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FEDUSA is meeting with Deputy President Kgalema Motlanthe today on Wednesday 26 September 2012 to discuss the Constitutional Court ruling on the Gauteng Freeway Improvement Project (GFIP) that was envisaged to be funded solely by e-tolling on the “user pay” principle.

“FEDUSA is of the view that Government should consider all possible funding options to ensure that the GFIP is funded fairly and reasonably, said FEDUSA General Secretary Dennis George. “The funding should be a user-friendly measure without unreasonably burdening workers to get to and from their workplaces and the poor using other means of privately-owned transport. There is also currently a disproportionate subsidisation policy in place,” he added.

“Toll roads are normally perceived as a financial burden and not as a sound investment in infrastructure, which is required for economic development” noted FEDUSA President, Koos Bezuidenhout. The implementation of the GFIP could not have come at a more difficult time for many South Africans, who experience that their disposable income has already been eroded by fuel and food price increases. The implementation of the “user pay” principle would impose an unreasonable additional tax on South Africans. The toll fees do not only effect workers’ disposable income but will unavoidably lead to higher prices for goods and services, as the business community will most definitely also pass their additional running cost to consumers. “A real concern to FEDUSA,” said Bezuidenhout ,” is that certain workers who are compelled to travel for work purposes are the hardest affected by the imposition of the “user pay” principle as they are required to spend more of their disposable income.”
FEDUSA therefore proposes that Government consider the following multi-pronged-approach funding model to fund the GFIP.
1. “User pay” principle and a fair dispensation on motorists paying for the use of the toll-roads with a lower threshold;
2. The establishment of a national fuel levy determined by an independent regulator after consultation with stakeholders; and
3. Funds budgeted and allocated by National Treasury.
George further motivated that “FEDUSA is of the view that national public roads are an important public good and is essential for the growing of our modern economy. The national fuel levy fund should cater for the development, improvements and maintenance of the national roads, together with the “user pay” principle as used already on many roads in South Africa and funds allocated by Government.”
FEDUSA is concerned that funds raised from the capital money markets by issuing bonds and loans could create an unnecessary additional risk for the country, and borrowing money will undoubtedly increase costs. We are however also gravely concerned that public-private partnerships as this particular one could undermine the process of creating a public good, because contracts are often awarded to the wrong companies with poor managerial skills. It must also be borne in mind that private companies will attempt to maximise profits and the resultant risks for these kinds of projects are then shifted to the tax payer. .Furthermore, we record an additional concern related to Public-Private Partnerships, i.e. they are very seldom transparent because it is standard practice that these contracts have commercial confidentiality clauses that does not promote transparency.
FEDUSA is also opposed to the privatisation of our national and provincial roads as well as other infrastructure, as these assets that were originally established by the fiscus, are converted to commercial ventures and the tax payers are then obliged to commit to repeated payments to fund such commercial ventures.
FEDUSA therefore calls on Government to establish an independent regulator to provide transparent oversight in the setting of “user pay” principle fees in order to develop fairness and transparency with
regard to the methodologies followed to determine the fees, and why groups of commercial entrepreneurs are exempted from tolls and user charges. It would be easy for Government to extend the scope of National Energy Regulator (NERSA) to include toll fees based on the “user pay” principle.