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11 December 2016 15:48 (South Africa)
South Africa

Right of response: Tolling is the most sustainable way to raise funds for highway maintenance and upkeep

  • SIPHO MADONSELA
    SIPHO MADONSELA
  • South Africa
sanral-subbedm.jpg

As you may have noticed over the years, we at the Daily Maverick have been pretty much completely against the e-tolls. We believe that they are wrong on many levels, and have been loudly saying so from the very beginning of the issue that put so many former friends at opposite sides of the spectrum. But, as always, we need to hear both sides sometimes. We now give SANRAL an opportunity to present their story. No editing from us. This response is authored by SIPHO MADONSELA, SANRAL’s board member.

The phantom arguments about the alleged virtues in funding the construction of the Gauteng Freeway project through the fuel levy as opposed to e-tolling continue to be raised. After more than four years of rehashing the same arguments over and over, opponents of e-tolling have not moved the debate any closer to a conclusion.

Neither will raising the volume or launching personal attacks on the integrity of the national government improve the quality of the argument. It is time to move on beyond the debate or South Africa will be the loser.

One myth that is being perpetuated about the introduction of open-road tolling in Gauteng is that it was a whimsical decision taken by government without the consideration of alternative options. Nothing could be further from the truth.

In reality both the government and SANRAL, as the implementing agency, spent a considerable amount of time and consulted widely with industry leaders, economists, engineers, technical experts, and the Gauteng Provincial Government.

The latest stance taken by the Gauteng Provincial Government is unfortunate. During the mid-1990’s, the provincial government investigated tolling as an option to upgrade and expand freeways in Gauteng. The impact of traffic congestion on the province’s ability to sustain economic growth was already identified at that stage as a major constraint.

Over a period of about three years, the Gauteng Province together with SANRAL explored the implementation of the project as a concession project. An unsolicited proposal received in accordance with SANRAL’s policy on Unsolicited Bids was entertained as a public, private partnership (PPP).  This proposal was found to be unacceptable for, inter alia, the tariffs to be charged to the motorist. The Gauteng Provincial Government initiated the project, including proposing provincial legislation to implement toll roads.

In the end, a decision was taken by Cabinet after weighing up all the evidence and considering the specific needs and requirements of Gauteng that SANRAL would implement the project and the method of funding would be tolling.

A hike in the fuel levy was considered but in the end it did not pass the requirements of equity and sustainability.

The fuel levy is a nationally raised tax. Government took a considered decision that taxes raised at a national level should go into a single revenue pool, administered by the Treasury, from where allocations are made in the annual to national departments provinces, municipalities and government agencies. The money collected from the fuel levy is not ring-fenced for roads, in terms of government’s fiscal policies and SANRAL is not involved in its collection or administration.

The fact is that hiking the fuel levy is not the most sustainable and cost-effective way to fund improvements and upkeeps to the Gauteng Roads. A recent study by the Los Angeles-based Reason Foundation shows that a fuel levy has several disadvantages.

First, it does not keep up with inflation. Second, increased fuel prices plus a lagging economy will result in slower traffic volume growth. Third, hybrid and more fuel efficient vehicles – and the emergence of electric cars – will, over time, result in lower fuel sales.

The cumulative effect of these factors is that the income from the fuel levy will decline over time.

It would be easy for government to add another R1 or more across the board to the fuel price, so goes the argument. For certain pressure groups with a narrow interest in a predominantly urban economy, this has become the option of choice but they fail to spell out the implications to the rest of the country’s citizens.

Why should a motorist in Mahikeng or Kakamas, or Cape Town – for that matter – have to fork out an extra amount per litre every time he fills up at the pump? Why should he pay for upgrades to a road connecting Pretoria to Johannesburg if it is unlikely that he will ever make use of this road? What will the cumulative impact be on inflation when transport companies, distributors and retailers start to hike their prices to cater for higher fuel prices? Why should poorer communities who usually own older or less fuel-efficient vehicles subsidise the rich? And why should users of public transport – taxis and buses – pay more when fares are raised – while the e-toll system has the flexibility to exempt registered owners of such vehicles from paying?

Clearly to use the fuel levy as a funding model for the upkeep and improvement of our road network is neither equitable, nor fair, nor sustainable.

Toll roads have been operational in South Africa for more than two decades. The overwhelming majority of road users would agree that the construction and maintenance of our world-class highway network would not have been possible without the income derived from the toll roads that are managed by SANRAL together with private sector concessionaires.

The more rational opponents of e-tolling agree that the new upgraded Gauteng road network is a significant improvement on the old roads and has led to improvements in safety, efficiency, productivity and time spent in traffic.

But the inevitable question is how do you pay for better roads that bring major benefits to the hub of our country’s economic activities?

Open road tolling on the Gauteng freeway network did not introduce a new principle for South African road users. It merely provides for a modern method to collect tolls on busy highways where road users don’t have to stop or pass through boom gates, resulting in the inevitable delays, time wasting and traffic snarl-ups.

Despite the claims that the e-toll system leads to inflated costs because of built-in costs of collection, the reality is that the costs are not as high as the detractors claim.

The cost of toll collection is only 17c for every rand received. This means that 83c in the rand is ploughed back directly into the maintenance and upkeep of the road network.

Tolling is equitable, sustainable and sensible. DM

Sipho Madonsela is a member of SANRAL’s Board of Directors.

Photo of N1 by Greg Marinovich.

  • SIPHO MADONSELA
    SIPHO MADONSELA
  • South Africa

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