billion, comprising the following:[29]

 

  • Government: R2.3 billion, in line with the Appropriation Bill to be signed by the President;
  • Public Investment Company (PIC): Limited to R1.50 billion, subject to obtaining the necessary approvals;
  • G10 investments: R20 000 interest;
  • Up-front Investment 64: R20 000 interest; and
  • Oppressed ACSA Minority 1: R20 000 interest.

 

The funding requirement is based on the following key assumptions over a three-year period:[30]

  • Capital Expenditure Programme amounting to R2.8 billion (excluding capitalised interest); and
  • Debt redemptions totalling R2.7 billion.

 

 Revenue

The Group’s revenues comprise both aeronautical, as well as non-aeronautical revenue. The Group’s forecast revenue of R3 422 million for 2021/22 follows the 0% increase in aeronautical charges as granted by the Regulating Committee in the 2019-2023 Permission and extremely low levels of traffic with a forecast decrease of 49.4%.[31] The postponement of the Permission application means that the fourth year of the 2019-2023 Permission will come into effect for the 2022/23 financial year, with increases of 3.3%. This increase, together with the envisioned traffic growth of 18.4%, will result in revenues of R4 323 million.[32] The plan assumes tariff increases of 35% that will form part of the 2022-2026 Permission. It is forecast that non-aeronautical revenues will contribute between 42% and 48% to total revenues during the Corporate Plan period.[33]

 

Aeronautical Revenue

Aeronautical revenue is expected to increase by 118.6% in 2022/23, compared with the forecast for 2021/22 due to a 3.3% increase in tariffs and some recovery of traffic volumes from the extreme lows of 2021/22.[34] It is forecast that traffic will be 37.5% lower than 2020/21 (pre-COVID-19 level).

Non-Aeronautical Revenue

Non-aeronautical revenue is expected to increase by 103.7% in 2021/22, compared to 2020/21 and 32.1% lower than the 2019/20 financial year.[35] Owing to a high level of uncertainty, retail, car rental and car parking forecasts have been kept the same as the forecast of the previous Corporate Plan.

When a comparison is drawn between the 2020/21 forecast and the 2021/22 forecast budget, the following estimates can be made:[36]

  • Retail revenue is estimated to increase by 32.5%;
  • Car parking is estimated to increase by 32.5%;
  • Advertising revenue is estimated to stay the same;
  • Car rental revenue is estimated to increase by 32.5%;
  • Property rentals and property developments are estimated to decrease by 144.3%; and
  • Other commercial revenues comprise permits, recoveries and subsidiary revenues, such as hotel revenues.

 

Expenditure

 

Operating expenditure for 2021/22 is estimated at R3 940 million, and represents a 2.7% decrease when compared to the forecast for 2020/21.[37]  The major cost components are as follows:[38]

 

  • Personnel costs (including other employee costs) decrease by 10.6%, from R1 617 million to R1 446 million. This is against the backdrop of no allowance for new positions, no salary increases and no provision for performance bonuses.
  • Repairs and maintenance costs increase by 9.7% to R470 million.
  • Utilities are kept the same at R367 million, in line with an annual tariff increase of 10% reduced by energy-saving initiatives (solar, switching off geysers during certain times when hot water is not required; reducing the operating times for air conditioning units in terminal buildings; replacement of luminaire with light emitting diode (LED) technology.
  • Security costs increase by 8.8% to R503 million due to more guards required as the level of activity starts to increase across all airports.
  • Rates and taxes increase by 7.8% to R282 million based on the expected increase, as promulgated by municipalities and property valuations.
  • Information systems expenditure increases by 35.5% to R371 million as a result of the delivery against the digitisation strategy.

 

Depreciation

 

The depreciation charge for 2021/22 is estimated at R1 179 million.[39] This represents a marginal difference to the 2020/21 owing to the low levels of capital expenditure.

 

Financing Costs

 

The COVID-19 pandemic is expected to have a long-lasting impact on the Company, with traffic volumes expected to take years to return to pre-pandemic levels. Consequently, the credit metrics are expected to remain weak over the forecast period which will increase the financing costs.

 

Earnings

 

A loss of R928 million is budgeted for 2021/22.[40]

 

 

5.2        AIR TRAFFIC AND NAVIGATION SERVICES COMPANY (ATNS)

 

ATNS was established in terms of the Air Traffic and Navigation Services Act (1993). The company is mandated to provide safe, orderly and efficient air traffic navigational and associated services to the air traffic management community, and in accordance with the standards set out by the International Civil Aviation Organisation. Over the medium term, the company will provide air traffic management solutions that are responsive to regional, continental and global demands, trends and technological advancements.

 

Expenditure is expected to increase at an average annual rate of 3.6 per cent, from R1.5 billion in 2020/21 to R1.7 billion in 2023/24. This relatively low increase is due to the implementation of cost‐containment and cash preservation measures following the decrease in air travel as a result of the COVID‐19 pandemic. Revenue is derived mainly from aerodrome, en‐route and approach fees, and is expected to increase at an average annual rate of 33.9 per cent, from R660.7 million in 2020/21 to R1.6 billion in 2023/24. This high increase is mainly due to the sharp decrease in revenue in 2020/21 because of COVID‐19 travel restrictions, with air traffic operations expected to begin normalising over the period ahead.

 

5.3        DRIVING LICENCE CARD ACCOUNT (DLCA)

 

The DLCA is responsible for manufacturing driving licence cards based on orders received from driving licence testing centres across South Africa. Over the medium term, the entity will continue to focus on ensuring optimal manufacturing productivity.

 

Expenditure is expected to increase at an average annual rate of 3.7 per cent, from R201.3 million in 2020/21 to R224.5 million in 2023/24. Spending on production and infrastructure accounts for 72.8 per cent (R486 million) of total expenditure. The entity generates revenue through the sale of driving licence cards. Revenue is expected to increase at an average annual rate of 11.5 per cent, from R202.2 million in 2020/21 to R280.1 million in 2023/24.

 

5.4        cross-border road transport agency (c-brta)

 

TheC-BRTA is a Schedule 3A public entity, in terms of the Public Finance Management Act (PFMA) (No. 1 of 1999). It was established as per the Cross-Border Road Transport Act (No. 4 of 1998), as amended. The Agency’s founding legislation places the following responsibilities on it:[41]

 

  • Improving the unimpeded flow of road freight and passengers in the region;
  • Liberalising market access progressively in respect of cross-border freight road transport;
  • Introducing regulated competition pertaining to cross-border passenger road transport, and reducing operational constraints for the cross-border road transport as a whole;
  • Enhancing and strengthening the capacity of the public sector in support of its strategic planning, enabling and monitoring functions; and
  • Empowering the cross-border road transport industry to maximise business opportunities and to regulate themselves incrementally to improve safety, security, reliability, quality and efficiency of services.

 

For 2021/22, the C-BRTA’s programme operating expenditure stands at R259.3 million.[42] Nominally (without inflation), the Agency’s budget increases by 12% from the previous financial year, and it increases by 7.5% when one takes cognisance of inflation (real terms). The exponential increase is in the Regulatory programme, which grows significantly by 36.8% (above inflation), and increases nominally by 42.6%. The Law Enforcement programme is the only programme whose budget decreases in 2021/22, down from R43.8 million in 202021 to R37.6 million in the current financial year. This translates into a below inflation decrease of -17.5%, and a nominal decrease of -14.1%.

 

Constituting 52.2% of the Agency’s programme operating expenditure, the Administration programme is the C-BRTA’s biggest spending area, with its allocation sitting at R135.4 million 2021/22, up from R125.7 million previously. This indicates an above inflation increase of 36.8%, and a nominal increase of 42.6%.

 

5.5        PORTS REGULATOR OF SOUTH AFRICA (PRSA)

 

The Ports Regulator of South Africa was established in terms of section 29 of the National Ports Act (2005). It is tasked with regulating South Africa’s commercial ports by considering tariff increases of the National Ports Authority and regulating the provision of adequate, affordable and efficient port services and facilities. This includes hearing complaints and appeals aimed at ensuring fairness, transparency and competitive practices in the ports system. Over the medium term, the regulator will continue to develop and review policy, strategy and research for an effectiveregulatory framework for the economic regulation of ports.

 

Expenditure is expected to increase at an average annual rate of 2.9 per cent, from R40.4 million in 2020/21 to R43.9 million in 2023/24. Revenue is derived entirely through transfers from the department, and is expected to increase in line with expenditure.

 

5.6        passenger rail agency of south africa (prasa)

 

PRASA is a Schedule 3B National Government Business Enterprise that reports to the Minister of Transport. The Agency derives its mandate from the Legal Succession Act to the South African South African Transport Services Act (No.9 of 1989), as amended.

 

The main objectives and business of PRASA are to:[43]

  • Ensure that, at the request of the  Department, rail commuter services are provided within, to and from the Republic in the public interest and provide, in consultation with the Department, long haul passenger rail bus and services within, to and from the Republic in terms of the principles set out in section 4 of the National Land Transport Transition Act (NLTA) (No. 22 of 2000), as amended; and
  • Generate income from the exploitation of assets acquired by it.

 

A further requirement is that, in discharging its objectives and business, PRASA shall have due regard to key Government social, economic and transport policy objectives. The governmental plans, policies and pieces of legislation informing the Corporate Plan are the following:[44]

  • ERRP), 2020;
  • National Rail Policy White Paper, 2017;
  • Public Transport Strategy, 2007;
  • Legislation specific to transport (Legal Succession Act to the South African Transport Services Act (No. 9 of 1989), as amended, the National Land Transport Act (No.5 of 2009, and the National Rail Safety Regulator Act (No. 16 of 2002); and
  • Priorities of the NDP, and the Sixth Administration.

 

The allocations are in line with the business priorities of PRASA to improve the service offering to the customer.[45] The planned spending on the Rolling Stock Fleet Renewal Programme is the largest single category. In 2021, expenditure on this item sits at R4.8 billion, and is expected to increase to R6.9 billion in 2023/24.[46] In addition, there is massive investment in accelerated rolling stock programme for the old train sets, signalling, station improvement, as well as other related infrastructure.

 

Expenditure is expected to increase at an average annual rate of 4.5 per cent, from R15.9 billion in 2020/21 to R18.2 billion in 2023/24. Compensation of employees is the agency’s largest cost driver, spending on which accounts for 41.9 per cent (R21.2 billion) of expenditure over the medium term. A total of 68.2 per cent (R34.4 billion) of the agency’s expenditure over the period ahead is earmarked for spending on the Metrorail and mainline passenger service programmes, including the modernisation programme.

 

As a result of historic underspending on capital programmes, the agency’s cash balance as at 30 October 2020 was R19.6 billion. Over the period ahead, the agency plans to spend R44 billion on infrastructure mainly for Metrorail and the mainline passenger service. Transfers from the department account for an estimated 82.3 per cent of revenue over the medium term. Other sources of revenue include the sale of train and bus tickets, rental income from the leasing of properties, onboard sales, and interest earned. Revenue is expected to increase at an average annual rate of 7.5 per cent, from R19.9 billion in 2020/21 to R24.7 billion in 2023/24.

 

The capital budget is also aligned with the ministerial mandate deliverables that encompass:[47]

  • Service recovery or reinstatement;
  • Safety and security management;
  • Accelerating capital programme and modernisation;
  • Enhancing revenue and reducing costs; and
  • Putting proper measures to ensure good governance.

 

Other critical deliverables, include but not limited to:[48]

  • Corridor protection;
  • High-tech security deployment;
  • Recovery of verified components;
  • Rolling stock components at depots;
  • Electrical rehabilitation programme;
  • On-track machines;
  • Perway rehabilitation programmes; and
  • Overall security in general.

 

5.7        ROAD ACCIDENT FUND (raf)

 

The RAF or “the Fund” was established in terms of the Road Accident Fund Act (No. 56 of 1996), which outlines the mandate of the Fund as the payment of compensation for loss or damage wrongfully caused by the negligent driving of a motor vehicle.

 

The powers and functions of the RAF shall include:[49]

  • The stipulation of the terms and conditions upon which claims the compensation contemplated in section 3 shall be administered;
  • The investigation and settling, subject to the Act, of claims arising from loss or damage caused by the driving of a motor vehicle whether not the identity of the owner or driver thereof, or the identity of both the owner and driver thereof, has been established; and
  • The management and utilisation of its powers or the performance of its duties, and reinsurance for ant risk undertaken by the Fund.

 

The fund receives its revenue from the road accident fund levy in terms of the Customs and Excise Act (1964). Revenue from the levy is expected to increase at an average annual rate of 5.8 per cent, from R38.1 billion in 2020/21 to R45.2 billion in 2023/24.

 

Claims against the fund have increased at an average annual rate of 8.4 per cent, from R61.3 billion in 2017/18 to R78.2 billion in 2020/21, and are expected to increase to R102.9 billion by 2023/24. As a result, the accumulated deficit is expected to increase from R367.7 billion in 2020/21 to R518.7 billion in 2023/24.

 

5.8        RAILWAY SAFETY REGULATOR (RSR)

 

The Constitution of the Republic of South Africa, 1996, (“the Constitution”) identifies the legislative responsibilities of different spheresof Government pertaining to airports, roads, traffic management and public transport. Transport is a function that is legislated and executed at all spheresof Government. The implementation of transport functions at the national level takes place through public entities that are overseen by the Department of Transport (“the Department”).

 

The RSR shall comply with Chapters 2 and 3 of the Constitution.

 

The RSR observes and adheres to the principles of cooperative government and intergovernmental relations that is supported by its work on the rail service regulations and harmonisation of the Southern African Development Community (SADC) railways through common safety methods.

 

The promotion of the South Africans affirms the democratic values of human dignity, equality and freedom. The achievement of safer railways reinforces the values contained in the Bill of Rights.

 

The RSR was established in terms of the National Railway Safety Regulator Act (No. 16 of 2002), as amended, to establish a national regulatory framework for South Africa, and to monitor and enforce compliance in the rail sector. The primary legislative mandate of the RSR is to oversee and enforce safety performance by all railway operators in South Africa, including those of the neighbouring States whose operators enter South Africa. All operators are, in terms of the Act, primarily responsible and accountable for ensuring safety of their railway operations.

 

As a state entity, the RSR is also governed and directed by various policies developed and approved by the South African Government at varying spheres. The following are some of the policy mandates which guide the work of the RSR:[50]

  • The NDP;
  • The National Transport Master Plan (NATMAP);
  • The National White Paper on Transport Policy, 1996;
  • The New Growth Path (NGP) Framework; and
  • Various national and international policies within the railway sector.

 

In executing its legislative oversight mandate, the RSR performs the following duties and functions:[51]

  • Issuing and managing safety permits;
  • Conducting inspections and audits;
  • Conducting safety assessments;
  • Investigating railway occurrences;
  • Developing regulations, safety standards and regulatory prescripts;
  • Issuing notices of non-conformance and non-compliance;
  • Supporting and promoting occupational health and safety and security;
  • Cooperating with relevant organs of state to improve safety performance and oversight functions;
  • Playing a leading role in the alignment of the railway safety regime of South Africa with those of SADC; and
  • Data management and analysis.

 

Expenditure is expected to increase at an average annual rate of 4 per cent, from R247.3 million in 2021/22 to R278.2 million in 2023/24. Compensation of employees and goods and services account for an estimated 97.8 per cent (R781.3 million) of the regulator’s budget over the period ahead. The regulator generates its revenue mainly through permit fees and transfers from the department. Revenue is expected to increase at an average annual rate of 1.7 per cent, from R257.8 million in 2021/22 to R271.4 million in 2023/24.

 

5.9        road traffic infringement agency (rtia)

The RTIA is a State-Owned Entity (SOE) reporting to the Department of Transport (“the Department”). It is listed in the PFMA) as a Schedule 3A National Public Entity, and should comply with Treasury Regulations and other laws. These include the Constitution of the Republic of South Africa, 1996, the Protection of Personal Information Act (PPIA) (No. 4 of 2013), the Promotion of Access to Information Act (PAIA) (No. 2 of 2000) and the Promotion of Administrative Justice Act (PAJA) (No. 3 of 2000).

 

The RTIA was established by the Administrative Adjudication of Road Traffic Offences (AARTO) Act (No. 46 of 1998). The Agency’s mandate is to facilitate the adjudication process pertaining to the infringement notices dispensed by the various Issuing Authorities to the alleged infringers on South African roads. The AARTO Act depicts the RTIA as an independent adjudicator designed to provide for an administratively fair and just system for road traffic law infringements, whilst upholding the rights of the alleged infringer.[52]

 

The Agency’s responsibilities, as enshrined in the Act, include the implementation of community education and awareness programmes targeted at enhancing voluntary road traffic compliance, and fostering behavioural change amongst road user communities. Thus, in its mandate, the RTIA should ensure objective, transparent and fair implementation of the adjudication process for road traffic infringements.

 

The following is the synopsis of the objects and functions of AARTO, as outlined in section 4(1) of the Act, as amended:[53]

  • Administering a procedure to discourage the contravention of road traffic laws, and to support the adjudication of infringements, as set out in subsection (2);
  • Enforcing penalties imposed against persons contravening road traffic laws, as set out in subsection (3);
  • Administering and managing a point demerit system for infringements and offences; and
  • Undertaking community education and community awareness programmes in order to ensure that individuals understand their rights and options, as set out in subsection (5).

 

In its quest to advance responsive road safety interventions, the Agency – under the guidance of and leadership of the Department – has facilitated the promulgation of the amended AARTO Act (No. 14 of 2019).[54] In addition, the Amendment Act is accompanied by new 2020 Draft AARTO Regulations aimed at the amplification of the infringement adjudication process.

 

For 2021/22, the budget for the RTIA’s programmes stands at R834.4 million, up from R316.2 million in the previous financial year. Of this amount, the biggest allocation, constituting 30.5% (or R254. 8 million) goes to the Adjudication and AARTO Support programme. The smallest expenditure is on the AARTO Information and Analytics programme that receives 1.5% (or 12.2 million) in 2021/22, up from R6.5 million in 2020/21.

 

5.10      THE ROAD TRAFFIC MANAGEMENT CORPORATION (RTMC)

 

The RTMC was established in terms of the Road Traffic Management Corporation Act (RTMCA) (No. 20 of 1999). It is further governed by, inter alia:[55]

  • The Constitution of the Republic of South Africa, 1996;
  • National Land Transport Act (No. 5 of 2009);
  • National Road Traffic Act (No. 93 of 1996);
  • Public Finance Management Act (PFMA) (No. 1 of 1999);
  • Companies Act (No. 71 of 2008), the Criminal Procedure Act (No. 51 of 1977); and
  • Protection of Personal Information Act (POPIA) (No. 4 of 2013).

 

In terms of the RTMCA, the RTMC was established to pool powers and resources, and to eliminate the fragmentation of responsibilities for all aspects of road traffic management across the various spheresof Government. The Act provides, in the public interest, for cooperative and coordinated strategic planning, regulation, facilitation and law enforcement in respect of road traffic matters by the national, provincial and local spheres of Government. The RTMC is a Schedule A Government entity with the primary mandate of contributing to overall road safety and responsible road usage.

 

For 2021/22, the budget for RTMC stands at R1.5 billion. Nominally (without inflation), the Corporation’s budget increases by 31.4%, and it increases by 26.1% when one takes cognisance of inflation (real terms). The exponential increase is in the Operations programme, which grows significantly by 60.1% (above inflation), and increases nominally by 67.2% (without inflation).

 

5.11      SOUTH AFRICAN CIVIL AVIATION AUTHORITY (SACAA)

 

SACAA was established in terms of the South African Civil Aviation Authority Act (1998) to enforce safety standards in the civil aviation industry. Over the medium term, the authority will continue to focus on improving compliance and adherence to the standards and recommended practices of the International Civil Aviation Organisation.

 

Expenditure is expected to increase at average annual rate of 9 per cent, from R632.9 million in 2020/21 to R820.3 million in 2023/24. The authority is expected to spend R205 million over the period ahead on the replacement of the flight inspection aircraft and flight calibration equipment. The authority generates most of its revenue through passenger safety charges, user fees and the aviation fuel levy. Revenue is expected to increase at an average annual rate of 23.3 per cent, from R437.3 million in 2020/21 to R820.3 million in 2023/24.

 

This significant increase is due to the expected recovery in air passenger travel over the medium term after the sharp decrease in passenger numbers in 2020/21 as a result of COVID‐19 travel restrictions.

 

 

5.12      SOUTH AFRICAN MARITIME SAFETY AUTHORITY (SAMSA)

 

SAMSA or “the Authority” is a Schedule 3A public entity in terms of the (PFMA (No. 1 of 1999). SAMSA was established on 1 April 1998, following the enactment of the South African Maritime Safety Authority Act (“the SAMSA Act”) (No. 5 of 1998). The Act provides for the establishment of an authority entrusted with regulating and enforcing maritime safety, marine pollution from ships, and promoting South Africa’s maritime interests. The Authority is governed and controlled by a Board of Directors, appointed by the Minister of Transport in terms of the SAMSA Act.

 

For the 2021/22 financial year, the budget allocation for SAMSA stands at R541 million.[56] Nominally (without inflation), the Authority’s budget increases by 1.8% from the previous financial year, but decreases by -2.3%, when one takes cognisance of inflation (real terms). Constituting 52.1% of the SAMSA’s programme operating expenditure, the Ensure Safety of Life and Property at Sea programme is the Authority’s biggest spending area, with its allocation sitting at R282.1 million 2021/22, up from R275.5 million previously. This indicates a below inflation decrease of -1.7%, but a nominal increase of 2.4%.

 

 

5.13      SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED (SANRAL)

 

SANRAL has been established as an independent, statutory company in terms of the South African National Roads Agency Limited and National Roads Act (No.7 of 1998), as amended. The Agency exists to, inter alia, manage, improve, maintain, the national road network – both toll and non-toll roads – as well as finance toll roads. SANRAL is a Schedule 3A public entity in terms of the Public Finance Management Act (PFMA) (No.1 of 1999). Currently, SANRAL manages a network of 22 253 km of roads throughout South Africa.[57]

 

SANRAL subscribes to a suite of institutional policies and strategies that seek to not only support the implementation of its mandate, but also align itself with Government priorities and objectives. These include the following:[58]

  • SANRAL Act;
  • Road Infrastructure Strategic Framework of South Africa (RISFSA), 2006;
  • National Development Plan (NDP) 2030;
  • Medium Term Strategic Framework (MTSF) 2019-2024;
  • NDP 5 Year Implementation Plan;
  • Budget Prioritisation Framework;
  • National Transport Master Plan 2050;
  • Horizon 2030 Long Term Strategy;[59]
  • Transformation Policy;
  • Board Approved Policies; and
  • Applicable legislative prescripts that include the PFMA, Promotion of Administrative Justice Act (PAJA) (No. 3 of 2000), Preferential Procurement Policy Framework Act (PPPFA) (No. 5 of 2000)), King Code IV, Constitution of the Republic of South Africa, 1996, Companies Act (No. 71 of 2008), as well as Protocol for Corporate Governance for Public Entities.

 

For 2021/22, SANRAL’s budget for its two programmes stands at approximately R38.4 billion. Nominally (without inflation), the Agency’s budget increases by 67.7% from the previous financial year, and it increases by approximately 61% when one takes cognisance of inflation (real terns). The exponential increase is in the Roads Asset Infrastructure programme, which grows significantly by 69.6% (above inflation), and increases nominally by 76.7%.[60]

 

 

 

6.         COMMITTEE RECOMMENDATIONS

Having considered the planning documents and budgetary allocations for this financial year, the select committee recommends that the Minister of Transport should ensure that:

6.1        PRASA should give the Select Committee regular updates on its rolling stock fleet renewal programme, the refurbishment of coaches, as well as the upgrading of signalling systems. These briefings should encompass the budget spent per programme, the timeframes thereof, as well as the progress made.

6.2        PRASA should provide the Committee with a comprehensive plan to combat theft and vandalism of the rail infrastructure.

6.4        The Department should brief the Committee on its interventions to ensure the expeditious implementation of the PTNG by the implementing cities.

6.5        SANRAL should brief the Committee on the implementation of its road maintenance programmes for 2021/22 on a quarterly basis. This should also include information on maintenance done by SANRAL in agreement with Provincial and Municipal authorities on their roads (if any).

6.6        The Department should provide the Committee with an updated presentation on the Moloto Road project, as well as the maintenance plan for the Moloto Road.

6.7        The Department should deliver an updated report to the Committee on the rollout, expenditure and reasons for delays in active operations of the IPTN programmes.

6.8        The Department should deliver an updated report on the rollout of the revised taxi recapitalisation programme and how it aims to work towards achieving the Taxi Lekgotla resolutions, including the formalisation and corporatisation of the taxi industry.

6.9        The Department should continue to deliver an updated report on the status of vacancies in the Department and its entities. This report should also indicate whether there was still a need to fill these vacancies.

6.10      The Department should deliver an updated report on the transformation policy for the Department, as well as each of its entities and indicate concrete and clear steps on how it and the entities’ management seek to address the lack in transformation progress in the industry.

6.11      The Department must deliver the final decision regarding the GFIP/e-toll policy matter, as soon as Cabinet releases its decision on this matter.

 

The Committee recommends that the National Council of Provinces (Council) approves Budget Vote 40: Transport. 

[The Democratic Alliance reserved its position on the Report and abstained.]

 

Report to be considered.

 


[1] Department of Transport (2021), p. 23.

[2] Department of Transport (2021), p. 74.

[3] Department of Transport (2021), p. 75.

[4] Department of Transport (2021), pp. 26-.73

[5] Department of Transport (2021), p. 24.

[6] Department of Transport (2021), p.89.

[7]It should be underscored that this section only covers the first Three Quarters of 2020/21, as the Fourth Quarter was not yet available at the time of analysis.

[8] The actual expenditure of R14.7 million should be classified under Programme 1: Administration and relates to goods and services, specifically payments for the office accommodation lease. The expenditure had been awaiting classification at the time the Department submitted the June 2020 in-year monitoring report (IYM). However, the Department has since classified the spending accordingly in the Basic Accounting System (BAS) (National Treasury 2020). 

[9] National Treasury (2020b). p. 157.

[10] National Treasury (2020b), p. 159.

[11] National Treasury (2020c), pp. 143-144.

[12]Ibid.

[13] National Treasury (2021).

[14] National Treasury (2021), p. 865.

[15] National Treasury (2021).

[16] Department of Transport (2021), p. 9.

[17] Department of Transport (2021), p. 39.

[18] Department of Transport (2021), p.177.

[19] Department of Transport (2021), p. 41.

[20] Mbalula (2020).

[21] National Treasury (2021).

[22] Airports Company South Africa (2021), p. 12.

[23] Aeronautical operations denote passenger facilitation services for which passenger service charges are collected, as well as airline services in the form of landing and parking fees. Conversely, non-aeronautical revenue includes all other revenue streams, such as concessionaire revenues – retail, car rental, advertising and parking revenues – as well as office rental and property development revenue streams.

[24] Airports Company South Africa (2021), p. 52.

[25]Ibid.

[26]Ibid.

[27] Airports Company South Africa (2021), p. 54.

[28] Airports Company South Africa (2021), p. 55.

[29]Ibid.

[30]Ibid.

[31] Airports Company South Africa (2021), p. 57.

[32]Ibid.

[33]Ibid.

[34]Ibid.

[35] Airports Company South Africa (2021), p. 59.

[36]Ibid.

[37] Airports Company South Africa (2021), p. 60.

[38]Ibid.

[39] Airports Company South Africa (2021), p. 61.

[40]Ibid.

[41] Cross-Border Road Transport Agency (2021), p. 9.

[42] Cross-Border Road Transport Agency (2021), p. 80.

[43] Passenger Rail Agency of South Africa (2021), p. 6.

[44] Passenger Rail Agency of South Africa (2021), pp. 6-8.

[45] Passenger Rail Agency of South Africa (2021), p. 91.

[46]Ibid.

[47]Ibid.

[48]Ibid.

[49] Road Accident Fund (2021), p. 13.

[50] Railway Safety Regulator (2021).

[51] Railway Safety Regulator (2021), pp. 24-25.

[52] Road Traffic Infringement Agency (2021), p. 8.

[53]Ibid.

[54]Ibid.

[55] Road Traffic Management Corporation (2021), pp. 11-16.

[56] South African Maritime Safety Authority (2021), p. 34.

[57] South African National Roads Agency Limited (2021), p. 11.

[58]Ibid.

[59] SANRAL’s Horizon 2030 articulates the Agency’s long-term vision and perspective, and contributes to the NDP objectives (South African National Roads Agency Limited (2021), p. 12.

[60] South African National Roads Agency Limited (2021), p. 55.

Documents

No related documents