ATC110524: Report Budget Vote and Strategic Plan of the Department of Transport
Report of the Portfolio Committee on Transport on Budget Vote and Strategic Plan of the Department of Transport, dated 24 May 2011
The Portfolio Committee of Transport, having considered Budget Vote 37: Transport and the Strategic Plan of the Department of Transport for 2011-2014, reports as follows:
The report contains the strategic objectives of the Department and its entities presented to the Portfolio Committee on Transport on 30 and 31 March 2011. The Committee, in its oversight role over the Ministry, the Department and its entities, has to consider the strategic plan of the Department and its entities to determine whether the funds requested are aligned to the stated objectives in the strategic plans.
The Department oversees 13 public entities, namely –
· Airports Company of South Africa (Acsa);
· Air Traffic and Navigation Services Company (ATNS);
· Cross-Border Road Transport Agency (CBRTA);
· Ports Regulator;
· Passenger Rail Agency of South Africa (Prasa);
· Railway Safety Regulator (RSR);
· Road Traffic Infringement Agency (RTIA);
· South African Civil Aviation Authority (SACAA);
· South African National Roads Agency Limited (Sanral);
· South African Maritime Safety Authority (Samsa);
· Road Accident Fund (RAF);
· Road Traffic Management Corporation (RTMC); and
· Driving Licence Card Account.
2. Mandate of the Department
The mandate of the Department is to maximise the contribution of transport to the economic and social development goals of our country by providing fully integrated transport infrastructure.
3. Objectives for 2011-2014
In responding to government priorities, the Department’s objective for the next five years is to focus on the following areas:
3.1 Increase the market share of total freight to rail to an annualised 250 million tons from the current 178 million tons by 2014;
3.2 Benchmarking cost of building and maintenance of roads to assess efficiency and developing an appropriate funding model to ensure adequacy of supply and maintenance;
3.3 Implementation of the approved Road Infrastructure Strategic Framework (RISFSA);
3.4 Implementation of the approved Rural Transport Strategy for South Africa;
3.5 Road accident fatalities to come down from 14 600 by 2014 (a 5% per annum reduction);
3.6 Ring fencing of road maintenance funds, including construction and maintenance of rural roads;
3.7 Development of Integrated Rapid Public Transport Networks (IRPTNs) in 12 cities and six rural districts;
3.8 Completion of the Rail Policy and Rail Act;
3.9 Establishment of a Rail Economic Regulator;
3.10 Implementation of the National Freight Logistics Strategy;
3.11 Ten per cent of the identified new investment in rail should be public-private partnership (PPP) projects;
3.12 Introduce private operators at branch level (secondary rail network);
3.13 Implement the National Ports Act and create transparent cross-subsidies between port and rail infrastructure; and
3.14 Introduce competition for the management of container terminals.
4. Strategic goals for the Department
The strategic goals for the Department for the next three years are:
Goal 1: An efficient and integrated infrastructure network that serves as a catalyst for social and economic development
This goal seeks to increase transport infrastructure efficiencies and ensure seamless, integrated movement of freight and reduce system costs to 8% of gross domestic product (GDP) by 2014, improve road infrastructure maintenance of the secondary network and create 100 000 jobs through labour-intensive methods of road maintenance.
Goal 2: A transport sector that is safe and secure
The outcome is to reduce the number of fatalities on roads by 50% and incidents and occurrences in the rail environment by 25% by 2014, measured against the 2010/11 baseline.
Goal 3: Improved rural access, infrastructure and mobility
This goal seeks to increase mobility and rural access by implementing integrated public transport services in six district municipalities by 2014.
Goal 4: Improved public transport systems
This goal seeks to develop Integrated Public Transport Networks (IPTNs) by rolling out Integrated Rapid Public Transport Networks (IRPTNs) in five cities and through initiating the acquisition of new rolling stock for passenger rail by 2014.
Goal 5: Increased contribution to job creation
This goal seeks to create 400 000 jobs by 2014 through labour-intensive methods of road infrastructure maintenance, transport infrastructure build programmes, and training and deployment of seafarers in the maritime sector.
Goal 6: Increased contribution of transport to environmental protection
The goal seeks to reduce carbon emissions by 10%.
The key priorities of the Department for 2011/12 are to:
· Assist in the management of issues and risks;
· Provide visibility across the multiple projects and initiatives;
· Assist with workload balancing by ensuring optimal workload allocation;
· Management of interdependencies between projects and multiple stakeholders;
· Knowledge sharing and skills development through the programme management system and process;
· Tracking mechanism through visible dashboards and reports; and
· Standardised project management approach based on best practices.
The service delivery challenges are:
· Road Safety;
· Infrastructure maintenance; and
5. Budget summary
The Department of Transport receives R35 billion in the 2011/12 financial year. This allocation constitutes 7,2% of the national budget. Compared to the R30.3 billion that the Department received in 2010/11, the 2011/12 budget allocation increases by 15.48% in nominal terms and 10,19% in real terms.
The Road Transport Programme receives the largest portion of the Department’s budget (R15.3 billion), followed by the Public Transport Programme and the Rail Transport Programme that are allocated R9.6 billion and R9.5 billion respectively. Transfers and subsidies increase from R29.3 billion in 2010/11 to R34.2 billion in 2011/12, of which R15.5 billion goes to the provinces and municipalities. The budget allocation for the departmental agencies and accounts increases from R6.9 billion in 2010/11 to R8.8 billion in 2011/12. The compensation of employees increases from R266.2 million in the 2010/11 financial year to R294.4 million in 20011/12. Of the R547.4 million allocated to goods and services, 41,3% goes to consultants and professional services. This percentage increases to 42,6% in 2011/12.
5.1 Programme 1: Administration
The Administration Programme aims to co-ordinate and render effective, efficient strategic support and administrative services to the Minister, the Director-General and the Department. This programme has four sub-programmes:
· Corporate Services; and
· Office Accommodation.
In 2010/11, the budget allocation for the Administration Programme was R246.5 million. This amount increases to R274 million for 2011/12. Corporate Services receives the largest share of the budget allocation (R121.6 million in 2011/12 and R128.4 million in 2010/11). The allocation for Office Accommodation increases significantly by 215,7% in nominal terms and by 201,24% in real terms. This is attributable to significant increases in annual rental costs.
5.2 Programme 2: Integrated Transport Planning
This programme manages and facilitates national strategic planning for new projects, formulates national transport policy and strategy, co-ordinates international as well as inter-sphere relations and provides modelling and analysis of the sector. The Integrated Transport Planning Programme comprises the following sub-programmes:
· Transport Planning;
· Freight Logistics;
· Modelling and Economic Analysis;
· Regional Integration;
· Programme Management Unit; and
· Integrated Transport Planning Administration Support.
In 2010/11, this programme was allocated R93.3 million and it receives R147 million in 2011/12. The marked increase is largely reflected in the Transport Planning sub-programme which increases from R37.5 million in 2010/11 to R79 million in 2011/12.
5.3 Programme 3: Rail Transport
The Rail Transport Programme facilitates and co-ordinates the development of sustainable rail transport policies, strategies and systems. In addition, it oversees rail public entities. Five sub-programmes fall under this programme:
· Rail Regulation;
· Rail Infrastructure and Industry Development;
· Rail Operations;
· Rail Oversight; and
· Rail Administration Support.
In 2010/11, the budget allocation for the Rail Transport Programme was R9.2 billion and it increases to R9.5 billion in 2011/12. The Railway Safety Regulator (RSR) and the Gautrain Rapid Rail Link receive R37 million and R5.3 million respectively.
5.4 Programme 4: Road Transport
The Road Transport Programme is tasked with regulating road traffic management. It is also responsible for ensuring the maintenance and development of an integrated road network through the development of standards and guidelines and oversight of the road agencies and provincial road expenditure. The programme is divided into four sub-programmes:
· Road Regulation;
· Road Infrastructure and Industry Development;
· Road Oversight; and
· Road Administration Support.
Expenditure on the Road Transport Programme increases from R12.3 billion in 2010/11 to R15.3 billion in 2011/12. For the current financial year, the South African Roads Agency Limited (Sanral) is allocated R200 million for road maintenance. In addition, Sanral receives R464.7 million for coal haulage roads and preventative maintenance. Transfer payments to municipalities amount to R35.4 million.
5.5 Programme 5: Civil Aviation
The Civil Aviation Programme is responsible for facilitating the development of an economically viable air transport industry that is safe, secure, efficient, environmentally friendly and compliant with international standards through regulation and investigation. Moreover, this programme oversees the aviation public entities. The Civil Aviation Programme has five sub-programmes:
· Aviation Regulation;
· Aviation Infrastructure and Industry Development;
· Aviation Safety and Security;
· Aviation Oversight; and
· Aviation Administration Support.
For 2011/12, the Civil Aviation Programme is allocated R57.6 million, which is down from the R51.6 million it received in 2010/11.
5.6 Programme 6: Maritime Transport
The Maritime Transport Programme co-ordinates the development of a safe, reliable and viable maritime transport sector through the development of policies, monitoring and oversight of the maritime public entities. Five sub-programmes fall under the Maritime Transport Programme:
· Maritime Regulation;
· Maritime Infrastructure and Industry Development;
· Maritime Safety and Security;
· Maritime Oversight; and
· Maritime Administration Support.
The programme’s budget increases from R134.7 million in 2010/11 to R152.1 million in 2011/12.
5.7 Programme 7: Public Transport
The Public Transport Programme is responsible for developing norms, standards, regulations, as well as legislation intended to guide the development of public transport for rural and urban passengers. It is also tasked with regulating interprovincial public transport and tourism services. Moreover, the Public Transport Programme monitors and evaluates the implementation of the public transport strategy and the National Land Transport Act (No. 5 of 2009). The programme consists of five sub-programmes:
· Land Transport Regulation;
· National Public Transport Regulator;
· Public Transport Infrastructure and Development;
· Public Transport Oversight; and
· Public Transport Administration Support.
The budget allocation for the Public Transport Programme increases from R8.2 billion in 2010/11 to R9.6 billion in 2011/12.
6. Public entities
The Committee also considered the strategic plans of the following public entities:
6.1 Airports Company of South Africa (Acsa)
Airports Company of South Africa was established in 1993 as a listed company under the Companies Act of 1973, as amended, and the Airports Company Act of 1993, as amended. Acsa is majority-owned, i.e. 70% by the South African Government through the Department of Transport. The Public Investment Corporation owns 20% and black economic empowerment shareholders and employees hold the remainder.
The strategic objectives of Acsa for 2011/12 are as follows:
· Improving its financial position;
· Maintenance of existing infrastructure, long-term business sustainability and business excellence;
· Focused management and controllable cost, and consistent customer focus services; and
· A mature and predictable economic regulatory framework.
The prevailing economic regulatory regime remains the biggest threat to a sustainable business. Other risks and challenges are:
· Finalisation of 2010/11 – 2014/15 tariffs;
· Clear economic regulatory pricing policy required that would enable investment in
· new capacity infrastructure;
· Support for old Durban airport site fair value recovery;
· Appointment of board members;
· Return to a profitable position; and
· Continuous focus on service delivery.
The estimated budget for the company is R5.258 billion.
6.2 Cross-Border Road Transport Agency (CBRTA)
The CBRTA is mandated through the SADC Protocol to take up the role of championing regional integration by facilitating the unimpeded flow of cross-border freight and passengers by road in order to promote trade and economic development with the SADC region.
The strategic objectives for the CBRTA for 2011/12 are as follows:
· Implementing the Southern African Development Community (SADC) Protocol on Transport, Communications and Meteorology;
· Implementing the Southern African Customs Union (SACU) Memorandum of Understanding on Road Transport: South Africa, Botswana, Lesotho, Namibia and Swaziland;
· Implementing the Trans-Kalahari Memorandum of Understanding;
· Improving visibility of inspections by expanding human resource capacity and infrastructure; and
· Establishing an industry development unit and capacitating of the research and advisory unit.
The CBRTA requires funding to bridge operational constraints. A funding increase from R52 million to R182 million is required to perform optimally. The CBRTA is currently operating below restricted law enforcement visibility. Increased funding will enable the agency to fully execute its mandate and increase its roadside visibility.
The estimated expenditure for 2011/12 is R 67.4 million.
6.3 South African National Roads Agency Limited (Sanral)
The mandate of the South African National Roads Agency Limited is to finance, improve, manage and maintain the national road network (both toll and non-toll roads).
Sanral’s key priorities for 2011/2012 are as follows:
· Asset management systems for the timely maintenance of national roads;
· Planned increase of national road networks by incorporation of roads as requested by provinces;
· Good co-operative relationships with relevant government departments and provincial and municipal authorities;
· Toll road development (Gauteng freeways, N1/N2 Winelands);
· Community development projects (rural areas);
· Using appropriate technology;
· Incident management systems; and
· Research and development (pavement standards).
Estimated expenditure of SANRAL for 2011/12 is R15.331 billion.
6.4 South African Maritime Safety Authority (Samsa)
The mandate of Samsa is to promote the Republic’s maritime interests and to ensure the safety of life and property at sea. The SAMSA Act is divided into two broad and distinct areas: Meeting the United Nation’s conventions in regard to safety and pollution at sea and attending to the nation’s developmental challenges as they affect its oceans and inland waters.
The strategic focus areas of Samsa for 2011/12 are as follows:
· Modernisation of the shipping administration;
· Industrialisation of the maritime sector;
· Safety and security of the Republic’s maritime domain;
· Review and implementation of small vessel regulations; and
· Ratification of international instruments into domestic law.
Samsa’s challenges are unfunded/underfunded government mandates that are constraining the company’s delivery capacity. Skills shortages in key maritime technical areas remain a key risk. The Samsa Act is outdated, contradicting key legislation such as the Public Finance Management Act (PFMA) and the Companies Act.
The estimated expenditure of Samsa for 2011/12 is R252.127 million.
6.5 Ports Regulator
The Ports Regulator’s main functions are the economic regulation of the ports system, promoting equity of access to ports and their facilities and services, and monitoring the activities of the Transnet National Ports Authority.
Estimated expenditure for 2011/12 is R9.3 million.
6.6 Road Traffic Infringement Agency (RTIA)
The Agency’s mandate is to decriminalise road traffic infringements and to deal with them through administrative justice processes, thereby freeing the courts to deal with more serious crimes.
The key priorities of the Agency for 2011/12 are as follows:
· To realise the commitment to the United Nations “Decade of Action of Road Safety 2011”; and
· To develop an effective legislative governance framework and to develop efficient adjudication processes and a dedicated Road Traffic Infringement Appeals Tribunal.
Some of the critical issues that the Agency faces are insufficient funding and audit queries. Urgent intervention is required with an increased budget allocation for 2011/12 of R50 million.
Estimated expenditure for 2011/12 is R295.1 million.
6.7 Road Traffic Management Corporation (RTMC)
The mandate of the RTMC is the co-operative and co-ordinated strategic planning, regulation, facilitation and law enforcement in respect of road traffic matters by the national, provincial and local spheres of Government.
The key priorities for 2011/12 are to:
· Enhance the quality of road traffic services and protection of road infrastructure;
· Harmonise standard on axle load limits and other technical standards and infrastructure;
· Develop the 2009/15 Road Traffic Safety Management Plan; and
· Develop effective and efficient road traffic information and knowledge management systems
The RTMC is experiencing funding challenges. Estimated expenditure for 2011/12 is R78.2 million. Additional funds of R92.5 million are required for making an impact towards safe roads in 2011/12. The Road Traffic Management Corporation Act must still be amended to enable sustainable revenue generation. Current grant allocation is grossly inadequate.
6.8 Passenger Rail Agency of South Africa (Prasa)
The Passenger Rail Agency of South Africa was established in March 2009. Prasa’s strategic focus for 2011-2014 is aimed at:
· Strengthening its financial position (18 months);
- Implementing operational efficiency measures (modernising passenger rail operations); and
- Investing in new capacity to meet passenger demands in the medium to long term (2011-2030).
The total operational budget for 2011/12 is R8.462 billion.
6.9 Air Traffic and Navigation Services Company (ATNS)
The mandate of the ATNS is to provide safe, orderly and efficient air traffic, navigational and associated services to the air traffic management community within South Africa.
The key priorities for 2011/2012 are as follows:
· Replacement, upgrading and enhancement of surveillance at Rhodes, the lowveld and the Northern region;
· Conclusion and implementation of electronic flight plan enhancements as per the 2012 International Civil Aviation Organisation (ICAO) requirements;
· Conclusion and implementation of agreement with New Zealand Airways to deploy a 3D simulator and the transfer of engineering skills to South Africa;
· Entering into partnerships with neighbouring countries in relation to technology and infrastructure development in line with the provision of seamless, inter-operable and harmonious Air Traffic Management (ATM) service provision in the region;
· Successful implementation of a research and development division in partnership with recognised academic institutions and other interested parties;
· Successful implementation of the Central Airspace Unit (CAMU ) ATFM Test Bed/Laboratory as a means to develop and transfer critical ATM and engineering skills to South Africa;
· Implementing a fit-for-use radar display simulator at the Aviation Training Academy for the development of staff and to address the demand from the rest of the region;
· Release in excess of 250 Air Traffic Services staff for rating training across all ATS disciplines while maintaining agreed-to service levels;
· Validate in excess of 200 ATS ratings in the operational domain;
· All ATS staff to attend safety management system training;
· Introduce Normal Operational Safety Survey (NOSS) in operations; and
· Women Development Programme.
The estimated expenditure for 2011/12 is R1.015 billion.
6.10 Road Accident Fund (RAF)
The RAF provides compensation for loss of earnings and support, general damage, and medial and funeral costs to victims of road accidents caused by negligent or wrongful driving of another road user. Revenue for the fund is generated mainly from the fuel levy.
The key objectives for the RAF are:
· Operational efficiency and effectiveness;
· Legislative enablement
· Financial sustainability.
Some of the options being considered to address the RAF’s capital structure are raising debt from moneylenders, equity injections from Government and an aggressive increase in fuel levy income.
Estimated expenditure for 2011/12 is R16.166 billion.
6.11 South African Civil Aviation Authority (SACAA)
The mandate of the SACAA is to regulate the civil aviation industry to ensure security and safety by complying with the International Civil Aviation Organisation (ICAO) and taking into consideration the local context.
Key priorities for 2011/12 are as follows:
· Implementation of the Civil Aviation Act (No.13 of 2009) which came into effect on 31 March 2010. The focus areas for implementation are:
· Establishment of the Aviation Safety Investigation Board (ASIB) and the Appeals Committee;
· Participation on the ICAO Committee;
· Standardise processes to achieve effectiveness and efficiency, promoting industry transformation in line with BBBEE goals; and
· Ensure sound corporate governance, human resource management and financial sustainability.
The risks and challenges that affect the SACAA are the recent tariff increases which are insufficient to fund the operational and capital budget. The organisation is heading for a loss for three consecutive years. The organisation pays more than R1 million a month in building rental and no significant investments have been made in assets post inception.
Estimated expenditure for 2011/12 is R320.6 million.
6.12 Railway Safety Regulator (RSR)
The mandate of the RSR is to oversee safety in the railway transport industry. The RSR oversees and promotes safe railway operations through support, monitoring and enforcement guided by an enabling regulatory framework, including regulations and safety standards.
Key priorities for 2011/12 are as follows:
o Undertaking targeted technical audits on both Transnet Freight Rail (TFR) and Prasa focusing on infrastructure integrity, train control systems, rolling stock and interface management;
o Overseeing safety compliance of the Gautrain Rapid Rail Project;
o Monitoring and evaluating railway safety performance; and
o Implementing and administering penalty regulations.
Estimated expenditure for 2011/12 is R58 million.
In addition to the input by the Department and the entities, the South African National Taxi Council (Santaco) provided input on their strategic focus areas as follows:
- Consolidation of individual taxi business operations to co-operative entities that will harness bargaining power and create efficiency in the management business operations.
- Electronic Management System – to develop a fare collection system that will create a platform for consolidation of value and power for the industry.
- Promote empowerment through a conscious change from consumer to equity and shareholding arrangement within the taxi industry value chain and all other economic transactions.
- Expanding scope of business operations from Taxi To Transport thereby participating in other transport modes through a diversification strategy e.g. bus, rail, aviation etc.
7. Committee observations and recommendations
Based on the information provided in the strategic plans of the Department and its entities, the Committee made the following observations and recommendations:
7.1 Lack of an integrated transport plan
7.1.1 The Committee noted the lack of proper integration of plans between the
Department and its entities.
7.1.2 The Committee recommended the integration of transport plans from national to provincial to municipal levels. An integrated transport plan should include the amalgamation of rail freight and ports.
7.1.3 Standard setting, monitoring and technology development should form part of integrated planning.
7.1.4 The Project Management Unit should be prioritised and there should be
engagement with National Treasury on the matter.
7.1.5 Time frames for implementation should be shortened.
7.1.6 The finalisation of the scholar transport policy was welcomed as it would speak to the budget and location of functions. Scholar transport should be prioritised and the scholar transport function should be located in the Department of Transport.
7.1.7 The issue of monopolies should be addressed and BBBEE should truly become broad based. Social investment, job creation and women development should be included in planning.
7.1.8 The Department should investigate ways for E-Natis to connect with other databases.
7.1.9 The location of E-Natis should be migrated to the Department.
7.1.10 The co-ordination of transport in provinces in terms of reporting should be addressed at political level.
7.1.11 The Committee recommended the need for a planning commission to establish an integrated transport plan.
7.1.12 The Committee recommended that government should address the issue of an economic regulator.
7.1.13 The issue of one economic regulator should be addressed as a matter of urgency.
7.2 Road Transport
7.2.1 The Committee observed that the Road Accident Fund is technically insolvent and legislation will not provide an adequate solution for the problems experienced by the entity. An appropriate funding model has to be established for the entity.
7.2.2 Sanral presented a funding model and acknowledged that the roads are beyond their lifespan, but no alternative solution was given.
7.2.3 The issue of rural scholar transport needs to be unpacked. Manufacturing plants for bicycles and vans in rural areas will create jobs and eradicate poverty.
7.2.4 The Committee recommended that the conditions of rural roads should be addressed. The Committee requested further engagement with the Department on the Rural Road Fund.
7.2.5 The Committee requested follow-up meetings with RTIA and RTMC to address their mandates.
7.2.6 The Committee further recommended that the Department of Transport consider taking over the administration of the RTMC and the RTIA until such time that their mandates under their respective Acts had been redefined and their management challenges had been addressed.
7.3 Rail transport
7.3.1 The Committee recommended that the focus should be on the development of rail as a mode of transport.
7.3.2 Legislation should be put in place to move the transport of goods from roads to rail.
7.3.3 Public transport should be prioritised as an alternative to relieving congestion on the roads.
7.3.4 The cost of Bus Rapid Transit (BRT) was high and light rail transport should be considered for public transport initiatives.
7.4 Aviation transport
7.4.1 The Committee recommended that the vacancies on the Acsa board should be filled within determined time frames.
7.4.2 Legislation to address tariffs should be prioritised.
7.4.3 In terms of the Durban international airport, a ministerial task team should look at the issue of the land and the sale thereof to offset costs.
7.4.4 The status of air traffic controllers should be clarified in terms of their skills base and training. The Committee recommended that further education and training institutions and academic institutions are partnered to provide training for the industry to establish a skills pool and to reduce the cost of in-house training. The training and skills development of women and trainees from previously disadvantaged backgrounds should also be prioritised.
7.5 Maritime transport
7.5.1 The Committee recommended legislation that regulates pollution disasters along the South African coastline.
7.5.2 Capacity challenges experienced by the Ports Regulator should be addressed so that the regulator can fulfill its mandate. The Department was asked to address the matter urgently.
7.5.3 The South African Maritime Safety Authority was tasked to address the issue of skills development programmes to develop a sustainable pool of expertise for the maritime industry.
7.5.4 The economic value of a South African fleet should be unpacked by the South African Maritime Safety Authority.
Having considered Budget Vote 37: Transport and the strategic plan of the Department of Transport and the strategic plans of the related entities, the Committee recommends that its report on the budget vote be adopted.
Report to be considered.
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