Road Accident Benefit Scheme Bill: clause by clause consideration

Meeting report

Department of Transport (DoT) response to 31 August meeting questions
Adv Johannes Makgatho, DoT Director: Legal Services, took the Committee through the DoT written response document to questions asked by Members in the previous meeting (see document).

Discussion
Mr C Hunsinger (DA) said that the Committee references to the King IV Code has been suggestive rather than prescriptive. The Committee must move forward in the design  and security of funding of RABS to ensure that there is financial health on a continual basis. He therefore suggested that the CFO was part of the Board to ensure direct alignment and transparent reporting. Even though King IV is a suggestion, it is a significant one in terms of transparency and responsibility.

On funding the dual system, the RAF needs to continue and be financed along with RABS both having a significant administration support structure. He asked for more information about the administration support and how the costs would be carried as well as the financing of the dual system. The structure and system of processes and procedures required under the RABS Bill is expensive and extensive, even for the RAF. There is an underlying concern about the duration of the outstanding RAF claims. What is the projected deadline of clearing the R200 billion RAF debt. How long will the dual system carry on for? Where parents had to give up their job to take care of a child who was an accident victim, would those parents be supported under the RABS Bill?

On the prescription of RAF claims, if the legal representatives does not provide the legal services that they should, one can turn to the law society but that does not work here. One would see the R200 billion deficit outstanding. Surely there can be a remedy for this. In terms of prescription of claims, an additional component to the Administrator had been proposed because of the need for expertise that would be of benefit to the Administrator. The Administrator cannot be seen as a single entity. A panel of experts would be of assistance to mediate and act as a buffer and recommend the right claims. He did not understand why that additional component was not being taken into consideration.

Mr L Ramatlakane (ANC) suggested that the DoT response be noted, and the Committee move on as the clauses of the Bill must be considered. The discussion must be focused on the Bill and all other items can be taken into account holistically during that process. This legislation is informed by government policy and the debate on funding must be based on the source of the funds. It is a matter for the fiscus and Treasury may look into different sources of funding. He suggested that the Committee should get into the Bill and its clauses.

Mr M De Freitas (DA) said that it was concerning that the official was telling the Committee that the Bill was a skeleton; it was very flimsy to refer to the Bill as such. He lamented that the Committee was not afforded the opportunity to scrutinise the formulas. The Committee cannot move onto the clauses without actually going into the details and the specifics of the DoT response. If the Members start looking at the clauses now without even having half the answers yet, that is not advisable. He wondered how many RAF claims are in the system – how is that deadline going to be met realistically considering the dire situation of the RAF. He asked why specific recommendations were ignored by DoT. Its job is to convince the Committee why those recommendations should not be considered.

Ms S Xego (ANC) said that she was not against anything in the DoT responses but it would be more relevant to make references to these responses when the clause by clause exercise commences. She suggested that Members should also look at the report made by Adv Alma Nel to see if there are any similarities or differences that may be spotted. When the Committee goes through the Bill clause by clause, these highly contested matters will come up during that exercise.

Mr M Sibande (ANC) agreed that the Committee now go through the Bill clause by clause, and raise these matters as they came up in the Bill.

Mr Hunsinger asked what the purpose of the DoT presentation was if his questions are not going to be answered now. His questions were valid and directed at the DoT presentation.

The Chairperson said that the purpose of the DoT presentation was to respond to the questions raised in the previous meeting.

Adv Makgotho replied that it was not a mistake that he said the Bill is a skeleton. Section 16 of the Act empowers the Minister to develop a set of regulations. The principle of the separation of powers is known and the Minister develops the regulations. DoT has given the definition for the national average income. In determining the methodology we refer to two sources: the SARB indices and Stats SA, but we cannot have that but rather a schedule.

Mr Chris Willemse, RAF Senior Manager, replied that the definition of what the formula must refer to is in the Bill. If the formula contradicts what is in the law, then it would be contravening the Act and it cannot go outside what the RABS Act will be saying. The reason StatsSA would be considered as a source of data is because it provides the correct data about the age group that falls within the definition of the annual average national income as outlined in the Bill. The Reserve Bank index refers to the income and then there is an actuarial sum that provides a specific amount. If at any given time the definitions in those surveys change, and the methodology in the Act had been hard coded, DoT would need to come back to Parliament with an Amendment Bill. It is not practical to have this detail in the Act knowing very well that there might be a future possible change. Hence, this detail is left to the regulations.

Adv Makgotho replied about the mediation process and said that it is up to Parliament to decide whether to accept or reject mediation as one of the options for adjudicating claims. On claim prescription, he did not elaborate further because it is included in the document submitted. On the duration of the claim, DoT has put a proposal in the latest Bill and the Committee can exercise its discretion on a sunset clause – there is a transitional process for a sunset clause.

Mr Willemse replied about administration support that when the Bill becomes law, RAF as a legal entity ceases and all the administration and personnel. move to the new dispensation. The Board moves over and it takes over administration and the legal liability of the RAF. Additional capacity has been made available for the rehabilitation facilities in the new dispensation specifically health care benefits. There is a legal change but the staff and administration will continue under the new dispensation.

Clause by clause consideration

Preamble
Mr Ramatlakane said that he was satisfied that the Preamble and Objects of the Bill capture its intention and are aligned to the policy. 

Mr De Freitas noted that Mr Ramatlakane indicated that he was happy with the Preamble. So therefore a drunk driver or a person who drives without a licence would get rewarded for possibly killing someone. Is that correct?

Mr T Mpanza (ANC) said that the Chairperson should give guidance. The Committee has debated drunk drivers extensively. Moving forward, Members needed to state whether they agree or not with a clause. Opening up a discussion on the intention of the Bill would result in a futile exercise.

Mr Ramatlakane said that the unfolding exercise of consideration of the clauses was not a question and answer exercise. The procedure was for Members who wanted to effect amendments on the clauses, to do so. He had merely stated that he agreed with the intention of the Bill as it now stands.

Mr Mpanza supported Mr Ramatlakane.

The Chairperson asked Mr De Freitas if he had a proposal for the amendment of the Bill.

Mr De Freitas suggested that where it states the policy is on a no-fault basis in the Preamble, it must read “except under certain conditions".

Mr Hunsinger asked for clarity about the public hearings process. The Committee, by virtue of accepting the no-fault policy in the Bill, was categorically ignoring the public's sentiments against the no-fault policy. He wanted to put that on the record.  Earlier someone indicated that this Bill was derived from policy. The policy objective and imperative needed to be changed because people were against the intended no-fault policy.

Mr Ramatlakane said that the motion of desirability on the Bill was done a long time ago when it was first presented. The Committee then went for public hearings, listening to the lawyers and other stakeholders, and they were clear that we should remain with the current status quo. Therefore, the statement that everybody at the hearings did not want to see change was untrue, because people made it clear that change must happen. He proposed that Mr De Freitas' suggestion about “except under certain conditions".
was unacceptable. This has no place in the objectives for this because it would not take the process anywhere.

Mr Mpanza vehemently opposed Mr De Freitas' suggestion.

Mr Sibande supported Mr Ramatlakane's proposal to reject that insertion in the Preamble.

Mr N Seabi (ANC) supported the no-fault basis formulation currently in the Bill.

Ms Xego said that based on discussions and the provincial hearings, she agreed with the current Preamble.

Mr Hunsinger said the sequence of the Bill's processing had been there were submissions from specialists and subsequent to those submissions, the motion of desirability was accepted on 15 May. It was accepted but with two points that the DA objected to about no-fault and the common law. From 15 May onwards, it was clear that a particular direction was taken. This was not during the time when the specialist submissions were made. Following that there was a tour on the provinces. The Committee heard 187 individuals as representatives of the public: 38% said no to the Bill, 16% said yes, 24% spoke about their experiences claiming from RAF and 13.9% had proposals to amend the RAF Act. All these hearings were recorded and these numbers can be audited from what was recorded.

The Chairperson asked where the statistical information came from.

Mr Hunsinger said that he conducted this.

Mr Sibande rebutted that 187 people had participated in the provincial hearings. He asked the Chairperson to protect him because he was being pushed to get personal due to the statistics presented by Mr Hunsinger. He categorically stated that they were false. Lawyers had followed the Committee during the provincial hearings with the intention to make the process illegitimate. This is a ploy to derail the process.

Mr Ramatlakane said the Committee needed to proceed. People were allowed to have opinions. The figures mentioned remained disputed. The DA has a right to have a party perspective on the matter, but the Committee should proceed.

Members agreed with the proposal, and the DA’s objection was noted.

Clause 1 Definitions
Mr Ramatlakane said there had been uncertainty about the definition of “average annual national income” but this was cleared when DoT engaged with National Treasury. Therefore, he supported the current definition.

Mr Mpanza supported the Chapter.

Adv Makgotho read the “average annual national income” definition.

All Members supported the current definition.

Mr Sibande asked for clarity about the definition of "Administrator" on whether it referred to one person or the entire team.

Mr Willemse replied that it related to the legal entity as a collective.

Clause 2 Objectives of Act
Mr Ramatlakane agreed with objectives of the Bill. Earlier there had been a concern about the Department’s position on the policy intent, and DoT had responded adequately on this. It was mentioned earlier that the lawyers contested the legality of this clause. However, after perusing the Constitutional Court cases on this matter, that brought some certainty and the clause can be accepted as it is.

Mr Hunsinger submitted an objection from the DA about clauses 2(b) and (c).

Clauses 3 Establishment / 4 Financial year
These were agreed to by the Members.

Clause 5 Duties
Mr Ramatlakane was concerned about 5(c), particularly “reject claims” because it had no qualification. If it is left like that, it means that the Administrator can reject, and there was no basis for rejection under a no-fault system.

Mr Seabi said one of the challenges was the activities previously done by the lawyers, was it implied that the Administrator would do this?

Mr Sibande asked what informed “reject” in 5(c).

Ms Xego asked if there was any function in the Administrator that would deal with the rejection of claims.

Adv Makgotho replied that if one looks at clause 5(c), it clearly states that it will be the Administrator that would reject claims.

The Chairperson said DoT needed to look into this because it seems as though the Administrator would play both a referee-and-a-player role.

Adv Makgotho noted this concern. He said regulations would be developed to deal with this. There will be a lever where if a claimant is not happy with the decision of the Administrator, the claimant can take the decision to the Appeals Committee.

Mr Hunsinger said, despite his objection to the clause, clause 2(d) spoke about disputes but in Clause 5 Duties of the Administrator there was no mention of disputes as per clause 2(d). Is it the intention to disregard the Administrator’s powers to assess disputes or was the intention to insert that later?

Mr Ramatlakane said the provision suggested by Mr Hunsinger should be added to clause 5 Duties of the Administrator.

Adv Makgotho pointed out that clause 55 stated that the Minister may establish one or more Appeal Committees and these committees would be independent of the Administrator; though the point was taken.

Mr Hunsinger referred to clause 5(a) “assist injured persons, dependants and immediate family members to submit claims”. He suggested that some monies be allocated for victims to obtain documentation to validate their claims. This must not be out of the claimant’s pockets – financial assistance must be provided.

Mr Willemse said there is no cost for submission of claims, therefore, the Administrator was not required to provide any financial support. When you submit a claim you would have normally incurred costs related to medical services. The medical service provider that was assisting the claimant would be able to claim from the Administrator. Consequently, there is no financial implication for the claimant.

Mr Ramatlakane said that “reject” in clause 5(c) must be qualified and activate certain actions for somebody submitting a claim.

The Chairperson asked when the claim would be rejected.

Adv Makgotho replied that the concern was noted and a relevant provision to that effect would be drafted.

Mr Hunsinger said that when people make claims, they have to prove that they have a claim, and realistically people incur costs before submitting claims. People would only be allowed to come in the RABS door once it has been established that the claim is legitimate, and in compiling that documentation there are costs that would be incurred by the victims.

Mr Ramatlakane said that Members must remember that we are moving from fault to no-fault, when there is an accident. The responsibility is taken by the authorities who take charge of the accident scene. The details of which the vehicles belong to whom and other relevant details are recorded as well as the admission in the hospital. After that process, a foundational document would be established, not individual victims taking responsibility for that job. That foundational document is the one that would be used as part of the necessary documentation to validate a claim – basically, this is a document that is prepared by the state. The clamant would then make use of that foundational document, and would not have incurred any costs for that.

Mr Hunsinger supported what Mr Ramatlakane said but the Administrator duties do not extend to assisting victims in preparing documents. He read clause 42(2) which contradicted this: “Other than payment for contracted healthcare service providers and for a funeral benefit in terms of section 39(2), the Administrator shall not be liable for the provision of a benefit until a claim for such benefit is submitted in the manner set out in the rules". He drew Members attention to clause 43(1)(a) – (e) and (2), which was very conditional and specific and not vague. The victim will be left alone to obtain all this documentation at the cost of the victim. This was to motivate that it was important to include financial assistance.

Ms Xego said that if Mr Hunsinger’s point was inserted in clause 5 Duties, what would happen if the claim was unsuccessful? All possible loopholes for potential corruption must be considered when crafting law.

Mr Mpanza said that he understood the principle outlined by Mr Hunsinger but the suggestion had major financial implications. He feared that it would defeat the objective of cost effectiveness when dealing with claims. Perhaps, it does not fit very well under the Duties of the Administrator but it could be looked at under Finance.

Mr De Freitas read clause 56 “the Administrator shall not be liable ….to prepare and submit a claim”. Based on the clause it seems as though only people who were not poor would be able to claim under RABS and asked if this was the case.

The Chairperson said clause 5 needed to be crafted clearly as it outlines that the Administrator "must" assist everybody that will be submitting a claim.

Mr Ramatlakane said to accommodate what was raised by Mr Hunsinger, the Committee should insert that the Administrator “may” assist claimants.

Mr De Freitas said that the clause was silent on whether that assistance would be financial or not. Poor people living in remote rural areas would clearly not receive any financial assistance.

Adv Makgotho said there was no logic in the way this was being coined. How could RABS assist a victim’s claim if in the end that claim may not be successful? Would there be an undertaking that there will be a refund? We must guard against bringing lawyers through the back door and this is about the affordability of the scheme.

Mr Ramatlakane said he was happy that Mr Hunsinger accepted his suggestion. He suggested that the financial aspect must be dealt with under the finance section. If one wants to specify a type of assistance under the duties, then the type of assistance must be included. Financial assistance should be dealt with under the discussion relating to finances.

The Chairperson submitted to Members that the suggested insertion in clause 5 about financial assistance is dealt with under financial related matters. Therefore, clause 5 would be flagged for now.

Members agreed to the proposal.

Clause 6 Powers
Mr Seabi commented that 6(j) should be looked into specifically about the Administrator investigating the cause of road accidents.

Ms Xego said that since this was a no-fault Bill there would be no need for an investigation to be undertaken for the purposes of processing claims. This responsibility to investigate the causes of road accidents should be left with the relevant transport authorities. The Administrator should therefore not be given the powers to investigate.

Mr Hunsinger said that 6(f) bothered him and the fact that funding should be restricted to particular asset classes and instruments that would not hinder the cash flow of the Fund. He appealed that one specify the classes of assets and instruments that would not hinder cash flow, because it cannot be that certain investments would take away money from the scheme. The 6(f) provision should be taken away so that money invested can be used to pay for victims’ benefits not the repayment of loans and other obligations.

The Chairperson suggested that this comment should be dealt with under the finance section.

Mr Ramatlakane said when it comes to the scheme funding, National Treasury would handle financial related matters. Therefore, “in consultation with National Treasury” should be inserted in 6(f) instead of stating “subject to national legislation". He asked what “excluding share certificates” meant in 6(g). He agreed that “investigate” in 6(j) should indeed be reconsidered.

Mr Chris Hlabisa, Acting DoT Director General, replied that DoT would reconsider 6(j) as suggested as well as “in consultation with National Treasury” in 6(f).

Adv Makgotho replied that the reason “excluding share certificates” was included in 6(g) was because RABS was not a company. If the Committee wishes, that can be deleted completely.

The Chairperson indicated that the Committee would move on to Chapter 3 at the next meeting.

Meeting adjourned.