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Budget Vote Address to National Assembly
Jeremy Cronin, Deputy Minister of Transport

13 April 2010

Minister Sbu Ndebele has already provided a very comprehensive overview of the DoT’s 2010 budget allocation. I would like to focus on three additional areas.

RAF Court Case decision

Two days before the past Easter weekend, Judge AJ Fabricius delivered a landmark judgment in the North Gauteng High Court in Pretoria. Perhaps because it WAS the week before Easter, and because it was a lengthy 204-page judgment, or, more likely, perhaps because those who often monopolise the commercial media didn’t like the outcome, the judgment received only a passing mention in several newspapers.

And yet this 204-page judgment is of considerable significance for the broad South African public.

Those of you who followed the brief and occasional reporting on this matter will know that the Law Society of South Africa and the South African Association of Personal Injury Lawyers challenged the constitutional validity of the Road Accident Fund Amendment Act which came into force in 2008.

In particular, the Law Society and the Association of Personal Injury Lawyers challenged the Amendment Act on the following grounds:

  • The abolition of the right to seek compensation under the Common Law for a loss not compensated by the RAF;
  • The cap set on compensation for future loss of earnings and support at R160, 000 (since adjusted for inflation to R175, 887) per annum.
  • The limitation of claims for general damages to “serious injuries” only; and
  • The application of prescribed tariffs for emergency and other hospital and medical care.

Before coming to his conclusions, Judge Fabricius had some relevant things to say about the context to the Court challenge brought by members of the legal fraternity. The Judge noted that legal costs to the Fund in the year ending 31 March 2009 were a whopping R1,6 billion – and these were merely the so-called “party-and-party” legal costs (i.e. what was paid directly by the Fund to lawyers). The attorney-client costs, he noted, were not known (since that is privileged information). However, the Judge accepted as plausible the RAF’s estimate that these costs amounted to somewhere around R4,3bn in the financial year 08/09 – that’s a total of nearly R6bn going to lawyers.

These figures are roughly similar to those that were suggested by the Satchwell Commission (2002), which estimated that of the RAF’s annual multi-billion Rand fuel levy allocation (to which we all contribute as road-users) some 50% was being paid out in legal professional fees. Judge Fabricius refers to this earlier commission.

“The Satchwell Commission had stated that it was not the function of road accident compensation to prop up a legal profession in order that it may `do good’ for the benefit of democratic or constitutional values. I agree with that view.”

Judge Fabricius found against the Law Society and Personal Injury Lawyers on every single count (bar one minor technicality in the regulations). The nub of the Judge’s findings are contained in the following two paragraphs.

In regard to the alleged unconstitutionality of removing a claimant’s right to take up a civil case for the balance of a claim not paid out by the RAF, he noted that contrary to the applicants’ claim that it took away more than it gave:

“The substitution of a statutory claim for the common-law claim is to the advantage of claimants insofar as they now have a debtor with a “deep pocket”. They would otherwise have been at risk of having a good common-law claim against the debtor who cannot afford to pay… The substitution of the risky common-law claim with a statutory claim against the public fund, is a significant advantage”

Looking at the same issue from the perspective of a driver at fault, the Judge further noted that while we all pay into the Fund through the fuel levy, those unable to afford additional personal insurance for indemnity might be forced into bankruptcy as a result of a moment’s inattention.

As for the other allegations of a lack of fairness in the Act, the Judge ruled that exactly the opposite was the case:

“While contributing the same fuel levy, the poor obtained much less because they could claim less (if anything) for loss of earnings / earning capacity; they were less likely to institute large claims for medical expenses because they could not afford to pay for the treatment upfront, and they were less likely to obtain the same quantum of general damages as the rich, having regard to the consistency and the quality of treatment in respect of general damages.”

In short, in reaching his findings in favour of the DoT and the RAF, the Judge found that the RAF Amendment Act was not irrational or unconstitutional, it advanced the objectives of a Road Accident compensation system that was equitable, reasonable, affordable and sustainable.

In warmly saluting both the content and the contextualisation of Judge Fabricius’s findings we should note, of course, that there is every reason to believe that the Law Society of SA, and the SA Association of Personal Injury Lawyers will take this judgment on review to the Constitutional Court – after all there are billions of rands at stake. I have no doubt, however, that the Constitutional Court will uphold Judge Fabricius’s findings.

These findings are, of course, related to the Amendment Act dealing with the present RAF – in other words they are, in effect, transitional measures, as we lay the basis for a complete overhaul of road-accident compensation. Members will remember that earlier this year we presented the DoT’s draft policy document on a no-fault Road Accident Benefit Scheme as an integral part of a comprehensive social security net. Taking this work forward in this budget year is a key priority of the Department.

State of our Roads

If this landmark RAF court finding has received scant attention in the media, the same cannot be said about the state of our roads in SA. There has been a great deal of adverse publicity around pot-holes and the general deterioration of our road network in the local media.

First a word of qualification. Not all of our road system is in a bad shape. Specifically the 17,000 kms of national road network looked after by the SA National Road Agency Ltd (SANRAL) is, generally, in good to excellent condition. Indeed, this national road network often comes as a surprise to international visitors who frequently comment favourably on it.

However, having said this, it would, of course, be entirely wrong to imply that there are not serious challenges on much of the rest of our road network. The DoT asked SANRAL to conduct a survey of the entire road network in our country. It makes for sobering reading.

Some 80% of our road network is now older than the 20-year design life for which it was originally built. Even more sobering is the fact that in making its assessment of the entire network SANRAL was able to rely on data for only 64% of roads in our 9 Metros – and, when it came to other municipalities (some 340,000 kms), there was data for only 4% of these roads. In other words, the majority of municipalities are simply not conducting basic, routine evaluations of their roads – surely the basis for any planned and budgeted maintenance programme?

It would be tempting for those of us in the DoT to shrug our shoulders and to say it’s a provincial and municipal matter. But of course we cannot use the schedules in the Constitution to evade collective responsibility.

So what can be done?

There are a range of interventions that are necessary and with which we are engaged:

Working together with our colleagues in the Department of Public Enterprises, and with Transnet Freight Rail, we are seeking to greatly improve the reliability, efficiency and coverage offered by our freight rail system. Despite some improvements and capital investments, Transnet Freight Rail has continued to lose market share to road haulers. This is one of the reasons why we plan, as the DoT, to introduce a Rail Economic Regulator. In seeking to shift freight from road to rail, our objective is not to undermine road freight, which has its own merits, but to achieve a much better balance. Excessive freight on our road system not only damages roads, but contributes to carbon emissions, congestion, and road fatalities.

Related to the above, we also need to improve our load control inspecting capacity and, working together with the RTMC, the Road Freight Association and the labour movement, we need to ensure the more effective regulation of road freight – while there are responsible road haulers out there, there are also many fly-by-night operators.

We need to ramp up road construction and maintenance as a major component of the Expanded Public Works Programme – already there are important experiences in several provinces, in particular the labour-intensive road maintenance programme that was pioneered by Minister Ndebele when he was MEC in KZN.

Working with colleagues in the National Treasury and in other spheres of government, we are also seeking to ensure that budget allocations to provinces and municipalities intended for road maintenance ARE actually spent on roads. All too often money so intended gets diverted to other priorities.

In addition to all of these interventions, we also need to pay much greater attention to capacity and skills in provinces and municipalities.

Many smaller municipalities and even some provinces have limited in-house road engineering capacity. Project management capacity is often weak, and wide open to abuse and corruption, not least from a stratum of “tender-preneurs”.

As SANRAL professionals have pointed out, the good news in the bad news is that many of our pot-hole problems can be eliminated through very basic road maintenance eminently suited to EPWP labour-intensive work– like clearing drains and verges, and sealing road surface cracks timeously.

And, finally, we need to help provinces and municipalities to prioritise as much as possible preventative maintenance. When budget is actually spent on roads the tendency is for it to go either on brand new roads or to the absolutely worse situations. But for the same budget you can maintain 18kms of road, or fix just 1km of seriously deteriorated road. This kind of cost-benefit assessment needs to be undertaken – but seldom is.

Changing apartheid geography

If working closely with municipalities is critical to ensuring that we rescue our road network, close cooperation with Metros and other municipalities is absolutely central to transforming the public transport reality in our country. Minister Ndebele has already spoken eloquently about the priority that public transport enjoys in the Department’s strategic plan.

However, we are not going to achieve sustainable, reliable and affordable public transport without, at the same time, beginning to transform the persisting apartheid geography of low density, sprawling suburbs reliant on cars and free-ways, on the one hand, and distant, marginalised dormitory townships on the other. Public transport needs to be the mode of choice for all of us, and not a reality to which those who cannot afford cars are condemned. As long as public transport is simply about trying to catch up with the expanded reproduction of distant dormitory townships we will battle to make it efficient, affordable and sustainable.

This means that public transport planning, regulation and financing need to be devolved, as much as possible, to the local level, and these functions need to be aligned with local Integrated Developmental Planning that increasingly fosters towns and cities with mixed-income, medium density housing. Good public transport is not just about moving people, it is about democratising space. Good public transport will help to promote, but it will also depend upon deracialised, democratised local space, local communities. And this is why it is important that we help to empower municipalities to integrate their transport planning into a holistic transformation of our local geographies.

That, surely, is a common task we all face.

By    Mr. Jeremy Cronin
Deputy Minister of Transport
Cape Town

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