No new money…

To prevent a total collapse of South Africa’s finances, the National Treasury has requested that government departments implement “fiscal consolidation measures”. SHARMINI NAIDOO reports that this translates into bigger spending cuts and the utilisation of existing funding, as “no new money” will be allocated.

Speaking at the SABOA Annual Conference, Shireen Darmalingam, senior economist at Standard Bank South Africa, highlighted the deterioration in South African consumer confidence, low GDP growth, and the impact of electricity constraints on market sectors for the first two quarters, as well as expected inflation, currently forecast at 6%. Negative sentiment in investor and consumer confidence will continue as the country heads towards a much bigger financial crisis than expected, including  increased social demands and Stage 5 and 6 loadshedding.

It is likely that this directive will also impact the many planned projects in the transport industry, including pending policies and regulations that are awaiting promulgation. One such policy is the Draft Public Transport Policy that proposed a move away from subsidising a mode of transport to a model wherein the user is subsidised.

The bus industry relies largely on subsidies which have been underfunded over the years. SABOA estimates that there has in fact been an under recovery of over 16% in subsidies for contracted bus services. With the budget cuts in the offing, it is unclear what the impact will be on the bus industry and how the policy will be implemented if it is promulgated.

In an attempt to remove the use of cash in public transport fare collection, the Department of Transport (DoT) has sanctioned an Account Based Ticketing (ABT) solution which would be facilitated by SANRAL. ABT would allow public transport operators to move away from multiple, non-integrated fare collection systems to systems that require only a single account identifier for commuters to utilise multiple modes of transport. The SANRAL solution proposes that an electronic ticketing clearing house would no longer need to be established to settle obligations between operators, while SANRAL would host the back-office administration. Once promulgated, this legislation would become mandatory for all public transport operators, with a phase-in period of three years.

Suveshni Pillay, project manager: planning, toll, and traffic at SANRAL, assured SABOA conference delegates of the system’s efficiency and reliability. However, little consideration has been given to the costs of implementation that will have to be borne by operators, such as commissions, hardware, and software. It is yet to be seen whether operators will enjoy any savings or be adequately compensated by the proposed system. The issue of money transfers that may not be immediate or even “same day” is also quite concerning.

Although SABOA has had a consultative session with the DoT and commented on the draft policy, there was an undertaking by the department that further discussions would be addressed directly with operators to ascertain the impact on individual operations. As this has not happened and plans are underway to gazette the draft policy, this is naturally of immense concern and SABOA has requested an urgent meeting with the DoT.

In terms of South African law, the Promotion of Administrative Justice Act (PAJA) affords everyone the right to procedurally fair, lawful, and reasonable administrative action, as well as to explanations regarding administrative action that adversely affects their rights. Any decision that the administration (all government departments, the police, the army, and parastatals like Eskom, Telkom, and the SABC) takes that affects people’s rights is considered an administrative action.

This means that in terms of PAJA, adequate notice of the nature of the administrative action must be given, along with enough time to respond to the planned administrative action. The person also needs to know the nature (what is being proposed) and the purpose (why the action is being proposed) and must be given a reasonable opportunity to make representations. These include raising objections or substantiating verbally or in writing the extent to which they will be affected. A person should also be given the opportunity to present information and arguments in their favour and to challenge information and arguments against them. They may also need to be given the opportunity to appear in person before the administrator.

The four steps below for the notice and commentary process must also be complied with:

1. The public must be given enough information about the proposed administrative action to allow them to make meaningful representations.
2. The administrator must call for comments on the proposed administrative action and must allow enough time for those comments to be made.
3. The administrator must consider the comments received.
4. The administrator must decide whether or not to take the proposed administrative action, with or without changes.

PAJA confers these rights on everyone and makes it quite clear that government has a duty and responsibility to receive, review, and seriously consider comments and understand the impact and affectedness of stakeholders before making any policy decision.