DEPARTMENT OF TRANSPORT BUDGET VOTE 2004, BY MINISTER OF TRANSPORT, JEFF RADEBE, MP, National Assembly
17 June 2004

"DRIVING TRANSPORT'S REORGANISATION THROUGH INNOVATION"

Last year I had the privilege to address the Transport Budget Vote as the Acting Minister of Transport in the presence of the Minister of Transport, Cde Dullah Omar. It was one of those instances when Cde Dullah showed the extraordinary courage that defined him throughout. I am deeply conscious of the difficulties that the Department experienced when we all worked in the hope that Cde Dullah would resume his full duties in due course.

It was not to be, and so it is with a special poignancy that I take the podium today. Our country and this House have already paid special tribute to Cde Dullah for his life's work. The ANC tradition is to honour fallen heroes and heroines by picking up their fallen spear and continuing the struggle. This is in fact an African tradition and one that I am sure is not foreign to anyone in this House. It is our task, amongst others, to continue the journey towards a humanitarian society free of racism, sexism, and injustice based on class discriminations and prejudices. We do so now.

It would be foolhardy of me to attempt even a thumbnail sketch of all that we do. I will restrict my initial attention then to certain key areas of our strategic programme. I do not see my contribution today as separate from the continued interaction between the Committee and my department.

Honourable Members, since 1994 the democratic government has produced a range of policies to address the specific needs of our country's spatial, economic, social and political inequalities that are rooted in apartheid, and which continue to evolve along structural lines, whilst producing new social and class relations. In the RDP we committed ourselves to a safe, affordable and reliable public transport system and increasing the frequency of public transport in the rural areas. We also identified the need for an integrated transport-planning framework, and to make sure that we provided transport infrastructure in an environmentally sustainable manner.

However, the spread of responsibilities across all spheres of government, (1) a bewildering range of non-government and statutory bodies, (2) as well as the activity of arms-length commercial institutions (3), regulatory bodies (4), and a host of international, regional and continental organisations and institutions that Transport is affiliated to (5) has complicated the definition and implementation of clear mandates in the transport sector as a whole. As it is, the sector deals with all physical infrastructure and elements upon which transport operations take place, whether these are on land, by sea, road, rail or in the air. Over and above responsibilities in those fields, it also comprises operation and control of land passenger transport, land freight transport, civil aviation, maritime transport, road traffic and safety. Increasingly, security in the transport sector has moved beyond the safety of users to the security of infrastructure, routes, and personnel. This has brought even further responsibilities to those entrusted with transport across the globe.

If Members will bear with me, I wish to quote at some length from the 2003 Public Service Commission's Report on the Evaluation of the Department of Transport and its Agencies requested by Minister Omar, just to illustrate the depth of the strategic problem that confronts us:

The Government has prioritised the development of basic services to the previously under-served communities. Transport is a function derived from the social and economic needs of communities, especially the under-served communities, as it serves to meet their demands in a manner that ensures safety, reliability, efficiency, accessibility, mobility, and economic and environmental sustainability. As such, transport infrastructure and services play a significant role and the Government has recognised transport as one of its five priority areas for socio-economic development. The effectiveness of the role played by transport is to a large extent dictated by the soundness of transport policy and the strategies utilised in implementing policy. This is the main task of the Department. Furthermore, one of the principles applying to land transport policy (...) is that affordable and accessible transport services should be provided to the public. This is a social and economic enabler and provides the avenue to poverty reduction, which is a Government priority. The problem is that, for defining Government funding options, the Department is classified in the economic services and infrastructure sector, and not in the social sector. When looking at social development in the budget, items such as rural transport development do not feature. (6)

The Report goes further to add that in terms of NEPAD's long-term objectives to which Government subscribes wholeheartedly, it is necessary to bridge the infrastructure gap, "as a major parameter of economic growth and poverty reduction", so that African countries "both individually and collectively" can overcome poverty. Transport is at the centre of this strategy (7). Closer to home, the Report reminds us that the aim of the SADC Protocol on Transport, Communications and Metrology is for member states to promote economically viable integrated transport service provision in the region to support the development of major regional development corridors and facilitate travel between their territories. As such the long-term vision for the South African transport system is that South Africa should be the hub of transport within the region. (8)

It is against this background that Government sees transport as a key driver for growth and development. Government must and will play an active role in the transport sector because transport is not simply an instrument of broader social and economic policy. For us, transport policy and infrastructure investment support and drive Government's social and economic objectives.

South Africa's current and projected economic and social demands on the transport sector are greater than the outputs the sector and its components can manage adequately at the moment. As a result, the transport sector and its components, not least of which are the myriad government and public contributions to this sector, need to be overhauled, transformed and re-energised to meet growing and expanding challenges. We must release the brakes that are holding back the massive potential that exists in the transport system as a whole.

As part of our initial plan to remedy the situation towards implementing an overarching development agenda in the transport sector, we have identified three main focus areas for 2004/05. Alongside day-to-day operations, these include:

* Completing the comprehensive review of the public transport system by September, including the subsidy system;
* developing a comprehensive logistics strategy and investment plan by November 2004; and
* overhauling the Department as soon as possible so that the Department can fulfil its mandate.

A review of the public transport system is underway. Factors to consider include the mis-match between how the subsidies are allocated at the moment the types of public transport used by commuters, and whether special category commuters like learners, the isolated, the infirm, aged, or unemployed are discriminated against. (9) We also need to consider alternative means of delivery and payment. We will also develop a business case for increasing public sector investment in the public transport system.

We need to rationalise route planning to avoid duplication of services to eradicate wastage and the dilution of the impact that subsidies might otherwise have. Obviously this will necessitate consultation between sectors, spheres of government and stakeholders alike.

The revision of the public transport subsidy system that is underway will also underpin the merger of Metrorail, Shosholoza Meyl and the SARCC to report to the DoT, allowing Spoornet to concentrate on freight. We have not come to any decisions yet on the shape of the new entity and will only do so after proper consultation with all relevant stakeholders and spheres of government.

An important component of the public transport system is the quality of infrastructure serving the public. In line with our desire to improve these facilities to benefit commuters, we continue to invest in upgrades and the provision of facilities, such as improved lighting. (10)

The taxi recapitalisation programme has dragged on for far too long. None of the objections that have been raised question the principle of the programme, namely helping South Africa's most utilised public transport sector overcome credit and loan impediments from a hostile financial sector, and at the same time improve the quality, safety, reliability and ability of the sector. The shortcomings of the current proposals relate in most part to the escalation of costs that have appeared over the years from when it was first proposed.

The taxi recapitalisation process is on track. The inter-departmental steering committee is engaging with the short-listed bidders to clarify elements of their best and final offers. Government's officials are under clear instructions to ensure that offers are affordable to government and will allow taxi-owners to make a suitable living. We would like to see final recommendations from the committee before the end of August 2004, where after Cabinet will be asked to finalise the matter.

Government's transport infrastructure strategy review proceeded last year and is largely complete11. Government does not intend to reinvent the wheel and will concentrate on the areas of greatest pressure, such as the current road and rail systems that carry growing quantities of freight by mode, volume and value, which members are familiar with. (12) At the same time, an innovative approach to thinking about logistics is necessary to build a system that will take us into the next decades.

Significant operational problems continue to bedevil our economic development. The rail system is unreliable, the road freight system is under enormous pressure, and the ports suffer from poor throughput. The lack of point-to-point infrastructure, as well as out-dated managerial and operational systems have greatly increased the urgency of tackling this problem as South Africa's capacity to deal with an ever-increasing trade environment falls further and further behind. (13)

At the same time, though, we cannot restrict ourselves to these traditional corridors of activity, in the belief that simply ironing out current bottlenecks and problems as they arise will be sufficient. Africa's history and our own development track record shows clearly that in many instances the location of roads and particularly rail networks in the earlier parts of the last century, in combination with the politics of colonial and internal boundaries, often influenced the patterns of exclusion and poverty associated with peripheries and centres of development and power.

Hence, it is critically important that we examine ways to overcome those structural and spatial discriminations. One approach is through the active promotion of multimodal node developments through projects such as the Dube Trade Port, the country's first multi-modal logistics platform. It has the potential to resolve a long-standing structural constraint at the heart of our logistics system, by developing an intercontinental air platform in close proximity to the nation's hub port in Durban. Globally, projects like this one are increasingly becoming the norm for countries wishing to increase the competitiveness of their economies by reducing trade transaction costs and actively participating in global supply chains.

The R1, 6 billion Dube TradePort and King Shaka International Airport will be fast tracked. I have instructed that the key obstacles to the unlocking of the implementation process, including the ownership of the land and the decommissioning date of Durban International Airport, will be overcome in the next three months. This will allow the project to proceed to the private sector procurement stage. We will have to pull out all the stops if we are to meet the 2009 target for the new airport and trade port to be operational and ready for business, but I am confident that we can do it.

Allow me a brief word about port operations. It is a truism that our ports need urgent reorganisation and it is therefore important that Parliament finalises its consideration of the National Ports Authority Bill as soon as possible. I must just say that we have no intention at all of not having effective regulatory frameworks in place whenever a competitive market structure is envisaged for any sector of our transport system. (14)

Another set of plans and programmes to encourage seamless operations and integrate formerly isolated areas of the country and regional economies into the national network relate to the revitalisation and further expansion of development spines (mainly rail and major trunk roads) and ribs (representing access and other roads) that carry huge potential to overcome previous and current neglect. (15) A primary example of this type of plan is the Kei Rail Project, currently funded by the Eastern Cape Dept of Transport with a contribution from the DoT.

A lot of work has already been done to refurbish the railway line and certain bridges that have fallen into disrepair, renew fencing along the track, and aims to realign the track and its location in certain instances. Ultimately travelling times will be cut from an average (16) hours between East London and Umtata to 4 1/2 hours; a remarkable achievement! The long-term project envisages an extension from the current multi-cargo freight plan concentrating on timber, minerals and limited container traffic towards a commuter service covering the long-distance route but more particularly servicing the future needs of the greatly expanded but properly panned urban spatial area located in Umtata and spreading down towards Viedgiesville and Qunu. The overall plan extends a vision for development in that region for the next 20 years. It already involves the close co-operation and planning of a number of national and provincial departments, the premier's office, local and traditional authorities, the East London IDZ, education, health and economic institutions and so on. There is no other rail/road integrated development project in a remote predominantly rural area of our country like it, and this is definitely something worth monitoring and supporting. (16)

Road developments are no less important and are subject to similar problems of budgetary allocations not yet at a level to meet requirements (17), but one of SANRAL's tasks is precisely to manage these shortfalls through a careful programme of prioritisation and the promotion of highly scientific and technology-based road works assessment criteria. This is a job they do quite well!

Our country still shows major disparities in the distribution of paved and gravel roads, and of access roads. The network thus also experiences widely divergent patterns of heavy-vehicle use, traffic volumes, and so on that makes generalisation difficult. (18) I would simply refer members to Ch 8 of the Intergovernmental fiscal review for 2003 to highlight what these challenges are.

I just want to raise two initiatives within the road transport system. The first is the classification system; the second is the use of labour-, or employment-intensive, methods of construction.

We are all well aware that road construction, upkeep, maintenance and bridge works over the past number of years, if not the decade, have in fact outstripped the outdated classification system of responsibility for roads based on ownership of the asset. Hence, today we have a situation where national government through SANRAL is responsible for the national road network, provinces and local authorities for a melange of provincial, local and municipal roads, and a whole cluster of roads, mainly rural access roads, that fall between the cracks of the administrative system and remain unclassified.

I would like to draw attention to at least one important process that is related to the new classification system but is not dependent on the finalisation of that programme, and that has already begun to see an improvement in how we prioritise and then implement road works programmes. Some time back, Government took a decision to expand SANRAL's approximately 7 500 km national road network to about 20 000, not through building a whole lot of new roads to clutter up the landscape, but rather through identifying those roads variously classified as national, provincial, or local, that together form a strategic network for road transport access in a seamless and integrated manner. It rests with the relevant provincial authorities to request, through the provincial premier, that particular roads be transferred to the strategic network where they would fall under the responsibility of SANRAL. Since 1999, when the project began, over 2 200 km of roads across 6 provinces have been transferred. (19) A glance at a map shows how the system links together and affects some provinces more than others. (20)

We believe that this system can significantly relieve provinces of some of the pressure they face in dealing with major roadworks initiatives and allow them to reallocate resources towards other transport and road related matters that fall directly under their constitutional remit, such as rural roads and rural public transport or projects they identify.

For some time now, the classification system has been under review, and I would have been happier if we were further along the road as it were than we are at present. However, as a result of valuable interactions with provincial and other stakeholders the proposals as outlined in the Intergovernmental Fiscal Review for 2003 have had to be reviewed and reworked. I understand that a basic principle rests on the function of the road, rather than an obsession with ownership of the asset. This can only be a step in the right direction, once all issues concerning financial responsibility, budget flows, regulation, control and so on have been dealt with.

I must caution that whilst some work remains to be done prior to the finalisation of a new model for the classification of our road system, time is of the essence and certainly I would like to see the final proposals within a month or so. In the meantime, mutual discussion and agreement between provinces and ourselves to take further advantage of the system I have just described will continue (21).

If I may turn to the labour- or employment-intensive methods of construction that we believe should underpin road, rail and other appropriate infrastructure construction. Obviously, the nature of some road pavement and surface types require more technology than others, but we would urge all designers and engineers to do their work with the imperative of employment uppermost in their minds.

My interaction in the NCOP last week revealed that there is still some confusion about what we mean by employment-intensive methods of construction. We are certainly not advocating a reversion to apartheid's rural - road construction method where the fat white foremen sat dosing on the truck whilst the black labourers did the hard work.

Let me give you one example of the proper methods in action, the construction of the Amadiba road in Pondoland where the only source of pea-gravel for the road surface in the area could only be quarried by hand because of the shallowness of the seam of gravel. If mechanical means had been used, there would have been much greater environmental damage to topsoil, with erosion arising as a result. The choice of appropriate technologies is key to the successful implementation of the labour-intensive approach. These methods have been used very successfully throughout the public works programme over the years.

What is more - and this addresses in some way the vexing question, of now that we have a road, what next? - Family units, most of which are women-headed, have been contracted to carry out maintenance work along defined sections of the road close to where they live according to negotiated rates, conditions and terms. They are assisted in opening bank or post office accounts, and given other support to begin a process of changing the way in which people manage their own affairs as well. From the immediate benefit of employment in construction, longer-term work packages that provide income are this arranged around time-tables and terms that allow these rural people to continue their subsistence work as well as look forward to the growth that should follow in the tourism and other sectors as the access provided by the road itself begins to lay stronger foundations for more diverse economic and social activity as time goes by. In this sense, these roads not only enable growth and development, they become critical drivers of focused development in terms of the integrated rural development strategy.

But besides our own positive experiences in this regard, comparative international experience shows quite clearly that labour-based options in the feeder and access road sectors, minor urban works, and area-based development programmes are, in financial terms, reduce the cost of using equipment intensive methods by between 10 and 30%; cut foreign exchange requirements by between 50 and 60%; and they create about 2 to 5 times more employment for the same amount of investment. (22) In this context it is interesting to note that African imports from Europe comprise some 80% of manufactured goods, and about 1/2 of this figure again covers machinery and transport equipment. (23)

Honourable members, I have outlined a number of the major, but by no means all, the challenges we face in Transport. Although time prevents me from outlining in any detail others, we must not forget the critical mandate of oversight and regulation of agencies and functions, and of the range of aviation and maritime, regional and international measures that we need to implement, participate in, monitor and regulate.

Thus, the third major part of my address this afternoon, the need to radically overhaul the DoT and its administrative sections to meet the challenges of a developing economy.

The DoT has a serious shortage of senior personnel across all divisions and sections. This under-capacity of skills hampers innovation and the ability of the department to focus on its key role as a development-centred department. It also does not allow for effective oversight over the numerous transport agencies that it is meant to administer. We aim to produce a more streamlined and focused department, paying attention to transport issues in a strategic manner that allows for a core focus on key issues, some of which I have already identified, with cross-cutting interests integrated into the larger plan.

Before I conclude, let me refer to the Road Accident Fund. Steps taken by Government and the Board of the RAF following the Satchwell Commission and Nkonki Sizwe Ntsaluba's first audit in 2000 were necessary but insufficient to overcome the financial challenges of the RAF or to combat the fraud and corruption that is eating away the heart of the fund.

We cannot underestimate the extent of the problem and I wish to outline briefly some of the steps that have been taken by both Government and the Board of the RAF to deal with the matters at hand. Our primary aim at this stage is to return the RAF to a sustainable financial position.

More than 670 claims are lodged against the RAF, and about 650 claims settled, every working day. Below are the immediate measures taken by the RAF Board to stabilise the Fund. More medium term strategies are being developed in consultation with the Department and my Ministry.

1. A payment queuing system for all claims finalised, whereby claimants' attorneys receive moneys on a once weekly basis has been introduced This replaces the laissez-faire system of payments being made to attorneys at all times during every working day. This weekly payout system has been effective from last month.

2. Effective this month, a new centralised verification system is being implemented to authentic claims, in view of the inordinate number of fraudulent claims. Reliance on existing databases from various transport and other entities is underway.

3. RAF is investigating a claims differentiation system to separate out the bulk of claims, which clutter the magistrate's court system in our country. Two thirds of the claims are below R50 000 and just over 90% of the claims below R100 000 each.

4. An evaluation of existing service providers/consultants engagement is underway to reduce reliance on external service providers/consultants, reduce cost of RAF administration and to enhance internal capacity. RAF has brought down the cost of its claims administration to levels last seen in 2000. Outside the Department of Justice, the RAF has the largest number of lawyers employed in the public service. These lawyers in turn brief external attorneys all over the country, who in turn brief counsel.

5. A review of business processes at RAF is underway and these will be considered by the RAF Board in terms of restructuring and engineering RAF to enable business process improvement, application of appropriate technology and a more committed RAF staff. New Executives have been appointed in the last two months and two more are due to join RAF from next month. In the new Executive there is only one out of five from the "old guard."

6. The investigations into the Chairman and CEO have begun and it is anticipated that these will be concluded in a matter of weeks, not months.

7. Various key stakeholders interactions have ensued and RAF's difficulties have been full communicated to these stakeholders, particularly the organised attorney profession. There has been agreement on a structured deferred payment system to lessen the cash flow crisis that the fund faces. In this regard, if there were no fraud and corruption, there would be no need for any cash injection by Government. To this end, the Board has resolved not to approach Treasury for further fuel levy increases. Instead, it is determined to resolve the susceptibility to fraud and corruption that exists in the RAF environment first.

8. Interactions have taken place with other similar jurisdictions in the world that have dealt with fraudulent claims in order for the RAF to reposition itself accordingly. I wish to acknowledge the presence in the Public Gallery of Mr Tony Tenaglia from TAC, Australia, who is reviewing on my behalf RAF processes.

9. The RAF Board has adopted a draft Corporate Charter and is engaging with me on a Shareholder Compact with clearly defined deliverables that I intend to actively monitor.

10. Further fraud reduction and business process enhancement measures will be announced in the forthcoming months by the RAF Board, which has committed itself to a phased turn-around of the RAF by the end of August 2004, the 1st anniversary of its appointment.

These interventions by the RAF Board will create the conditions to stabilise the ship. The system of payment/settlement of claims and our ability to uproot corruption and fraud are both critical to the success of our efforts. Parliament can assist the process of normalising the situation by processing speedily the finalisation of the Road Accident Fund Amendment Bill. Sturdy amendments are necessary to deal with the issue. These amendments, central of which is to reform the current road accident compensation system, are key to ensuring that the interventions of the Board become sustainable. This will make sure that we do not return here after five years or less to face a similar crisis in the RAF.

W should all be concerned that there seems to be an industry of specialists feeding on the resources of the RAF and marginalising the legitimate victims in the process, making victims of accidents victims again of a predatory system. The RAF must operate according to our initial intentions.

Honourable members, I have not outlined the extensive obligations and operations in fulfilment of our SADC, NEPAD a membership of international organisations, particularly those in the aviation and maritime sectors. Let me just stress that this is an area that we shall not neglect and we will certainly beef up our ability to fulfil these obligations much quicker than we have up until now. In this regard may I just indicate that I intend dealing with some of these issues when I open the AfricaRail conference in Midrand next Tuesday and when I attend the Aviation and Allied Business conference in Nairobi at the end of the month. I would suggest that the extent of these actions requires a separate and dedicated presentation to portfolio committee in the near future.

Finally, and at the simplest level, the proposals outlined above, alongside the integration of labour-intensive methods of implementation and construction that we adhere to, serve as one important link in the chain that will bring the first and second economies within reach of each other. The removal of bottlenecks at ports and railheads for example address some of the challenges of the first economy; the upgrading and revitatilisation of marginal and low density railway lines on the other hand, if carried out correctly and according to our ANC labour intensive and community based policies, will address second economy issues. They are strategies that address the problems of our country from both sides of the same coin. One side cannot exist without the other!

Although still fresh in the portfolio, I am fortunate to have had some exposure to the transport sector through my previous role as Minister of Public Enterprises. Transport however has a different focus. Nonetheless, I am absolutely convinced that innovation in thought, in operation and action, is the crucial ingredient in our response to a world in constant change. If we are to keep South Africa moving we have first of all to think faster, more laterally, and not be scared to air new ideas. If we do not do this, we will suffer increasing costs of doing business in our country, we will not assist our neighbours, and our citizens will continue to struggle to get to school, to work, to places of leisure in a secure, affordable, comfortable and efficient manner.

Providing South Africans with access to the good things of life is the key challenge for the future and we cannot be prisoners of outdated thinking. Innovative transport policy is the key ingredient in providing that access. Our citizens and business partners expect nothing less.

I trust we have your support in this ambitious yet necessary project. It is time for perhaps the hardest work we have all ever embarked upon.

Mayihlome!

I thank you.

1 National, provincial, metro and local authorities
2 Transnet and its various entities; SARCC; Metrorail; ACSA; and ATNS
3 SANRAL, CAA, SAMSA, CBRTA, RAF, UTF, AA, RTMC, and RTIA
4 including the (economic) regulating committee for ACSA and ATNS; IASC; ASLC; MRCC; TAT, and the AAIC
5 e.g. ICAO, AFCAC, IMO, SADC, and many others
6 PSC Report on the Evaluation of the Department of Transport and its Agencies [RP 62/2003], p 13
7 ibid. p 13
8 ibid. p 14
9 Information Slides, numbers 6 - 10 provide statistical information about bus subsidies
10 Information package slides 11 - 12 provide information about capital expenditure plans in provinces
11 Information package slide 14 provides an overview of current infrastructure.
12 Information package slides 15, 16, 17, 20, 21, 24 provide maps and data of these networks.
13 Information package slide 18 provides an overview of the problems.
14 Information package slide 19 maps the SA port system
15 Information package slide 25 maps the Spoornet classification of lines according to density and viability
16 Information package slides 31 - 33 map out parts of the Kei Rail project
17 Information package slides 3 - 5 provides details of backlogs for rail infrastructure, rolling stock and commuter rail
18 Information package slides 19, 20, 22 show the road network according to volumes, cargo traffic and border posts
19 Information package slides 36 - 39 identifies these by financial year, province, road and kilometres
20 Infrastructure package slide 35 identifies these national roads by classification
21 Information package slides 40 - 44 indicate ongoing and proposed transfers
22 For example, ILO, Employment-intensive infrastructure programmes: labour policies and practices, [Geneva, 1998], pp 13-15.
23 United Nations Conference on Trade and Development's 2003 Review of Maritime Transport [UNCTAD/RMT/2003]