Date: 20/04/2009

Source: Department of Transport

Title: SA: Radebe: Address by the Minister of Transport to the National Summit on Taxi Industry Participation in Bus Rapid Transit Systems

Programme director
The President of the African National Congress (ANC): Mr Jacob Zuma
The Executive Mayor of Johannesburg: Councillor Amos Masondo
MMC of Roads and Transport in Johannesburg, Ms Rihana Moosajee
The Director-General (DG) of Department of Transport (DoT): Ms Mpumi Mpofu
The President of South African National Taxi Council (SANTACO): Mr J Mthembu
Deputy President's of SANTACO: Mr MD Molefe and Mr C Thuntsi
Members of the Presidential Consultative Forum
Members of the National Executive Committee (NEC)
Media representatives
Distinguished guests
Ladies and gentleman

Ngithe mangivule ngokwedlulisa okukhulu ukuxolisa kwi-mboni yamatekisi nganina ngoba iSummit yokuqala eyabakhona lapha eGallagher angizange ngakhona ukuz'oyibungaza. Ngiyajabula-ke ukuthi namhlanje ngilitholile ithuba lokuba ngizozithoba phambi kwenu.

Thank you for inviting me to address this important summit. I am hopeful that today's gathering will lead to a meeting of minds with regard to taking public transport forward in South Africa. The citizens of this country deserve nothing less than a united approach and speedy implementation. They have waited 15 years since 1994 for a radical improvement in pubic transport services and we cannot in good conscience delay any further. On the eve of the fourth democratic election - citizens are looking to both government and the public transport industry to come up with real solutions that improve their daily lives.

Introduction

It is possible to create a win-win coalition to transform public transport!

Mphathi wohlelo, izinxoxo esesibenazo nabaholi bemboni yamatekisi, amaMayor, amaCouncillor, nosomatekisi emazingeni aphansi naphezulu kungicacela ngokusobala ukuthi izihibe ezikhona kuBRT azikho nzima kangako. Ngiyethemba-ke ukuthi lomhlangano wanamhlanje uzoletha ikhambi lokuqubekela phambili.

From listening to the input of the SANTACO President, from my study of the preliminary submissions made by SANTACO in the run-up to this summit, from talking to the mayors and councillors of our metropolitan cities and from listening to the views of grassroots users, workers and operators - I am confident that it is possible - despite any current superficial disagreements - for all of us to collectively rally around the banner of a public transport transformation strategy that delivers a win-win situation for all the parties - including yourselves as existing operators.

I therefore appeal to the delegates present, to work together with us to find solutions to the concerns you might have. All three spheres of government have committed to have an open door, to hear and discuss the genuine concerns of both those who are directly affected by Bus Rapid Transport (BRTs) and other integrated networks and also those who are indirectly affected or not affected or who may be affected in 5 to 10 years. No one with a genuine issue will be turned away by any sphere of government and we are all committed to maximum transparency and full dissemination of information.

With a spirit of genuine co-operation and with a shared sense of responsibility to the millions of citizens who are looking to us for solutions, I firmly believe that it is possible for government and the current public transport industry to build an effective win-win partnership for positive change. This partnership can, I believe, deliver high quality public transport solutions while at the same time empowering current operators and workers.

Government is firm on the need for change.

Having said this I would like to make it clear that government has a responsibility to transform the public transport experience of the travelling public, to expand affordable access to mobility for all citizens and to ensure sustainable cities that are not unliveable and uncompetitive due to increasing traffic congestion.

Therefore, for all these reasons and more - we have to urgently transform public transport service delivery.

The premise of the PT Strategy which was adopted by Cabinet in March 2007 is to do just this through creating a win-win-win situation for citizens, cities and for existing operators and workers.

Now change involves the unknown and is challenging and we genuinely understand this and are willing to work with you to address this. However, government is firm that we need to change in order to be sustainable, and equitable and user-friendly. No change is not an option.

Continuing with the status quo will see public transport in cities decline over the next 20 years and will see a massive increase in car use. Our cities will become clogged, polluted, parking lots that will be unliveable, unattractive and uncompetitive. The public transport industry, yourselves and delegates will be stuck in that congestion and will be continuously losing users and fare revenue to cars.

Ask any new graduate from Soweto or Mamelodi - the first thing they do when they get a job that pays say R6 000 a month is that they look for a cheap car. The last thing they want to be seen in is a minibus taxi or a bus or train. Delegates, this is the next generation of car users who are going to defect from public transport and will add to the traffic that is already clogging up city streets...unless we embark on a path of progressive change.

Public Transport Strategy and SANTACO's concerns on BRT

I would like to use this opportunity to explain the national context in which cities are tasked with implementing Integrated Rapid Public Transport Networks - of which Bus Rapid Transit systems are a key component. I also want to respond to some of the concerns about BRT that have been conveyed in SANTACO's submissions to the DoT in February and March 2009.

However, before I do this, I want to state emphatically at the outset and I will repeat this throughout my address that government guarantees no loss of legitimate jobs and profits among those who make the shift into BRT systems This is a bold statement and requires a lot of work at both local and national spheres in order to achieve this but we are serious about this. Therefore I repeat, there will be no loss of legitimate jobs and profits among operators and workers who move into the BRT system.

Furthermore, all cities currently implementing BRTs will do so via a negotiated contract with incumbent minibus and bus operators on the affected routes. The only way that outsiders will be able to participate in operations is if they are invited as partners by the current operators themselves.

In addition, I would like to give you some perspective on the scale of the BRT rollout as there is a perception among operators that BRT systems are going to affect every taxi operator across the country.

On the contrary, BRT systems are a road-based version of a mass mover public transport mode and therefore apply only to the larger cities that have high volumes of passengers. BRT do not apply to smaller cities and towns, villages, rural areas, long distance services etc. BRTs are purely applicable to larger cities for daily, short distance travel.

In addition, by 2012 we envisage that BRT Phase one systems will be fully operational in four cities at most and that these will affect a maximum of 8 000 current taxi vehicles. By 2020 we envisage BRTs in a maximum of four additional cities with a maximum of an additional 7 to 10 000 current taxi vehicles being affected. What I am saying is that by 2020 a maximum of 15 to 18 000 taxi vehicles in South Africa will be affected by BRT systems. This is under 15% of the current national taxi fleet. Therefore the vast majority of taxi services in South Africa will not be affected by BRT systems at all.

Public Transport Strategy

The Cabinet approved the Public Transport Strategy in March 2007. This strategy reviewed the public transport implementation challenges of the past decade since the 1996 White Paper on National Transport Policy was released. The strategy also responded to the political imperative for a radical improvement in public transport services in the run up to 2010 and beyond.

In order to meet these challenges, Integrated Rapid Public Transport Networks were recommended as the key action to change the face of public transport in South Africa. Integrated Networks in the larger cities comprise rail priority corridors as identified in the National Rail Plan as well as Bus Rapid Transit corridors together with feeder services.

These corridors are the high volume, mass-mover core of the system - which is to be planned and managed by municipalities in consultation with all local stakeholders. The actual operation of these networks is to be performed by incumbent bus, minibus and train operators under performance-based contracts with the municipality or other sphere of government.

Delegates, I want to be clear about one thing. The Public Transport Strategy does call for a major re-organisation and optimisation of current public transport services. This is the least that we owe the current and potential users of public transport in our cities and if I might add this is long overdue - having been envisioned in the Reconstruction and Development Programme (RDP) document in 1994 and subsequently in the 1996 White Paper on National Transport Policy.

However, this re-organisation into integrated networks is meant to create opportunities and to empower existing operators who see themselves as committed service providers. It is not intended to displace operators, or to run you out of business, or to reduce the number of employment opportunities in the industry. On the contrary we see integrated networks and BRT systems as providing a platform for the current minibus industry to grow and become fully fledged public transport entrepreneurs in line with the Transport Broad Based Black Economic Empowerment (BEE) Charter.

Taxi industry as the nucleus of BRT

The 2008 Transport Indaba, which comprises the minister and MECs for Transport as well as the metropolitan cities and South African Local Government Association (SALGA) - resolved that the minibus industry shall be the nucleus of Bus Rapid Transit networks. We chose the word "nucleus" very carefully to emphasise to the implementing municipalities that they had to view this issue of including minibus operators in a very serious light.

Delegates, by nucleus we mean that the minibus industry must participate in BRT systems in proportion to their current market share on the affected routes. In general, the minibus industry has the vast majority of the current market on affected routes and therefore will be the biggest player in the new BRT operating entities that are formed to provide services under contract to the city.

For example the Phase 1a BRT in Johannesburg will be operated 100% by affected minibus operators. This is a firm example of what we mean by nucleus. I would like to highlight that being a BRT operator means that you own the BRT vehicle fleet and have direct control over vehicle procurement, maintenance, staff hiring and training, day to day running of the depots etc. This is indeed the nucleus of the BRT value chain.

Nevertheless, we have also heard the call from SANTACO about the taxi industry wanting to participate in more than just operations but also in other aspects of what is termed the "BRT Value Chain" - for example - station cleaning and security, vehicle manufacturing, etc. We have communicated this to the implementing cities and they have all indicated a willingness to maximise the empowerment opportunities for minibus operators in other aspects of the value chain besides direct operations.

The logistics of this will have to be negotiated in detail at local level as there are constitutional and legislative mandates that affect procurement - but nevertheless there is a genuine willingness on the part of government to maximise taxi industry participation in city BRT projects. At a national level the DoT is exploring the development of a BRT-related trust fund that will be able to channel a certain percentage of the profits from the BRT value chain back into taxi industry-related development and empowerment projects.

Having said this, I want to highlight that the BRT projects are not an automatic cash cow. The success and profitability of BRT systems depend on excellent performance by all the contracting parties. The city has to supply infrastructure, maintain it and ensure proper planning, monitoring and enforcement. Operators have to supply the contracted number of vehicles of a certain specification and have to ensure compliance with the schedule and other performance criteria. It is only with both parties performing efficiently that a BRT system can flourish, attract users and be profitable.

Therefore, while we emphasise maximum empowerment of the taxi industry in the BRT value chain and while we guarantee no loss of legitimate jobs and profits - we also insist upon performance in line with contractual agreements. Having said this, government is committed to providing technical support to the new BRT operating entities in the start-up period to ensure that they are able to perform.

I would like to conclude by responding to some of the issues that have been arising from the feedback we received from SANTACO in February and March this year in my discussions with them:

SANTACO's submissions to date have not in our view objected to any of the detail of the Draft National Framework on the Inclusion of Taxi Operators and Labour into Integrated Networks that the DoT circulated in December 2008. In its submissions SANTACO have not raised any fundamental objections that are not solvable through constructive engagement.

SANTACO's 8 March 2009 roadmap background paper which was the basis for discussion at the provincial roadshows summarises the DoT Draft Framework and comments that SANTACO was not consulted on the BRT strategy; they would prefer the term BRT be replaced by "Integrated inter-modal rapid public transport system"; that the taxi industry should participate in the entire BRT value chain and that government should be open about comparing the operational efficiencies of all vehicle sizes for example 12 to35 seaters vs 63 seaters etc.

Delegates, government have no problem in accommodating these proposals in principle. We commit to deepening consultation and information flow. All the BRT cities have committed to engaging with those sectors of the taxi industry who feel excluded. We would ultimately like to see all these parties that are directly and indirectly affected and the broader industry incorporated into the formal consultation structures at local level so that all parties can have access to the latest information.

We have no problem broadening the name from BRT to "Integrated inter-modal rapid public transport system". Similarly, we have no problem in engaging the industry to show how the appropriate sized vehicle has been selected to meet the demand on particular corridors and as mentioned above - local and national government have no problem in principle in ensuring maximum participation in aspects of the BRT value chain.

SANTACO furthermore want the feeder services to be clearly defined and that taxi operators should not just be shareholders but also managers.

Government has no problem in accommodating the above. Formal feeders to integrated networks are motivated in each city's project operational plan. The size of the feeder vehicles, how they will be contracted and scheduled etc. can all be discussed and motivated in project level engagements. As noted above - government is keen to ensure that taxi operators rise to the challenge of becoming public transport entrepreneurs in the formal sector and not just being confined to being passive shareholders.

SANTACO furthermore requests statutory powers, a review of the National Land Transport Bill etc.

Even though these are not BRT framework-specific issues, government is willing to engage further. However, on the National Land Transport Bill which is now an Act I would like to provide the following response:

The National Land Transport Bill was passed by Parliament on 28 January 2009. The President assented to the National Land Transport Act, 2009 (Act No of 2009) and it was published in government Gazette No 32110 (Notice No 413) on 8 April 2009.

Though the said legislation is an Act, it has not yet been proclaimed for the Act to be operationalised. The Act will only be proclaimed once the National Public Transport Regulator (NPTR) has been established and the draft Regulations have been finalised. To date I as Minister, have signed off on the establishment of the NPTR and the draft regulations have been developed for public comment.

With respect to the concerns of SANTACO that an operating licence lapses after seven years, the draft regulations stipulates that an operating licence may not be refused renewal unless:

• the applicant is no longer a fit and proper person to provide public transport services (e.g. the applicant has a criminal record)
• the vehicle is not registered or licensed or does not have a roadworthy certificate.

The above provides a clear interpretation of the Act as intended by the Legislature. It seeks to address the issues of compliance to operate public transport services.

Given that these are draft regulations, there is still an opportunity to alter the wording in the regulations. However, if the above is not to the satisfaction of the industry, the department will endeavour to change the reading of the Act as follows:

"Operating licences will be reviewed on the basis of compliance every seven years."

SANTACO also requests technical assistance to engage on BRT and that there is effective local operator participation and appropriate business structures.

Government has no problem with this in principle.

SANTACO also requests government support to set up nine provincial business structures and a national business structure - with seed capital for all.

This needs to be discussed further. Government's view is that operators have the right to form businesses at any level and do not need government input to set up businesses in general.

Government however, does commit to supporting the formation of local BRT companies comprising current operators and to assisting these with start up costs and expertise. The reason for this is that these local companies will be in a contractual Public Private Partnership (PPP) with government to provide BRT services. Therefore government needs well performing local BRT operating entities that will be formed out of existing operators in order to contract with to provide services.

With regard to providing feedback on taxi recapitalisation-related matters, I would like to point out the following:

The Taxi Recapitalisation Project continues. It started in October 2006 and will run for seven years. In February 2009, Cabinet approved an increase in the scrapping allowance effective from 1 April 2009, from R50 000 to R54 300 with further adjustments for inflation annually. Based on the current budget we will be able to pay over 11 000 scrapping allowances in the 2009/10 financial year. For those of you who have not been able to recapitalise already, please be patient and bear in mind that the taxi recap and scrapping process is ongoing and you will indeed have your chance to scrap.

For those operators affected by BRT Phase 1 projects in the four cities - the detailed business planning and negotiations at local level is expected to develop an inventory of all affected taxi vehicles. Affected vehicles that have not been recapitalised will qualify for the scrapping allowance and will be scrapped if at the end of their useful lives. Affected vehicles that have already been recapitalised will be dealt with as part of the local business plan - they can either be sold, redeployed to alternative routes, etc.

Ladies and gentlemen, let me also announce that recently Cabinet favourably considered the funding strategy for the Taxi Recap Programme, the taxi subsidy framework and the increase in the scrapping allowance which will now be increased annually based on the consumer price index.

With regard to the subsidisation of the taxi industry, Cabinet noted and recommended further discussion with the Minister of Finance to finalise the subsidy model. We have already commenced this process with the National Treasury and will be reporting back to Cabinet soon. However, the road based passenger plan is the strategic thrust for transforming the present bus subsidy system into an integrated road based public transport passenger system. In this regard, its implementation sets the procedures for achieving the restructuring of the current subsidy system as the current bus and mini-bus taxi industries integrate into one public transport system for the country.

This plan is the foundation of all public transport planning processes and this is visibly in Provinces such as the Western Cape, Eastern Cape, KwaZulu-Natal and Free State. Further discussions are being held with the National Treasury to secure additional funding to support this integration process. Regarding concerns about operating licences, Cabinet in February approved a strategy to deal with what is termed "semi-legal" operators (those who had attempted to legalise in the 1997 and 2002 Special Legalisation Process and Be Legal processes respectively).

Records show there are nearly 36 000 applications for licences that can be considered in the "semi-legal" category and that 22 000 of these have already been processed.

With regard to taxi industry participation in the 2010 World Cup transport plan - the DoT has just finalised a Transport Operational Plan which it is discussing with SANTACO. This plan h as identified certain inter-city and intra-city services that could be provided by the taxi industry. These include services between stations, airports and hotels, stadia and fan parks. A list of criteria for accrediting the operator, the driver and the vehicle has also been developed and will be discussed in detail with SANTACO.

With regard to the valid frustrations of the industry in relation to the performance of certain Operating Licence Boards (OLBs):

A Turnaround Strategy has been developed in consultation with the taxi industry to deal with inefficiencies, poor service delivery, and to capacitate the Operating Licence Boards to deal with the legalisation of semi-legal taxi operators, finalisation of outstanding Special Legalisation Process and Be Legal Campaign applications; and the conversion of permits to operating licenses.

The strategy sets out the key short to medium term interventions with specific focus on human capacity, institutional strengthening, change management and business process and systems re-engineering.

I have pleasure in informing you that Cabinet has approved the Turnaround Strategy for the OLBs for implementation and that the DoT has committed approximately R40 million to this.

Conclusion - Partnering for change

I would like to reiterate that government and the public transport industry need to partner together to transform the quality of services and to create a win-win outcome for users, operators and cities.

As government we are serious about the Public Transport Strategy and the related Integrated Networks of which BRTs are a part. We therefore invite operators on the affected routes to become an owner in the BRT company; we offer the opportunity for you to participate actively in this company.

We guarantee that there will be no loss of legitimate jobs and profits in the move to the BRT company. Legitimate profits will be jointly determined via a transparent local process of benchmarking current operations and factoring the costs of full compliance with current legislation and the need for ongoing vehicle renewal.

Legitimate jobs will likewise be determined by a transparent local process of developing a database of all current workers who have a track record in the industry - together with their skills base.

The new companies will have a long term contract with a city together with appropriate operating licences. This contract is legally binding regardless of political office bearers and it pays a basic amount for vehicle kilometres supplied - regardless of the number of passengers carried. If required we can explore legal options to make the long term contract renewable subject to good performance. We are also offering training for all employees including upgrading driver licences to larger vehicles, start up funding and other technical support to ensure that the new companies can perform from day one.

The companies will control 80% of the BRT value chain through their control of operations. They will own their vehicle fleet and will be responsible for procurement, maintenance, staff hiring and training etc.

In addition both cities and the DoT are exploring additional options for the industry to participate in other aspects of the BRT value chain such as station maintenance and security etc.

In exchange for the above business offer, affected operators will give up their current licences and the vehicles will either be scrapped under the recapitalisation programme or will be sold or redeployed if required. In return they will get a formal stake in a new operating company and will get a guarantee of a certain amount of profit that will not be less than current legitimate profits.

We think that there is enough common ground in principle for the taxi industry to come together and to partner with the different spheres of government. We look forward to your considered co-operation in this exciting venture. Delegates, before I leave this platform. I would like to formally hand over this file to the President of SANTACO.

The file contains the following official documents which may be disseminated widely among the membership of SANTACO:

National Land Transport Act and a related response from the DoT

The Cabinet approved Taxi Recapitalisation Project Policy and Increase in the Quantum of the Scrapping Allowance as well as the Turnaround Strategy for Operating Licence Boards and the Legalisation of Semi-Legal Taxi Operations.

In addition the file contains a framework for Taxi Industry participation in the 2010 World Cup and 2009 Confederations Cup transport services.

Finally the file I am handing over also contains the Taxi Sub sector Broad Based Black Economic Empowerment Charter.

I would like to encourage SANTACO to use this material as a basis for detailed engagement with the transport departments across the three spheres of government.

I thank you.