department of transport select committee on finance and appropriations ffc recommendations on the...

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)


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


5-8 Years


(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


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


10

Road damage


11

Road damage

Strand, Western Cape Umdloti, KZN


12

Road damage


13


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


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


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


16


Figure A1: Roads Coordinating Body

17


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


18


South Africa has one of the highest road accident fatality rates in the world

Road accidents


19

Road accidents


• 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


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)

department of transport select committee on finance and appropriations ffc recommendations on the...

Documents