Selling the family jewels to make ends meet…

On 22 February, Finance Minister Enoch Godongwana delivered his long-awaited 2024 Budget Speech. It was touted as a “budget without a plan” by political analyst and newspaper columnist Justice Malala. Godongwana was also accused of “selling the family jewels” by many political parties and, while this year’s budget didn’t provide much tax relief to taxpayers, it certainly came with a few surprises.

High levels of debt servicing costs and a higher budget deficit have forced government to seek bold ways of funding. National Treasury plans to tap into the Gold and Foreign Exchange Contingency Reserve (GFERCA)held by the South African Reserve Bank (SARB).

The GFERCA comprises the profits and losses in foreign currency reserve transactions and gold price movements. These funds are meant to act as a buffer and provide protection against economic shocks. The minister has assured citizens that the country will have sufficient buffers available to absorb exchange rate swings after the draw down and that the solvency of the Reserve Bank will not be compromised. We fervently hope so!

On the day after President Ramaphosa’s brazen statement at the State of the Nation Address (SONA) that government was “confident that the worst is behind us and the end of loadshedding is finally within reach”, loadshedding was ramped up to Stage 5 and 6. The Finance Minister was forced to acknowledge that loadshedding is a problem that “confronts all South Africans and disrupts production, operations, and livelihoods”.

Consumers, commuters, households, and businesses alike bear the brunt of loadshedding, which naturally places additional strain on the already ailing economy.

The bad news for taxpayers is that personal income tax will be increased by not adjusting the tax brackets for inflation. Having said this, we can be grateful for the lack of an increase in VAT and the fuel levy.

Fuel represents about 30% of total operating costs for a typical bus company. Whilst the zero percent increase in fuel levies may offer a slight reprieve, operators can expect to feel the pinch of the carbon fuel levy, which will increase to 14c/litre for diesel effective from 3 April 2024.

Against the backdrop of a severely constrained economy, serious logistics and infrastructure challenges, failing municipalities, broken promises, and an inflated public sector wage bill amidst the “inevitable challenges and overlapping crises”, the minister would have us believe that this year’s budget was an attempt to avoid extremes. It was either “blind optimism or crippling pessimism”. One can’t help but hope for a miracle to keep South Africa Inc afloat and its dignity preserved.

Gauteng’s economy is now bigger than those of the Western Cape, KwaZulu-Natal, and Limpopo combined (according to Stats SA). According to Premier Lesufi’s State of the Provinces Address (SOPA) for Gauteng, “despite job losses during the Covid pandemic, the Gauteng economy remained resilient” and the “economy is now firmly back on track”.

Good news for bus operators and the transport industry at large is that e-tolls will soon be a “thing of the past” in Gauteng. The province remains confident that it will be able to end e-tolls by the end of March 2024.

The Gauteng premier also indicated that the current number plate system in the province is running out of numbers and letters, so there is a need to introduce new numbers. This comes after KwaZulu-Natal implemented a revamped number plate system in December last year, which is aimed at improving vehicle identification and simplifying registration processes. It was introduced in response to the depletion of numbers in some towns.

The National Department of Transport has developed a draft legislative proposal (of which the industry has not had sight) for the harmonisation of national plates. This includes the security features that will be used on Gauteng’s new number plates. A pilot project is expected to be rolled out on 1 April 2024 on government vehicles, and later with the general public when the Minister of Transport finalises the Bill. This will have serious implications for the bus industry, as it will impact licensing and permits and operations, as is the case in KwaZulu-Natal presently.

After a four-month hiatus on the ITSB B-BBEE Codes, the Charter Council hosted alignment meetings for the transport industry over four days in February this year. The bus industry was presented with a proposed scorecard that was vastly different from the original scorecard proposed in October. The new proposal is more stringent and features much higher targets than in the generic code. Requests for empirical evidence to substantiate the increased targets have not met with success; the evidence has not been shared with the industry.

The industry was advised that it had one last chance to comment on the proposed scorecard. Even though the Charter Council was given a year by the Minister of Transport to finalise the sector codes they now intend to have it finalised in one month – in March! The electronic presentation was only shared with SABOA two weeks after the engagement, following repeated requests. The previous scorecard was also not shared electronically with the association or stakeholders, which limited comment.

The next step for the Charter Council is approval from the Minister of Transport as well as from the BEE Commissioner and the DTIC, as the sector codes deviate from some of the principles of the Generic Codes. The draft ITSB B-BBEE Codes will then be published in terms of Section 9 (5) for public comment, followed by Section 9 (1) for implementation. 

A B-BBEE Sector Charter, gazetted in terms of Section 9(5) of the B-BBEE Act, means that it is a draft sector code published for public comment for 60 days and where major stakeholders have agreed to the stipulations of the charter. 

A B-BBEE Draft Sector Code, gazetted in terms of Section 9(1) of the B-BBEE Act, means that it becomes a Sector Code of Good Practice and shares the same status as the B-BBEE Codes of Good Practice. It is fully binding between and among businesses operating in the industry. 

This means that once gazetted for Section 9 (5), the industry is obliged to comply and will be measured by the sector code until the code is repealed or replaced, as is the case for the existing charter for the bus and coach industry.

Without sufficient time for review and comment, the industry can hardly accept this as adequate and proper consultation to date. Major concerns remain, including the lack of a transition period allowing for implementation and the potential for the proposed scorecard to be damaging to the industry.