South African motorists could be paying R131 less to fill their tanks
South Africa should scrap the Road Accident Fund (RAF) fuel levy, which contributes R2.18 per litre of fuel, and replace it with a requirement for all vehicle owners to have comprehensive insurance with third-party injury cover.
That is the view of road safety expert and Driving.co.za managing director Rob Handfield-Jones.
The Road Accident Fund fuel levy is roughly 10% of South Africa’s fuel price and adds between R98 and R175 per tank of fuel, depending on the size of your car’s fuel reservoir.
Typical sizes of fuel tanks range between 45 litres for smaller cars and 80 litres for larger vehicles like Toyota Hilux and Ford Ranger bakkies.
When filling up a larger sedan or SUV’s 60-litre tank, motorists pay R130.80 towards the RAF.
Handfield-Jones argued that given South Africa’s road carnage, the RAF will always be chronically underfunded.
Therefore, government should get rid of it, make comprehensive insurance mandatory for all roadgoing vehicles, and phase in third-party injury benefits over time.
He was responding to commentary from professor emeritus Hennie Klopper, who objected to the RAF’s claims that its portion of the levies on fuel should be increased.
Klopper, a practising attorney since 1973 and a retired University of Pretoria private law professor, told MyBroadband that the RAF’s inefficiency is a major reason the levy is R2.18.
However, while Klopper was against increasing the RAF levy, Handfield-Jones said it should be done away with entirely.
“Let’s ignore the fact that the RAF is — and always has been — technically bankrupt, just like the Multilateral Motor Vehicle Accidents Fund before it,” stated Handfield-Jones.
“Instead, let’s focus on the real issue which is that the fundamental cost base of the RAF is predicated on the crash and fatality risk figures of three decades ago.”
Handfield-Jones said that since the 1990s when the RAF was established, fatality risk has increased at least four-fold.
Therefore, the RAF is at least four times under-funded, but probably more considering that medical inflation routinely exceeds the Consumer Price Index.
“The RAF levy would need to be at least R12 to R15 per litre to adequately fund the current injury disaster on our roads, and that is simply not politically palatable,” said Handfield-Jones.
He said the South African health system has the same problem.
The health budget, treatment, and rehabilitation facilities for crash victims are scaled and funded on the basis of the crash rate from three decades ago.
“Curiously, the current traffic disaster is not reflected in official government data, but always turns up in mortuary returns surveys,” Handfield-Jones said.
“Starting two decades ago, the National Injury Mortality Surveillance System showed that the actual number of road deaths was nearly double the official figure,” he continued.
“Now it is more like triple, probably more.”
Handfield-Jones said that he sees three possible solutions to this problem — only one of which is realistically implementable.
“The first and most obvious is to fix road safety, but that will never happen,” he said.
“Government is too fixated on the annual R5 billion – R6 billion it can ostensibly make in profit from traffic enforcement and related services while ignoring the over R200 billion that leaks out the back door due to the cost of crashes.”
Handfield-Jones said the latter figure was based on a Road Traffic Management Corporation research study from 2016 titled Costs of Crashes in South Africa, inflation-adjusted forward.
“Interestingly, the Department of Transport published a figure of R309 billion per annum in 2013 which, inflation-adjusted forward, would be almost half a trillion rand annually by now,” he said.
“Either way, the government’s utter incompetence and neglect regarding road safety is costing South Africa dearly.”
His second possible solution is to increase RAF and healthcare funding to match South Africa’s road carnage.
“This will also never happen, because it would be political suicide,” said Handfield-Jones.
“But in literal terms, if we could reduce the burden on the state for traffic injuries to 1990s levels, the current health budget would be adequate to provide an NHI-equivalent system without needing to do anything further.”
Handfield-Jones said that a major part of the problem with South Africa’s healthcare system is that it is trying to treat a level of road crashes and fatalities it was never scaled for.
“That’s even if one disregards the gross incompetence in state healthcare management,” he said.
The third solution is to make comprehensive insurance mandatory for all roadgoing vehicles and over time, phase in a third-party injury insurance benefit.
“The current third-party insurance only covers damage to property of third parties, not third-party injuries,” Handfield-Jones said.
“This is the only possible — and affordable — solution to the cost of traffic injuries in the current scenario since the first two options are completely off the table.”
Handfield-Jones said that making comprehensive cover mandatory would also reduce the specific cost of insurance.