Parliament, 9 March 1999
Madam Speaker,
As this is my last Budget speech to this House as the Minister of Transport, I would like to address you on matters broader than my Department’s plans for the coming year as well as review some of the lessons we have learnt.
These first five years of democracy in our country have been momentous years in our history and all of us, regardless of our political differences, have been privileged to have had the opportunity to play a role.
For me, as the Minister of Transport in the first democratically elected government of this country, a review of these past five years in office is the measure of our achievements against the enormity of the problems that confronted us when we came into office. I think that a striking aspect of apartheid was the extent to which it was entrenched and institutionalised to become the warp and weave of our very society.
There was the obvious face of apartheid: the dominance of white men in the top echelons of government. But beneath it lay a more insidious legacy.
In transport it was an entire system that was built and geared to meet the needs of a minority’s interests.
Take two statistics across the freight and passenger findings in the interim report of the Moving South Africa project: 40 percent of our rail network carries 5 percent of its total tonnage. Put this against the 2,8 million urban South Africans (i.e. 13 percent of our urban population) stranded without any access to public transport.
Madam Speaker, this gives an idea of how investment in transport infrastructure was skewed in favour largely of a fortunate few commercial white farmers while raising the entire system’s costs to carry the financially unviable, but politically significant, sections of our society.
The success that we have had in transformation has been to an extent a measure of our ability to undo the legacy of the past in order to create a platform for an integrated transport system, embracing both freight and passenger services, and driven by customer needs and not ideological interests.
To transform one cannot change just a piece of the puzzle. Transformation, by definition, is a great change in appearance and character: it is a matrix where all the components must be pulled apart critically and then retailored, reformed or even shut down before being put together in such a way that it is geared to perform the required function.
One thing I have learnt in this job, Madam Speaker, is that institutions have a life of their own and often outlive their usefulness and purpose to the point that they, in themselves, become an obstacle to change and development as the old style has a tendency to absorb the new purpose and then continue on as before.
The first assumption we questioned as we tackled transformation in the national Department of Transport was the role of government in transport and the institutions that were created to fulfill these functions.
In Transport we found no capacity for strategic planning but a focus on operational detail in the administering of subsidies, the issuing of permits and the writing of regulations where there was no accounting for the service provided against the cost of providing it or how it was performed.
Our next questions went to the heart of the public service itself:
How do you transform public servants who were schooled to follow orders, into a public service that operates in a constitutional state where there is an obligation on individual public servants to exercise their conscience in the discharge of their duties and where their customers are people with constitutional and human rights?
How do you make the public service representative of a population that was largely excluded while at the same time create sustainable career paths, and a system of mentoring and human resource development so that empowerment becomes a systematic programme and not a once-off gesture?
How do you introduce a culture of performance so that jobs are not
seen as a parking place for life but rather a reward for work?
We needed to create a sense of purpose for our employees through creating a role for them in policy, planning and strategic implementation so that they could be released from the cycle of operational details that was turning them into cogs in a bureaucratic machine.
The national Department of Transport is today an organisation of 250 people clearly focussed on transport policy development, strategic planning and implementation, and regulation and safety.
This sharp focus has enhanced our capacity and the role of government to give strategic direction in the transport sector as well as realise the government’s national goals to reconstruct our society.
The structuring of the Department of Transport into business units and the appointments we have made in the past six months will be released when we unveil our Business Plan for 1999/2000 at the end of this month.
With the Business Plan is the Director-General’s performance contract with me, supported in turn by performance agreements with each and every member of staff. This is our third year of working in this framework because we believe government, like the private sector, should work in a performance-orientated environment where there are clear goals and measurable results.
When I took office in 1994, the Department employed about 1,400 people, whose salaries accounted for 3,4 percent of the Budget in the 1993/1994 financial year and with consultants, the sum escalated to 7 percent.
In the Budget before you today salaries in the Department of Transport account for 1,1 percent of our Budget and with consultants the total provision is 3,6 percent. All in all, Madam Speaker, we have over the past five years halved the salaries budget, while bringing down the number of employees to 20% (a fifth) of what it was in 1993. This has been achieved without the retrenchment of staff.
Through an examination of all our functions, we found that there were areas of activity that could be done more effectively if there was a direct relationship between the providers and the users, and where we could introduce the "user-pay" principle which, along with a transport system driven by customer needs, is a key principle of our transport policy.
Last year we established four agencies: the Civil Aviation Authority, the Cross-Border Transport Agency, the National Roads Agency and the South African Maritime Safety Authority. Of the 283 jobs offered in the agencies, only one employee refused to leave the public service.
All four agencies are now fully operational and I am confident that their service and performance levels will continue to grow.
As the new Department started to take shape, 292 of the 340 applicants for voluntary severance were allowed to take the package while the other members of staff were transferred to the private sector as we outsourced functions the department no longer needed to do.
The saving to the taxpayer has been significant: R70 million alone in the annual salary bill since 1994 and more than R50 million in the informal subsidisation of services that are now provided on a "user pays" principle.
I will bring our last major piece of institutional reform, the Road Traffic Management Corporation Bill, before this House in two weeks time.
The RTMC Bill aims to reform the way in which we do road traffic management on all three levels of government in order to make the 7,000 officers employed in this country will be developed into a coherent force to eliminate criminal behaviour by road users.
At the same time we want to establish the income stream for road traffic management, including traffic law enforcement, by putting mechanisms in place that will ensure road-users pay the full cost for breaking the rules of the road.
Hand in hand with institutional restructuring, we have established the principles of how we do business as an organisation of government whose prime responsibility is policy and regulation.
Our first principle is that where possible we must rely on the private sector, exclusively or in partnership with government.
In the case of the former, we completed the first three phases of the privatisation of the Airports Company last year raising about R1,2 billion for the Treasury. Government is currently busy looking at the final phase, a public share offer through an IPO.
Where exclusive private sector involvement has not been possible, we have formed partnerships with the private sector. These Public-Private Partnerships have chartered a way in which we can address the fundamental problem of resources for transport infrastructure.
The debate around Public-Private Partnerships has developed a clear perception in our minds that risk should be placed where it can best be shouldered: that is, financial risk must be placed within the financial sector and political risk with the politicians.
Through these partnerships R8 billion of national road construction is being financed by the private sector on Build, Operate and Transfer contracts. With every billion spent on road construction 42,000 jobs are created (17,000 directly in construction and the rest indirectly) ... jobs that would not exist if government solely had to find the financial resources to build these roads.
In the past government underwrote the construction of all toll roads, but with the tender for the N4 to Maputo that provision was removed and in the tender on the N3 between Johannesburg and Durban, the state’s R1,2 billion debt on the road has been written into the contract.
This means that the state owns the infrastructure but the cost of building and maintaining the road is concessioned to the private sector.
Furthermore we have written into these contracts specifications on job creation and empowerment through the employment of SMMEs as well as skills-transfer programmes in the construction work.
With the R3,8 billion we have spent on construction and maintenance since 1994, 33,000 person years of employment were created and R70 million was invested in the development of SMMEs. In the 30-year concession period of the Maputo road, the contract stipulates that 20 percent of the design and construction work and 30 percent of the maintenance and operation work must be allocated to the development of sustainable SMMEs. This amounts to more than R800 million during the life of the contract.
Where public-private partnerships have not been possible, we have introduced commercial "user charges" or competitive practices to ensure that government gets value for its money.
In two modes of passenger transport, bus and rail, we have changed our organisational arrangements to introduce both competition and performance criteria into our contracts with transport operators.
This year we hope to finally sign the agreement with MetroRail that will move us away from deficit financing to a more performance-orientated contract that will not only give value for money but also improve efficiency and service, which is a cornerstone in developing a reliable and safe public transport system in our country. This contract will be the first step towards the concessioning of the rail commuter network to the private sector.
Where full private sector involvement or concessioning has not been possible, we have used outsourcing, for example, for the provision of government motor transport. We have developed three major government motor vehicles contracts that are worth more than R6 billion over the next six years.
The significance of all three contracts is that we have shifted the risk in the provision, maintenance and finance government motor vehicles from the public to the private sector, which will save government the millions lost every year through theft, corruption and abuse in the current system.
The private sector welcomed the challenge to provide this service because they understood government’s position that they are best positioned to manage the operations and the risks involved.
The success of Public-Private Partnerships is the partnership, that they must be a win-win scenario for all parties. This is the delicate balance on which they can be successfully used because Public-Private Partnerships are not (in our experience) an easy, catch-all solution to the problems of public sector financing.
Central to the Department’s work in the coming years will be the findings of the Moving South Africa project which has laid out clear strategic goals for an integrated transport system over the next 20 years.
During my five years in government I have learnt that you can have all the policy documents in the world, but without the hard data to drive the strategic choices you need to make to implement them you will not achieve your long-term goals and your policy will remain mere words on paper.
As a data-driven research project, the Moving South Africa report (when it is released next month) will clearly put on the table the tough choices and the strategic trade-offs we must make now in order to make sound transport decisions for our long-term social and economic development.
Hard choices will have to be made in all areas, and the arena of public transport will be particularly challenging.
We will need to clear the way for the creation of transport authorities at both metropolitan and district council levels, who will be responsible for planning inter-modal transport services that will co-ordinate rail, bus and taxi to serve the needs of their customers for safe, efficient and effective public transport.
We have lived under a moratorium on increases in bus and rail subsidies as we undid the unsustainable legacies of open-ended, "contracts for life" for bus operators and the deficit financing of rail operations.
In the foreseeable future we will have to lift the freeze if we want our public transport system to grow. But at the same time we must ensure that there is a balance between money spent on operating costs and investment in the rehabilitation, maintenance and expansion of transport infrastructure, which will guarantee the sustainability of the whole system.
In the minibus taxi industry, provinces are currently registering taxi associations which will form the basis of a regulated taxi industry. In the meantime the industry has taken steps to form SATACO, the South African Taxi Association Council, and the process is rapidly reaching a point where government will have to accord it formal recognition.
Madam Speaker, all that we have done in Transport has been done by systematically reading off our positions from the government’s macroeconomic strategy of reshaping our economy with a focus on exporting high-value goods within a competitive world environment and a clear eye on development, job creation and empowerment of the people of this country.
We have done this through a range of mechanisms: from changing the tenders at our airports and stations to make sure that empowerment is built into every contract for work to building rural roads, such as the Noluntu project in the Sitebe Komkulu area where we raised money overseas for a 13km gravel road that was built by women from the area who gained certificated training for their work (including five women who got certificates in project management), and thereby fundamentally altering their life chance and choices.
In conclusion, Madam Speaker, all that we have achieved would not have been possible without the solid team work that goes behind any successful endeavour. My thanks goes to the chairperson and members of the Portfolio Committee in the National Assembly and the National Council of Provinces. We have worked together well over the past five years and I thank you for your dedication and hard work.
My special thanks also goes to the staff of the Department of Transport, who firstly under the capable leadership of Ketso Gorhan (who is now the manager of Johannesburg) and now under Dipak Patel, have worked tirelessly towards our new vision for Transport. I would also like to thank the boards, the CEOs and all the people who helped develop the concepts and prepare for the implementation of the four agencies, and my thanks goes to the parastatals that report to me, the Airports Company, the South African Rail Commuter Corporation, Intersite, ATNS and the Road Accident Fund. Their names are too many to mention now, but I will express my gratitude to you all closer to the time of my departure.
We have all learnt a lot of lessons over the past five years. In some areas, for example the Road Accident Fund, we were perhaps a bit too ambitious about the extent to which we could introduce reform and change. But another thing I have learnt also is that institutional change is a slow process if you want to take all your roleplayers along with you.
This is why clear strategic implementation plans, set against your long-term goals, and patient and tenacious management are the only way we can systematically tackle the fundamental task of transforming our country into an equitable society.
I am confident that Transport , in addressing the legacy of the past, has put in place a platform to build a transport system that will indeed serve the needs of our people and our country. I thank you.
Issued by Didi Moyle: PA and Media Liaison Officer to the Minister of Transport 082 808 5108
Didi Moyle
PA and Media Liaison Officer to the Minister of Transport
Pretoria: (012) 309 3131 (phone) or (012) 328 3194 (fax)
Cape Town: (021) 457260 (phone) or (021) 461 6845 (fax)
email: moyle@mweb.co.za
or moyled@ndot.pwv.gov.za
(Pretoria only)
cell: 082 808 5108