E-toll or bust
Website wikipedia.org defines propaganda as a form of communication that is aimed at influencing the attitude of a community toward some cause or position.” In recent months the South African National Roads Agency (Sanral) has used and abused both online
The headlines published on local online news portal fin24.co.za are telling… Over the past few weeks the website carried the following: Sanral revises e-toll terms; Sanral denies vehicles to be impounded; Sanral: E-tags will not be compulsory; Sanral: E-tags compulsory; Sanral denies e-toll road blocks – and many more. The end result – confusion and fear – forcing the timid among us to install an e-tag, despite their being no requirement to do so... Motorists who elect not to fit an electronic tag will receive their e-toll accounts by snail mail.
A string of objections to the e-tolling process
As the 30 April 2012 e-toll implementation looms the organisations opposed to this revenue collection mechanism are growing. The official opposition, the Congress of South African Trade Unions and agriculture union TAU SA have all voiced their objections, while private business interest groups such as the Southern African Vehicle Rental and Leasing Association, the SA Tourism Services Association and the Retail Motor Industry have approached the North Gauteng High Court to put a stop to the controversial system. Their motion will be heard on 24 April, just six days before the ‘go live’ date.
Meanwhile the Democratic Alliance’s attempts to get Sanral to answer certain allegations in front of the National Consumer Commission have failed dismally. Sanral was a ‘no show’ at the first two meetings and appears certain to miss the third… Their position is that the e-tolling system will go ahead – as planned – regardless of the myriad consumer concerns. Why all the fuss? The last time we covered this topic (Stokes’ Stage 11 November 2011) we raised four objections to the tolling revenue collection model. We will take another look at these points today – with a few additional comments...
The first objection: We have paid – and still pay for – road infrastructure
Both Sanral and government smugly claim that users should pay for the ‘new’ Gauteng freeways. But South Africa taxpayers have already paid for these roads. The bulk of the now upgraded road network was built with public money, whether from budgeted government expenditure or from levies on fuel. Aside from income tax and VAT, motorists contribute approximately 30% of the pump price of each litre of fuel to state coffers, including 88c/litre to a Road Accident Fund Levy and 197.5c to a General Fuel Levy.
The decision to fund the GFIP via tolling is absurd. In doing so government has handed over an asset already paid for, via its road agency, to a private company headquartered in Austria. Taxpayers (or road users if you prefer) will now pay a private company around R6.2 billion until 2019 to manage a section of highway that should have been maintained from public funds. Even worse – instead of just paying for the ongoing maintenance and upgrade of our asset, we are also paying an offshore company to collect this money from us!
It is an extremely lucrative business. On Tuesday 20 March, The Star confirmed that Kapsch Traffic-Com generated R1.2 billion (€120.7m or 31% of total group revenues) from its South African operations in FY2011, including revenues from traffic and parking fines and the sale of e-tags.
The second objection: We don’t really know what we are paying for
I’ve trawled the Internet for information on GFIP. There are plenty of general facts and figures covering the project and it benefits. And as expected, there are as many pro-tolling articles (from Sanral and other beneficiaries) as against (from consumers, both private and commercial). But nobody seems capable of providing an exact breakdown of costs for the entire project. How can Sanral expect taxpayers to pay without full and complete transparency on the transaction? To date we can only rely on rumours, including claims that our ‘upgraded’ roads cost multiples more than similar infrastructure projects in other Western economies…
There was limited transparency on the toll bidding process too. We are left wondering whether the contract was awarded to the cheapest bid. Apparently the R6.2 billion we mentioned earlier could easily climb by R3 billion when inflation adjustments are factored in. We also don’t know the identities of many of the South African parties involved in the transaction .An Austrian multi-national (Kapsch) and Cape Town-based TMT Services and Supplies are partnered in the deal, but TMT lists strange subsidiaries such as Berrydust 51 (Pty) Ltd, Crestwave 61 (Pty) Ltd and Crestwave 63 (Pty) Ltd. In their 2010/11 Annual Report Kapsch refers to these subsidiaries as follows: “With regard to additional disclosures in accordance with Section 265 (2) UGB for the companies mentioned above, the protection-of-interest clause pursuant to Section 265 (3) UGB was applied.” Sounds a bit like the Secrecy Bill.
If I am expected to pay for the maintenance and upgrade of the roads and for the administration of a toll collection system, then I want to know who has been contracted on my behalf, exactly how much I’m paying and to whom! I want a full account of every cent in my tax rand!
The third objection: A flawed ‘user pays’ system
Government is aware of resistance to the tolling proposal. The threat of an uprising from the taxi industry forced them to abandon a fair ‘user pays’ system by offering exemptions to taxis and buses using the improved freeways. Thus my third objection to the proposed tolls is as follows: Why should the fifteen individuals in a minibus taxi, for example, object to paying their one fifteenth share of the ‘user pays’ toll? What gives the occupant in a taxi or bus more or less of a right to the use of a publicly funded road than you or I? If the principle for funding of the road development is ‘user pays’ then ALL users should pay.
The ‘user pays’ concept will be further eroded by the numerous road users that will boycott the system. As things stand a motorist who opts out of the e-tag system will receive a monthly bill, posted to the vehicle’s registered address. There is no way to ensure that these motorists pay their bill on time, if at all. What will Sanral do if a few hundred thousand motorists toss these bills into the trash? Blacklist them? Issue summonses and prosecute? Lock the defaulters in jail? My guess is they will simply increase the tolls for the few motorists who bother to pay.
The fourth objection: A flawed collection system
A number of economists have been extremely vocal about the inefficiency of a tolling system as a collection mechanism. First, there are millions each year in unnecessary additional administration expenses. Second, the billing system relies on motor vehicle registrations to track vehicle owners – a database which is hardly as accurate as it needs to be. The risk is that the number of people who refuse to pay (resist) or aren’t billed (because they cannot be reached) will exceed those who do.
A far better solution
Let me paint the situation in the simplest possible terms… Option A: You get a new highway costing R20 billion and are asked to pay R20 billion – split equally among 50 million citizens – and collected by way of an efficiently administered fuel levy. Option B: You get a new highway costing R20 billion and are asked to pay R29 billion (of which R9 billion goes offshore) – split unequally across a million motorists – and collected by way of an expensive and inefficient e-tolling mechanism? The choice is simple isn’t it?
At an estimated R20 billion the GFIP amounts to just 2% of the expenditure on our 2012/13 National Budget. And the amount is less than National Treasury loses to wasteful expenditure each year. It is time to scrap this dodgy tolling solution and ring fence some of the general fuel levy for Sanral’s grandiose road building schemes. If more funds are required it is much cheaper to raise the levy by a few cents per litre than to build a massive tolling infrastructure. The answer is a single levy, collected via mechanisms already in place, where all citizens contribute equally to the upkeep of the country’s national road infrastructure.
Editor’s thoughts: The media has sensationalised the e-tolling story to such a degree that we’ve lost track of the commonsense solution. The deal should never have been given the go-ahead in its current form – and the only sensible solution is for government to step in and undo the mess that their ‘representatives’ have created. Why is government not listening? Please add your comment below, or send it to [email protected]
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