All aboard the e-toll gravy train

One cannot help but feel sorry for the South African consumer. Not only do we face the challenge of high petrol prices, a workforce that sits the whole year eagerly anticipating strike season and paying exorbitant prices for imported goods because of high import taxes, now Gauteng residents are being bullied into paying e-toll taxes, as well.

But if we have learned anything from the Americans and Europeans, we cannot stand and throw a tantrum hoping that the situation will go away. Preparation is necessary because it will have an impact on our daily life.

Governments reasoning

As part of the country's preparation for the 2010 FIFA World Cup, the Government went on an extensive infrastructure improvement programme which upgraded the highways and roads leading to the stadiums used in the showpiece sporting event.

This programme came at a significant cost. In order to recover the costs which it spent on the programme, government established e-tolling. This was met with significant resistance by road users who are justifiably worried about the way in which e-tolls will impact their lives.

There were a number of strikes and court cases before a bill which makes e-tolling legal, made its way through Government until it found its way to the desk of President Jacob Zuma.

Zuma was contemplating signing the bill while the South African Roads Agency Limited (Sanral) found itself in and out of court with Opposition to Urban Tolling Alliance (Outa). But because of pressure from Sanral and other politicians, Zuma had the final say in the matter when he signed the Transport Laws and Related ­Matters Amendment Bill before Outa went to court to oppose its implementation.

A report by the City Press pointed out that one senior official, who was involved in the interministerial committee on e-tolling, chaired by Deputy President Kgalema Motlanthe, said e-tolling's implementation was always something of a forgone conclusion.

"By embarking on another consultation, government wanted to show that it was listening to the objections on the bill. But the die was cast long ago, when Sanral signed the contracts and borrowed money with government guarantees,” said an official, who asked not to be named.

Big deep people

While the pricing structure for e-tolls has not been finalised, it is widely believed that road users, with the exception of taxies and busses, will be expected to pay a double digit figure per kilometre used. This is in addition to the high petrol prices South African consumers already face.

This is likely to have a significant impact on middle and lower income earners. An article by news website www.businesstech.co.za pointed out that Neil Roets, CEO of debt counseling firm, Debt Rescue, says that, the extra R450 a month needed for commuters who use the N1 highway between Johannesburg and Pretoria on a daily basis, combined with an the country's unemployment rate of 25% which looks likely to increase in the foreseeable future, is going to make a huge difference to disposable income.

"With some 20 million credit-active consumers collectively owing R1.45 trillion, the additional burden of e-tolls is going to be the straw that breaks the camel's back,” Roets said. "The writing is on the wall for many middle class families who have only recently escaped from dire poverty. With the additional costs imposed on them directly through tolling and indirectly through the increased costs of goods traveling on the tolled roads, many will be pushed back into poverty.”

Workable alternatives

While this is a daunting prospect for consumers, it should also be an area of concern for Sanral. Those who can afford e-tolls, or those who are against the programme in principle, will merely use alternative routes than the highways.

But not everyone can use domestic roads, so Sanral's plans may take longer to work out than expected. Key for them is to recuperate the greatest amount of cash from the greatest target audience.

There are alternatives to e-tolling. An article by News24 presented a few interesting options:

- One option is to raise the additional revenue required through increasing income tax, company tax or VAT. Although this will have the same devastating effects as e-tolls on middle and lower income earners, it would spread the burden around the country as a whole and lower the impact on individual citizens.

- Another option is for a general increase in the fuel levy which, although slightly bowing to the "user pays” principle, would still attract the kind of criticisms which apply to the second option. But if we saw resistance to e-tolls, we might see an outright revolution on the Highveld after consumers will be expected to fork out more for petrol which already sports exorbitant prices.

Doomed for failure?

While many people are bracing themselves for the impact of e-tolling, there are some who are quietly optimistic that the whole programme will fail before it even sees a year of implementation.

The DA has had many fights with ruling parties over the years, first with the NP and now with the ANC. And while many of these fights proved to be unsuccessful, this one may prove to be the one that did not get away as it has the weight of the nation (well at least Gauteng road users) behind it.

A media release on the DA website points out that according to recent reports, as a result of lower than expected revenue from e-tolls, Portugal's e-tolling system has been so unsustainable that the country's road chief has warned that there will not be enough money for road maintenance.

Portugal's e-tolling failure is clear evidence that e-tolling does not work. According to the Portuguese road agency Estradas de Portgual (EP) chief, António Ramalho, the agency failed to collect more than €30 million (R386 million) from e-tolltransgressors.

They found that on average 19% of toll-road users fail to pay for using the-tollroads and that e-tolls have effectively forced thousands of cars onto secondary roads. He further admitted that expected revenue from e-tolls is far below those anticipated by initial studies. Failure to pay, amongst others, has increased administrative fees from €17 million (R218 million) in 2011, to €42 million (R540 million) in 2012.

Editor's Thoughts:
There are some pretty tough times ahead for Gauteng residents. The irony of the situation is that this does not have to be the case. Alternatives do exist and if Sanral follows the model applied in Sweden and Norway, e-tolling will not be such an issue. In Sweden and Norway, once the Government recuperates the necessary money through e-tolling, they take down the gantry's all together. Is there any likelihood of this happening in the local market? Please comment below or email me your thoughts [email protected].