E-Tolls – The Other Truth Not Told

2015-05-30 07:14

Using social media and press reports to measure public opinion in South Africa is risky business, it is like the casino adage; “the house always wins” – on public opinions; “the media is always inaccurate”. Time and time and again the ANC demise has been projected but when analyzing the data carefully, even the last national elections in 2014 were a landslide win for the ANC, all that with an influential Public Protector Report that was released just weeks before the elections and the other media reported frenzies around the ANC and its leaders.

It is also true that of all political parties, the ANC and COPE are the only parties that suffered from their voters being apathetic and not bothering to vote. For the ANC, voter complacency is also a major factor. If voters know their party will win elections, they turn to use the voting day for personal errands. This being said, even with the e-tolls pains, the ANC did well still in Gauteng with voters there clearly pointing to e-tolls as a swinging issue.

South Africans are used to toll roads - for over 30 years, they have been in existence in most provinces. The difference here is technology. The booth toll road makes the road end, drivers are controlled, you pay or you silly don't get through. E-tolls ask for an adult out of each driver, a personal responsibility.

E-tolls created anxiety in the economy that has stagnated in low growth following trends of its trading partners including China. Good politics from the DA and FF Plus also played a key role in creating citizen anxieties.

To this day a few people are aware of what the DA’s policy on funding roads is. What the DA managed to do was create a political storm. This is what any good competitor does. On its part, the ANC message got convoluted and mixed up with SANRAL’s shoddy but expected rollout issues. Expected in that, internationally, projects of this nature experience some rolling out issue or the other, be it payment gateway crash or the systems crash or some unforeseeable event. President Obama had Obama Care crash etc. Airbus couldn't lance its airline on time etc. A friend of mine called be extremely angry that he had received a bill for over R3000 from SANRAL on a car he had sold a year before. This unexpected debt worried him greatly and caused him added stress in his life.

The rating agencies were well within their right to be reticent and infact downgrade SANRAL's rating primarily due to the court cases by the lobby group and 'anti-etollers', Opposition to Urban Tolling Alliance (OUTA). This exposed the risk on fees collection and the matter was exacerbated by Premier David Makhura sending signals that promised a possibility of legislation amendment.

Most political parties prefer the Fuel Levy as the only collection method to be used; the DA also supports this view. The EFF and COSATU are just totally against tolling.

Roads improvements must be paid for. It is clear that the Fuel Levy Fund at its current rates cannot absorb the Gauteng roads expenditure and the option made available, as policy alternative by DA and others is that the levy be increased. So, users still pay anyway.

New international best practice as published by the World Bank Group, (http://www.worldbank.org/transport/roads/toll_rds.htm), encourages the tolling system as the most optimal way to collect the user fees.

 “User Pays and Internalizing of Externalities. Some Governments have introduced tolls in pursuit of a general policy to increase the extent of "use related payment" or with the goal of reducing road use and internalizing the negative effects of road usage (for example, congestion related prices). This is central to a 'sustainable' transport policy. In the Netherlands tolls are levied with the express intention of directing road users to other means of transport, both to ease road traffic conditions and to encourage use of the railways and inland waterways.” World Bank

The Gauteng Freeway Improvement Project (GFIP) rakes up R20 billion of the entire R40 billion long-term debt SANRAL has. After legal settlement of e-tolls via courts, Rating Agencies were able to give SANRAL an improved rating of stable from negative. We should expect pressure to revert back to negative due to slowing numbers of receipts with drivers playing a wait and see game. The ratings downgrade will push the interest on the debt higher and the R1.8 billion SANRAL must make from e-tolls in 2015 could shoot up to approximately R2 billion.

The new pricing and collections regime announced by Deputy President Ramaphosa two weeks ago mean that the expected R1.8 billion receipts are discounted by up to approximately 40 to 60 percent. This alone puts pressure on the SANRAL balance sheet and the citizens have no care for any of it. The discounts announced by Ramaphosa are a huge state haircut and may not be sustainable yet they were done in response to public pressure.

When government moves positively, the only right thing to do is for citizens to move positively to the middle ground to meet government halfway. That is partnership.

Refusal to pay risks is that future tax policy will be educated by these events of stay-aways or tax strike. Policy makers will not likely cut income or employees taxes to close gaps that may occur as is now with SANRAL GFIP.

The Transport and Related Matters Amendment Act of September 2013 enabled stability and the court cases won by SANRAL were starting to bear fruit with people grudgingly paying their dues. Premier Makhura’s investigation into the alternatives to the policy created hope that the policy may be scrapped.

Throughout the world, tolling of roads bring together in alliance the right and left ideologies as we see COSATU agreeing with FF Plus, DA etc. The reasons for agreement are not the same however. The right organizations hold the view: “they are taxed enough already” TEA, the left believes public property use should not be taxed: “don’t tax us”. These beliefs are ideological.

The national government has guaranteed 60% of the SANRAL debt as such the matter is a national one and one that must be handled with care as it could easily push price inflation up and exacerbate the plight of the poor.

COSATU is wrong in its analysis that targeted user pay principle is going to cause job losses and make factory floor workers in general pay more for transport to their workplaces. Targeted tax is able to distinguish between groups.

The idea of using fuel levy method of payment and abandon the user pay principle is not pro poor, e-tolls are pro poor and can be tracked to check their impact. An example is a township based teacher, nurse or policeman, local shopkeeper or a local shopping mall retail employee, she works in the township and lives in the same township – hardly travels on tolled roads, this person is able to say I am not paying for e-tolls as I don’t drive in them. The same can be said for village based workers and employers; farm areas too. All escape the e-tolls but with fuel levy you target the entire people. A taxi driver will pay extra for fuel and will in-turn pass the fee to the passengers. These are school children and low earners who count the last cent. With e-tolls you are able to give certain categories of vehicles either discounts or no fees.

Fuel levy will mean that teacher who resides in Soweto and works at a school in Soweto will pay more on fuel if e-tolls were scrapped for fuel levy. The fuel levy does not just cover road build cost but road accident assurance cost via Road Accident Fund which is also in the red.

Fuel stations will also not be happy if the technological burden was passed on to them to install pumps that allow fuel shoppers to choose a fee less non high way drivers at the pump.

What people are not being communicated is that all drivers pay tolls via the fuel levy. So the COSATU argument is weak. The DA’s argument is not on whether tolls must be paid or not, they just disagree with e-tolls for fuel levy instead, bottom line and net effect is the same, you still pay either way. DA must protect their constituency from paying. This they do by spreading the fee to include poor people who don't use the roads or use public transport.

The e-toll noise was first started by AVIS after they complained about the huge costs of having to install tags in all their vehicles as these are shifted around provinces. This was innovation laziness. This noise has left South Africa with a debt it must pay anyway. There is no hiding or running from it.

Indeed, fuel levy has shown to be very efficient and seamless in collections of roads tolls but could be very punishing to the poor as it will be impossible to have separate fuel prices for taxis at the pump. You can also not implement efficient price zones whereas a Soweto based person pays less levy. Fuel levy is thus not efficient in an environment where policy must be sensitive to growing inequality. Fuel levy says to a bakkie owner grass cutter in the township you are the same as a sports car driver zooming on the highway - pay same. It cannot be. Inequality is ravaging the economy and government is duty bound to be careful in its policy choices.

With fuel levy, taxi fares will be pushed up and this will affect the poorest most. At present, e-tolls grant free passage to taxis and other public or worker transport. Even if taxi operators were given a tax rebate, because of the cumbersome nature of claims, the cash flow deficit will be passed to consumers. However, I have toyed with this idea as the best way to getting taxi operators to pay their tax and or claim their future subsidies.

Electoral politics must never trump good governance.

The 2014 election spooked Gauteng ANC has drawn day light between itself and national government on e-tolls. The idea to support the scrapping of e-tolls is inept, expensive and wasteful as the R20 billion already spent on the system will have to be scrapped. Even if these are transferred to municipalities to re-use for law enforcement, the municipalities will have to buy these from SANRAL or else it remains irregular and wasteful expenditure. Transfer of such equipment also requires a means and affordability. Legislation of mass data collection and surveillance will have to be enacted too.

It doesn't make sense to simply transfer equipment to municipal management wherein the same offices may have to raise local taxes to defray maintenance and management costs. You will still pay.

The option of infusing in the vehicle licensing is correct. But this could see more cars getting registered outside of Gauteng as a result. Crafty car salesmen will soon start offering cars that are registered in other provinces. Legislation in this regard at the national level will be required to enable a recorded user of tolled roads who has dodged payment fees to be systematically picked up by a system in any other province and make it illegal to issue the license to that vehicle.

To avoid a banana republic, government must embark on an educational drive that covers the needs, the why, and implications – South Africans can be patriotic when nicely asked to be. Provincial governments must jack up their NCOP inputs in Parliament so as to avoid being caught napping in policy.

The world watches, the global money watches and its not Nkandla they worry about but a petulant citizenry, that is what causes general anxiety in money markets. Money loves predictability and requires clear stability. Gauteng road users haven’t offered money any love in this regard and all the noise being made is simply a suicidal portion. As we witness with Greece, no matter what you jump around and say, debt must be paid and you will pay more if you don’t do it sooner with clarity of mind.

Gauteng Province risks being marked as an unruly area by financial markets and all the projects that are planned may struggle to get funding as a result. If funding is found, it will be hefty in interest due to risk that the citizens feel taxed enough already. TEA parties are a fad, eventually reality has to bare.

Taking ownership of ones infrastructure requires sacrifice, if sacrifice means e-tolls let it be so.

Good leadership is about making unpopular decisions and sticking to them. A good government is one that does not move with the winds of popularity. If it does, another popular group will come to demand the death penalty back or ending of abortion law or other. E-tolls were unpopular because of the high fee, the tag you had to get – with capped fee, no need for a tag - there should be no valid reason why a fuel levy is still being demanded.

A responsive government is one that looks at economics data and drops taxes down and raises them up only as the economy allows.

And, no, even if those corrupt public servants stop being corrupt tomorrow, you will still be required to pay for roads as the money that gets reported misused is already earmarked for particular projects. Often we hear of R30 billion per annum corruption, this requires proper explanation by the Auditor General, as this is not supported by data or evidence. Indeed some public servants have been caught in malfeasance but the figures are not that high and indeed will make no difference to individual road user tax (e-toll) obligations.

Paying the e-toll fees is now about being patriotic to country and protecting the non-user from paying, the low earners and the poor from subsidizing the better off via hiked taxi fares due to hiked fuel cost that come from fuel levy.

One often unmentioned factor on e-tolls is the ability to dissuade jollying driving - pro clean environment - they encourage limited essential vehicle use. Since e-tolls the price of milk in Gauteng is not different to that in Limpopo neither is bread. The idea that costs will rise is not supported by linked data at the time of e-tolls introductions. Only drought has recently contributed to inflation on foods, currency wars added their own weight too.

Populists’ politics shouldn't force a steady government to be populist in return. This risks damaging the noble history of not pandering to populist rhetoric and policies.

E-tolls are pro poor, they are pro environment and healthy living, they force the government to invest in transport infrastructure and instill the sense of ownership and patriotism. Let us tell our grandchildren, “we built that”. Let us not pass this cost to our housemaids and servants via taxi fares.

The poor still uses trains, buses and taxis in their overwhelming majority. We already pass the street beggars as though they are not there. Lets us regain our humanity and stop pointing fingers. Taxes are a pain, they irritate, for South Africa and its past and where she wants to be, be must do more.

Finally, the biggest investor in SANRAL is Public Investment Corporation (PIC) which manages over a million public servants pension money. Who will the loser be? The workers pensions of which COSATU should be concerned about.

History validates those who make tough, unpopular decisions that matter for public good. Populism is easier.

Bongani Mbindwane hosts The Bridge on UbuntuRadio. He is Columnist with Daily Maverick, on twitter: @mbindwane

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