Transcript Road Infrastructure Funding Road Freight Association convention | 22 May 2012 Marissa Moore.

Road Infrastructure Funding
Road Freight Association convention | 22 May 2012
Marissa Moore
Overview of presentation
• Existing network and expenditure
• Policy and legislation on road funding
• Condition of network
• Efficiency, effectiveness, equity
• Systemic constraints on growth
• Sustainable alternatives
2
Public Sector Infrastructure Spending
Table 7.1 Public sector infrastructure expenditure and estimates by sector
2010/11
Allocated
R billion
Economic services
Energy
2010/11
Actual
2011/12
2012/13
2013/14
2014/15
MTEF
Total
Percenta
ge of
total
228.9
155.7
197.7
226.2
243.9
253.3
723.3
85.7%
35.1%
103.0
52.2
73.1
91.7
100.2
104.3
296.2
Water and sanitation
21.0
14.6
22.0
25.5
24.7
25.0
75.2
8.9%
Transport and logistics
80.5
68.7
75.3
81.2
88.6
92.3
262.0
31.0%
24.4
20.2
27.3
27.8
30.4
31.7
89.9
10.6%
26.3
16.8
21.2
24.1
32.9
36.9
93.9
11.1%
Health
8.5
6.7
7.7
8.1
13.1
14.8
36.0
4.3%
Education
6.8
6.1
8.1
10.9
14.5
15.3
40.7
4.8%
6.0
2.8
3.8
3.2
3.3
4.8
11.3
1.3%
4.9
1.2
1.7
2.0
2.0
2.0
5.9
0.7%
3.1
3.8
3.4
3.4
3.5
3.7
10.6
1.3%
2.1
2.1
3.8
7.9
3.5
2.8
14.2
1.7%
–
0.3
0.7
0.7
0.7
0.9
2.4
0.3%
260.3
178.7
226.8
262.3
284.6
297.6
844.5
100.0%
9.5
6.5
7.6
7.9
7.9
7.4
Other economic services1
Social services
Community facilities
2
Other social services
Justice and protection
services
Central government and
administative services
Financial services3
Total
% of GDP
1. Other economic services includes agriculture and environmental infrastructure, telecommunications,
housing, IDZs,etc
2. Others social services includes infrastructure like labour centres, heritage institutions, national libraries, etc
3. Financial services was previosuly reported under central government and administrative services hence
no figure reflected for 2010/11 allocation
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Exiting network and expenditure
Estimated total expenditure on all roads: 2012/13
R37.1 billion
– National roads
R13.7 billion
– Provincial roads
R13.2 billion
– Municipal roads
R10.2 billion
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Exiting network and expenditure
• 22,7 % of all vehicle kilometres travelled in RSA is on the national road
network, which represents 2 % of the total network of 750,000 km and
14% of the surfaced network (110,000 km) – an indication of the strategic
importance of the national road network.
• The travel density on the national road network under SANRAL
jurisdiction is 10 times higher than the national average for all roads.
• More than 70% of the long distance road freight in RSA is transported on
the SANRAL network.
• Toll roads represent approximately 16% of SANRAL network of
15,600km, and only 3 % of the surface network (110,000 km) of RSA.
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Condition of network
Source: SANRAL 2009
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Condition of network
Pavement Age Trend
100%
National Road Network Length
(Carriageway km)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
YEAR
> 25 years
21 - 25 years
Source: SANRAL 2009
16 - 20 years
11 - 15 years
6 - 10 years
0 - 5 years
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Exiting network and expenditure
Budget Kilometre Trend (2006 Rands)
R 2,000,000
Budget per Kilometre (Rands)
R 1,800,000
R 1,600,000
R 1,400,000
R 1,200,000
R 1,000,000
R 800,000
R 600,000
R 400,000
R 200,000
R0
1970
1975
1980
1985
1990
1995
2000
2005
2010
Year
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Policy and legislation on road funding
•
•
1996 White Paper on National Transport Policy accepted road tolling as a
principle
– To support the development and maintenance of road infrastructure in
accordance with sustainable economic and financial considerations
– To encourage more efficient land use, correcting past imbalances and reducing
travel distance and time
– To contribute to the prioritisation of public over private transport
Context
– Few major road construction or improvement projects had been launched since
1986 when the ring-fencing of the fuel levy was abolished
– South Africa has been spending less than half of the international benchmark for
road construction and maintenance over the past decades, against background
of slow growth and inadequate capital formation since 1980s
– The estimated maintenance backlog for national and provincial roads was
estimated to be R149 billion in 2010
– If public funds are to be prioritised for provincial and regional road backlogs,
major Gauteng freeways are going to have to be partially self-funded
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Policy and legislation on road funding
•
•
The South African National Roads Agency Limited and National Roads Act,
1998, Section 27 provides
– That the Minister of Transport
• may approve any specified national road to be a toll road
• may levy and collect a toll, grant an exemption for payment of a toll; suspend
the levying of toll on a particular toll road and resume the levying of toll after
the suspension
• May set amount of toll that may be levied
Cabinet continues to support tolls as user charge for road infrastructure
investment
– To pay off investment costs of major road improvements that cannot be fully paid
for from general revenue
– To assist in reducing road congestion, which slows mobility and economic activity
and leads over time to traffic gridlock
– To contribute to maintenance and traffic management costs of intensively used
road networks
– To raise the cost of private vehicle use vs public transport
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User charges
– To pay off investment costs of major road improvements that cannot be fully
paid for from general revenue
– To assist in reducing road congestion, which slows mobility and economic
activity and leads over time to traffic gridlock
– To contribute to maintenance and traffic management costs of intensively
used road networks
– To raise the cost of private vehicle use vs public transport
“A pure user fee/charge is a levy charged by a government agency in exchange
for the goods and/or services that the agency provides to the consumers of the
particular good or service. An efficient, pure user fee would equal the marginal
cost of providing a particular service (Anderson, 1991: 15). In this sense it is
equivalent to a market price in competitive environments. This definition implies
that user fees should be designed based on the individual benefit principle.”
Source: Conrad Barberton & Donald Maphiri, AFReC (Pty) Ltd, 10 April 2001
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International examples
• Vehicle surveillance technology combined with intelligent traffic system
management has led to new road charge systems in many countries
• System design depends on spatial characteristics and context
• Tolls complement general revenue or fuel taxes – combination of funding
instruments is common
• Toll systems strengthen funding of public transport and discourage
private vehicle use
–
–
–
–
–
–
–
–
Singapore – urban traffic charges since 1975
London – urban congestion charge (2003) – R100 a day
Norway – “toll rings” in Oslo, Bergen, Trondheim – charge for entry to city
United States – tolls widely used both for cost recovery & congestion
Switzerland, Germany – heavy goods vehicles electronic charge p km
Santiago, Chile – 4 major toll roads (5 new toll roads recently announced)
Beijing, China – 11 toll expressways – major transport links across metropolitan region
India – major highway improvements largely financed through toll systems, unified
national electronic toll system is currently being introduced
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Electronic Road Pricing in Singapore –
notice the gantry-mounted beacons
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Alternatives?
• Objectives for tolling is more that just finding money
– Address congestion and road traffic management
• R7 billion/a
– Ensure efficiency in allocating resources
• C/B ratio 1:8.4
– Ensure equity in allocating nationally raised resources both
horizontally and vertically
• Other provinces
• Provincial road maintenance
– Ensure funding source is sustainable
• Buoyancy of fuel levy
– Ensure administrative cost of raising revenue in affordable
• Operational costs vs. cost of violations management
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Fuel levy as % of budget revenue:
2011/12: R36.6 billion; 21.7 billion litre; 50 800 MtCO2
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Financial Mail, Mr. Gantry departs
“The problem is bigger than Alli. In fact, it goes beyond the e-toll debacle.
It encapsulates the increasing rapacity of the state and its functionaries
to swindle ever more from an overtaxed public which doesn’t believe its
money is put to good use.”
“More schemes are devised to extract money from the public.”
“Nobody seems to care about public service anymore. It’s about how the
state can get more money from the public. Citizen’s has become
unwilling cash cows.”
Barney Mthombothi, editor’s note Financial Mail, May 11, 2012
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Change in composition of expenditure
• Capital expenditure 2008/9 – 2011/12 – 2.2 to 2.3 per cent of GDP
• Personnel expenditure over same period – 10.1 to 11.6 per cent of GDP
• Although local government, housing and community amenity spending
has increased at a functional level, economic infrastructure expenditure
has declined as a percentage of GDP
• Reprioritisation of budgets – R20.2 billion national, R5.4 billion provincial;
R1.4 billion local
• Strategic support and capacity development for financial management,
contract management and internal control; supply chain management
and fraud prevention; accounting frameworks and standards
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Improved delivery
•
•
•
•
•
•
In 2010/11 provinces have underspent R1.9 billion in all sectors, with particularly
high under-expenditure in infrastructure
R5 billion of conditional grant allocated in 2009/10 was unspent by local
government
Revised estimate expenditure 2011/12 at national over R10 billion
Low priority towards
– 3 yrs – X5, 5yrs – X18
Importance of project approval
– Feasibility
• Cost benefit analysis
• Cost effectiveness analysis
• Indicators and baseline to support monitoring and accountability
Risks of infrastructure led development, lack of systems and blurred
accountability
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Efficiency, effectiveness, equity
• Efficiency: RAMS
1. Need to ensure that all authorities perform visual condition assessments
of their road pavements (1-2 years) and bridges (3 to 5 years).
2. On road with higher traffic levels we also need to perform additional
automated condition surveys on roughness, rut depth, macro texture
and surface deflection
• Effectiveness
– Traffic Data – Required for economic analysis and prioritization.
– Alternative routes
• Equity
– 68% of national road network carries less than 5000 vehicles per day
– Socio economic goals
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Systemic constraints on growth
• Congestion
– Time of day savings
• Value chain
– Shipping, port handling, trucks and rail - which are the sectors where
speed and cost efficiencies can be achieved?
• Cross border - Insurance, border waiting times, corridor development,
cabotage law?
• Efficiency – intermodal reducing the number of empty trucks and
coordinating the loading better?
• What does the industry think about the move from road to rail? What are
the impediments to the move? Is the industry inputting to the rail policy?
• Let’s think about the whole value chain –
• How can cross-border road transport be made more efficient? Insurance,
border waiting times, corridor development, cabotage law?
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Presidential Infrastructure Coordination
Commission

Rail, road and water infrastructure investment in the Waterberg and Steelport
regions of Limpopo to support mining and beneficiation, including rail
connections to Mpumalanga’s coal-fired power stations

Further investment in the Durban-Free State-Gauteng logistics corridor, including
freight rail improvements, and the expansion of coal freight rail capacity to
Richards Bay

A southeastern development node, linking industry and agriculture with the
export capacity of the Eastern Cape, a new dam on the Umzimvubu River, and
various water, sanitation, electricity, roads, housing and airport improvements

Water, roads, rail and electricity projects in North West province

West Coast projects, including expansion of the iron-ore rail line between Sishen
and Saldanha Bay
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Thank you
Cabinet has taken note of the comments made by the public and various organisations and expressed
appreciation for the various views and solutions offered. Government will continue to consult the public and
various organisations on the GFIP with a view to reaching a constructive outcome.
We have effected major improvements to Gauteng freeways under the first phase of the GFIP, which have
brought about observable changes to the flow of traffic on these roads. The benefits to motorists are evident.
In doing so the Government has borrowed money and incurred a significant debt. As a country we need to
demonstrate unequivocal commitment to meet all our contractual obligations, including repaying the debt incurred
in the construction of GFIP. Defaulting on our debt is simply not an option.
The South African National Roads Agency (Sanral) was created by our democratic government and with its
demonstrable capacity to manage large contracts and deliver world-class road infrastructure, it has proved to be a
valuable institution of the state.
Government plans to use Sanral to build more road infrastructure faster, in the period ahead. Accordingly, in light
of the delay in e-tolling as a result of the court decision, government will take the necessary steps to ensure
Sanral's financial soundness pending the outcome of the legal and consultation processes. In this regard, the
Committee chaired by the Deputy President is exploring interim measures to assist Sanral in meeting its financial
obligations.
Cabinet reiterated its commitment to the user pay principle and its decision on e-tolling as an efficient mechanism
of collection.
www.treasury.gov.za
Cabinet has taken a decision to appeal the interim order to stop the e-tolling. Furthermore, government only
received the written judgment late yesterday, 16 May, 2012. Our lawyers are studying this judgment and will
advise the executive in due course.
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