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Department of Transport
Select Committee on Finance and Appropriations
FFC recommendations on the Division of Revenue 2010/2011
5 August 2009
1
Contents
FFC Submission on the 2010/2011 Division of Revenue Bill:
• Public Infrastructure investment • Management and financing of road infrastructure
Other recommendations
Additional information on Transport Grants:
• Gautrain Rapid Rail Link • Public Transport Infrastructure and Systems • Public Transport Operations • Sani Pass (Roads) • Overload Control • Rural Transport Services and Infrastructure
Schedule
564556
2
3
FFC Submission on the 2010/2011 Division of Revenue Bill
• Public Infrastructure investment
• Management and financing of road infrastructure
4
Public Infrastructure investment
FFC Recommendations Comment
Review departmental baselines upwards
Agree, investment should be targeted towards basic needs. Accessibility via transport should be a primary condition for infrastructure investment
Improve targeted outcomes towards employment creation and poverty reduction
Agree. Being implemented through EPWP programmes
Implement a fully comprehensive national infrastructure maintenance strategy
Agree. There are however no capacity building programmes to improve municipal spending capacity, which should be attended to. (Refer Table 24 on page 113 of the report)
Facilitate, integrate and sequence infrastructure planning and delivery
Agree
5
Public Infrastructure investment (continued)
FFC Recommendations Comment
Support stronger municipal management
Agree
Improve long term planning:• Use best practice from
effective agencies• Complete comprehensive
monitoring and evaluation system
• Use common methodologies for calculating costs and benefits for project appraisal
Agree, but common methodologies cannot be used for calculating costs for roads due to different conditions:
• Physical factors such as climate, rainfall, soil conditions, inclines
• Other factors such as traffic volumes, location of population and size, expected road usage and frequency of use, planned infrastructure investments
• Social and economic benefits cannot always be determined using common methodologies of appraisal
6
Management and financing of road infrastructureFigure 15: condition of surfaced roads in South Africa , 1998 - 2008
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
Very poor Poor Fair Good Very good0% 20% 40% 60% 80% 100%
7
Repair Cost = R 0,1mill / km
0
20
40
60
80
100
2000 2002 2004 2006 2008 2010
Year
Roa
d C
ondi
tion
Good
Fair
Poor
Very Poor
3-5 Years
Repair Cost = R 0,6mill / km
5-8 Years
Repair Cost = R 1,8mill / km
(Ratio 1:6)
Ratio 1:18
Cost of maintenance delay
Road Infrastructure (continued)
8
Impact of maintenance delay on road user cost (Over 90% of total transportation costs is road user costs)
Good PoorInternational Roughness Index (m/km)
ArticulatedTruck
Passenger Car
More than
100 % Increas
e in Road User Costs
R 0.00
R 2.00
R 4.00
R 6.00
R 8.00
R 10.00
R 12.00
R 14.00
R 16.00
R 18.00
R 20.00
0 2 4 6 8 10 12 14 16 18 20
Vehi
cle
Ope
ratin
g C
osts
(R/k
m)
Very Poor ConditionPoor Condition
Good Condition
Road Infrastructure (continued)
9
In the following provinces, more than 30% of roads are in poor to very poor condition:
• Eastern Cape (46%, 2000)• Free State (59%, 2007)• Kwa Zulu Natal (46%, 2005)• Mpumalanga (65%, 2004)• Limpopo (60%, 2000)• Northern Cape (47%, 2004)• North West (45%, 2007
Road Infrastructure (continued)
10
Road damage
Road Infrastructure (continued)
11
Road damage
Strand, Western Cape Umdloti, KZN
Road Infrastructure (continued)
12
Road damage
Road Infrastructure (continued)
13
FFC Recommendations Comment
There should be an increased and stable flow of funds for maintenance, rehabilitation and addressing backlogs in the long term:a. Formulating a pricing and
cost recovery policy for roads
Agree. Programmes should be implemented to improve municipal capacity for pricing of services and borrowing
b. Earmarking a portion of road related user charges and taxes
Agree. A portion of the fuel levy to fund roads could be re-instated
c. Including a road infrastructure component in the equitable share
Agree. The formulae do not include any significant factors for transport needs, although and average of 20% of disposable income is spent on transport
Management and financing of road infrastructure (cont.)
14
Management and financing of road infrastructure (cont.)
The quality of road infrastructure is positively linked to capacity, e.g. SANRAL capacity is in line with the quality of roads under its control (national roads)
Dedicated funding is positively linked to quality of roads, however, not linearly: There is under spending in some Provinces and Municipalities on roads although there is a crisis with funding for roads
15
FFC Recommendations Comment
There should be an increased and stable flow of funds for maintenance, rehabilitation and addressing backlogs in the long term:d. Expanding the role of
development institutions and capital market in funding road infrastructure
Agree for high capacity Municipalities only (Metro’s and District Municipalities)(Refer Table 24 on page 113 of the report)
Greater coordination of road management functions across the three spheres, and revision of the inter road coordinating model proposed by the Department of Transport
Agree. It is impractical for all of the 283 Municipalities to have a Municipal roads Service Delivery Entity (Refer Figure A1: Roads Coordinating Body on next slide).Recommend that these entities should be restricted to high capacity municipalities, and that clear governance structures should be arranged before these entities are created
Management and financing of road infrastructure (cont.)
16
Management and financing of road infrastructure (cont.)
Figure A1: Roads Coordinating Body
17
FFC Recommendations Comment
Priority should be given to addressing the lack of technical skills in the road management sector of sub-national governments.
Attaining this objective can be done via the introduction of a separate conditional grant specifically targeted at building technical capacity within the road management sector of sub-national governments
Agree if the S.A. National Roads Agency model is adopted. Maintenance and road condition data should be centralised to determine priorities and optimal funding via the Pavement Management System that SANRAL has adopted
Management and financing of road infrastructure (cont.)
18
Road Infrastructure (continued)
South Africa has one of the highest road accident fatality rates in the world
Road accidents
Road Infrastructure (continued)
19
Road accidents
Road Infrastructure (continued)
• Some road accidents are caused by the state of our roads
• There is also a growing trend of growing costs associated with litigation where courts have ruled against the State for negligence in maintaining road infrastructure
20
Road Infrastructure (continued)
Fiscal injections alone is not a panacea to road conditions. Given this, certain policy interventions are necessary
There is a need for policy interventions such as:
• Axle weight limits• Targeted rail investments and interventions to move non
time sensitive goods and commodities to rail• Law enforcement - Trucks use the secondary road
network to avoid weighbridges
21
22
Sections in Division of Revenue Bill
Comment
Sections 27, 28 and 29:
Under certain circumstances:• A transferring national
officer may withhold a transfer for no longer than 30 days
• The National Treasury may withhold an allocation for up to 120 days
• The National Treasury may stop a transfer
• National Treasury may re-allocate an allocation
National transferring officers should be provided with more powers to withhold, stop and re-allocate an allocation.
It should be made possible to re-allocate transfers that were stopped:
• To other spheres of Government and• For other purposes that are related to
the original purpose of the allocation
The flexibility in scheduling of grants should not be sphere specific
Provinces should be more involved in Municipal priorities
DoT recommendations
Thank you
23
Gautrain Rapid Rail Link
24
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
R'000 3,241,000 3,029,411 3,265,993 2,507,211 340,660
2006/07 2007/08 2008/09 2009/10 2010/11
Allocations from 2006/07 to 2010/11
25
Gautrain Rapid Rail Link(continued)
• Annual allocations are paid in terms of a payment schedule• Key and General Milestones have to be achieved before payment• The Provincial Support Team then checks whether Milestones have indeed
been achieved• The Milestones are certified by the Independent Certifier (IC)• The certified claim is submitted by the IC to the Gauteng Management
Agency to check claims for compliance• The GMA then sends the claim to the Department with a request for
payment from the DORA Grant• The Department satisfies itself that there has been compliance with the
DORA requirements and the conditions contained in the DORA Framework
Currently, indications are that Phase 1 of the Project, i.e. the section between OR Tambo International Airport and Sandton will be completed in 2010, while the rest of the Project will be completed in September 2011.
Public Transport Infrastructure and systems
26
• The Public Transport Infrastructure and Systems (PTIS) grant is aimed at improving transport infrastructure & systems for 2010 and beyond;
• Total PTIS grant from 2005/06 to 2011/12 = R18,767bn• Total Host Cities PTIS grant = R10.979bn which is 80% of PTIS
Grant• Ongoing Monitoring and Evaluation of progress is in place, with
monthly reporting• Five Host Cities currently receiving technical assistance (Polokwane,
Rustenburg, Mangaung, Mbombela and Tshwane
27
Allocations per City / Entity
Actual Actual Actual Actual Budget Budget Budget Totals
R'000 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 PeriodJohannesburg 106,900 184,000 329,000 661,171 652,803 1,070,471 600,000 3,604,345
Tshwane 13,150 11,000 105,000 260,000 565,245 864,180 300,000 2,118,575
Ethekwini 22,600 11,760 125,000 624,949 376,926 529,699 500,000 2,190,934
Cape Town 8,000 120,000 230,000 424,842 332,500 647,270 800,000 2,562,612
SARCC 179,000 476,000 0 464,758 500,000 0 1,619,758
Nelson Mandela 53,650 68,600 132,000 305,484 147,079 408,333 500,008 1,615,154
Mangaung 23,600 29,230 25,000 242,617 82,168 183,551 249,000 835,166
SANRAL 130,000 100,000 206,559 0 0 436,559
Mbombela 1,810 830 55,000 170,544 60,833 135,893 250,000 674,910
Polokwane 4,000 10,400 50,000 143,207 66,146 147,161 250,000 670,914
Non Host Cities 4,000 82,200 90,000 18,359 66,695 152,880 1,450,000 1,864,134
Rustenburg 4,000 33,000 68,657 67,782 150,337 250,000 573,776
CBRTA 1,000 1,000
Total 241,710 698,020 1,780,000 3,019,830 3,089,494 4,789,775 5,149,008 18,767,837
Public Transport Infrastructure and systems (continued)
28
Allocated per City / Entity (Rm)
2,5632,191 2,119
1,8641,620 1,615
835 675 671 574 4371
3,604
Johannesburg Cape Town Ethekwini TshwaneNon Host Cities PRASA Nelson Mandela MangaungMbombela Polokwane Rustenburg SANRALCBRTA
Public Transport Infrastructure and systems (continued)
29
The grant replaced the former bus subsidies:• Subsidy levels have been insufficient since 2005/06 to halt the
declining levels of service, escalation in costs and the growth in demand
• In order to improve operational and financial efficiency a more focused approach to determining service priorities will need to be developed
Implementation Plan: • Conditional Grant to Provinces introduced• Phased implementation in co-operation with Provinces• Negotiated performance based contracts for route operations• Formalisation of unscheduled Interim Contract services• Define operating areas that will not be served• Implementation of supporting infrastructure• Continued enforcement and monitoring of all contracted Public
Transport Operations
Public Transport Operations
30
Finalise integrated road based networks
Develop KPI’s
Identify key role-players who are to be part of the operating entity
Engage with all parties to establish operating entity
Implement depots and vehicles if so decided
Recruit/develop admin capacity to manage the contracts
Contracting authorities will have to: Change in compensation method – based on fixed
kilometre
KPI’s
New national monitoring model
Fare levels as set by the authority
Fleet replacements to be based on requirements of the contracting authority
Contracting authority may purchase existing assets (eg depots) and contract compliant vehicles
Operators will have to accept:
Bus Subsidy Funding - Conditional Grant in DORA Critical conditions:
Interim contracts to be converted to negotiated (kilometre based) contracts by September 2009
Alignment with IRPTN
Interventions to achieve change 2009/10 onwards:
Public Transport Operations (continued)
31
Operators that accept will sign a negotiated contract that Operators that accept will sign a negotiated contract that includes:includes:
KPI’sKPI’s
Provision that the operator will be provided with an Provision that the operator will be provided with an opportunity to be party to a new integrated contract regime opportunity to be party to a new integrated contract regime for some or all of the services within the contract areafor some or all of the services within the contract area
Operators that do Operators that do notnot accept will continue on month-to- accept will continue on month-to-month basis and their contracts will be terminated as and month basis and their contracts will be terminated as and when requiredwhen required
Intervention conditions:
Public Transport Operations (continued)
32
Roads, Overload Control and Rural Transport
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Sani Pass 30,000 34,347 37,650 40,520Overload control 8,796 10,069 11,036 11,879Rural transport 8,900 9,800 10,400 11,100
2008/09 2009/10 2010/11 2011/12
Note: Sani Pass grant to be replaced by a roads grant from 2010/11Overload control grant to be allocated for 2011/12
33
Road Grants
The grant was introduced to develop road infrastructure projects that promote regional integration, development and connectivity between neighbouring states
Construction of the Sani Pass:
• Phase 1 – Upgrade of P318 Sani Pass (km 0 to 13.6) - completion scheduled for April 2010.
• Phase 2 – Upgrade of sections 1 and 2 (km 14 to 25 and 25 to 33):• Environmental Impact Assessment Studies underway with record of
decision scheduled for announcement in September 2009• Engineering designs are underway and are at various stages of
completion by the joint venture consultant team
• Future road construction projects to be identified for inclusion in the Division of Revenue Act
34
• To achieve the objectives of the national overload control strategy, a 3-year grant has been developed in conjunction with National Treasury
• Grant funds are currently being used for upgrading the weighbridge infrastructure facilities in Mpumalanga and Limpopo
• In Mpumalanga, projects for the upgrade of weighbridge infrastructure were completed in October 2008:
• Kinross Traffic Control Centre• Ermelo Traffic Control Centre
• In Limpopo, the detailed design, planning and bill of quantities have been compiled, and construction works are set to begin in 2009/10 on:
• Rathoke Traffic Control Centre• Mooketsi Traffic Control Centre
• Future allocations:
2009/10 Gauteng R5,0m Limpopo R5,0m
2010/11 Eastern Cape R5,5m Mpumalanga R5,5m
Overload Control Grants
35
Rural Transport Grants
Purpose :• To improve mobility and access in rural municipalities in support of
Integrated Development Plans
Reasons for not incorporating in equitable share:• This is a specific purpose grant mainly for the provision of rural transport
infrastructure and services. • This grant ensures that district municipalities are giving priority to the
following rural transport interventions:• infrastructure construction• maintenance, upgrading and rehabilitation• support rural development and• accelerated and shared growth initiatives in line with government
priorities• It is also used as vehicle for stimulating the use of labour intensive methods
in large infrastructure programmes / projects to create jobs and develop required skills in terms of the Expanded Public Works Programme
36
• MTEF Allocations:– R8.9 million 2008/09, – R9.8 million 2009/10– R10.4 million 2010/11– R11,1 million 2011/12.
• Details of Projects : 2008/09 Allocations:District Municipality PROJECT BUDGETChris Hani Intermodal Public Transport
Facility R 4,1m
Thabo Mofutsanyane Upgrading of Access Road to a Thusong Service Centre
R 2.0m
Dr Ruth S. Momphati Construction of 2No. Pedestrian Bridges
R 2.0m
Sekhukhune Development of a Pedestrian & Bicycle Paths Master Plan
R0.8m
Rural Transport Grants (continued)
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