e-Toll economic justification queried

These parties often refer to a Gauteng Freeway Improvement Project (GFIP) 8.4 benefit cost ratio. Simply put, this hypothesis claims that for every R1 spent on the tolls, motorist will receive a benefit of R8.40. This claimed benefit is sourced from the Economic Analysis of the Gauteng Freeway Improvement Scheme prepared in August 2010 by the Graduate School of Business (University of Cape Town) for both the South African National Roads Agency and the provincial government of Gauteng. This claimed benefit cost ratio was also presented in last year's GFIP Steering Committee Report.

Minister's reply seems to refute assumptions

As this claimed benefit is one of the key motivations for the e-Tolling project, SAVRALA would encourage these parties to take note of the Minister of Transport's reply, tabled on 31 October 2011, to a Democratic Alliance question on the claimed GFIP benefits raised at the National Assembly (Question no 2598);

"As can be seen, the key assumption of the 2007 feasibility study was that the GFIP Project would reduce congestion. In my considered view, and in retrospect, the original feasibility study did not sufficiently weigh up international evidence suggesting that freeway expansion often does not in the medium term, resolve congestion challenges and often induces greater demand.

It also failed to consider alternative solutions to congestion - improved public transport provision, moving more freight onto rail and a curb on urban sprawl. The project benefits to road users therefore, may unfortunately not be forthcoming. This is the subject of further assessments and consultations by the Department of Transport and a Cabinet Task Team."

No independent, public input

The claimed GFIP benefits of timesaving, reduced vehicle expenses and lower accidents are again based on questionable assumptions derived in many instances from information unchallenged by SANRAL itself. It is also important to note that the economic analysis of the scheme did not request any input from any of the affected stakeholders like SAVRALA, which represents 450 000 vehicles. Surely, it is time for a proper public and independent economic analysis to be conducted?

Cost to revenue - 43%

It is also essential to separate the actual construction of the roads from their funding model. SAVRALA agrees with SANRAL on the need for the GFIP and that it will provide some benefit, but how much and at what cost is now a moving target. In reality, the viability and efficiency of the proposed e-Tolling model is now well beyond any economic argument.

After the Minister of Finance last month contributed almost R6 billion from Treasury to fund SANRAL's outstanding GFIP debt, the balance now due is approximately R14 billion (excluding interest payments). Unfortunately, SANRAL have not made the actual impact of the contribution from the Minister of Finance to the total GFIP debt public. This means one has to determine the relative economic efficiencies of the e-Toll model at a rather crude level - however, the message is clear. Economically, it is irrational to continue with a revenue collection scheme that will very conservatively cost the GFIP users just over R6 billion (although it has been estimate to be as much as R11 billion), to collect the outstanding R14 billion, resulting in an e-Toll administration cost to revenue ratio of 43%!

This is an unacceptable percentage for administration costs and contradicts the Minister of Finance's earlier call this year for all parties to be wise with scarce resources.

SAVRALA, and many other business and civil associations, have never disputed the need to pay for the costs of GFIP, however, jointly they continue to oppose the unacceptable levels of cost for a wieldy administration imposed by the e-Tolling funding mechanism. SAVRALA therefore calls on the government to seriously consider other less costly funding models, such as the revenue raised from the Fuel Levy, as one of several other funding mechanisms.

Bullying not democratic

Further, SAVRALA remains perplexed as to why the government remains obstinate in the extreme about the drive to implement such an inefficient and costly system, given the extensive and growing resistance to e-Tolling across South African society, including some elements of government itself.

It is also of great concern that our Government agencies and their various spokespersons are reverting to verbal bullying and threats against its citizens should they wish to exercise their rights and not register for an e-Tag but rather pay the non-discounted rate, given the concerns about individual/account information protection etc.

What is needed, is greater transparency regarding the terms and conditions of the ETC (Electronic Toll Collection) tender document and the extent of the potential financial penalties, should the e-Toll project not proceed. The current stance only corroborates government's stubbornness to proceed despite all logical and economic reasons to rethink the project.

It has however become painfully obvious, that this is the biggest public uprising against a decision taken by government since the birth of our new democracy 18 years ago.

Last week saw the launch of a new e-Toll opposition alliance site www.outa.co.za (Opposition to Urban Tolling Alliance), which encourages the public to register.