Cont...
7) By adding R2,90 per kilometre to heavy vehicles, you are adding close to a 20% total cost increase to the logistics industry, which in turn adds further inflationary pressures through simple economic principles. The further cost burden to every citizen in Gauteng will result in lower levels of disposable income, not only hampering growth, but for many SMEs, resulting frozen employment and/or retrenchments. In addition, all increases to motorists are an effective 100% increase, while we have seen zero reduction in other levies and taxes specifically intended for road infrastructure development and maintenance. Questions remain as to where the money intended for maintenance was spent, as it wasn’t for a long time spent on the Gauteng freeway road infrastructure. One also has to question why Alex Van Niekerk’s original presentation to government, where he suggested a combined MBUF and fuel levy collection system, was ignored?
8) I also object in principle to the vast majority of payments forming the profits of an international company, for which we derive very little value apart from taxation. Taxation that I may add, is reduced in order to secure so-called investment in the country. This is the exact opposite of investment. Investment for the sake of tax income is to the detriment of the tax payer. It is a value dilution agent, as only a percentage of the spend remains in the country. Kapsch have no vested interest in further investment in infrastructure in the country, nor have they ever. Their involvement in traffic camera systems is not an investment in infrastructure. Kapsch is effectively acting as an agent of government, using the tax payer as a forced client through legislation. This is not good governance.
9) E-tolling has been implemented in the most inefficient manner possible, driving up costs for no apparent rhyme or reason. When compared to similar projects in France, for example, where the country bought the hardware and utilised the platform as a proper job creation tool, the entire CAPEX spend was EUR10m. Their operational costs were also minimised and the system was widely accepted by the public. To force exorbitant pricing points on to tax payers in order to recover the cost of an inefficient implementation is just poor governance and should not be tolerated, either by government, or tax payers. Alex Van Niekerk has stated that the cost of toll operations is R12.5bn until 2020 and the CAPEX expenditure was. That is R2.2bn per annum spent to simply collect money from motorists. Working with the maximum possible cap, for 2million motorists subjected to paying e-tolls, that equates to 20% of total income. 20c of every rand paid by motorists goes to the costs required simply to collect the money in the first place. This doesn’t include the debt repayment and interest components. Eventually we land up in a system where about 60c-70c of every Rand paid for e-tolling goes to costs, and only 30c-40c actually goes towards the upgrades and maintenance. That is not acceptable, and the solution is not to increase price-points. The solution is to identify cheaper recovery methods.
10) While Sbu Ndebele was still minister of transport, he made two critical statements that are pertinent to this issue:
o “Furthermore, it is noted that the costs of the ORT [open road tolling] system and COC are not only applicable to the GFIP, but are potentially applicable to the national road network since it fulfils a national function.”
Government is refusing to acknowledge the possibility of adopting a fuel levy, on the basis that it is unfair to other provinces to have to pay for Gauteng’s roads. What’s important to take into consideration is that the reasons clearly stated for construction in the first place, are that they are of national importance. Government’s change of heart now plays little role in anything after the fact. It informed the decisions at the time, which is the important aspect.
o “There is not enough money available to fix roads, so more toll gates will probably have to be built on national roads, Transport Minister Sbu Ndebele said in a report on Thursday. More than 4 100 km of roads - or 32 percent of the national road network - are in such a bad state that they only have a "structural life span" of five years left. It would cost more than R35-billion to fix these roads before 2014, Ndebele said in Parliament, according to Beeld newspaper. But his department has only R16,8-billion available to do this “
Sbu Ndebele stated outright that fixing 4100km of road would cost R35bn. the GFIP in fixing only a fraction of this stretch of road, has spent that same amount, excluding interest. Clearly we either had an incredibly incompetent transport minister at the time, for which the tax payers should not have to pay for now, or we have further evidence that the costs of the project were inflated beyond comprehension. Another outcome that the tax payers should not have to pay for.
11) In conclusion, the tolls’ pricing does not make sense from the get-go, and the tax payers will be funding a project that will not survive the duration of its bond issuances. That much is abundantly clear, so one can only assume that the government is hoping that GFIP can survive until after the elections. It is a reasonable conclusion to draw. Furthermore, all points above indicate that the processes, costs, procedures, and entire business model need to be completely redesigned, from the ground-up, in order to protect the country from further economic issues and civil unrest.
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