ATC130523: Report of the Portfolio Committee on Transport on Budget Vote 37: Transport, dated 22 May 2013.

REPORT OF THE PORTFOLIO COMMITTEE ON TRANSPORT ON BUDGET VOTE 37: TRANSPORT, DATED 22 MAY 2013.

The Portfolio Committee of Transport, having considered Budget Vote 37: Transport, reports as follows:

1. INTRODUCTION

The Portfolio Committee on Transport considered the 2013/14 budget of the Department of Transport on 14 May 2013. As part of its oversight function the Committee also considered the 2013/14 strategic and annual performance plans of the Department and its entities. The Committee’s report on the strategic and annual performance plans were adopted on 30 April 2013. This report contains a summary of the Transport budget allocation and the strategic objectives of its programmes with the Committee’s findings and recommendations on the budget. The report should be read in conjunction with the Committee’ report on the strategic and annual performance plans.

2. POLICY PRIORITIES FOR 2013/14

In terms of the outcomes-based performance management framework adopted by Government, the Department contributes mainly to the development of an efficient, competitive and responsive economic infrastructure network (outcome 6). [1] To achieve this outcome, the Department will focus on: [2]

· Maintaining road infrastructure.

· Upgrading rail infrastructure and services.

· Constructing and operating public transportation infrastructure.

These policy priorities are in line with what the National Development Plan (NDP) proposes with regard to social and economic development. Indeed, the NDP maintains that sound economic infrastructure is a precondition for economic growth and that the country’s transport infrastructure is a sine qua non of attaining this.

The major recommendations of the NDP are to improve public transport planning and integrate it with spatial planning. It also puts emphasis on asset management and institutional arrangements to ensure safe, reliable and affordable public transport and renewal of the commuter rail fleet. In this regard, the NDP accentuates the need to focus on the Gauteng-Durban Corridor for freight, incentivise public transport and focus on transport systems rather than modes. The need to invest massively in transport is recognised as is the need to carefully prioritise these investments. [3]

In his 2013 State-of-the-Nation Address, President Zuma identified transport as a catalyst for the country’s socio-economic development. In this regard, the President provided the following as niches for achieving this objective: [4]

· Shifting the transportation of coal from road to rail in Mpumalanga in order to protect the provincial roads.

· Improving the movement of goods and economic integration through a Durban-Free State-Gauteng Logistics and Industrial Corridor.

· Upgrading Mthatha Airport runway and terminal and the construction of the Nkosi Dalibhunga Mandela Legacy Road and Bridge.

· Fast-tracking of roads in the North West .

· Integrating different modes of transport (bus, taxi and train) in Cape Town , Nelson Mandela Bay , Rustenburg eThekwini and Tshwane.

· Improving commuter rail network.

The budget allocation of the Department responds to the Government’s strategic objectives raised in the State-of-the-Nation Address. This is evidenced by massive investments in the road, rail and public modes of transport which receive R18.2 billion, R10.3 billion and R9.9 billion respectively. This augurs well for economic growth and job creation. In addition, it will stand the country in good stead for attracting investors and tourists. [5]

3. 2013/14 BUDGET ALLOCATION

Table: Budget Allocations

Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2012/13	2013/14	2014/15	2015/16	2012/13-2013/14		2012/13-2013/14
Administration	333.8	353.1	0.0	0.0	19.3	0.6	5.78 %	0.17 %
Integrated Transport Planning	118.5	80.6	0.0	0.0	- 37.9	- 42.2	-31.98 %	-35.59 %
Rail Transport	10 301.4	11 240.8	0.0	0.0	939.4	343.3	9.12 %	3.33 %
Road Transport	18 230.7	19 541.5	0.0	0.0	1 310.8	274.5	7.19 %	1.51 %
Civil Aviation	520.3	140.0	0.0	0.0	- 380.3	- 387.7	-73.09 %	-74.52 %
Maritime Transport	149.0	105.3	0.0	0.0	- 43.7	- 49.3	-29.33 %	-33.08 %
Public Transport	9 993.5	10 814.1	0.0	0.0	820.6	247.1	8.21 %	2.47 %
TOTAL	39 647.2	42 275.4	0.0	0.0	2 628.2	386.3	6.63 %	0.97 %

(Source: National Treasury 2013 – Vote 37: Transport)

Of the R588.7 billion total appropriation by vote, the Department of Transport receives R42.2 billion in the 2013/14 financial year. This allocation constitutes 7.2 per cent of the national budget. Compared to R39.6 billion that the Department received in 2012/13, the 2013/14 budget allocation increases by 1.0 per cent in real terms and 6.6 per cent in nominal terms. The budget allocation for the use of consultants and professional services (business and advisory services) in all programmes decreases from R1.2 billion in 2012/13 to R326 million in 2013/14.

4. OVERVIEW OF ALLOCATION PER PROGRAMME

4.1 Programme 1: Administration

The Administration programme coordinates and renders effective, efficient strategic support to the Minister, Director-General and the Department. It also develops transport skills for the sector. This programme has five sub-programmes:

· Ministry;

· Management;

· Corporate Services;

· Communications; and

· Office Accommodation.

In the 2013/14 financial year, the Administration programme receives R353.1 million, up from R333.8 million in 2012/13. This translates into an increase by 0.2 per cent in real terms and 5.8 per cent in nominal terms. The marked increase is in the Communications sub- programme which increases from R28.2 million in 2012/13 to R40.6 million in 2013/14, amounting to an increase by 36.3 per cent in real terms and 44 per cent in nominal terms.

4.2 Programme 2: Integrated Transport Planning

This programme manages and facilitates national strategic planning for new projects. It also conducts research and formulates national transport policy, including for the cross-modal area of logistics. In addition, the Integrated Transport Planning programme coordinates international and inter-sphere relations. The programme comprises the following sub-programmes:

· Macro Sector Planning;

· Logistics

· Modelling and Economic Analysis;

· Regional Integration;

· Research and Innovation; and

· Integrated Transport Planning Administration Support.

The budget allocation for the Integrated Transport Planning programme decreases drastically from R118.5 million in the 2012/13 financial year to R80.6 million in 2013/14. This is a decrease of 35.6 per cent in real terms and 32.0 per cent in nominal terms. The marked decrease is in the Modelling and Economic Analysis sub-programme which decreases by 64.3 per cent in real terms and 62.3 per cent in nominal terms. In the 2013/14 financial year, the budget allocation for this sub-programme is R22.6 million, down from R60 million in 2012/13.

4.3 Programme 3: Rail Transport

The Rail Transport programme facilitates and coordinates the development of sustainable rail transport policies, strategies and systems. Moreover, it oversees rail public entities. Five sub-programmes fall under the Rail Transport programme:

· Rail Regulation;

· Rail Infrastructure and Industry Development;

· Rail Operations;

· Rail Oversight; and

· Rail Administration Support.

In 2012/13, the budget allocation for the Rail Transport programme was R10.3 billion and it increases to R11.2 billion in 2013/14, indicating an increase of 3.3 per cent in real terms and 9.1 per cent in nominal terms. The budget allocation constitutes 26.6 per cent of the Department’s budget. The Rail Oversight sub-programme receives the biggest share of the programme’s budget allocation, which is R11.2 billion. This constitutes a real increase of 3.3 per cent and a nominal increase of 9.1 per cent, up from R10.3 billion that the sub-programme received in 2012/13. The Rail Regulation sub-programme receives R14.2 million, down from R16.2 million that was allocated to it in 2012/13. This indicates a decrease by 17.0 per cent in real terms and 12.3 per cent in nominal terms.

The Passenger Rail Agency of South Africa (PRASA) receives R6.1 billion in the form of transfers for capital payments. This is largely intended to enable the entity to carry out its rail recapitalisation programme, in line with the NDP and the State-of-the-Nation Address. An additional R3.3 billion is allocated to PRASA for current payments. For its part, the Railway Safety Regulator receives R46.5 million for capital payments.

4.4 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. In addition, it oversees road agencies, provincial and local expenditures. The programme is divided into five sub-programmes:

· Road Regulation;

· Road Infrastructure and Industry Development;

· Road Oversight;

· Road Administration Support; and

· Road Engineering Standards.

Expenditure on the Road Transport programme increases from R18.2 billion in 2012/13 to R19.5 billion in 2013/14, translating into an increase by 1.5 per cent in real terms and 7.2 per cent in nominal terms. It is worth noting that the programme receives the largest share of the Department’s budget, that is, 46.2 per cent. However, the budget allocation for the Road Regulation sub-programme decreases markedly from R335.1 million in 2012/13 to R37.5 million in 2013/14. This is a decrease by 89.9 per cent in real terms and 89.4 per cent in nominal terms.

An amount of R10.5 billion is transferred to the South African National Roads Agency Limited (SANRAL). Of this amount, R3.5 billion is for current payments, R6.4 billion is for capital payments towards non-toll networks and R648.9 million is allocated for coal haulage networks. The Provincial Roads Maintenance Grant receives R8.7 billion. Of this amount, R7.5 billion is allocated for Road Maintenance Sani Pass Roads Grant and R367.8 million is set aside for the Provincial Roads Maintenance Grant: Disaster Relief. An additional R808.9 million is for the Provincial Roads Maintenance Grant: Coal Haulage Road Network Maintenance. The Rural Roads Asset Management Grant receives R52.2 million, up from R37.3 million in the 2012/13 financial year.

4.5 Programme 5: Civil Aviation

The Civil Aviation programme is responsible for regulating and investigating the development of an economically viable air transport industry that is safe, secure, efficient environmentally friendly and compliant with international standards. It also 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.

The programme budget decreases from R520.3 million in 2012/13 to R140 million in 2013/14, which is a decrease of 74.5 per cent in real terms and 73.1 per cent in nominal terms. The Aviation Safety and Security sub-programme increases significantly from R12.4 million in 2012/13 to R69.3 million in 2013/14. This represents an increase of 429.2 per cent in real terms and 458.9 per cent in nominal terms. The increase is due to the fact that the search and rescue and watch keeping budget for aviation and maritime are transferred from the Maritime Transport programme to this sub-programme.

Similarly, the budget allocation for Aviation Oversight sub-programme increases from R24.3 million in the 2012/13 financial year to R35.7 million in 2013/14, indicating an increase of 39.12 per cent in real terms and 46.9 per cent in nominal terms. The increase is attributed to increased transfers to the South African Civil Aviation Authority with a view to enabling the entity to improve aviation safety and discharging its accident and incident investigation function.

4.6 Programme 6: Maritime Transport

The Maritime Transport programme coordinates the development of a safe, reliable and viable maritime transport sector. It does so by developing, monitoring and exercising oversight over maritime public entities. Five sub-programmes fall under the Maritime Transport programme:

· Maritime Policy Development;

· Maritime Infrastructure and Industry Development;

· Implementation, Monitoring and Evaluations;

· Maritime Oversight; and

· Maritime Administration Support.

For the 2013/14 financial year, the Maritime Transport programme is allocated R105.3 million, down from R149 million in 2012/13. This budget allocation decreases by 33.1 per cent in real terms and 29.3 per cent in nominal terms. The decrease is as a result of the once-off allocation of R20 million for removing the Seli 1 shipwreck from Bloubergstrand in 2012/13. This is also due to the transfer of the search and rescue function from this programme to the Civil Aviation programme.

The noticeable decrease is in the Implementation, Monitoring and Evaluations sub-programme, decreasing by 53.1 per cent in real terms and 50.5 per cent in nominal terms. Conversely, the budget allocated for the Maritime Policy Development sub-programme increases from R16.3 million in 2012/13 to R21.7 million in 2013/14, which is an increase by 26.7 per cent in real terms and 33.1 per cent in nominal terms. The increase is due to the operational costs of the International Maritime Organisation office, International Maritime Organisation diplomatic conference and the development of the business model for regional shipping and transhipment.

4.7 Programme 7: Public Transport

The Public Transport programme develops norms, standards, regulations and legislation to guide the development of public transport for rural and urban passengers. It is also tasked with regulating interprovincial public transport and tourism transport services. Moreover, the programme monitors and evaluates the implementation of the public transport strategy and the National Land Transport Act (No. 5 of 2009). The Public Transport programme comprises six sub-programmes:

· Public Transport Regulation;

· Rural and Scholar Transport;

· Public Transport Industry Development;

· Public Transport Oversight;

· Public Transport Administration Support; and

· Public Transport Network Development.

The Public Transport programme received R9.9 billion in 2012/13, which increases to R10.8 billion in 2013/14, indicating an increase by 2.5 per cent in real terms and 8.2 per cent in nominal terms. The programme’s budget allocation constitutes 25.6 per cent of the Department’s budget. However, the allocation for the Public Transport Administration Support sub-programme decreases significantly from R47.8 million in 2012/13 to R9.5 million in 2013/14. This represents a decrease by 81.2 per cent in real terms and 80.1 per cent in nominal terms. This is due to the fact that in 2012/13 the Department used the money allocated to this sub-programme on consultants who were responsible for verifying subsidies. This was as a result of the Department’s intervention in the administration of the Limpopo Provincial Department of Transport in terms of section 100 of the Constitution.

5. TRANSFERS TO TRANSPORT ENTITIES

5.1 AIRPORTS COMPANY SOUTH AFRICA (ACSA)

The Airports Company of South Africa is regulated in terms of the Airports Company Act (1993) and the Companies Act (1973), and is listed as a schedule 2 public entity in terms of the Public Finance Management Act (1999). The Airports Company of South Africa was formed to own and operate the nine principal South African airports, including the three main international gateways of OR Tambo, Cape Town and King Shaka International Airports . As well as providing secure infrastructure for airlines to transport people and goods, the company extends its responsibilities to include promoting tourism, facilitating economic growth and job creation, and protecting the environment.

The Airports Company of South Africa derives its revenue from aeronautical and non-aeronautical services. Aeronautical revenue consists of landing fees, passenger service charges and aircraft parking fees. Non-aeronautical revenue is derived from advertising, retail rental, property rental and parking receipts. While revenue increased by 14.4 per cent a year over the historical period, this growth is expected to slow down to10.3 per cent a year over the medium term. The highest growth in expenditure over the medium term is expected for airport management. Infrastructure investment over the medium term is expected to be mostly for maintaining the existing airports. The estimated expenditure for 2013/14 is R6.5 billion.

5.2 PASSENGER RAIL AGENCY OF SOUTH AFRICA (PRASA)

The Passenger Rail Agency of South Africa’s mandate is contained in the Transport Services Act (1989), as amended in November 2008. The Act requires the agency to, at the request of the Department of Transport, provide rail commuter services within, and to and from South Africa in the public interest. In consultation with the Department of Transport, it also provides for long haul passenger rail and bus services within, to and from South Africa .

The main revenue source of the Passenger Rail Agency of South Africa is transfers from the Department of Transport. Secondary revenue comes from fares and rental properties. The increase in transfers is mainly driven by increases to the capital transfers for the upgrade of infrastructure while the operational transfers increase moderately. Revenue from passenger services is generated from ticket sales on train and bus commuters for passenger and long distance journeys. Revenue increased significantly between 2009/10 and 2012/13 due to increases in sales of tickets as a result of the incorporation of Autopax and Shosholoza Meyl into the agency in 2009/10 and transfers received from the department to support the investment in rail infrastructure. The spending focus over the medium term will be on improving the agency’s infrastructure to increase service reliability. This includes the maintenance of existing infrastructure and rolling stock, upgrading signalling and buying new rolling stock.

Estimated expenditure for 2013/14 is R10.329 billion. An amount of R4.5 billion was transferred to the entity in 2012/13. Transfers for 2013/14 are estimated at R4.8 billion.

5.3 ROAD ACCIDENT FUND (RAF)

The mandate of the Road Accident Fund, derived from section 3 of the Road Accident Fund Act (1996), is the payment of compensation for loss or damage wrongfully caused by the driving of motor vehicles in South Africa .

Almost all of the Road Accident Fund’s revenue is derived from the fuel levy, which was 88 cents a litre in 2012/13 and will be increased by 8 cents a litre from 1 April 2013. The fund’s spending focus in terms of its founding legislation is the payment of claims made by accident victims. Social benefits expenditure increased consistently from R14.3 billion in 2009/10 to R19.6 billion in 2015/16. In 2011/12, payouts were much higher at R32.6 billion as a result of the increase in cash claims paid. On average, a total of 95 per cent of the fuel levy will be utilised for claims and claims related expenses, while the rest is used for administrative purposes.

Revenue for 2013/14 is estimated at R21.598 billion. Estimated expenditures are R19.452 billion.

5.4 SOUTH AFRICAN NATIONAL ROADS AGENCY (SANRAL)

The South African National Roads Agency was established by the South African National Roads Agency Limited and National Roads Act (1998). The act makes the agency responsible for the planning, design, construction, operation, management, control, maintenance and rehabilitation of the South African national road network, including the financing of these functions. This includes both toll and non-toll roads.

The South African National Roads Agency’s income consists mainly of revenue generated from toll fees and government allocations for the toll road network, as well as government allocations for the upkeep of the non-toll road network. The 78.4 per cent of revenue comes from national government transfers.

Transfers received in 2012/13 were R7.47 billion. Estimated transfers for 2013/14 are R7.8 billion with estimated expenditure at R13.94 billion.

5.5 SOUTH AFRICAN CIVIL AVIATION AUTHORITY (SACAA)

The South African Civil Aviation Authority was established in terms of the South African Civil Aviation Authority Act (1998). The Act requires the authority to control and regulate civil aviation safety and security, oversee the implementation and compliance with the national aviation security programme, oversee the functioning and development of the civil aviation industry, and promote civil aviation safety and security.

The South African Civil Aviation Authority derives its revenue from fuel levies, user fees and passenger safety charges. A grant transfer received from the Department of Transport is only to be used for investigations of accidents and incidents. In 2012/13, 74.1 per cent of the authority’s revenue was generated from the passenger safety charge and 17.3 per cent from user fees. These continue to be the two major revenue sources over the medium term. Both amounts are collected from airlines which include them in passengers’ ticket costs. An increase in the passenger safety charge from R12 to R16 per departing passenger was implemented from 1 March 2012.

Estimated expenditure for 2013/14 is R146.6 million.

5.6 SOUTH AFRICAN MARITIME SAFETY AUTHORITY (SAMSA)

The South African Maritime Safety Authority was established by the South African Maritime Safety Authority Act (1998). It is mandated to promote South Africa ’s maritime interests, ensure the safety of life and property at sea, and prevent and combat the pollution of the marine environment by ships.

The South African Maritime Safety Authority’s major revenue source is Portnet levies, constituting 73.5 per cent of total revenue in 2012/13. Transfers from the Department of Transport and user charges are secondary income sources. There was strong growth in revenue due to levy increases. There has also been an increase in revenue generating activities due to the increase in the capacity to deliver services as well as additional revenue streams being established. No major levy increases are expected over the medium term. Estimated expenditure for 2013/14 is R349.9 million.

5.7 AIR TRAFFIC AND NAVIGATION SERVICES (ATNS)

The ATNS acquires, establishes, developss, provide, maintains, manages, controls and operates air navigation infrastructure and air traffic services. Estimated expenditure for 2013/14 is R1.2 billion.

5.8 CROSS-BORDER ROAD TRANSPORT AGENCY (C-BRTA)

The C-BRTA is tasked with the responsibility of facilitating the unimpeded flow of cross-border freight and passengers by road in order to promote trade and economic development within the SADC region. Revenue for the C_BRTA is generated from the application and issuing of permits for cross-border freight and passenger movements, money collected from fines, and parliamentary appropriations. Between 2009/10 and 2012/13, revenue increased from R56 million to R204.3 million attributable largely to the permit tariffs which increased by 33 per cent in April 2011. Estimated expenditure for 2013/14 is R212.9 million.

5.9 PORTS REGULATOR

The Ports Regulator exercises economic regulation over the ports industry. The regulator

mainly receives transfers from the Department to fund its operations. Estimated expenditure

for 2013/14 is R16.2 million.

5.10 RAILWAY SAFETY REGULATOR (RSR)

The Railway Safety Regulator’s mission is to oversee and promote safe railway operations through appropriate support, monitoring and enforcement guided by an enabling regulatory framework. Estimated expenditure for 2013/14 is R86.6 million.

5.11 ROAD TRAFFIC INFRINGEMENT AGENCY (RTIA)

The Road Traffic Infringement Agency administers the procedures that discourage the

contravention of road traffic laws and adjudicates infringements, enforces penalties,

provides specialised prosecution support services, and undertakes community

education and community awareness programmes. Estimated expenditure for 2013/14

is R120.4 million.

5.12 ROAD TRAFFIC MANAGEMENT CORPORATION (RTMC)

The RTMC coordinates strategic planning, regulation, facilitation and law enforcement

in respect of road traffic matters by national, provincial and local spheres of

government. The entity’s expenditure has been greater than its revenue, as it had not budgeted for the responsibilities of the National Traffic Police Unit. Over the medium term, the entity was allocated transfers of R80.0 million in 2013/14 to pay for the National Traffic Police Unit that was created in 2011/12 and fully established in 2012/13. Estimated expenditure for 2013/14 is R173.4 million.

6. OBSERVATIONS

During its deliberations the Committee made the following observations:

6.1 97.8 per cent of the Department’s budget allocation went to its entities in the form of transfers and subsidies and the Department was left with only 2.2%.

6.2 The Department aimed to increase the passenger rail volumes by 2.5 per cent annually, while the increase of road volumes were increasing at a rate of 7.5 per cent.

6.3 The objective of the Department was to reduce the kilometers of provincial roads in a poor to very poor condition to 51 000 kilometers by 2014. The Committee welcomes the additional funding that would be made available to SANRAL for capital roads works for the 2014/15 financial year as it would have a positive effect on the speed and standard at which roads were maintained.

6.4 The Committee noted the efforts made by the Department to maintain and preserve coal haulage roads through rehabilitating 2 156 km of coal haulage roads by 2014 and engaging with Transnet and Eskom to facilitate the ongoing migration of coal from road to rail.

6.5 The Committee noted the objectives of the Department to reduce accidents and incidents of roads by 50 percent in 2020 in support of the Millennium Development Goals and to regulate the driving school industry through a review of the drivers’ training manual in order to reduce road accidents.

6.6 The Committee noted that the taxi recapitalization programme, in its current form, was not achieving its desired objectives. Fewer taxis were scrapped than planned.

The Committee appreciated that the Department was exploring the contribution of cooperatives in addressing challenges in the implementation of the programme.

6.7 The Committee noted that the Department was silent on the implementation of its Shova Kalula programme.

6.8 The Committee further appreciates the introduction of the Public Network Operations Grant as it will provide much needed operational funding of public transport infrastructure for municipalities.

7. RECOMMENDATIONS

The Committee recommends that the Minister should ensure:

7.1 That the Department enhances its oversight capacity, as it transfers a huge portion of its budget to its entities.

7.2 That the Department’s objective to improve public transport access and reliability should include the increase of rail volumes beyond the 2.5 per cent increase in order to reduce congestion on roads.

7.3 That the Department increases its efforts in facilitating the migration of coal from road to rail.

7.4 That the Department monitors under-expenditure on road maintenance to reduce the huge maintenance backlog. The Department should also ensure that it achieves its targets for job creation.

7.5 That the Department investigates and assesses the use of technology to curb irresponsible driver behavior to reduce road fatalities. The Committee supports the Departments objective to review the drivers’ training manual, but this should be coupled with life skills development to improve driver behaviour. A more rigorous driving test and the introduction of a probationary period would ensure better trained drivers.

7.6 That, in view of the high rate of road fatalities, the Department increases its efforts to reduce road fatalities. The Department is encouraged to look at driver training programmes used by countries such as South Korea and Japan that focus on training methods to prevent accidents.

7.7 That the Department increases the speed at which it formulates its policies as the maritime and scholar transport policies have taken more than four and a half years to be finalised.

7.8 That bicycles for Shova Kalula are produced in South Africa . The production of the bicycles should address job creation and the alleviation of poverty in under developed and rural areas.

Report to be considered.