Strategic Planning and Budget: Department briefing

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
4 March 2005
STRATEGIC PLANNING AND BUDGET: DEPARTMENT BRIEFING

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Department Strategic Plan and Estimates of National Expenditure
Department Budget 2005-06

SUMMARY
The Committee was briefed on the Department of Transport’s strategic plan, estimates of national expenditure and medium term budget. The main focus of the Department was to reposition transport to facilitate economic growth and social development in areas of government priorities. Several strategic improvements were identified along with their key deliverables and recent outputs. An overview of the medium-term budget, expenditure trends and a breakdown of the budget were also given. Compared to the other areas of expenditure, there had been a relative growth in expenditure on roads, but a relative decline in public transport expenditure. Members were concerned with improving public transportation, rural transport development and the co-ordination of transport and housing development.

MINUTES
The delegation from the Department of Transport was led by Wrenelle Stander, the D-G, and included Mr Dan Pretorius, the Chief Financial Officer; Mr Jerry Makokoane, Chief Operating Officer; Ms Wendy Watson, Chief Director: LTR; Mr Mathabatha Mokonyama, CD: Integrated Planning and Intersphere Implementation; Mr Khibi Mhamha, CD: Transport Policy, and Mr Deon Viljoen, Deputy Director: Parliamentary Services and Stakeholder Management. Ms Stander said that the main emphasis of the Department was to reposition transport as an enabler of economic growth. Transport was necessary to link different economies, enhance mobility and facilitate tourism and trade links. Key governmental priorities that the Department was involved in were economic growth, poverty alleviation, rural development, black economic empowerment, gender equality, access for the disabled, and the use of technical innovation. The Department faced challenges in improving public transport, freight logistics of rail and ports, increasing investment, strengthening oversight and regulation of the public entities, linkages in regional transport integration and safety. The Departmental strategy included reducing freight logistics bottlenecks, improving public transport provision, improving land transport safety and overhauling the capacity of the Department. The Department’s six divisions were the Chief Operating Office, Public Transport, Freight Logistics and Corridor Development, Integrated Planning and Inter-sphere Co-ordination, Transport Regulation and Public Entity Oversight and Transport Policy and Regional Integration.

Mr Pretorius outlined the breakdown of the budget over the period 2001-2008 and recent trends. In 2005, there were increased allocations in the key strategy areas of taxi recapitalisation, rail and road infrastructure, public transport policy, freight logistics and public entity oversight. There had been consistent growth in the total budget and in allocations to each of the areas of expenditure. Comparatively, there had been relative growth in road and taxi expenditure and relative decline in rail and public transport expenditure. The total budget for 2005-2006 was R7 602 million. Special projects included restructuring the Road Accident Fund, migration to the new National Traffic Information System, establishment of a Rail Economic Regulator and Ports Economic Regulator, the National Transport Plan, the Integrated Rural Mobility Access project, the Dube Trade Port and a Public Transport review.

Mr A Ainslie (ANC) asked whether, and to what extent, the budget and strategic plan fed into the analysis of the National Transport Survey, where the Department was on that survey and when the Committee would be able to see a copy of it. He also asked where the Rural Development Transport Strategy fit into the budget, what it entailed, what the progress of the bicycle pilot project was and who was responsible for rolling it out.

Mr G Schneemann (ANC) said that the graphs indicated an overall decline in expenditure on public transport, but that there was an emphasis being put on that sector. He wanted to know how that could be and implications for the short and long term.

Ms B Thomson (ANC) asked what the Department’s role was in contributing to infrastructure for low cost housing.

The Chairperson said that there was low cost housing going up but that there was insufficient provision for transport infrastructure.

Ms Stander said that all the work the Department had done over the last period was intended to look at what was actually happening in the transport sector, and the Travel Survey had a huge impact on how the Department viewed and planned for transportation needs and funding. There was a need for intervention in non-motorised transport so they had been working with the Treasury to attract funds. The World Cup Action Agenda had been allocated R3 billion, much of which would go to pedestrian facilities and mobility projects. Public transport was a critical area, and actual expenditure on it was increasing. The slide showing relative expenditure showed that the proportion of expenditure on public transport was decreasing, but this trend would change. Part of the reason for setting up the Intersphere Implementation division was to work with local authorities and other government departments, and this was linked to the issue of low-cost housing. This division had not done well at lobbying and needed to assert itself in areas identified for low-cost housing. The new policy of the Department of Housing had begun to respond to the transport challenges facing poorer communities, and as the Department of Transport built up its capacity, its lobbying would improve. The Department had allocated R30 million to the Integrated Rural Mobility Access (IRMA) project over three years and there was also a bicycle programme to provide bicycles and develop bicycle lanes.

Mr Mokonyama said that the pilot bicycle programme involved two phases, the first of which had been completed. The Department was continuing to fund the purchase of 17 000 bicycles for distribution in the provinces and was rolling out the programme to the rest of the country, but the provinces were not contributing as they should have been.

The Chairperson asked if the Committee could see the report done at the end of the pilot project as the Committee was very interested in it and could learn lessons from it.

Mr Mokonyama said that the Development Facilitation Act and the National Land Transport Transition Act emphasised the need for harmony in land use and transport planning. Pressures in the need for housing tended to overtake transport provision, but there were guidelines in the Integrated Transport Plan dealing with land use and transport planning. In spite of plans, problems arose in implementation, which was the reason for the establishment of the Implementation Support division, which was meant to lead implementation in other spheres of government. The IRMA project was brought about by the draft Rural Transport Strategy to link villages and cities. In the first phase, there were three pilot projects, and if these were successful, they would be rolled out. The implementing agents would be the municipalities.

Ms Mhamha said that there had been problems with the census figures used in the National Household Travel Survey, but new weights had been submitted and the technical report was being rewritten. Data analysis workshops would then be run with the Department and different companies that would be using the data. The Minister also requested a user-friendly CD to be produced for use by any interested parties.

The Chairperson asked how the Department was conceptualising the case for public transport. In the report, the measurable objective for public transport was the increased provision of safe and reliable transport for the most vulnerable passengers. The estimates of expenditure stated that the Department responded to the needs of both the first and second economies, but this thinking set up a strategic position of the Department as a respondent to needs rather than a driver of change or a re-shaper of needs. Instead of ensuring that all people had access to transport, the Department should perhaps have been involved in better spatial planning so that fewer people needed it. Subsidies for public transport were seen as a welfare or charity response, but should also be seen as a way to produce better functioning and environmentally-friendly cities. In this way, it was necessary to change the discourse surrounding public transport to develop and present a mainstream economic case for it.

The spending for public transport had seen a relative decline compared to spending on roads, but this road spending could also cater to public transport needs in the form of bus lanes. In Latin America, a lot of money was put into capital subsidies, and none into operational subsidies. Public transport operators were from the private sector and were able to make a profit because the infrastructure was so well developed. The key in public transport was intersphere co-operation and the Department must push for planning and co-ordination. Taxi recapitalisation seemed to be about security and national intelligence and there was no presence of local government in the inter-departmental cluster that was driving this programme. It needed to be deeply integrated into planning in order to be organised and effective. The programme that remained vague was Transport Policy and Regional Integration. The Transport Regulation and Public Entity Oversight division needed to conduct oversight of SANRAL (South African National Roads Agency Limited). In the output section, the implementation of AARTO (Administrative Adjudication of Road Traffic Offences Act) was not listed, and a full report was requested explaining the challenges faced in establishing the RTMC (Road Traffic Management Corporation). Significant funding was going to the RTMC, so presumably the implementation of AARTO would follow that. The Committee would like to do an oversight visit of RTMC.

Ms Stander agreed that it would be necessary to reassess the conceptual framework for public transport. Using the term ‘passenger transport’ would include non-motorised transport, car use and public transportation, because these elements could not be isolated from each other. Emphasis should shift to implementation, and when looking at policy and regional integration, the Department should monitor the economic impact of transport. Although the Department was organised into divisions, cross-cutting teams were used to look at different aspects of the same issues. While Public Entity Oversight and Regulation looked at public entities in an administrative sense, other divisions would look at how effective that spending had been. It was important to look into how SANRAL was spending its money and whether it was developing infrastructure that promoted motor-car usage or public transport usage. The presentation document was vague on RTMC, but some progress had been made in engaging with the CEO of RTMC to possibly part ways, and the Department would continue that process until they found another CEO. The Department was quite far in setting up the National Ports Regulator and was just waiting for the Bill to become an Act as funding had already been set aside.

Ms Mhamha said that it was important to use the data from the National Household Travel Survey to influence and change policy decisions in a positive way. The Transport Policy and Regional Transport Integration division had three Chief Directorates. At the time of setting it up, it was thought that there would be a shift from developing more policies to measuring the impact that the Transport sector was making in the economy. The other branches would act as the implementation arm, but if any of the other branches needed policy, economic analysis or research and development work done, it would be centralised in the policy branch.

Mr Mokonyama said that the Public Entity Oversight division looked at governance and legislation issues, while the Integrated Planning and Implementation conducted technical oversight. A document called the Road Infrastructure Strategic Framework of South Africa (RISFSA) had an implementation plan and a list of projects, and SANRAL had been told to begin restructuring its business plan to address issues identified in RISFSA. A reclassification of the network of primary, secondary and local roads had been done, and with this, the Department would be able to direct the efforts of SANRAL into priority areas.

Mr Pretorius said that there was a budget of R3 million a year for the Ports Regulator which had been decreased from a budget of R7.5 million. This was done because a substantial donation was being negotiated for setting up economic regulators in the transport sector. This donation would allow the Department to set up all of the regulators it had planned. The budget for the Ports Regulator fell within the budget for Transport Regulation and Public Entity Oversight.

Ms Watson said that the AARTO was one of the functional areas of the RTMC, but there was some doubt about whether to have it run by the RTMC. This depended heavily on a national database of offences being developed in July, and a Project Manager had been appointed to look at AARTO in terms of this database to determine where it should be placed.

Ms Thomson asked what the Rail Economic Regulator was and what skills were being developed in skills development programmes. She expressed concern about black economic empowerment and mentioned the success of a project in KZN where the positive impacts could be seen.

Mr Schneemann said that in the new housing strategy, there were nine pilot projects throughout the country and these might be a good place for the Transport Department to start integrating transport strategies. Since these were new projects, a strong working relationship could be established to make sure that the infrastructure and planning were successful. There were quite substantial increases in the budget for RTMC and Mr Schneemann asked what those increases were meant to accomplish.

Mr Ainslie said that one of the problems with the integrated transport system was that Transport Authorities were not working, and he asked why the Department was not reviewing these authorities. He also asked if the Dube Trade Port would get off the ground and what had been done to improve security on public transport.

Mr Schneemann asked if the Khayelitsha rail line was still a priority.

Ms Stander said that in all modes of transport except roads, there were safety regulators in place, and there was a Security Committee functioning within the Department. The Transport Survey showed that rail usage was declining because of unreliability and a lack of security, so the Department had put in place a pilot project for rail security in the Western Cape. There was an issue with the Treasury to determine whether security should be included on the police budget or the transport budget. Without economic regulators, input costs increase, so there was a plan to put a transition economic regulator in place as part of railway consolidation to separate the regulation process from the service provision process. In many of the Department’s agencies, there was tension between the board and the CEO, and this existed in the Rail Safety Regulator, so the role of the board vis-a-vis the CEO must be looked at closely. The Department increasingly felt that there should not be boards at all because the tensions were detracting from the work that needed to be done.

Ms Mhamha said that the Department was progressing towards finalising the black empowerment strategy, and currently there were eight or nine charters in the process. There was a BEE charter on maritime issues that was signed in 2003 and was currently being implemented. In each charter, sector-specific indicators would be determined in terms of job creation or poverty alleviation.

Ms N Mbombo (ANC) asked for clarity on what ‘maritime’ meant.

Ms Mhamha said that ‘maritime’ related to anything to do with sea transport, so within the BEE process, for example, they would try to register more black-owned ships or attract more black port operators.

Mr Mokonyama said that SANRAL reported on how many jobs had been created under EPWP. Since the Department intended to increase involvement in implementation, it would be possible to set EPWP targets and make sure they were achieved. The Department had been informed of the nine housing pilot projects at an early stage, and although it was not involved, it would try to make suggestions in terms of transport planning. There was one Transport Authority already and other cities had also indicated the need to establish one. The main challenge for the TAs was funding. The TAs were meant to consolidate the transport functions being done in different departments, but the cost of doing this prevented many municipalities from establishing them. The establishment of TAs was voluntary and transport planning was to be done by all planning authorities, but once the issue of funding was sorted out, more TAs would be established.

The Chairperson said that the Committee had interacted with a senior person from the existing Transport Authority who spoke to the Civil Engineering Department at UCT and had said that they would have been better off maintaining a Department of Transport rather than creating the TA. The key disadvantage to the TA was the problem of tension between the Metro and the TA. It may be useful for the Committee to review this TA and report on how well it was working to see if the TA system was the best option.

Ms Watson said RTMC would be established and that many programmes to be done under the RTMC were being run by the LTR division at the moment. Once RTMC was established, these programmes would be transferred over.

Mr Makokoane said that technical plans for the Khayelitsha rail line extension had already been completed, the allocation of funds had been done and they were now trying to finalise the acquisition of land. Construction would start in the second half of 2005. In terms of skills development, the Department had been addressing four areas. They had aligned with TITA to co-ordinate delivery of skills development. A skills audit would be done across the country and TITA was focusing on transport to understand where the pressures were in order to respond well to them. Secondly, there had been an allocation to centres of development to group universities and identify sector-specific careers that would benefit the Department. They would then work with the universities to strategically direct training in these areas. Thirdly, the Department must ensure that it is itself well capacitated and that people with the right skills had been placed appropriately. Finally, the Department had also been assigned the responsibility of conducting a broader skills audit in the transport arena. Data collection had already been done and was being prepared for analysis in order to respond to skills needs.

Ms Stander said that the Department had done an analysis on the Dube Trade Port and that the report was to be submitted soon. The Department’s role in this case was difficult because they needed to lead freight infrastructure development, but were also the shareholding Ministry for the Airports Company of South Africa (ACSA), which would be impacted by the development of the trade port. They had to look at the impact of the Dube Trade Port in terms of the national interest and not its impact on ACSA. Three impacts for ACSA would be the decommissioning of the Durban International Airport, the sale of the land and the role of ACSA in the trade port. The Department would support the development of the Dube Trade Port if it would positively impact blockages of the Durban-Gauteng corridor and job creation. The Department had also examined the basic assumptions of the feasibility study in order to see whether its conclusions were