ATC211118: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Transport, Dated 16 November 2021

Transport

Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Transport, Dated 16 November 2021

The Portfolio Committee on Transport (“the Committee”), having considered the performance and submission to National Treasury (NT) for the medium-term period of the Department of Transport (“the Department”) and its entities, reports as follows:

INTRODUCTION

The period under review took place against the backdrop of the second phase of the implementation of the National Development Plan (NDP) (2019-2024). As part of its contribution to the NDP, the transport sector had to identify interventions aimed at accelerating service delivery, increasing sector job opportunities, rural development and skills development. Key priorities in this regard included investments in public transport, maintenance of roads and rail investments. These had a direct bearing on the Government’s drive to respond to the challenges of poverty, unemployment and inequality.

Due to the impact of COVID-19 lockdown measures on the performance of the Department and its entities throughout the year under review, as well as its impact on the reporting and audit finalisation timeframes for the year under review, this report will be based on those annual reports that were tabled before 16 November 2021. The Road Traffic Infringement Agency (RTIA), Road Accident Fund (RAF), Passenger Rail Agency of South Africa (PRASA) and South African Maritime Safety Authority (SAMSA) did not submit their annual reports in time for consideration by the Committee. The Auditor-General of South Africa (AGSA) indicated that the audits of PRASA and SAMSA are expected to be finalised by the end of November 2021 and that they are in a dispute with RAF on some issues from the audit and this is being mediated by National Treasury. The AGSA did indicate that they finalised the audit of the RTIA, however the annual report of the entity was not tabled before Parliament at the time of finalising this report. The AGSA also indicated that PRASA, SAMSA and RTIA submitted their annual financial statements late.

COVID-19 lockdown interventions to slow the spread of the pandemic through the world and the country restricted movement of all transport operations (including road, rail, maritime and aviation), restricted administration programmes responsible for the filling of vacancies, restricted access to vehicle and driver licencing services and road accident claim services, restricted maintenance and/or repair of road and/or rail infrastructure and restricted the roll-out of labour intensive infrastructure projects – to mention but a few areas of impact. This had a significant impact on the revenue generation and operations of a number of the entities under the Department, as is evident from the audit outcomes and the financial statements per the annual reports received to date.

1.1 Mandate of the Committee

The prime mandate of the Committee is governed by the Constitution of the Republic of South Africa, 1996 (“the Constitution”), in respect of its legislative and oversight responsibilities as public representatives. It is required to consider legislation referred to it and consider all matters referred to it in terms of the Constitution, the Rules of the National Assembly (NA) or resolutions of the House. It is also required to respond to matters referred to it by Government within its mandate. In addition, the Committee is entrusted with considering the budgets, Strategic Plans, Annual Performance Plans (APPs) and the annual reports of the Department and entities that fall within the transport portfolio.

1.2 Purpose of the Budgetary Review and Recommendation Report

Section 77(3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money bills before Parliament. This constitutional provision gave effect to the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009). The Act gives Parliament powers to amend money Bills and other legislative proposals submitted by the Executive whenever the Executive deems it necessary to do so. The Act therefore makes it obligatory for Parliament to assess the Department’s budgetary needs and shortfalls against the Department’s operational efficiency and performance.

This review seeks to establish whether the Department and its entities have achieved their aims and objectives, as set out in their Strategic Plans, as well as whether they continue to fulfil their constitutional mandates within the year under review. As this is the third BRRR done by the 6th Parliament Committee, reference will be made to the key achievements made, as well as challenges encountered during the 2018/19, 2019/20 and 2020/21 financial years, as reported in the Department’s and entities’ 2018/19, 2019/20 and 2020/21 annual reports and APPs.

1.3 Methodology

The Committee engaged with the AGSA on its audit findings of the Department and its entities, as well as engaged with the Department (including the Driving Licence Card Account (DLCA)) and, due to time constraints, selected entities on 9, 10 and 11 November 2021 on their performance and audit outcomes for the period under review.

The Committee selected to meet with the DLCA, Air Traffic and Navigation Services (ATNS), Airports Company of South Africa (ACSA), South African Civil Aviation Authority (SACAA), South African National Roads Agency Limited (SANRAL), Cross-Border Road Transport Agency (C-BRTA), Road Traffic Management Agency (RTMC), Railway Safety Regulator (RSR) and Ports Regulator of South Africa (PRSA) as these entities tabled their reports in time for consideration during the BRRR process.

At the time of considering this report, the RTIA, RAF, PRASA and SAMSA had not tabled their annual reports yet. The AGSA indicated that PRASA, SAMSA and RTIA submitted their annual financial statements late – the AGSA also indicated that the PRASA and SAMSA audits were expected to be finalised by the end of November 2021, and further indicated that the RTIA audit had been finalised and that there were technical issues to be resolved with the RAF audit prior to finalisation thereof. The Committee voiced its dissatisfaction with the reasons provided for the failure to table the RTIA, RAF, PRASA and SAMSA annual reports – it was the second consecutive year that RTIA and SAMSA did not table their reports in time for the BRRR process.

The following entities were not programmed or called to meet with the Committee specifically, however, their annual reports and/or financial statements were tabled on time and their audit was part of the Department’s audit:

South African Search and Rescue Organisation (SASAR), including the National Sea Rescue Institute (NSRI).

The BRRR details the analysis of the 2018/19, 2019/20 and 2020/21 annual reports and financial statements, strategic objectives, budget allocation and financial performance and the recommendations made by the Committee.

The BRRR is based on information accessed through:

The 2020 State of the Nation Address (SONA);
The Department’s Strategic Plan and APPs for 2020/21;
The Department’s Annual Report and Financial Statement for 2018/19, 2019/20 and 2020/21;
The Strategic Plans and the APPs/Corporate Plans of the entities that fall under the Department, as well as their annual reports and financial statements for 2018/19, 2019/20 and 2020/21;
Quarterly reports of the Department;
The report of the AGSA on the audit outcomes of the Department and its entities;
National Treasury Section 32 Reports;
The NDP; and
Oversight visits by the Committee during the period under review.

MANDATE OF THE DEPARTMENT OF TRANSPORT

The Department is mandated with maximising the contribution of transport to the economic and social development goals of society providing safe, reliable, effective and efficient fully integrated transport systems that best meet the needs of passenger and freight users. To attain this objective, the Department is entrusted with the provision of transport infrastructure and services in a manner that is efficient and affordable to consumers and the economy, while ensuring safety and security in all transport modes. The Department depicts itself as “the heartbeat of South Africa’s economic growth and social development”. Its core values are:[1]

• Maintaining fairness and equity in all our operations;

• Striving for quality and affordable transport for all;

• Stimulating innovation in the transport sector;

• Ensuring transparency, accountability and monitoring of all operations; and

• Ensuring sustainability, financial affordability, accessibility, as well as the upholding of the Batho Pele principles.

The Department is mandated through various Acts of Parliament to render specific services to the public that relate to the provision of passenger transport, as well as goods. In an endeavour to discharge its mandate effectively and efficiently, the Department has organised itself into the following programmes:

• Programme 1: Administration;

• Programme 2: Integrated Transport Planning;

• Programme 3: Rail Transport;

• Programme 4: Road Transport;

• Programme 5: Civil Aviation;

• Programme 6: Maritime Transport; and

• Programme 7: Public Transport.

The simplified structure of the Department puts extensive emphasis on modes of transport. Complementing this modal emphasis are two programmes that seek to provide strategic support to key programmes of the Department, namely Administration, as well as Integrated Transport Planning. It is the belief of the Department that these internal programmes not only set the agenda for the Department, but are equally a sine qua non of “a collective, integrated and harmonised approach to addressing sector challenges”. Key players in this collective comprise the Department, transport entities, provincial departments, municipalities and key private sector stakeholders. A convergence of all these stakeholders will assist in fast-tracking the responsiveness of the sector to the realities on the ground.

2.1 Strategic overview 2020/21

2.1.1 Strategic priorities of Government

To execute its mandate, the Department is guided by Government’s commitments as set out in, inter alia, the NDP 2030, the New Growth Path (NGP) Framework, the Presidential Infrastructure Coordinating Commission (PICC), the Medium-Term Strategic Framework (MTSF) 2019-2024, as well as the SONA policy directives.

The work of the Department contributes to the realisation of the vision of improved social and economic development articulated in the NDP and priorities 1 and 4 of Government’s 2019-2024 MTSF. Chapter 4 of the NDP calls for the development of economic infrastructure as the foundation of social and economic development.

Transport is one of the Departments with the largest infrastructure build programme across entities. Massive infrastructure investments are found in the Department entities PRASA, SANRAL and ACSA.

Priority 1 of the MTSF focuses on economic transformation and job creation, while priority 4 advocates spatial integration, human settlements and local Government.[2] It is against this backdrop that in the 2020/21 financial year, the Department has committed itself to giving effect to these guiding policies by focusing on:[3]

Building and maintaining national and provincial networks;
Providing rail infrastructure and services; and
Facilitating the provision of integrated public transport networks (IPTNs).

Delivering his 2020 State of the Nation Address, the President accentuated two areas that the Department will be zeroing in on during 2020/21 as he committed Government to:[4]

Fixing the commuter rail in an endeavour to modernise PRASA’s rail network. In this regard, it undertook that R1.4 billion will be invested to refurbish and upgrade the Central Line in the Western Cape, while a similar amount will be allocated to the Mabopane Line in Pretoria; and
Piloting of “an alternative rural roads programme during which four experimental roads stretches of 50 km will be constructed”. It is maintained that this initiative will “ensure cost effective solutions to the State, meaningful skills transfer and higher potential for labour intensive job creation than conventional roads construction methods”.[5]

In order to give impetus to the priorities of Government, the table below shows a schematic illustration of the alignment between the MTSF pillars, apex priorities of the 6th Administration and the strategic focus areas of the Department.[6]

Table 1: Alignment between MTSF Pillars, Apex Priorities and Strategic Focus of the Department

MTSF Pillars	Apex Priorities	Department’s Strategic Focus Areas
Achieving a more capable State	Priority 1: A capable, ethical and developmental State	Improved efficiency and effectiveness of support services
Achieving a more capable State	Priority 7: A better Africa and world	Building a maritime nation, elevating the oceans economy Environmental protection – Recovering and maintaining healthy natural environment
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
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 (2021a)

Of significance to the Minister and the Department are the following key outcomes:

Outcome	Sub-Outcome
Outcome 4: Decent employment through inclusive economic growth	Sub-Outcome 1: Productive investment is effectively crowded in through the infrastructure build programme Ensure monitoring of off-takes by end users on the infrastructure programme
Outcome 6 – An efficient, competitive and responsive economic infrastructure	Sub-Outcome 1: Regulation, funding and investment improved Establish a Single Transport Economic Regulator (STER) Develop a Private Sector Participation (PSP) Framework for ports and freight rail, removing barriers to entry for private investment and operations within the context of Cabinet-approved policy and with an analysis of the implication of tariffs Sub-Outcome 3: Maintenance, strategic expansion, operational efficiency, capacity and competitiveness of our logistics and transport infrastructure ensured. Improve national transport planning to develop long-term plans for transport that synchronise with spatial planning and align infrastructure investment activities of provincial and local government and clearly communicate the State’s transport vision to the private sector Ensure development and approval of the Integrated Transport Plan Develop and implement approved plan and improve market share of containers on rail vs road, to ensure that we move road freight to rail Improve and preserve national, provincial and local road infrastructure Strengthen road traffic management Improve public transport Strengthen institutional arrangements for public transport Sub-Outcome 6: Coordination, planning, integration and monitoring implementation of strategic infrastructure projects (SIPs) in the National Infrastructure Plan. SIP 1: Unlocking the Northern Mineral Belt SIP 3: South Eastern Node and Corridor Development SIP 4: Unlocking economic opportunities in the North West Province SIP 7: Integrated Urban Space and Public Transport Programme
Outcome 7 – Comprehensive Rural Development and Land Reform	Sub-Outcome 5: Increased access to quality infrastructure and functional services, particularly in education, healthcare and public transport in rural areas Improve transport infrastructure and public transport in rural areas Access Road Development Plan for improving rural road infrastructure implemented District municipalities implementing the Integrated Public Transport Network Strategy
Outcome 10 – Protect and enhance our environmental assets and natural resources	Sub-Outcome 2: An effective climate change mitigation and adaptation response Develop strategic policy and regulatory frameworks and programmes to promote a low carbon economy Green Transport Strategy and Implementation Plan formulated and completed

(Table 2: Ministers’ Delivery Agreement with the President of the Republic of South Africa – information obtained from the Annual Performance Plan 2019/20 p. 2 – 3. The Annual Reports of the Department for 2019/20 and 2020/21 did not contain this agreement as was done in the past. On page 13 of the 2020/21 Annual Report, the Minister does merely refer to the Delivery Agreement he signed with the President being the basis for the strategic focus areas guiding the Department’s performance.)

2.1.2 Strategic Priorities of the Department

The Department 2020-2025 Strategic Plan focus is guided by five strategic thrusts:

Safety (including security) 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; and
Accelerating transformation towards greater economic participation

The Department had indicated the following eight priority focus areas for the five-year period from 2020 to 2025:

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;

8. Improved Efficiency and Effectiveness of SUPPORT SERVICES (Governance – Greater Efficiency, Effectiveness and Accountability).

Although the Department reported progress on the above goals, in the 2020/21 annual report (page 36) the Department also indicated a shift in focus areas for the medium term as the following five focus areas that will be prioritized for critical attention and delivery:

Improving road safety and reducing the carnage on South Africa’s roads;
Improving efficiencies at the RAF and addressing its debt exposure;
Formalisation and professionalisation of the taxi industry, including amongst others, the review of the public transport funding model, review of the public transport subsidy regime, and implementation of the revised taxi recapitalisation programme;
Addressing SANRAL’s liquidity and finality of the decision on the Gauteng Freeway Improvement Project (GFIP); and
Improving efficiencies at PRASA and ensuring reliable rail operations.

In the 2020/21 financial year, the Department aimed to perform its work in line with the following Priority Focus Areas and Performance Outcomes:

Department Priority Focus Area 1: SAFETY as an Enabler of Service Delivery
- Sub-Programme: Safer Transport Systems
  - Road Transport Safety
    - Improved transport safety and security
  - Rail Transport Safety
    - Improved transport safety and security
  - Civil Aviation Safety
    - Improved transport safety and security
  - Maritime Transport Safety
    - Improved transport safety and security
  - Public Transport Safety
    - Improved transport safety and security

Department Priority Focus Area 2: PUBLIC TRANSPORT that Enables Social Emancipation and an Economy that Works
- Sub-Programme: Public Transport
  - National Taxi Lekgotla Resolutions Implementation
    - Improved accessibility, quality and reliability of public transport
  - IPTNs
    - Improved accessibility, quality and reliability of public transport
  - Rural and Scholar Transport
    - Improved accessibility, quality and reliability of public transport
  - Rail Transport
    - Improved accessibility, quality and reliability of public transport

Department Priority Focus Area 3: INFRASTRUCTURE Build that Stimulates Economic Growth and Job Creation
- Sub-Programme: Competitive and Accessible Markets
  - Road Transport
    - Increased access to affordable and reliable transport systems
    - Decent Jobs sustained and created
  - Rail Transport
    - Increased access to affordable and reliable transport systems
    - Decent Jobs sustained and created
  - Civil Aviation
    - Decent jobs sustained and created

Department Priority Focus Area 4: Building a MARITIME Nation, Elevating the Oceans Economy
- Sub-Programme: Competitive and Accessible Markets
  - Increased access to affordable and reliable transport systems

Department Priority Focus Area 5: Accelerating TRANSFORMATION towards Greater Economic Participation
- Sub-Programme: Competitive and Accessible Markets
  - Increased access to affordable and reliable transport systems

Department Priority Focus Area 6: INNOVATION that Advances Efficiencies and Supports a Continuous Improvement Model
- Sub-Programme: Innovation
  - Improved competitiveness through adoption of new technology

Department Priority Focus Area 7: ENVIRONMENTAL PROTECTION – Recovering and Maintaining a Healthy Natural Environment
- Sub-Programme: Reduction in Greenhouse Gas Emission and Pollution
  - Emission of Greenhouse Gases reduced
  - Pollution incidents reduced

Department Priority Focus Area 8: Governance – Greater Efficiency, Effectiveness and Accountability
- Sub-Programme: Skills Development
  - Improved sector skills and capacity
- Sub-Programme: Functional, efficient and integrated government
  - Improved governance and strengthened control environment

2.1.3 Challenges experienced in 2020/21 as reported by the Department

The outbreak of the COVID-19 pandemic resulted in restrictions that led to the closure of Driving Licence Testing Centres (DLTCs), Registering Authorities (RAs) and Vehicle Testing Centres (VTCs), particularly during Alert Levels 5 and 4, between 26 March 2020 and 31 May 2020.[7] These institutions gradually opened from 1 June 2020 depending on their readiness in terms of COVID-19 regulations. Due to the impact of COVID-19 on service delivery, in terms of limited staff and demand for services, major backlogs were incurred, especially with regard to the renewal of driving licences.[8] This then necessitated extensions of validity period of driving licences, in a way to allow the backlog to be cleared.

The high vacancy rate in the Department remained a challenge. The main contributors to the high vacancy rate are unfunded positions in the organisational structure of the Department, high termination rate and administrative delays in completing recruitment processes.[9] During the period under review, a total of 28 vacant positions were filled, against the predetermined target of 17. The medium-term target is to ensure that the vacancy rate is reduced to 10% or below.[10]

The following were reported in the annual report as challenges experienced by the Department during the year under review, per the Report of the Accounting Officer:[11]

2.1.3.1 Programme 1: Administration

Vacancy rate in the Department remains a challenge. The main contributors to the high vacancy rate are unfunded positions in the organisational structure of the Department, high termination rate and administrative delays in completing recruitment processes. During the period under review, a total of 28 vacant positions were filled, against the predetermined target of 17. The medium term target is to ensure that vacancy rate is reduced to 10% or below. Furthermore, employment equity considerations are made when filling vacant posts. The target is to ensure that female representation in the Senior Management Services (SMS) is increased to 50%, and that the equity target of 2% for persons with disabilities is achieved and maintained.

A dedicated recovery plan was developed in the Third and Fourth Quarters and progress was monitored extensively to ensure that the deliverable is back on track to meet the annual target. The revised target for filling of vacant positions has been exceeded for the financial year.

2.1.3.2 Programme 2: Integrated Transport Planning

A dedicated recovery plan was developed in the Third and Fourth Quarters and progress was monitored extensively to ensure that the deliverable is back on track to meet the annual target. Draft Framework for the alignment of Electric Vehicles Regulations was developed as targeted.

2.1.3.3 Programme 3: Rail Transport

The principal outcome of capital investment in the modernisation programme is to improve and expand services, measured by its effects on paying passenger numbers. The fact that considerable spending on property, plant and equipment has been accompanied by a large decline in paying passenger numbers raises questions about the appropriateness of PRASA’s project pipeline and alignment with current priorities, budget realities and the corridor approach. Priority will be given to programmes that will return paying passengers to rail high-density passenger corridors, with less emphasis on low-density corridors, even if projects in low-density corridors are easier to implement. During the 2020/21 financial year, in the Rolling Stock Fleet Renewal Programme, a total of twenty-five (25) new trains were provisionally accepted for delivery as at end of March 2021. The number of jobs created in the programme amounted to 878. And in the Modernisation Programme, 1 691 jobs were created in first three Quarters of the financial year. In Quarter 4, jobs declined to 404 as a result of the signalling programme nearing completion in Gauteng and the Western Cape.

2.1.3.4 Programme 4: Road Transport

The Department will, for the first time within the 2021/22 financial year, be tabling to Cabinet the National Anti-Fraud and Corruption Strategy (NAFCS), which will serve as a blue print and a standard for the road traffic environment in the fight against fraud and corruption. Loss of life due to a crash will impact negatively on the survivors who might include dependants such as women and children because the motor vehicle involved might have obtained its roadworthy certificate in a fraudulent manner. The same would apply to the driver who might have obtained his or her driving license illegally. To that end, it is envisaged that the National Anti-Fraud and Corruption Strategy will address issues of this nature.

A dedicated recovery plan was developed in the Fourth Quarter and progress was monitored to ensure that the deliverable is back on track to meet the annual target. Progress on the quarterly milestones were not optimal during the financial year and the strategy will not be submitted to Cabinet as was targeted. More stringent focus will be put on ensuring that the strategy is gazetted for public comments, that the socio-economic impact assessment certificate is issued, that it is submitted to the National Economic Development and Labour Council (NEDLAC) and Cabinet Clusters before submission to Cabinet in the new financial year.

Linked to the Rural Road Asset Management System Grant (RRAMS) – the following challenges were indicated in the programme:

COVID-19 Regulations have delayed the appointment of service providers in other districts and fieldwork was impacted due to regulations.
The issue of ownership of the programme by the municipalities as most times data is hosted by service providers instead of districts.
Involvement of some local municipalities in the programme.
Delays by district municipalities to procure technical services on time, long before the expiry of the contracts.
Handing over of graduates by outgoing service provider when the contract comes to an end to the district municipality and/or the newly appointed service provider.
Lack of support from the Provincial government in some of the provinces.

Furthermore, graduates are now becoming skilled in the work they are doing. The district municipalities need to reach agreement on how these graduates will be taken up after the training period, with clear guidelines on their salary expectations and contractual arrangements. The Department is facing a major risk of losing these graduates to higher-paying jobs.

2.1.3.5 Programme 5: Civil Aviation

Review of the Remotely Piloted Aircraft (RPAS) Regulations - A dedicated recovery plan was developed in the Fourth Quarter and progress was monitored to ensure that the deliverable is back on track to meet the annual target. Reviewed Regulations have been provisionally withdrawn by the Civil Aviation Regulations Committee (CARCOM) due to safety and security concerns. Finalisation and approval of reviewed RPAS regulations will be prioritised in the new financial year pending resolution of concerns raised by CARCOM.

2.1.3.6 Programme 6: Maritime Transport

A dedicated recovery plan was developed in the Fourth Quarter and progress was monitored to ensure that the deliverable is back on track to meet the annual target. The draft Maritime Development Fund Bill was developed. However, the Merchant Shipping Bill and the Marine Pollution Prevention Amendment Bill will not be submitted to Cabinet as targeted. The submission of the two Bills to Cabinet will be prioritised in the new financial year.

2.1.3.7 Programme 7: Public Transport

Approval of Reviewed Regulations for Integrated Single Ticketing System – A dedicated recovery plan was developed in the Fourth Quarter and progress was monitored to ensure that the deliverable is back on track to meet the annual target. Reasonably, the deliverable made optimal progress during the financial year. Delays in finalising and gazetting the reviewed regulations due to COVID-19 meant that targeted approval could not be achieved in Quarter 4. Finalisation and submission for approval will be prioritised in the new financial year.

2.1.3.8 Key policy developments and legislative changes

During the year under review, the Department indicated the following key policy developments and legislative challenges:

The Economic Regulation of Transport (ERT) Bill was introduced to Parliament and subsequently approved for public comments in pursuance of further processing.
The National Rail Safety Bill was also approved by Cabinet and introduced in Parliament in March 2021.
Planned consultations between the Department and the Department of Public Enterprises (DPE) on the recommended corporatisation of the Transnet National Ports Authority (TNPA), in line with the requirement of the National Port Act (2005) were conducted during July and September 2020, bringing the need to comply with the Act nearer. TNPA was established as an independent subsidiary of Transnet in June 2021.
Rollout of the Administrative Adjudication of the Road Traffic Offences (AARTO) Amendment Act was deferred to the 2021/22 financial year due to the onset of the COVID-19 pandemic.

2.1.3.8.1 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

The 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 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 the South Africans, where necessary. In revising performance targets, the NDP, the seven (7) apex priorities of the 6th Administration and the MTSF 2019 – 2024 remained the authoritative documents from which the exercise took guidance. For the remainder of the current Medium Term Expenditure Framework (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.

2.1.3.8.2 Legislative challenges

The Department had 8 Bills that were processed during the year under review or still currently before Parliament and they are listed as follows:

1) Airports Company Amendment Bill, 2018 [B5B-2018] (introduced 27 March 2018, Bill processed and passed by the National Assembly on 3 March 2020 – National Council of Provinces passed the Bill on 24 November 2020 – on 2 March 2021 the Bill was signed by the President and enacted as Act (No. 17 of 2020);

2) Air Traffic Navigation Services Company Amendment Bill, 2018 [B6B-2018] (introduced 5 April 2018, Bill processed and passed by the National Assembly on 3 March 2020 – National Council of Provinces passed the Bill on 24 November 2020 – on 2 March 2021 the Bill was signed by the President and enacted as Act (No. 18 of 2020);

3) Civil Aviation Amendment Bill, 2018 [B44-2018] (introduced 14 November 2018, Bill processed and passed by the National Assembly on 11 May 2021 – currently before the National Council of Provinces for concurrence);

4) Economic Regulation of Transport Bill, 2020 [B1-2020] (introduced 31 January 2020 and still before the Committee);

5) Transport Appeal Tribunal Amendment Bill, 2020 [B8-2020] (introduced 29 May 2020 and still before the Committee);

6) National Road Traffic Amendment Bill, 2020 [B7-2020] (introduced 29 May 2020 and still before the Committee);

7) Railway Safety Bill, 2021 [B7-2021] (introduced 19 March 2021 and still before the Committee);

8) National Land Transport Amendment Bill, 2016 [B7-2016] (introduced 15 April 2016 and referred back to Parliament by the Presidency on 9 September 2021 to address the reservations about the Bill’s constitutionality).

2.1.4 Achievements highlighted and significant events and/or projects for the year 2020/21 as reported by the Department

The following were reported in the annual report as notable progress, milestones and achievements by the Department during the year under review:[12]

2.1.4.1 Programme 1: Administration

A total of twenty-eight (28) Cabinet Memoranda were facilitated to seek Cabinet indulgence and approval on a number of critical appointments and also to appraise Cabinet on key progress made on sector interventions. Notably, memoranda included, but not limited to,

Appointment of the Board of Directors at PRASA and ACSA;
Appointment of the Chief Executive Officers (CEOs) at the Ports Regulators and PRASA;
Hosting of the National Taxi Lekgotla and its outcomes;
Allocation of relief funds to mitigate the impact of COVID-19 on the taxi industry;
Progress made with considering options for the solution of the GFIP e-Toll Scheme challenge in the Gauteng Province;
Approval for unforeseeable and unavoidable expenditure for SANRAL’s toll portfolio for the loss in toll revenue due to the lockdown restrictions brought about by the COVID-19 pandemic for the 2020/21 financial year;
Approval for equity injection for the ACSA which was severely impacted by the travel restrictions imposed by governments around the world in response to the COVID-19 pandemic;
Overview of funding constrains facing the RAF, and approval for additional allocation to the RAF.

In line with requirements of the approved MTSF, gender-responsive Strategic Plans (2020-2025) and Annual Performance Plans (2021/22) for the Department and transport entities were approved by the Minister and tabled in Parliament in March 2021. Implementation of plans was monitored on a quarterly basis. The audited performance of the Department for the period under review was 91%, with the Department achieving forty-three (43) of its planned forty-seven (47) targets. The annual performance report of the Department was deemed useful and reliable by the AGSA, with a clean report on the audit of predetermined objectives.

To ensure uniformity of planning and implementation of sector concurrent functions, customised transversal indicators were developed and approved for all provinces. In accordance with the provincial budget programme structure, customised indicators were developed for four (4) programmes (Transport Infrastructure, Transport Operations, Transport Regulation and Community-Based Programme).

With regard to filling of vacancies in the establishment, a total of twenty-eight (28) vacant positions were filled, against a revised target of seventeen (17) for the period under review. The Department has targeted to improve filling of vacancies in the new financial year.

In line with the Workplace Skills Plan, 25% of the Department establishment were trained in various skills-based training programmes against the set target of 10% for the financial year. Due to the new normal, and as more employees warm up to online training programmes, this target has been increased to 50% for the new financial year. The number of bursaries managed by the Department has increased from 140 to 184 as at the end of the financial year.

In line with Government objective of improving chances of youth employment through on-the-job training interventions, a total of fifty (50) interns were appointed and placed in various programmes across the Department. All interns resumed duty in January 2021 and will be contracted to the Department for a period not exceeding twenty-four (24) months.

To address audit findings raised by the AGSA in the 2019/20 financial year, action plans were implemented and monitored on a quarterly basis. To that effect, no new cases of unauthorised expenditure and irregular expenditure were recorded during the 2020/21 financial year. Out of a total of forty-eight (48) cases of fruitless and wasteful expenditure reported in the previous financial year, nine (9) cases were either written off or transferred to debt. Eight (8) new cases, which resulted mainly from no shows, were recorded for the financial year under review. Total cases of fruitless and wasteful expenditure remaining on the roll as at the end of the financial year were forty-seven (47).

With regard to the Department’s Information and Communication Technology (ICT) environment, governance controls were drastically improved. All governance structures were reconstituted and met regularly during the period under review. Audit findings raised by the AGSA on ICT governance were fully addressed. In terms of ICT service delivery matters, improvements are being effected and still work in progress.

2.1.4.2 Programme 2: Integrated Transport Planning

To address changes that emerged over the years in the road, rail, maritime and aviation spaces, the Department initiated the revision of the White Paper on the National Transport Policy. The revision was mainly designed to broadly align the country to international, regional and continental transport trends. During the period under review, the revised policy underwent wide consultations and was subsequently approved by Cabinet.

To address regulatory and capacity gaps that relate to South Africa’s need for an efficient and cost-effective transport system, in order to raise economic growth and meet its social goals, the Department was in the process of finalising the ERT Bill, which will affect the establishment of a STER. In the 2020/21 financial year, the ERT Bill was introduced in Parliament mainly to factor in comments of public commentary and public hearings. Once promulgated, a business case will be completed, and human resource migration and management plans will be developed towards establishment of the STER.

To minimise risks and unpremeditated consequences of autonomous vehicle technology (AVT), Government is in the process of putting in place policy, legislation and strategies. This will also ensure that the country takes advantage of the AVT technology and its associated benefits. To that effect, during the period under review, guidelines for licencing and legislating autonomous vehicles were developed. Once finalised, these guidelines will ensure that mobility issues facing the country – road safety, social inclusion, emissions and congestion are solved through this intervention.

To address increasing environmental concerns in the country, motorists have been urged to consider going green on the road. As the vehicle and component manufacturing industry is switching to electric vehicles, it is highly critical for the country to ready the regulatory environment for this innovative move. To that regard, a draft framework for the alignment of Electric Vehicle Regulations was developed during the period under review. The desired outcome of this technology is in line with the sector’s target to reduce greenhouse gas emission within the medium-term.

In line with Government’s quest to understand transport needs and behaviours of households and individuals, to assess attitudes towards transport services and facilities, to ascertain the cost of transport, and accessibility to services, the 2020 National Household Travel Survey (NHTS) was conducted. During the 2020/21 financial year, an analytical report was finalised and disseminated to relevant stakeholders. Once finalised, the survey will guide government’s decisions particularly with key interventions for the medium and long-term.

In a bid to ensure transport connectivity and regional integration, the Department is developing a Regional Integration Strategy within the medium term. Once finalised, the strategy will guide interventions towards the desired lowering of transport costs, integration of rural economies and generation of savings in travel time and trade through cross-border road infrastructure development. In the 2020/21 financial year, a benchmarking exercise was conducted.

To address, amongst others, insufficient Transport Economists and Transport Planners in the Department, to enhance synergy between programmes where these skills are needed, and to ensure the spread of critical skills across the structure, the Department has moved at pace to establish a Bureau for Transport Economists (BTE) within its organisational structure. The main function of the BTE will be facilitation of data gathering and collection particularly for economic modelling and data collection and forecasting purposes. During the period under review, job descriptions and evaluations were conducted, business case and work study report were finalised and consultations were initiated with the Department of Public Service and Administration (DPSA).

2.1.4.3 Programme 3: Rail Transport

To provide for the regulation of railway safety in the country, the Department was in the process of developing a Railway Safety Act. Once promulgated, the Act will facilitate an improvement in general safety within the railway environment, and will ensure that rail becomes an attractive mode of transport and contributes towards economic growth. For the period under review, a Railway Safety Bill was approved for submission to Parliament. The Bill was subsequently introduced to Parliament in March 2021.

As part of ensuring a rail transport sector that is safe and secure, a concerted approach to address security and asset protection at PRASA has been adopted, leading to the development of an Integrated Security Plan. The plan, which was informed by Intelligence-Driven Operations, Regulatory Environment and PRASA’s security response, will see PRASA having a fully-fledged in-house security within three MTEF periods, to be achieved through a phased-in approach. To date, a total of 3 072 appointments were realised against the targeted 3 100 in the initial phase of the plan.

Over the medium-term, Government will be promoting greater private sector participation in rail, mainly through granting of third-party access to the core rail network and also the revitalisation of branch-lines. This move, which is expected to introduce competition into the market, will help address a number of challenges facing the sector. These include operational efficiency, uncompetitive positioning, ineffective equipment, etc. In the 2020/21 financial year, a draft Private Sector Participation Framework was developed.

With regard to the High Speed Rail (HSR) initiative, the Department has concluded pre-feasibility studies undertaken by Mitsubishi (funded by the Japanese Government) in 2010 and also by the China Railway and Engineering Corporation in 2013. The Department has also initiated the process to secure grant funding provided by the People’s Republic of China towards commissioning a full feasibility study on the HSR Link. It has been estimated that the feasibility study should be concluded over a period of between 24 to 36 months at a cost of RMB 1.2 billion (R 3.1 billion). The HSR Link feasibility is aligned with the African Union’s (AU), African Integrated High-Speed Rail Network Master Plan, 2033. On 13 May 2020, the Department registered the HSR Link as a Public Private Partnership project with National Treasury in terms of Treasury Regulation 16 of the Public Finance Management Act (No. 1 of 1999) (PFMA). An application for grant funding to conduct a full feasibility study was made to the Government of the People’s Republic of China. A framework agreement was also signed with the China Communications Construction Company as a nominated Chinese company to conduct the feasibility study. The Department has put in a Cabinet Memorandum through the Cabinet system to appraise Cabinet on the progress thus far. In the 2020/21 financial year, the final draft of the High Speed Rail Corridor Framework was developed.

2.1.4.4 Programme 4: Road Transport

Implementation of the National Road Safety Strategy was monitored nationally and in nine provinces. Regulatory law enforcement interventions were commissioned to improve road safety and reduce road crashes and fatalities. Reduction in road crash fatalities amounted to 20.27% (2 534) for the 2020 calendar year and 19.73% (2 421) for the 2020/21 financial year. Though most of the reduction could be attributed to less traffic on the country’s roads during Alert Levels 5 and 4 of the COVID-19 lockdown restrictions, this set the tone for increased interventions towards the Department’s pursuit of decreasing road crash fatalities by 25% within the medium term. Through the Department’s 365-day Arrive Alive partnership programme with social and business partners, the campaign had an extensive reach and impact. There were 2 152 activations that reached 117 424 road users in the top 15 hot spots. These resulted in a 23% decline in the top 5 (five) traffic offences relative to law enforcement. The campaign also realised a 5% reduction in pedestrian fatalities and an overall 10.3% year-on-year reduction in overall fatalities.

As part of Government strategy to enable safer road-user behaviour, the government approved the rollout of the AARTO Amendment Act nationally. AARTO national roll-out was launched in July 2021.

With regard to the RAF, over the last five years, the operating model of the RAF, which was anchored around litigation, saw the actuarial liability of the RAF increase exponentially to more than R320 billion. To address this unsustainable model, a new strategic plan for the RAF was introduced in the 2020/21 financial year. Through this plan, a new operating model, which was a move away from litigation to claims management, thus prioritising early investigation and settlement of claims within 12 days, was introduced. Through this new model, the RAF also terminated the mandate of its panel of attorneys in a bid to reduce legal costs and improve efficiencies. In addition, the RAF has put more efforts into the reduction of medical costs by, amongst others, developing RAF medical tariffs, implementing treatment protocols and introducing medical pre-authorisation. Other critical interventions during the period under review included the review of the RAF organisational structure and revision of the current funding model to improve financial sustainability of the Fund.

During the period under review, the Road Accident Benefit Scheme Bill, which intends to provide a social security scheme for victims of road accidents, was processed through Parliament. Though Parliament had reservations with the Bill, the Department has been provided with another opportunity to rethink its position.

National and provincial road networks were rehabilitated and maintained during the period under review. On the national front, the entire 22 253 km of the SANRAL network was exposed to routine maintenance. To enhance transformation in the road construction and maintenance space, SANRAL ensured that eight (8) percent of contracts, which represented 77% of contract value, were awarded to companies in which majority of shares are owned by black people. Black women held 12% of all contracts among black-owned companies.

In line with the Provincial Road Maintenance Programme, about 5% of the provincial road network was exposed to rehabilitation, maintenance, re-surfacing, resealing, blacktop patching, blading and re-gravelling during the period under review. Over 200 000 job opportunities were reported, with some opportunities being for women, youth and persons with disabilities. The Department has, in the 2020/21 financial year, also initiated an exercise to review performance of the Provincial Road Maintenance Grant (PRMG) since inception and shall effect necessary revisions in the Grant Framework during the next cycle, with a view to improving service delivery.

2.1.4.5 Programme 5: Civil Aviation

To fast-track transformation in the aviation sector, Government has targeted to increase the number of previously disadvantaged categories (women, youth and persons with disabilities) gaining critical expertise in technical aviation disciplines over the medium term. Part of this intervention involves amending academic syllabi at tertiary level to introduce aeronautical engineering disciplines at undergraduate levels. During the period under review, consultative engagements were conducted with a number of institutions of higher learning - Universities of Fort Hare, Johannesburg, Nelson Mandela, Stellenbosch and KwaZulu-Natal, mainly to review existing Memoranda of Agreements (MoAs) to align same with the medium-term transformation target.

To ensure compliance with international conventions, the Department has, within the 2020/21 financial year, initiated a submission to Parliament for approval of protocols relating to the amendments of articles 50(A) and 56 of the Convention on International Civil Aviation.

Following identification of a number of legislative gaps, particularly to provide for the National Aviation Security Programme, and to provide for additional measures directed at more effective control of safety and security of aircraft, airports and the like, the Department initiated amendments to the Civil Aviation Act, 2009. To that effect, the Civil Aviation Amendment Bill is currently before Parliament.

Since the approval of the Airlift Strategy and the National Civil Aviation Policy (NCAP), South Africa has gradually liberalised Bilateral Air Services Agreements arrangements with countries that are outside of Africa. This has led to South Africa exchanging traffic rights with these countries which could not be reciprocated by South African operators, even before the COVID-19 pandemic This resulted in an influx of frequencies being operated by foreign airlines since 2008. The situation was exacerbated by the unbalanced awarding of traffic rights which contributed to the erosion of the South African air transport market. South Africa has to date concluded air services frameworks with one-hundred and thirty-two (132) States, fifty-two (52) of the agreements are with African States. Only Fifty-seven (57) of the agreements are active, whilst the rest are dormant. The status renders the air services negotiation process a pointless exercise when South African carriers are not able to take advantage of created opportunities.

Due to the devastating aftermath of the pandemic, a number of South African airlines have been struggling financially, some have gone under business rescue and liquidation processes. The unintended consequences of liberalisation, combined with the negative impact of COVID-19 compels the Department to evaluate the existing bilateral air services frameworks and the impact thereof on air transport in the country. The Department is in the process of revising its economic regulatory framework to safeguard and promote the national interest. Thus, create an air transport environment that encourages the participation of South African airlines in regional and overseas international air transport markets and provide some level of reprieve from the aftermath of COVID-19.

2.1.4.6 Programme 6: Maritime Transport

Inefficiencies in container freight rail and port services raise the cost of South Africa’s imports and make the country’s exports less competitive. To address this, the Department, in partnership with the DPE and Transnet, are implementing a number of structural reforms. Among notable achievements in this space, the following were recorded:

The establishment of the National Ports Authority as an independent subsidiary of Transnet provided a boost for investor confidence;
Processes have been initiated to award more concessions in the ports, to partner with the private sector for massive investments in new container port terminals, and to partner with an international terminal operator to assist Transnet Port Terminals to improve its container freight operations;
Plans are already afoot to introduce third party access on the freight rail network.

To address the country’s maritime infrastructure deficit and promote inclusion of women and youth on the maritime economic mainstream, the Department is developing a Maritime Development Fund. The Fund will, amongst others, assist Government’s response to identified weaknesses in the country’s risk management capabilities, particularly in sea recue and oil pollution control. In the 2020/21 financial year, the draft Maritime Development Fund Bill was developed.

South Africa’s long coastline requires huge resources and capacity to service the country’s obligations to the International Maritime Organisation (IMO). Previously, through Safmarine, a state-owned entity in the previous regime, the country had tremendous capacity to meet South Africa’s international obligations to the IMO on Maritime Safety and Rescue. Safmarine had a number of tugboats, and capacity for salvage and re-floating of ships. Its capacity around rescue operations was huge as evidenced by the sinking of the passenger cruise liner on the coast of South Africa when everyone was rescued and saved. Safmarine also had trade ships for cargo. At the onset of the democratic dispensation, Safmarine and all its assets were sold. This left the country with no capacity for rescue operations and assistance at sea. This scenario is quite untenable as South Africa is on one of the busiest shipping routes in the world.

An Internal study of the Department has indicated that at least nine (9) tugboats are required to service South Africa’s coastline and its (her) waters. However, at a bare minimum 3 tugboats are required to service such a long coastline. During the period under review, the Department has planned to retain the current services of the only tugboat it has on contract and go out to tender for the staggered introduction of the three tug boats to replace the current one. The consideration is that a multiple award system be sped up to secure new contract tugboats. This is being done with a view to reprioritising the budget over three to five financial years to increase the necessary capacity on contract.

Implementation of Operation Phakisa 3-Foot Plan was also monitored during the period under review. The Marine Transport and Manufacturing delivery unit has developed eighteen (18) initiatives to accelerate growth of the oceans economy. These initiatives are divided into three (3) categories - port infrastructure, skills development and capacity building, and economic growth.

A draft Operating Model for the establishment of a National Shipping Company was developed as targeted.

2.1.4.7 Programme 7: Public Transport

In line with the implementation of the IPTN Programme, construction and operations were monitored in ten (10) cities. During the 2020/21 financial year, a total of six (6) cities were operating, with combined average weekday passenger trips of 143 000.

The four remaining cities are expected to launch operations in the new financial year.

In the 2020/21 financial year, the Department hosted a National Taxi Lekgotla, of which the objective was to assess progress and related challenges in the implementation of the National Taxi Task Team Recommendations that were published in 1996 and to forge a new roadmap that would put the taxi industry on a sustainable path going forward. The Lekgotla presented an opportunity to develop a feasible programme of action to set the industry on a sustainable path and take the transformation of the taxi industry to its logical conclusion. The Lekgotla emerged with momentous commitments towards the realisation of a truly united and empowered taxi industry, and implementation of Lekgotla resolutions will contribute to a national programme to improve public transport focusing on two pillars of improving the safety of passengers using the taxi mode and the transformation and empowerment of the taxi industry. The following resolutions, under each of the four themes, were adopted as part of a commitment by the taxi industry towards a renewed blueprint for public transport:

Unity and Leadership of the Taxi Industry - The industry remains committed to the ideal of bringing all other formations, including metered taxis and e-hailing services under a single unified National Council for Taxis. This is premised on the principle that the Minister must be given legal powers to recognise a single industry representative body and prescribe certain functions to be performed by such body.
Professionalisation and Customer Care - The industry made a commitment to paying serious attention to passenger issues and the introduction of standards on the treatment of commuters and other road users. This would be reinforced by a complaint mechanism that ensures consequences for negative conduct. Training programme must underpin skills development interventions aimed at upskilling operators. The abuse of women and people with disabilities, as well as the LGBTQIA+ community must be reported and decisively acted upon.
Industry Empowerment - A commitment was made to develop an empowerment model underpinned by the principle that economic benefits must cascade to all operators in the industry. Such empowerment model would be anchored on formalisation, which includes establishment of business entities, subsidisation of the industry and partnerships with Government on the rollout of public transport infrastructure and integrated public transport networks.
Industry Regulation - A commitment was made to a regulatory framework anchored on the principles of modernising processes characterised by reduced turn-around times in the operating licence process value chain. A moratorium on new operating licences should be implemented, until supply and demand can be reassessed. Such moratorium should be premised on the principle that once a Province completes the relevant processes to determine demand and supply and are able to determine the number of operating licences required, such moratorium may be lifted. Industry committed to the implementation of industry sectorial determination and compliance with labour laws. There was also a commitment to strengthen law enforcement in a consistent manner that affirms the supremacy of the rule of law and ensure respect for the rules of the road and eliminate the culture of lawlessness.

As part of the implementation of the National Taxi Lekgotla resolutions, the Department has also initiated the establishment of a Panel of Eminent Persons to lead discussions regarding unity and leadership within the taxi industry with a view to finding a lasting solution to the ongoing leadership dispute and bring stability. The key deliverable of this Panel of Eminent Persons would be to find a lasting solution to the ongoing divide that plagues the industry and bring about unity and stability. Members of the Panel were appointed within the period under review.

According to the NHTS conducted by Statistics South Africa, taxis are still the preferred type of road transport. Taxis move sixty-eight percent (68%) of 5.4 million passengers and 15.6 million passenger journeys on a daily basis and contribute immensely to our economy. The taxi industry is an over R40 billion per annum industry, with about 200 000 taxis, that create approximately 250 000 direct and indirect job opportunities. These include drivers, taxi marshals and administrative support. The Department will be reviewing the Taxi Recapitalisation Programme model to improve its effectiveness and affordability. Expenditure on the review was originally projected at R188.5 million over the medium term. In the 2020/21 financial year, the Department initiated a taxi relief scheme based on the principle of ex gratia payment. This initiative has a long-term view, not only address challenges caused by the COVID-19 pandemic, but also to achieve long-term sustainability of the industry through formalization and subsidization.

In line with the Revised Taxi Recapitalisation Programme (RTRP), a total of 1 679 old taxi vehicles were scrapped during the period under review. To ensure that uptake by the industry is improved, and that more old taxi vehicles are scrapped, the Department will develop a standard operating procedure and also conduct marketing drives in provinces in the new financial year.

In the Shova Kalula Bicycle Programme, a total of 6 929 bicycles were distributed across provinces during the period under review. This programme is implemented primarily to maximise the use of non-motorised transport to enable communities to access social and economic opportunities, while also seeking to promote cycling as a low cost mobility solution to low income households, targeting scholars, rural women and farm workers.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE

3.1 2018/19

Table 3: Appropriation Statement for 2018/19

Programme R’000	2018/19			2017/18
Programme R’000	Final Approp. R’000	Actual Expenditure R’000	Over/Under Expenditure R’000	Final Approp. R’000	Actual Expenditure R’000	Over/Under Expenditure R’000
Programme 1: Administration	434 094	379 809	54 285	415 254	407 466	7 788
Programme 2: Integrated Transport Planning	89 982	71 375	18 607	83 075	76 360	6 715
Programme 3: Rail Transport	15 887 279	15 873 693	13 586	19 333 199	14 515 158	4 818 041
Programme 4: Road Transport	30 098 760	30 067 108	31 652	27 138 175	27 118 369	19 806
Programme 5: Civil Aviation Transport	182 253	167 718	14 535	171 165	166 149	5 016
Programme 6: Maritime Transport	129 126	123 993	5 133	128 417	109 327	19 090
Programme 7: Public Transport	13 009 800	12 509 758	500 042	12 525 895	12 277 572	248 823
Direct charge against Revenue Fund	10 200	2 976	7 224	10 000	5 559	4 441
Total	59 841 494	59 196 430	645 064	59 805 180	54 675 960	5 129 220

(Source: Department of Transport Annual Report for 2018/19 (2019b).

For the 2018/19 financial year, the Department had received a budget of R59.8 billion and of this amount, it spent R59.2 billion by the end of the financial year, that is 98.9% of the available budget, up from R54.7 billion (or 91.4%) of the R59.8 billion it had spent by the same time in 2017/18. The Department underspent a total amount of R645.1 million, translating into an under-expenditure of 1.1%. The biggest under-expenditure was in the Public Transport programme. Of the R13 billion that had been allocated to this programme, the Department had spent R12.5 billion (or 96.2%) by the end of the reporting period, indicating an under-expenditure of R500 million (or 3.8%). The Compensation of Employees was underspent in all programmes due to posts that could not be filled.[13]

3.2 2019/20

Table 4: Appropriation Statement for 2019/20

Programme	2019/20			2018/19
	Final Appropriation	Actual Expenditure	Over/Under Expenditure	Final Appropriation	Actual Expenditure	Over/Under Expenditure
	R’000	R’000	R’000	R’000	R’000	R’000
Programme 1: Administration	419 337	412 741	6 596	434 094	379 809	54 285
Programme 2: Integrated Transport Planning	152 936	139 950	12 986	89 982	71 375	18 607
Programme 3: Rail Transport	16 560 839	16 560 238	601	15 887 279	15 873 693	13 586
Programme 4: Road Transport	33 295 501	33 285 865	9 636	30 098 760	30 067 108	31 652
Programme 5: Civil Aviation Transport	224 345	178 820	45 525	182 253	167 718	14 535
Programme 6: Maritime Transport	135 250	132 879	2 371	129 126	123 993	5 133
Programme 7: Public Transport	13 416 923	13 178 118	238 805	13 009 800	12 509 758	500 042
Direct charge against Revenue Fund	10 424	2 614	7 810	10 200	2 976	7 224
Total	64 215 555	63 891 225	324 330	59 841 494	59 196 430	645 064

(Source: Department of Transport, (2020).

For 2019/20, the Department had received a budget of R64.2 billion and of this amount, it spent R63.9 billion by the end of the financial year, that is 99.5% of the available budget, up from R59.2 billion (or 98.9%) of the R59.8 billion it had spent by the same time in 2018/19.

The Department underspent a total amount of R324.3 million, translating into an under-expenditure of 0.5%. The biggest under-expenditure was in the Public Transport programme. Of the R13.4 billion that had been allocated to this programme, the Department had spent R13.2 billion (or 98.2%) by the end of the reporting period, indicating an under-expenditure of R238.8 million (or 1.8%). The Compensation of Employees was underspent in all programmes due to posts that could not be filled.[14]

3.3 2020/21

Table 5: Appropriation Statement for 2020/21

Programme	2020/21
	Final Approp.	Actual Expenditure	Over/Under Expenditure	Final Approp.	Actual Expenditure	Over/Under Expenditure
	R’000	R’000	R’000	R’000	R’000	R’000
Programme 1: Administration	469 780	384 336	85 444	419 337	412 741	6 596
Programme 2: Integrated Transport Planning	90 071	57 614	32 457	152 936	139 950	12 986
Programme 3: Rail Transport	9 599 405	9 584 302	15 103	16 560 839	16 560 238	601
Programme 4: Road Transport	31 472 160	31 459 985	12 175	33 295 501	33 285 865	9 636
Programme 5: Civil Aviation Transport	2 670 849	2 642 208	28 641	224 345	178 820	45 525
Programme 6: Maritime Transport	144 618	135 776	8 842	135 250	132 879	2 371
Programme 7: Public Transport	12 907 852	12 809 594	98 258	13 416 923	13 178 118	238 805
Direct charge	10 997	-	10 997	10 424	2 614	7 810
Total	57 365 732	57 073 815	291 917	64 215 555	63 891 225	324 330

(Source: Department of Transport, (2021b)

For 2020/21, the Department had received a budget of R57.4 billion and of this amount, it spent R57.1 billion by the end of the financial year, that is 99.5% of the available budget. The expenditure pattern of the Department remains the same as in the previous financial year, when it had spent the same percentage (i.e. 99.5%) of the R64.2 billion allocated to it.

The Department underspent a total amount of R291.9 million, translating into an under-expenditure of 0.5%. In terms of Rand value, the biggest under-expenditure was in the Public Transport programme. Of the R12.9 billion that had been allocated to this programme, the Department had underspent R98.2 million (or 0.8%) of its allocation. Given the size of this programme’s overall budget, the smallest proportion would suggest significant amounts in monetary value. However, the Integrated Rail Transport Planning programme was the worst performing in terms of proportional expenditure, as it underspent 36% of its budget. This is a significant decline from the previous year when its managed to spent 91.5% of its budget.

In contrast, the Civil Aviation Transport programme’s expenditure improved in 2020/21. In 2019/20, its expenditure was 79.7%. However, expenditure reached 98.9%.

Compensation of Employees was underspent across all programmes, bar the Maritime Transport programme, “due to posts that could not be filled”.[15] Goods and Services underspent in most programmes owing to the effects of the COVID-19 pandemic.[16]

3.3.1 Programme 1: Administration

By the end of 2020/21, the Administration programme had spent R384.3 million (or 81.8%) of the R469.8 million that had been allocated to it, translating into an under-expenditure of R85.4 million (or 18.2%). This was mainly on Compensation of Employees owing to posts that could not be filled. In addition, it was attributed to Goods and Services under travel and subsistence due to travel restrictions, venues and facilities, training and development as most courses had been held virtually. Moreover, the under-expenditure was said to have been derived from advertising, as well as other operational costs.[17]

The Department reported that an amount of R1.7 million had been moved from Compensation of Employees to fund excess expenditure on Households. An amount of R2.5 million had been moved from savings on Goods and Services to fund excess expenditure on Machinery and Equipment by R1.8 million, and R633 000.00 to fund payments for financial assets for debt “written off” within the programme.[18]

3.3.2 Programme 2: Integrated transport planning

The budget allocation for the Integrated Transport Planning programme stood at R90.1 million and of this amount, the programme had spent R57.6 million (or approximately 64%) by the end of the reporting period, translating into an under-expenditure of R32.5 million (or 36%).

This under-expenditure was on Compensation of Employees due to slow filling of vacant posts and on Goods and Services for projects affected by the national lockdown due to the COVID-19 pandemic.[19] Consequently, internal capacity was utilised for the following projects:[20]

Regional Integration Strategy;
Regional Transport Integration Market Strategy; And
The District Development Model.

The Department reported that the following projects will be deferred to the 2021/22 financial year:[21]

Transport Sector Perspective on COVID-19;
Corridor Freight Development; and
The Regional Corridor Strategy.

An amount of R178 000.00 was moved from Compensation of Employees to fund excess expenditure on Households, and R314 000.00 to fund excess expenditure under Machinery and Equipment within the programme.[22]

3.3.3 Programme 3: Rail transport

For the 2020/21 financial year, budget for the Rail Transport programme sat at R9 599 405 billion and of this amount, the programme had spent R9 584 302 billion (or 99.8%) by the end of the period under review. The programme underspent R15.1 million (or 0.2%) on Compensation of Employees due to delays in the filling of vacant posts.[23] In addition, the under-expenditure was on Goods and Services owing to delays in the procurement process for the Establishment of the Rail Economic Regulator that was dependent on the approval of the work plan that was anticipated to be completed by May 2021.[24] Moreover, the under-expenditure was attributed to delays in the White Paper on Rail Policy due to the COVID-19 outbreak, and “issues of contention that still needed to be resolved, as well as other projects”.[25]

An amount of R20 000.00 was shifted from Compensation of Employees to fund the employee social contribution, and R88 000.00 was shifted within the programme to fund excess expenditure on Machinery and Equipment.[26]

3.3.4 Programme 4: Road transport

Of the R31.472 160 billion that had been allocated to the Road Transport programme for 2020/21, it spent R31.459 985 billion (or approximately 100%). The programme underspent by R12.2 million (or 0.04%) mainly on Compensation of Employees due to delays in the filling of vacant posts and overspent on Goods and Services, Machinery and Equipment, as well as Households.[27]

An amount of R1.1 million was shifted from the Maritime Transport programme to the Road Transport programme to cover the excess expenditure on Goods and Services owing to funds paid for the electronic National Traffic Information System (eNaTIS) related “special investigation”.[28] Funds were shifted within the programme as follows:[29]

R137 000.00 from Compensation of Employees to fund excess expenditure on Households; and
R87 000.00 from Goods and Services to fund excess expenditure on Machinery and Equipment.

3.3.5 Programme 5: Civil aviation transport

By the end of 2020/21, the Civil Aviation Transport programme had spent R2.6 billion (or 98.9%) against R2.7 billion that had been allocated to it during the reporting period, indicating an under-expenditure of R28.6 million (or 1.1%). This under-expenditure was mainly on Compensation of Employees as a result of delays in the filling of vacant posts and on Goods and Services for the following:[30]

The correction factor for ACSA and ATNS;
National Aviation Transformation Strategy that was awaiting approval of the business case and gap analysis to appoint a service provider to develop the “practicals” to complement the Draft Final Aviation Curriculum; and
Less spending on travelling due to travel restrictions.

The Civil Aviation Transport programme also underspent on Transfers due to less fees paid for foreign memberships. An amount of R2.8 million was shifted from “savings” on Compensation of Employees in this programme to fund the excess expenditure in the Maritime Transport programme under Compensation of Employees.[31] Funds were also shifted within the programme as follows:[32]

R127 000.00 shifted from Compensation of Employees to fund excess expenditure on Households; and
R59 000.00 shifted from savings on Goods and Services to fund excess expenditure on Machinery and Equipment.

3.3.6 Programme 6: Maritime transport

For the 2020/21 financial year, the Maritime Transport programme had received R144.6 million and of this amount, it spent R135.8 million (or 93.9%), indicating an under-expenditure of R8.8 million (or 6.1%). It is worth noting that there is regression on the expenditure in this programme compared to 2019/20, when of the R135.3 million that had been allocated to it, the programme had spent R132.9 million (or 98.2%), translating into an under-expenditure of R2.4 million (or 1.8%).[33]

The Maritime Transport programme underspent by R8.8 million mainly on:[34]

Goods and Services projects such as the IMO World Maritime Day Parallel Event that could not take place due to the COVID-19 pandemic, as well as the women and youth empowerment project;
Transfers and Subsidies owing to less fees foreign membership paid for the year; and
Machinery and Equipment.

However, the programme overspent on Compensation of Employees due to the payment of delayed invoices pertaining to the official who was stationed abroad. An amount of R2.8 million was shifted to the Maritime Transport programme to fund excess expenditure on Compensation of Employees from the Civil Aviation programme within the same item.[35]

3.3.7 Programme 7: Public transport

By the end of the period under review, the Public Transport programme had spent R12.8 billion (or 99.2%) of the R12.9 billion that had been allocated to it, translating into an under-expenditure of R98.3 million (or 0.8%). The programme recorded some progress from the previous financial year (2019/20), because by the end of that reporting period, it had spent R13.2 billion (or 98.2%) of the R13.4 billion that had been allocated to it, indicating an under-expenditure of R238.8 million (or 1.8%).[36]

The Public Transport programme underspent by R98.3 million on Compensation of Employees due to delays in filling of vacant posts, on Goods and Services projects due to the following:[37]

Public Transport Grant monitoring which was still at procurement stages;
Implementation of Shova Kalula Bicycle programme which was ongoing;
Implementation of the IPTNs in district municipalities;
Public Transport Safety Plan; and
Empowerment of Small Business Operations.

However, the Public Transport programme overspent on Transfers and Subsidies due to:[38]

An increased demand for the scrapping of old taxi vehicles on the TRP;
Machinery and Equipment due to an earlier than anticipated expenditure on Information Technology (IT) procurement; and
The reclassification for software and other intangible assets for the National Land Transport Information System.

An amount of R1.1 million was shifted on Goods and Services from the Public Transport programme to programme 4: Road Transport to fund excess expenditure within the same item.[39] Funds were also shifted from within the programme on Compensation of Employees to fund excess expenditure on Households for employee social contribution by R410 000.00, and on Goods and Services as follows:[40]

R25.4 million shifted to fund excess expenditure on Households for the TRP;
R27 000.00 to fund excess expenditure for Machinery and Equipment; and
R3.4 million to fund software and other intangible assets.

3.4 Virements/ Roll Overs 2020/21

Table 6: Virements/Roll Overs[41]

Economic Classifications	Administration	Integrated Transport Planning	Rail Transport	Road Transport	Civil Aviation Transport	Maritime Transport	Public Transport	Total
Economic Classifications	‘000	‘000	‘000	‘000	‘000	‘000	‘000	‘000
Compensation of Employees	1 (796)	(178)	(20)	(137)	(2 976)	2 849	(410)	(2 668)
Goods and Services	(2 453)	(314)	(88)	974	(59)	-	(29 869)	(31 809)
Households (HH)	1 796	178	20	137	127	-	25 830	28 088
Machinery and Equipment	1 819	314	88	87	59	-	27	2 394
Software and Intangible Assets	-	-	-	-	-	-	3 361	3 361
Payments for Financial Asset	634	-	-	-	-	-	-	634
Total	0	0	0	1 061	(2 849)	2 849	(1 061)	0

(Source: Department of Transport, (2021b).

As previously stated, savings on Compensation of Employees were shifted from Civil Aviation Transport programme to the Maritime Transport programme to fund excess expenditure for the payment of delayed invoices relating to the official stationed abroad within the same item.[42] Shifting of funds was also effected on Goods and Services from the Public Transport programme to fund the excess expenditure within the same item for funds paid for eNaTIS pertaining to special investigation in the Road Transport programme.[43]

The following references were made to roll overs in the annual report:

At the end of 2020/21, no payment was effected to any taxi operator by the National Empowerment Fund. The cut-off date for the payment to the taxi operators is the 30th of September 2021, subject to the approval of a roll-over application by National Treasury (p 340);
Division of Revenue Act (DORA) grant to Nelson Mandela Bay Municipality shows a roll over for the year under review of R98 173 000 (p 345).

3.5 Unauthorised, fruitless and wasteful and irregular expenditure 2020/21

3.5.1 Unauthorised expenditure

The cost of the eNaTIS maintenance and operations resulted in unauthorised expenditure of R1.3 billion that had been incurred in 2013/14, 2014/15 and 2016/17.[44]

An amount to the tune of R980 375.00 was incurred not in accordance with the vote of the programme in 2018/19: Road Transport.[45]

Steps taken to address and prevent a recurrence:

The RTMC took over the eNaTIS with effect from 5 April 2017.
Disciplinary processes commenced regarding the unauthorised expenditure that had not been in accordance with the vote of the programme: Road Transport.

3.5.2 Fruitless and wasteful expenditure

As at the end of 2019/20 financial year, there were 48 cases of fruitless and wasteful expenditure amounting to R114 624.27. Out of the 48 cases, the following actions were taken:[46]

Five (5) cases amounting to R73 790.10 were written off; and
Four (4) cases amounting to R3 194.35 were transferred to debt.

In 2020/21, eight (8) new cases of no shows amounting to R30 921.52 were added.

As at the end of the 2020/21 financial year, the balance of cases amounted to 47, with a total value of R68 561.34.

3.5.3 Irregular expenditure

According to the Department, no new irregular expenditure cases were reported in 2020/21, and 23 cases amounting to R119.3 million remained from the 2019/20 financial year of which:[47]

Four (4) cases amounting to R1.9 million were referred to the NT for condonation;
Seven (7) cases totalling R11.4 million awaited investigation report;
One (1) case to the tune of R42 million awaited disciplinary hearing;
Two (2) cases amounting to R2.6 million were being investigated by Internal Audit;
One (1) case amounting to R500 000.00 – The Bid Adjudication Committee (BAC) supported a case to request the NT to condone and disciplinary steps to be taken;
Four (4) cases to the tune of R57 million awaited submissions to the BAC and the confirmation of disciplinary steps; and
Four (4) cases amounting to R3.8 million – Disciplinary and recovery processes had to be started at the time of the tabling of the Annual Report.

3.5.4 Measures put in place to prevent and/or detect irregular expenditure

The table below indicates the measures that were indicated in the annual report as having been put in place to prevent and/or detect irregular expenditure.[48]

While the Committee appreciates that no new cases of irregular expenditure were incurred by the Department in the financial year under review, the eight (8) new cases of fruitless and wasteful expenditure in the Department pose a concern as well as the cases of irregular expenditure and fruitless and wasteful expenditure still occurring in the Transport portfolio (of which PRASA was provisionally indicated as the highest contributor with R742 million).[49]

The Committee commends the Transport portfolio for not having incurred any new unauthorised expenditure in the past two years under review.

Although there was a decrease in the incurrence of irregular-and fruitless and wasteful expenditure over the past two years, and despite the measures indicated as having put in place, the year under review saw R1.433 million in irregular expenditure incurred for the entire Transport portfolio (a decrease when compared to the irregular expenditure of the 2019/20 financial year of R2.4 million and the 2018/19 financial year of R4.1 million); R1.43 million of which represents non-compliance in the 2020/21 financial year, and R1.8 million is expenditure relating to prior year non-compliance identified in the 2020/21 financial year under review.

The Committee remains concerned that the measures listed below for the current year under review only differ by two measures from those which were taken from the previous annual reports of the Department that were identical to the measures put in place in the annual reports for 2014/15, 2016/17, 2017/18 and 2018/19. Although the Department itself did not incur any new irregular expenditure, for the entire portfolio the concern remains valid given that the Transport portfolio still incurred irregular expenditure in the current period under review, which would indicate that the measures were either insufficient or ineffective or that the Department had not implemented these measures appropriately throughout the Transport portfolio. This concern was shared by the AGSA for the transport portfolio in their presentation to the Committee and the proposal that the Committee should continue to do oversight on the implementation of these measures.

The reference to the BAC from the previous year was changed to a request for condonation from National Treasury and the reference to the checking of Sundry Payments has been removed from the measures for the year under review.

The Committee also noted that a previous measure that sought to ensure training was provided to staff involved in the procurement process remains removed from the measures in place during the previous and current years under review. This is especially concerning as the Committee extended recommendations to the Minister, as well as the Minister of Finance to assist with ensuring that officials in Supply Chain Management (SCM) for the Transport portfolio were sufficiently trained to ensure that irregular expenditure is prevented. The AGSA also indicated that there is a need to ensure that the staff appointed in SCM directorates in the Transport portfolio are sufficiently trained and skilled to ensure compliance to the internal procurement policies as well as the PFMA and other procurement legislation. The Department has therefore not improved or reviewed these measures, as requested by the Committee during previous BRRRs.

Table 7: Measures put in place to prevent and/or detect irregular expenditure 2017/18, 2018/19, 2019/20 and 2020/21

2017/18 Annual Report

2018/19 Annual Report

2019/20 Annual Report

2020/21 Annual Report

Measures listed in the 2017/18 report that were put in place to prevent and/or detect irregular expenditure are as follows:

•Where appropriate, cases of irregular expenditure are referred to the Department’s legal services to determine whether any official can be held liable for the irregular expenditure;

•Cases of irregular expenditure are referred to the Department’s Directorate: Investigations and Forensics for investigation when an investigation is required;

•Relevant managers are requested to take disciplinary steps against officials who make or permits irregular expenditure;

•The BAC will not consider condoning irregular expenditure until a legal opinion has been obtained where applicable and disciplinary steps were considered;

•The contract management system monitors all payments against orders that are placed, and will detect payments that exceed the contract value;

•The contract management system will detect any payments that are approved for processing for which no order was placed;

•Payments for all procurements must be processed via SCM so that any irregular procurement can be detected before payment;

•To prevent the occurrence of not completing the internal order and requisition forms, the SCM component does not make any approval documents or letters of acceptance available until the internal order and requisition forms are completed; and

•Initiatives to train all officials who are involved in the approval of procurement matters will continue.

Measures listed in the 2018/19 report that were put in place to prevent and/or detect irregular expenditure are as follows: