Address by Minister of Transport, Mr Sibusiso J Ndebele, MP on the occasion of the Department's Budget Vote

25 Apr 2012

Honourable Chairperson of this House
Chairperson of the Transport Portfolio Committee, Ms Ruth Bhengu and Honourable members of the Committee
Other Members of Parliament present here
Deputy Minister of Transport, Mr Jeremy Cronin
Director General of Transport Mr George Mahlalela and his team from the department
Road and Transport MECs and HoDs from our provinces
Transport sector stakeholders present here today
Members of the media
Distinguished guests
Lladies and gentlemen.

It is a great honour and privilege for me to once again stand on this platform to deliver to you another budget vote for the Department of Transport.The overall budget allocation for the department of transport for the Financial Year 2012/13 totals 39 billion rand, growing to 48 billion rand in 2014/15.

The bulk of this allocation goes to the following items:

• 10 billion rand set-aside for the Passenger Rail Agency, PRASA; of which 5 billion rand goes into the acquisition of the new rolling stock.
• 18 billion rand is allocated for roads, of which 8.8 billion rand is set-aside for South African National Roads Agency Limited (SANRAL) and another 8.7 billion rand for S'hamba Sonke programme.
• 10 billion rand is allocated to public transport, 5 billion rand of which goes to bus subsidies and the remaining 5 billion rand is earmarked for BRT related projects and the Taxi Recapitalisation Programme (TRP)

Over the past few years, the Department of Transport has embarked on a concerted effort to develop and improve South Africa's transport system to serve as a catalyst for socio-economic development, particularly the movement of goods and passengers. Our efforts have seen a meteoric increase in the provision of a safe, reliable, efficient and affordable transport system.

I should also acknowledge however that we still have a lot of work to do until we can safely say our people are living the transport dream. In his State of the Nation Address, President Jacob Zuma, said: and I quote: "the country's socio-economic development can be improved and realized through a sustained massive infrastructure development programme spearheaded by a developmental state in partnership with an active citizenry and private sector," unquote.

Through the Presidential Infrastructure Coordinating Commission, a 10-year project plan was developed and 5-year priorities based on the following development principles were identified: 

• Balancing the development of new infrastructure with the maintenance of the existing one
• Improving infrastructure links with rural and poor provinces
• Addressing capacity constraints and improve coordination and integration
• Scaling up investment in infrastructure

Four key sectors have been identified as central to the envisaged development: transport, water and sanitation, energy and communication.

Six strategic infrastructure projects have been identified with transport playing a central role in all of them, namely:

• Unlocking the Northern Mineral Belt with Waterberg as the catalyst
• Durban-Free State-Gauteng Logistics and Industrial Corridor
• South Eastern node and Corridor Development
• Unlocking the economic opportunities in the North West province
• Saldanha-Northern Cape Development Corridor; and
• Integrated Municipal Infrastructure Projects

Whilst all these strategic infrastructure projects have transport as providing corridor linkages, the Durban-Johannesburg and North West are principally transport corridors. The PICC framework gives us a blueprint of transport projects over the next few years in the spheres of roads, rail and public transport infrastructure development and services.

Honourable Chairperson, Members

I therefore wish to take this opportunity to announce key transport projects to be rolled out over the next few years:

Projects in the Durban-Johannesburg Corridor:

• Sale of the Durban International Airport to TRANSNET for the establishment of a dig-out port.
• Development of Cato Ridge as a dry port.
• Planned extension of commuter rail to reach Pietermaritzburg.
• The development of Harrismith as a logistics hub.
• Gauteng Logistics Hubs including, Tambo-Springs, Central Rand and improvement of City Deep.

We have put emphasis on the importance of getting right the balance between freight and passenger services. There's indeed no doubt that without freight logistics, the country would grind to a halt. As a result, we have taken a firm decision to prioritize the 2050 vision for the Durban-Johannesburg Corridor transport improvements that will enhance the freight industry and open up more opportunities to grow the sector.

The 2050 vision forms the backbone of South Africa's freight transportation network and is vital in facilitating economic growth for the country and the Southern African region. Its major objective is to deal with Infrastructure and Operational Planning, and Investment as well as Demand Forecasting over a 50-year horizon.

The vision for the Durban-Gauteng Transport Corridor provides an integrated transport solution to the growing expansion requirements of the corridor that will form the foundation for the establishment of a Southern African Regional Freight Corridor. Research is currently being undertaken to determine the nature of investment required for this corridor. Preliminary estimates so far indicate that for the Port Development precinct, an estimated 100 billion rand would be required and an estimated half-a-trillion is projected for the entire corridor.

The following are the Project Developmental components: The Port of Durban; Durban-Gauteng road corridor; Durban-Gauteng rail corridor (including High Speed Rail); Logistics Hubs and Terminals within the Corridor, as well as supportive local area Land-Use Plans. Some of the other key national projects include: National Road Infrastructure development projects, Acquisition of New Rolling Stock by PRASA and the transformation of the Public Transport System.

Balanced investment in transport infrastructure will lead the country to efficient and sustainable growth, mobility and community access. It is important that we reduce the cost of doing business and ensure that our economy remains competitive in global markets. We are now entering an interesting phase of transport integration, road-based logistics, ports, road, aviation and rail and the safety and security of transport services and infrastructure.

We base all these plans on sophisticated intermodal planning, efficient intermodal transfer facilities and streamlined institutional and intergovernmental arrangements for implementation.

Gauteng Freeway Improvement Project (GFIP)
 
Honourable Chairperson and Members,

We are presenting our budget speech 5 days before the implementation of the first phase of the Gauteng Freeway Improvement Project. South Africa is estimated to have about 9.7 million vehicles. About 2.5 million of these are estimated to be in Gauteng. Of these 2.5 million, only 800-thousand travel regularly on the tolled road that accounts for only 185 kilometers of South Africa's overall 750-thousand kilometers road network. The GFIP e-tolling project was premised only on this 800-thousand vehicle population and not the 9.7 million vehicles nationwide.

Fact is we cannot expect Mr Papiyana in Mthatha in the Eastern Cape to finance the construction or upgrading of a road regularly used by Mr Ponto in Johannesburg in the Gauteng province. We are therefore encouraged that 501 245 e-tags have so far been sold and distributed to regular users of this road network, a clear indication that people are cooperating with us. We encourage those who have yet to purchase their e-tags to do so in order to be eligible for the discounted tariffs announced by government in February this year. It is also important to note some people who reside in Gauteng still won't be affected by the introduction of e-tolling.

For instance, a teacher who resides and works in Soweto who never travels on the tolled road network need not be concerned, as he or she doesn't utilise the road on a regular basis like someone who resides in Pretoria but works in Johannesburg. Once-off users are encouraged to contact the SANRAL call center to get day passes that will qualify them for discounted tariffs should they wish to travel on the tolled road network.

We also have a responsibility as a country to service the debt incurred when GFIP was implemented to improve the road network in question. It is now public knowledge that South Africa has a financial obligation of 20 billion rand to this effect, escalating to 32 Billlion rand with interest over the next couple of years. Failure to honour this obligation will adversely affect our country's credit rating. Just yesterday the world woke up to news that Argentina's credit rating has been downgraded. South Africa is no exception to this possibility should we fail to honour our commitments. This is important to note particularly because as a country we borrow at least 10 billion rand a week to service our budget deficit, state debt and meet the financial obligations of state owned companies.

We would like to thank the people of Gauteng for their cooperation as we move towards the implementation of this critical project. We extend similar gratitude to the Premier of Gauteng, Ms Nomvula Mokonyane and the provincial government for the leadership displayed during our discussions on this matter over the past few months.We have learned very valuable lessons out of this process.

It is also important to remember that the implementation of the project was postponed on two occasions. The first postponement was in March 2011, after various stakeholders raised concerns. The postponement was intended to allow for further consultations to take place. A Steering Committee was then established which recommended to Cabinet a comprehensive discount regime which included zero-rating of public transport vehicles.

I wish to take this opportunity to re-emphasise that no public transport vehicle will be expected to pay for the e-tolling tariffs. They are exempted because we believe users of public transport are in the main people in the low-income bracket, therefore largely categorised as poor. The second postponement was in February this year that eventually led to the National Treasury setting-aside 5.8 billion rand for the project. This intervention resulted in a further reduction of tariffs, therefore further alleviating the financial burden on the consumer.

All these concessions were done in response to the concerns raised by the public, indicating that we are a caring government that's willing and able to listen to its citizens.

Roads development programme

Honourable Chairperson, Members

Roads play a critical role in the movement of passengers and goods in the country. A large percentage of people are dependent on roads for many reasons. Chief among these reasons is for people to be able to reach government service centers such as educational and health facilities, and to earn a living by having access to work opportunities.

All sectors of the economy depend on roads to transport goods to all corners of South Africa. The majority of goods (estimated at 83%) is transported by road and furthermore, forecasts reveal that freight transport demand will grow by between 200% and 250% over the next twenty years.

This will put more pressure on the existing road infrastructure and lead to increased congestion, increased vehicle operating costs and ultimately higher logistics costs.

The South African Roads Federation estimates that the failure of the road network, both in condition and its ability to cope with increased demand, imposes an estimated additional 20 Billion rand per year in excess road user costs (including fuel consumption, tyre wear, vehicle maintenance) and up to ten times more in congestion costs.

For rural communities, the very poor state of many municipal access roads (including un-proclaimed roads) have contributed to soaring vehicle operating costs and more significantly, hampered the ability of communities to access services in key health and education sectors.

South Africa has a total road network of almost 750-thousand kilometers of which 17-thousand kilometers is managed by the SA National Roads Agency. The total annual maintenance requirement for the South African road network is 88 Billion rand.

The total allocation from treasury in 2012/13 Financial Year for roads is 38 Billion rand, leaving us with a shortfall of at least 43 Billion rand.

The situation is further compounded by the following cost pressures:

• Exchange rate fluctuations
• Fuel price volatility that has an impact on bitumen price - animportant input in road construction and maintenance
• Price changes in other input materials

It is important that I start by giving context to the funding framework for roads in South Africa. There is an annual fiscal allocation to SANRAL for the maintenance and upgrade of the non-toll road network. The Roads Agency's allocation for 2012/2013 is 8 Billion rand.

For provincial governments there are three sources of road funding, namely: - equitable share from the fiscus, the ring-fenced Provincial Road Maintenance Grant (S'hamba Sonke) and provincial fines, penalties and forfeits.

Other than the Provincial Road Maintenance Grant, the two funding sources are part of the overall budget allocation to provinces. Based on specific priorities and budgetary imperatives, provinces have the discretion in determining the amount of resources to be allocated from their total revenue pool towards operating and maintaining their road networks.

For municipalities, just like in provinces, equitable share allocations and own revenues constitute a pool of funds from which municipalities are able to finance their road infrastructure and they also have a discretion in determining the amount of resources allocated for roads.

Some of the major projects being undertaken by SANRAL include:

• The R341 million Sitebe Kommkhulu to Viedgesville Road on the N2 in the Eastern Cape.
• The R42 million Harrismith - Kestell Road
• The R64 million Durban North Coast Interchange projectThe R147 million Ventersburg - Kroonstad Road project and the
• The R51 million Mhloti - Tongaat toll plaza project

The challenges that road network development faces are articulated in the Road Infrastructure Strategic Framework for South Africa. On average, more than 30% of our roads are in poor to very poor condition.

We therefore need to focus on the following areas:

• Road Maintenance fund
• Rural development through rural road infrastructure
• Job creation
• Ensuring rural transport safety and law enforcement
• Skills development

In addition to job creation, the provision of rural infrastructure contributes to protecting the socio-economic rights of people in rural areas. Road infrastructure in our rural areas is necessary to ensure access to schools, clinics and economic opportunities. Our Rural Transport Strategy is not about the rural access roads only but also addresses the following challenges:

• Building of bridges and non-motorized transport facilities
• Developing and implementing the integrated public transport networks for regular transport services
• Developing and upgrading the rural airport network with a proper road-link infrastructure and services
• Revitalising the rural railway operations by expanding rail passenger services and freight operations to rural areas

S'hamba Sonke

The S'hamba Sonke roads maintenance programme was launched on 18 April 2011. The first allocation to this programme was 6.4 billion rand for the 2011/12 financial year, 7.5 billion rand for 2012/2013 and 8.2 billion rand by 2014. The sum total allocation for this programme will be 22 billion rand by 2014. For the first time in the history of this country, this entire amount is ring- fenced for the maintenance of roads. The provincial roads maintenance grant is a conditional grant dedicated to road maintenance.

For the 2012/13 financial year this money is allocated as follows: KwaZulu-Natal: 1.2 billion rand; Eastern Cape: 1 billion rand; Mpumalanga: 1 billion rand; Limpopo: 934 million rand; Gauteng: 566 million rand; Free State: 447 million rand; Western Cape: 411 million rand; Northern Cape: 308 million rand and North West: 501 million rand.

Road Safety

Honourable Chairperson, Members

Road safety is one issue wherein all South Africans share a unity of purpose. It is a problem that affects everyone regardless of colour, gender, religious beliefs or even political affiliation. We agree that we all have a common responsibility to ensure that our roads are safer.We are confident that we are on the right path to win the battle against road carnage.

We are encouraged by the significant reduction in road fatalities recorded over the recent Easter long weekend. Although we remain concerned about the lives we continue to lose on our roads, we believe that a reduction from last year's Easter death toll of 297 to 181 this year is worth noting. This means our strategies are relevant to address the challenge we face on our roads.

I wish to convey my sincere congratulations to the MECs present here with us today for their tireless efforts in ensuring that we save lives on our roads. Your work has not gone unnoticed. My gratitude also goes to our traffic law enforcement agencies at all levels for their sterling work. We also thank the police service and emergency services for the partnership in ensuring that our roads are not turned into killing fields.

Credit should also go to the South African motorists. We've noticed a remarkable improvement in their conduct on our roads. It's encouraging to note that motorists are now taking personal responsibility for what happens with their cars once on road. It is indeed not government Ministers and officials who drive these vehicles. We will continue with our educational and policing activities throughout the year to ensure a culture of voluntary compliance with the rules of the road.

We encourage everyone to become a friend of the Decade of Action for Road Safety. You can do this by becoming a member of Road Safety Council in your community, ensuring that you take ownership of the streets and roads in your neighborhood. We also urge you to wear the Decade of Action tag at all times as a symbol of your commitment to safer roads. Our guests are donning this tag today and we encourage them to keep it on.

We will continue to seek lasting partnerships with the private sector as we explore various ways of addressing road carnage. I wish to thank our corporate partners who have been working with us on a number campaigns aimed at saving lives such as iPledge with Imperial Holdings, Think Pedestrian with the Nelson Mandela Centre of Memory, United Nations and Equestria Fleet; our partners in road safety activations such: Pick n Pay and Netcare 911. They are present with us here today. Nangomso!

The Road Accident Fund (RAF) needs to be financially resourced to carry out its mandate on victims of traffic accidents. Just yesterday, we were in Mitchells Plain where the RAF took services to the community in that area. A total number of 22 claims were settled on the spot, with the highest individual Payment of 915-thoudand rand. The total amount paid out to claimants during the two-day campaign is 3.1 million rand.

We also handed over wheel chairs to members of that community, one of the recipients is a man who got involved in a car crash 17 years ago. I'm glad to announce that he has not allowed this unfortunate situation to kill his spirits. He is now a road safety councilor, working in his community to save the lives of others. We commend the RAF for this sterling work.

Road Traffic Management

The battle against increasing road traffic fatal crashes has to be won. The Department of Transport and the Road Traffic Management Corporation (RTMC) will intensify efforts to reduce accidents by half by 2020 as part of the United Nations Decade of Action on Road Safety.

This we intend achieving through the implementation of the Road Safety Strategy and the National Rolling Enforcement Plan (NREP). The formation of Road Safety Councils in all provinces and various other programmes such as SANTACO's Hlokomela campaign are expected to play a significant role in achieving our road safety targets.

The role of the Justice Crime Prevention and Security cluster which is a composition of Metro Traffic Police, SAPS, the Departments of Transport and Justice, will also play a pivotal role in prosecuting traffic offenders. We have also made great strides in stabilizing the leadership of the RTMC. I have the pleasure to announce that by end of next month we would have finalized the appointment of the Board of Directors and CEO of this critical agency.

Rail Transportation

In the past one hundred years, South Africa has created one of the most advanced highway systems in Africa, an extensive network of railway lines and a vibrant and competitive aviation sector. Unfortunately, due to a lack of investment over the past three decades, we have seen the decline of the rail sector.

In our efforts to correct this, the Department of Transport has embarked on the process of developing an all-encompassing Rail Policy which will cover freight, long distance passenger and commuter rail.

The main thrust of the policy will focus on investment and new modern technology. It will address the regulatory framework required particularly economic regulation, infrastructure and operations.

It will also make proposals regarding the investment required to restore rail to its rightful place in our country's economy. The Green Paper on National Rail transport policy will be launched by the end of June to among other things, bring about some certainty in the rail sector.Regarding passenger rail services, the ageing rolling stock combined with rapidly growing needs, has led to renewed focus by PRASA on scaling up rolling stock investment as part of a broader strategy to acquire modern technology to meet changing demands.

Last week I attended an event wherein PRASA issued a Request for Proposals to prospective Rolling Stock Manufacturers in the near future. The rolling stock programme is valued at 137 Billion rand. It is envisaged that a Preferred Bidder will be announced in the last quarter of 2012, with financial close aimed for June 2013. The procurement programme for rolling stock, once approved, will follow the fleet programme process as set out in the government's Industrial Policy Action Plan (IPAP II).

Moloto Rail Development Corridor

We have now established a steering committee chaired by the Director General of the Department of Transport George Mahlalela to drive the Moloto Corridor development. The committee consists of Gauteng and Mpumalanga Provincial governments, Tshwane Metro and six other local municipalities along the corridor. We are commencing with the feasibility study as of next month. Among other things it would look at various public transport options for the corridor. The steering committee will report back to us on the outcomes of the study in the next 18 months.

Public Transport

As part of South Africa's Public Transport Strategy (PTS) we are moving towards a highly quality integrated Mass Rapid Public Transport Network which includes rail, taxi and bus services.The intention and objectives of the White Paper on National Transport Policy, Moving South Africa and the Public Transport Strategy is the provision of public transport that is reliable, affordable, safe and integrated that meets customer needs.

Integrated Public Transport Networks

We have integrated public transport networks which are being rolled out in 12 cities, Joburg, Cape Town, Tshwane, Nelson Mandela Bay, Buffalo City, Mangaung, eThekwini, Polokwane, Mbombela, Rustenburg, Pietermaritzburg and Ekurhuleni. For 2012/13, R5billion has been allocated in the Public Transport Infrastructure and Systems Grant to 12 cities that are slated to implement Integrated Rapid Public Transport Networks. For the 2013/14 and 2014/15 years, R5.55 billion and R5.87 billion are allocated in the MTEF respectively.

Subsidised Service

Transforming the subsidised bus services presents us with a perfect opportunity to integrate the conventional public transport services and thereby incorporating previously informal modes like taxis and small bus operators. Chronic underinvestment in public transport systems is continuing to create the current stalemate in the introduction of new public transport services.

In this regard the market response has been that 60% of public transport trips are carried through the minibus taxis. Despite the recent increase in the transport infrastructure investment grant of R13bn between s 2007 and 2011 and an additional R5bn in the next 3 years, commuter bus and rail operations subsidy still lags behind.Implementation of integrated contracts, including taxis and small bus operators will require over R14billion.

Taxi Recapitalisation Programme (TRP)

The TRP current contract is in its penultimate year with regard to the contract period and so far about 45-thousand old taxi vehicles have been scrapped at a cost of R2.3bn out of an initial target of 12-thousand old minibus taxis.

As government we have taken the broader approach of the following recommendations:

• Impress upon financial services industry to create affordable facilities for the taxi industry
• Support the industry's strategies to organize itself into formations that can transact economically on behalf of members
• Develop a post TRP vehicle replacement model for the taxi industry
• Facilitate the incorporation of the taxis and small bus operations into mainstream public transport through set asides or subcontracting
• Design public transport contracts to cater for fleet renewal

A Transport Ministerial meeting with MECs that sat last week in Johannesburg resolved on the following:

• Opting for negotiations of contracts
• The establishment of a steering committee comprising of national and provincial governments negotiate contracts.
• Invite all current providers of services to the negotiations
• And finish the negotiations by September this year.

Honorable members, I must stress that meaningful progress has been made in the formalisation of the taxi industry. In almost all the 9 provinces, the taxi operators have organized themselves into local associations, regional, provincial and national structures.

At national South African National Taxi Council (SANTACO) has the department's support as the structure that was envisaged by the NTTT process. SANTACO developed a TR3 2020 Strategy that aims to transform and develop the industry that the department supports. Projects that been proposed by the strategy and have already commenced include the establishment of a Training Academy, road safety campaign as well as diversification. Both the department and SANTACO are identifying projects that can be prioritised to make the industry self-sustainable.

Maritime Transport

Honourable Chairperson, Members

The Department of Transport is finalising the Maritime Shipping Policy. The policy will address the following areas, namely:

• Trans-shipment
• Coastal shipping
• Ship-registration in South Africa
• Skills development

A final round of negotiations with stakeholders was completed last month. We will be ready by end of May to talke this draft policy to cabinet. Once the policy is adopted as white paper, we will then proceed with the implementation of all projects related to the developemnt of the shipping industry in SA.

Aviation Transport

Our country's aviation services are premised on the work of the South African Civil Aviation Authority, the Air Traffic Navigation Services and the Airports Company South Africa. The three entities have an obligation to ensure that aviation safety and security, airports infrastructure development and air navigation services are efficiently carried out. This is a permission year in which the Airports Company of South Africa (ACSA) and Air Traffic and Navigation Services (ATNS) are submitting their applications in terms of the increase of their tariffs.

These applications have to do with the increases in Airport Charges and Air Navigation Service Charges. A review of the current Airlift Strategy that was a five-year strategy has become a priority. The development and promotion of our air transport industry is dependent on this. The Airlift Strategy review will involve an analysis that includes successes, challenges and obstacles faced in its implementation with a view of mitigating these challenges in future. We congratulate ACSA on securing the bid to build an airport in Sao Paolo, Brazil in preparation for the 2014 FIFA Soccer World Cup.

Conclusion

Honourable Chairperson, Members

I wish to thank the Deputy Minister of Transport Mr. Jeremy Cronin for his continued support and commitment to our endeavor to transform the transport industry. Working together we can do more. I also thank the Director-General Mr. George Mahlalela and his hardworking and dedicated team for keeping the ship afloat even in challenging times. In addition I want to appreciate the role played by all transport agencies and their Boards, Management and Staff for their contribution and determination. To the transport sector; thanks for your continued support. Working together we can ensure that South Africa realises and lives the transport dream.

I also thank the Transport Portfolio Committee Chairperson Ms. Ruth Bhengu and the committee for the wonderful work and their insight in making sure that our mandate on transport matters is implemented. Chairperson, Honourable Members, I therefore request the House to approve the Department of Transport Budget for 2012/13.

I thank you!

Issued by the Department of Transport, April 25 2012

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