Address by Minister of Transport Jeff Radebe to the National Assembly on tabling the Transport Budget Vote, Cape Town

Madam Speaker and Honourable Members

In the previous budget speeches we have highlighted, the importance of transport in the economy of South Africa, more recently we have restated our vision of; 'Transport - The Heartbeat of South Africa's Economy'. The movement of people and goods through our infrastructure essentially is akin to that of blood through veins and arteries in the human body and our transport system, the heart that determines the pulse and tempo of economic growth and activity. Globally, the increase in oil prices has led to the escalating transport costs resulting in spiralling food costs. Naturally, this places the greatest burden on the poorest of the poor. This is the global context around which we present this budget vote.

For our people, transport is a basic need which enables access to employment and economic opportunities. As the ANC government, we have over the past five years increased the transport budget to over R 20,5 billion within a short period of time. In fact, such massive public investment in transport has enabled a major transport infrastructure development programme never before. As we all know the multiplier effect of such investment in terms of employment creation is fourfold. The representation of our People's aspirations for a better future investment in infrastructure remains a key to sustainable growth and development.

Allow me, Madame Speaker, to remind the house of the three specific priorities that we set ourselves after the third Democratic Elections in 2004. Firstly, we said we will focus our energies to improve our public transport system to benefit the rural and urban poor in our country. Secondly, we committed ourselves to accelerate infrastructure development both as an instrument of growth and as an employment driver. Finally, we firmly committed ourselves to improve on safety and security within the transport sector. Madame Speaker, these are commitments that the ANC government has made to our people, as re-affirmed by the ANC National Conference in Polokwane, as a basis to meet the needs of our people and achieve a better life for all.

The most immediate focus has been on the 2010 FIFA World Cup which is to serve as a catalyst for transport transformation. To this end, 2010 is providing the platform for the development of much-needed transport, social and economic infrastructure in our country. The creation of a lasting legacy in the transformation of the existing commuter transport to integrated public transport networks, remain our key objective.

Today, we are 750 days away from the 2010 World Cup and as the transport sector our 2010 related projects and the majority are to be concluded before or on time for the event. The investment we are putting into the transport system to prepare for 2010, which has increased to R13.6bn over Medium Term Expenditure Framework (MTEF) period through the Public Transport Infrastructure Fund (PTIF) from 2005/06 to the current MTEF ending in March 2011. The overall investment framework in transport infrastructure in addition to PTIF is as follows:
* Road Infrastructure: R70 billion
* Access Roads (EPWP): R3 billion
* Airports Development: R19,5 billion
* Air Traffic Navigation: R 400 million
* Passenger Rail: R 18 billion
* Taxi Recap Programme: R7,7 billion
* Gautrain: R25 billion

Almost all of the major physical 2010 projects have started in all host cities. Some have even been completed or are in the final stages of completion. The major projects that have started so far include, among others, the Phase 1A of the Rea Vaya Bus Rapid Transit (BRT) system in the City of Johannesburg that is 48 kilometres long with 48 bus terminals as well as the N17 linking Soweto to Nasrec and northern suburbs of Johannesburg. It also includes the BRT system in Nelson Mandela Bay; the various rail station upgrades throughout the country and particularly those linked directly to stadia or training facilities in Host Cities and the first phase of the Gauteng Freeway Improvement Scheme (230 kilometres freeways widening by 2010 out the total of 560 kilometres).

This scheme is part of government's innovative way of improving traffic flow in the Gauteng freeways, which carries more than 180 000 vehicles per day. Honourable members, I am also delighted to announce that we have issued a "request for proposals" from prospective suppliers for more than 1 400 luxury buses used during the World Cup and thereafter will be absorbed into our public transport system.

By the end of 2010, South Africa will boast of a transport system and services that rank among the best in the World. This confidence was further strengthened by numerous visits I had undertaken to various sites where work is currently taking place such as our airports, commuter railways, Gautrain Rapid Rail construction sites, road construction, etc. It was only in 2005/06 when we presented to government and various stakeholders the 2010 Transport Agenda. Since then we have also concluded a detailed operational plan which we will be submitting to Cabinet and FIFA next month.

The preparation for the passenger and freight transport of the 2010 World Cup and the Confederation Cup is well advanced. The host cities operational plans for both events have been assessed and high level planning is in place. The detailed planning of passenger and of freight movement and the facilitation thereof is currently being finalised. The host cities of both events and the national and provincial networks are being mapped-out on the basis of travel and freight demand specific to the event.

An important area for the Department of Transport has been to drive the capacity of the aviation sector and attract much-needed skills and investment for growth to take place in this sector. The Airports Company of South Africa (ACSA) has embarked on a very impressive programme to prepare for 2010 and beyond. Revenue is expected to grow from R3 billion in 2007/08 to over R4,3 billion by 2010/11. This growth averages an increase of 12,1% per annum. ACSA in turn continues with its concerted infrastructure expenditure through developments at OR Tambo International Airport, Cape Town and Durban and other airports at a cost of over R20 billion to provide for the expansion of airport infrastructure.

One major area of investment and upgrading is in the area of public passenger transport as a critical part of the 2010 FIFA World Cup. We have seen major initiatives being undertaken by almost all spheres of Government in preparation for 2010 FIFA World Cup.

The approval by Cabinet last year of a Public Transport Strategy has gone a long way in guiding all spheres of Government towards the creation of mass rapid and efficient public transport networks, and this is a major improvement from a situation three years ago, where there was neither interest nor focus on public transport issues.

Before Parliament rises we will present the National Land Transport Bill to Parliament which will set a new framework for roles and responsibilities between the three spheres of Government and amongst others the effective management of the Public Transport Sector.

I must commend the many stakeholders ranging from community-based structures to municipalities that participated actively at our public transport strategy and continue to champion public transport transformation. In a great way those are the makers of history who actively work with the ANC government to effect a thoroughgoing socio-economic transformation.

In particular, I am glad to announce that we have made significant progress in the planning and implementation of Phase one of the Public Transport Networks in our major cities. This includes Operational, Business and Infrastructure Planning in Johannesburg, Cape Town, Tshwane and Nelson Mandela Bay.

These four pioneering cities will have Phase 1 Bus Rapid Transit projects fully operational in late 2009/early 2010. Johannesburg and Nelson Mandela Bay have already started construction of certain portions of their BRT networks. Tshwane and Cape Town are due to commence construction in the second half of this year.

Again, honourable members, these BRT initiatives are underpinned by the objectives of ensuring bus transport as the public transport of choice because efficiency would be enhanced by dedicated bus lanes. All these efforts are aimed at enhancing the value of public transport and therefore help reduce traffic congestion and carbon emissions on our roads. The escalating price of fuel also means we have a duty to lighten the heavy burden this has on the income of our people.

I am sure you are well aware that the economic growth experienced in the country over the past few years has also resulted in an enormous increase in the demand for public transport. This is evident in the year on year increases in the actual subsidy expenditure on buses that has increased at a rate of about 15%. An overall average growth in passenger numbers of 12% was experienced nationally with some operators experiencing growth of up to 40%. This growth has put a strain on the annual subsidy budget allocation.

However, honourable Members - by early 2010 South Africans will start experiencing a radically improved public transport service that is based on an integrated citywide network and which fully incorporates the minibus taxi industry. It is our stated objective that the current Bus Rapid Transit (BRT) initiatives will be integrated with the Taxi Recapitalisation Programme (TRP).

We must use the opportunities presented to us by the public transport initiatives to accelerate the transformation of the taxi industry as we know it. Today, more than ever, opportunities have emerged for the taxi industry which I believe will take this industry of emerging entrepreneurs to greater heights.

I am encouraged by the leadership that South African National Taxi Association Council (SANTACO) has shown on this matter in clearly stating that they are not only taxi operators but seek to empower and transform the industry to become transport operators in all modes. Honourable members, this brings me to the progress in rolling out the TRP, particularly to improve the role of government in improving the safety of the majority of our commuters who depend on taxis as their primary mode of transport.

The scrapping of old and unsafe taxi vehicles and their replacement with New Taxi Vehicles (NTVs) with better safety features is on track. To date, over 13 533 old taxis have been scrapped and R676 million has been paid out to taxi operators as scrapping allowance. Currently demand for scrapping has exceeded expectation.

As government, we acknowledge that the taxi industry has not benefited from the subsidy regime in public transport. Closely related to this issue is the fixed nature of the R50 000 scrapping allowance which is not inflation linked and has an impact on the affordability of a new vehicle. A fixed scrapping allowance over a seven-year period will have an accumulative negative impact. The price of new vehicles will have continued to rise throughout this period.

The department, in correcting the situation and being responsive to these realities, is currently looking into various options for the subsidisation of the taxi industry, to be tabled before Cabinet. This will be coupled with a funding model for the taxi recapitalisation programme for the balance of the seven-year period. Underpinning the continued success of the TRP is the efficient and effective process of converting permits to Operating Licence (OLs) which have posed a particular challenge.

The formulation of a turnaround strategy for the provincial Operating Licence Boards (OLBs) has therefore been essential. Key to the turnaround strategy is the identification of challenges and process weaknesses and the introduction of interventions to deal with them. This will be supported by a critical intervention on the effective regulation of the taxi industry which we will be discussing with stakeholders and forms a critical part of the Taxi Recapitalisation Programme.

Honourable Members, on the issue of passenger rail, which is another important pillar of our public transportation, government has increased funding for passenger rail transport services to the tune of R18 billion over the MTEF. This funding is vital for the turnaround strategy being implemented by the South African Rail Commuter Corporation (SARCC) aimed at immediate and significant improvements through the upgrading of the current rolling stock fleet as well as the upgrading of the signalling infrastructure.

I am proud to say that over the past 18 months, the SARCC has been able to upgrade and take through its general overhaul programme over 790 coaches which have since been deployed back into service. The SARCC has already committed another 700 coaches to be refurbished in this current financial year at an estimated cost of almost R2 billion in this regard. This is vital because a key factor in the deterioration of rail services has been under-investment in rolling stock.

The recent launch of the Tshwane Business Express between Tshwane and Johannesburg was yet another milestone in the turnaround of passenger rail, particularly after the Soweto and Khayelitsha Express Services were launched last year. It is important that we demonstrate in practice that Metrorail is positioned as an organisation that could offer high-quality passenger services. In addition, the programme to upgrade key rail stations for the Confederations Cup next year and for 2010 World Cup is already underway and construction or improvement at stations such as NASREC, Doornfontein near Ellis Park, Moses Mabhida, Cape Town, Loftus and North End Station in Port Elizabeth will be completed by end of April 2009. Furthermore, the SARCC has allocated an additional R300 million over the next three years to cover the basic improvement of facilities such as ablution facilities, lighting and subways in over 130 stations this year, with over 75 stations either nearing completion or completed.

I am glad, Comrade Maxwell Moss, to report to you that the SARCC has finalised its policy and programme on Special Needs and ensured that problems at both Mandalay and Lentegeur Stations here in the Cape Town have been fully addressed so that the facilities already in place in some of the stations are fully utilised to the benefit of passengers with special needs. Our plans are to ensure all new station improvements make them fully accessible to people living with disability.

Whilst we are beginning to see visible improvement in Metrorail services, there are still many challenges facing us. In the short-term, the cost of materials as a key input to the refurbishment of coaches has risen quite substantially. Whilst the SARCC has increased allocations for maintenance by 18% to a record R707 million, the rising cost of materials is proving to be a serious constraint

I am pleased to report to Parliament that the second phase of the consolidation of passenger rail entities is entering its final phase with the transfer of the long distance passenger service, Shosholoza Meyl, already underway. Shosholoza Meyl is with effect from 1 April 2008 part of the SARCC business. However, Transnet will continue to manage and run the business on behalf of the SARCC until September 2008 when the parties conclude a Sale of Business Agreement to allocate assets and the accompanying risks facing Shosholoza Meyl. Parliament is expected to consider and pass the Amendments to the Legal Succession Act in June this year so that we create the enabling framework for this important process, and plan all passenger rail transport from a single point.

An important recent development is the Cabinet approval of the Moloto Rail project which forms part of Accelerated and Shared Growth Initiative for South Africa (AsgiSA) and will have life-changing effects on the people of Tshwane and Mpumalanga. We are hard at work to ensure that Metrorail responds fully to the growing demands of passengers. However, criminal actions like the burning of trains and property will not be tolerated. We have made it very clear that when members of our communities burn or destroy rail assets and communities, we will be left with no other option but to shift these resources to other communities who need them most and are willing to protect them.

In the medium-term (i.e. over the next three to five years) the success of the turnaround strategy for rail passenger services, will present the country with new difficulties if no urgent steps are taken today to recapitalise the current Metrorail fleet. The average age profile of the fleet of 40 years is such that continuing to refurbish without a replacement strategy being implemented will have dire consequences and could even reverse the gains that would have been made through the current turnaround plans. A further delay would also mean that the cost of buying new trains at a later stage, will even be much higher than it is today with lead time of over three years. We need to move with speed to ensure that we do not miss the historic opportunity to introduce into our system a new generation modern fleet.

Consistent with the instructions of the President's State of the Nation Address last year that we recapitalise Metrorail, I am glad to report that the SARCC has now completed the business case for the recapitalisation of Metrorail's fleet. It is my intention in the coming weeks to present before Cabinet the fleet replacement programme of the SARCC, for consideration. Once approved, the Department of Transport and the SARCC, together with other key Government Departments such as National Treasury and Department of Trade and Industry, will be expected to commence with the process for the implementation of this strategy in the third quarter of this year. The SARCC will to this end be inviting interested parties to submit bids for participation in this programme.

As you know, the Gautrain Rapid Rail Project is well on course and we are spending R25 billion for this modern, state of the art rail system which will close a major gap in our public transport infrastructure provision and services. Honourable members, at the end of the 2007/08 financial year, the Gautrain project reached the eighteenth month of development putting phase one, the section between the O R Tambo International Airport and Sandton, at 40% and Phase two, the completion of the whole project, at 33,3% of actual time elapsed since the effective date.

Honourable members, the road infrastructure continues to be a priority for us. We have embarked on a programme to improve the capacity and technology of our road infrastructure. An important partnership programme between the three spheres of government is the Gauteng Freeway Scheme which is estimated to cost R15 billion. The second phase will see the development of new highways for the 10 years after 2010 and its estimated cost is R7 billion. This will target congested intersections such as Allandale, Gillooly's, Atterbury and provide a fourth lane allowing for a high occupancy vehicle lane including public transport. The net effect of this will be decreased travel time and reduced traffic congestion.

In its implementation, the South African National Road Agency Ltd (SANRAL) is moving towards an open road tolling system which entails electronic collection of fees, which will be linked to intelligent transport systems. Similarly, in August this year, SANRAL will also be issuing a tender for a concession contract, which will be a Build, Operate and Transfer (BOT) Scheme for the Winelands area in the Western Cape.

It is also important for the house to note that the SANRAL, at its inception in 1998, managed 7 000 kilometres of national road. Today as a result of the incorporation of provincial roads into the identified strategic road network it is the custodian of 16 150 kilometres of road and plans are currently afoot in the current year to incorporate the R21 in Gauteng and R511 that joins Gauteng and North West and the R49 in the North-West.

The programme of SANRAL funded toll roads will continue during the current financial year. Through this programme, we are currently developing the N1 South & R30 Welkom (Bloemfontein), N2 Tsitsikamma Extension, N2 Knysna Bypass, N3 Marianhill Extension, N17 Extension in the Gauteng Network.

The location of these projects will enable South Africa to meet its key strategic challenges related to road infrastructure. The Gauteng Network, for instance, will ease the current congestion experienced on the network, as well as the flow of goods and people between the major metros of Gauteng, including the movement of people during the 2010 Soccer World Cup. It is anticipated that these projects with a combined value of R8,7 billion will be funded from money and capital market loans.

I must say that there has been a steady increase in the allocation for roads from the fiscus. Unfortunately this has not kept pace with the increase in prices of the various elements and material used in the construction of roads. Therefore, we will continue to constructively engage the private sector to leverage the full potential of public private partnerships to meet the funding demands.

As you are aware, the freight logistics strategy approved by Cabinet in 2005 has created a systematic framework within which to pursue investment in our freight rail environment. The vision as articulated in the strategy (NFLS) is to reform the freight sector and introduce Economic, Safety and Environmental Regulation. We are developing an institutional and regulatory framework to guide the implementation of the National Freight Logistics Strategy. We have already begun with the process of establishing the Rail Economic Regulator and my department will soon commence with stakeholder consultations. This will inevitably change the current institutional structure of the freight industry.

We have also started a process of optimising the various corridors as identified in the National Freight Logistics Strategy and in this regard have an update of the National Freight Databank (NFD), which will enable the mapping of the various identified corridors as per the Strategy. Through the process of developing corridor strategies various projects have been identified and are in the process of being implemented, an example of this being, the Harrismith Freight Logistics Hub, the identified N4 Truck Stop project, Cato Ridge facility, the Durban Freight Plan amongst others. These projects will contribute immensely to operational efficiencies thereby lowering the costs of transport.

The initiatives in transport reflect the priorities we have set ourselves as a country. Transnet, our premier transport and Logistics Company, is investing over the next five years a total amount of R82 billion, of which R40.8 billion is being spent in upgrading freight rail infrastructure and rail engineering. The upgrading of our freight rail infrastructure is key to our objective of shifting more freight from our road network to the rail network as well as finding that delicate balance between road and rail in respect of the transportation of goods.

Honourable Members, let me re-emphasise that we are making steady progress in decreasing a number of fatal crashes and fatalities on our roads. This can be attributed to an improvement in co-ordination, better planned road traffic law enforcement operations as well as improved monitoring and evaluation over the past year. Our actions were further intensified through the National Rolling Enforcement Plan, which included all provinces, metros and municipalities.

In order to sustain and further improve our road safety record, we are intensifying our programme by implementing the points merit and the demerit system. I'm glad to announce that through the RTMC, we are ready to launch the Merit and Demerit system Pilot Project in Tshwane and Johannesburg next month. The project will assist us to test our systems in gearing ourselves for the national rollout during 2009. The national rollout will go a long way in making an impact and indicating our state of readiness for the promotion of road safety in addition to the Arrive Alive Programme as well as enhancing traffic measures during World Cup 2010.

As the Department of Transport, we continue to play a meaningful role in the Transport structures of the African Union. In the past year we have been able to host the AU meetings on Rail and Roads respectively. We also continue to have a strong presence in the International Civil Aviation Organisation (ICAO) and are playing a Deputy Presidency role in the International Maritime Organisation. Our presence and role in these areas is critical as both domains aviation and maritime play a critical role in global trade and people's travel.

The evidence of a country at work is there for all to see, whether it's the pounding of the Imbokodo, the Gautrain 900 ton machine drilling the belly of the earth in Johannesburg, the major construction of OR Tambo International Airport, the new La Mercy Airport in Durban, Bridge City Rail Station in Northern Durban, N17 extension in Soweto, or the N2 from Cape Town Airport to the Mother City, particularly the Groote Schuur Hospital Junction.

The South African Transport Landscape has turned the corner and it shall never be the same again.

I thank you!

Issued by: Department of Transport
20 May 2008