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Southern African Vehicle Rental and Leasing Association
presentation to
Gauteng e-Toll Panel
Midrand, September 8 2014
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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SAVRALA welcomes the opportunity to again present its e-Toll concerns.
SAVRALA supports the delivery of the Gauteng highway upgrades, the current ongoing alternate road upgrades and the progress towards a reliable, safe, efficient and economical integrated public transport system.
Despite its opposition to the GFIP funding method, SAVRALA members have implemented e-Tolls.
OVERVIEW
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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SAVRALA would like to offer its input to assist the panel assess the socio economic impact of GFIP e-Tolls as outlined by the invitation;
WE SUPPORT THE PANEL, AND THE GAUTENG PROVINCE, EFFORTS TO FIND AN EFFICIENT, EFFECTIVE, EQUITABLE AND BROAD BASED
ACCEPTABLE GFIP FUNDING SOLUTION
OVERVIEW: PANELS GFIP AND ETOLLS SCOPE
DIRECT INDIRECT
COSTS a) Economical and Social Impacts
b) Impact on the Environment
c) How and where are the costs and benefits distributed across society and the economyBENEFITS
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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1. SAVRALA - introduction
2. “User pay’’ policy observations
3. Overview of SANRAL engagement
4. The system
5. Cost benefit GFIP analysis
6. Proposals to consider
7. Conclusion
CONTENT
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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Established to ensure that members maintain highest standards of service, ethical and trading practices.
Industry is self-regulated and members commit to SAVRALA’s Constitution and Code of Conduct (www.savrala.co.za).
SAVRALA represents members interests and seeks to constructively engage with its stakeholders.
National Executive Council (NEC) is drawn from the industry but retains a General Manager.
1. SAVRALA - INTRODUCTION
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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General car rental forecasted statistics - 2014;o Annual revenue to exceed R5bno Average fleet 65,000 (utilisation 72%)o Annual number of rentals 2,7m
Some key car rental concerns:o Increasing cost of new vehicle priceso Poor driver/renter behavioro Impact of new Tourism B-BBEE scorecardo E-toll administrationo Traffic fine/infringement redirection (ie: AARTO)
Positively engages with stakeholders to find mutually beneficial solutions
1. SAVRALA – INTRODUCTION (Cont’d)
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Policy suggests a change in behaviour through pricing
Does not respond to
‘usage’
A usage charge for Tourism activity?
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Policy suggests the ‘user’ should pay for a service. Implies no cross subsidisation for an identified service.
Source: Tax Statistics 2013
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Source: Tax Statistics 2013
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Gauteng tax assessed rands has declined from 51.9% (R99bn) to 50.4% (R104bn) of growing total, while maintaining a similar 40% proportion of tax payers during period of GFIP
Source: Tax Statistics 2013
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Source: www.beta2.statsa.gov.za
Gauteng remains dominant GDP contributor
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Source: www. Treasury.gov.za
Total Vat collections R215bn. At 35% GDP, as a proxy, Gauteng receives back just a little more than its Vat contribution of R75bn. Gauteng’s PIT , Corp tax, fuel levy etc effectively all gets redistributed to other Provinces.
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Motor Vehicle Licence does not
recognise actual local or national road (ie:
GFIP) usage
Source: www. treasury.gov.za
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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2. “USER PAY” POLICY OBSERVATION
Source: www. Treasury.gov.za
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2. “USER PAY” POLICY OBSERVATION - SUMMARY
‘User pay’ theory offers an approach to change behaviour and manage resources when reasonable alternatives are available. A narrow view in the context of building a democratic development state is questionable.o Presidential Review Committee on SOE’s: Recommendation 21“Funding of social infrastructure, including roads, should have less reliance on the ‘user pay’ principle and more on taxes”o NDP -2030: Transport (p184)“Decisions should take South Africa’s developmental goals into consideration and guard against adopting transport approaches not aligned with South Africa’s priorities or resources” “Instead of focusing on a particular transport mode, emphasis should be placed on a total transport network”
Gauteng tax payers contribute for delivery of services in other Provinces
Gautrain and other modes of public transport (excluding mini bus taxis) are subsidized by non-users nationally
Goal must be to develop equitable integrated public transport solutions
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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3. OVERVIEW OF SANRAL ENGAGEMENT
Adequately traversed in the various legal records but SAVRALA was not pro-actively engaged to review the details of the proposed GFIP e-Toll plan.
SAVRALA introduced RMI and NAAMSA to e-Toll project team.
SAVRALA members engaged with SANRAL for almost 18 months prior to legal action.
Where the system permitted, some changes were made but industry wanted a simple solution. A proposed daily fee for vehicles, which could be reviewed monthly, was not accepted.
In other countries, car rental toll fees processed via an intermediary.
Industry argued need for efficiency and cost effectiveness of funding solution.
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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3. OVERVIEW OF SANRAL ENGAGEMENT
SAVRALA members agreed to adopted parallel actions prior to launch:o Support the legal opposition process against e-tollso Members to commence tagging of fleet and get e-toll ready
Since implementation, the e-toll system has generally stabilized but, as expected, the maintenance of the system remains a challenge
Once vehicles e-tagged, registered and IT systems integrated, the system processes transactions, however, the challenge becomes much greater when validation checks etc are applied
Delivery of late transaction files remains a challenge
Car Rental e-Tag
Lifecycle
Order tags and brackets
for fleet
Register e-tags on
TCH
Distribute e-tags to various depots
Link e-tag and vehicle
with TCH
Vehicle goes on rent and accumulates
toll fees
Vehicle returns from rent. Check
e-tag present
Billing Cycle
Vehicle defleeted and tag
recycled to a new vehicle
4. THE SYSTEM
Billing Cycle
Toll files received daily from Sanral.
Owner responsible for
payment not user
Queries Raised
Daily Financial file paid by Car
Rental Company
When vehicle returns,
cumulative toll fees for period
linked to vehicle registration
Toll fees added to rental within +/-
24 hours of vehicle return
Renter invoiced
4. THE SYSTEM
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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4. THE SYSTEM
Given the movements, car rental fleets have to be e-tagged nationally. Some have e-tagged regional fleets.
E-tag brackets not universal but industry advised one type will be used. Remember, industry constantly upfleeting and defleeting, within 12 months both their own and lease vehicles from OEM’s.
While smaller members manage manually, larger members developed new systems to track boxes and individual e-tags between centres.
Industry had to implement new procedures, policies and training.
Industry must pay within 7 days while customers pay afterwards. Accounts/corporate might only pay after 30-60 days after transaction.
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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4. THE SYSTEM
Systems then had to cater for exemption categories on a pay now and claim back later process which is proving to be very cumbersome.
System requires an e-tag and matching registered vehicle to transact. Providing VLN alone will not trigger transactions which will proceed to VPC.
SANRAL allocates payment by oldest invoice and not invoice number which is problematic for account reconciliations.
Credit request system for cloned plates, old/incorrect eNatis details and redirecting (individually) charges is very cumbersome.
Billing of e-tolls does cause customer dissatisfaction with so many tariffs (eg: standard v’s e-tag rate, time of day etc) applicable.
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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a) Economical and Social Impacts
5. COST BENEFIT GFIP AND ETOLL ANALYSIS
DIRECT INDIRECT
COSTS
• Conservatively, members spent R18m on preparation costs
• Majority are not covering monthly e-Toll costs. No reports of revenue surplus
• An additional wage/salary factor • e-Toll admin costs remain unacceptable
in the face of alternative collection method
• Addressing customer billing queries. Fleet card only payment conduit
• Dispute resolution takes long• Clients purchasing tracking
systems to validate e-toll charges• Invoicing is delayed • Employee fringe benefit tax
unclear
BENEFITS
• Members unable to substantiate • No evidence presented by
Government/Gauteng/SANRAL to demonstrate claimed 8,4 : 1 economic benefits which motivated the project
• People consider travelling more on GFIP
• No evidence to suggest that vehicle wear and tear has improved on GFIP (note: impact of alternate routes on vehicle)
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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b) Impact on the Environment
5. COST BENEFIT GFIP AND ETOLL ANALYSIS
DIRECT INDIRECT
COSTS
• While key accounts benefit from online integration, individual e-toll transaction and dispute system is predominantly paper based
• In the absence of alternate incentives, new roads just create induced demand
• Emissions on alternate routes due to congestion will exceed previous levels
• System does not distinguish between low and high CO2 emitting vehicles
BENEFITS
• Unaware of any substantiation of claimed emission/ environmental improvements due to GFIP as per project motivation
• No evaluation to identify if road users spend more quality time at home
• Note: Vehicles are constantly improving their CO2 emissions. Cleaner fuel would improve this further
• No empirical evidence to suggest that road safety has improved or decreased
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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a) How and where are the costs and benefits distributed across society and the economy
5. COST BENEFIT GFIP AND ETOLL ANALYSIS
DIRECT INDIRECT
COSTS
• E-tolls, as a separate charge, has increased the overall cost of car rental.
• Leasing members, are often intermediaries, and are absorbing costs while trying to resolve queries and streamline processes.
• Addressing customer billing queries
• Suppliers will start to pass their costs on to members
• Creates further cost /maintenance burdens on alternate routes
• Employment for staff at SANRAL
BENEFITS• Members unable to substantiate
claimed benefits• Revenue from SANRAL e-Toll
expenditure• Opportunity to use the
technology for law enforcement
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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6. PROPOSALS TO CONSIDER
6.1 Identify the objective to be achieved:
URBAN GFIP
UPGRADE
FUNDING
Fiscal transfer
Shadow Tolling
National road (?) funded
locally
Motor
Veh LicFuel Levy
National or Inland
DECONGESTION
Public Transport
Alternate Routes
Urban Planning Incentives
The primary objective to achieve has very separate dependencies Funding solution should be driven by efficiency and a clear strategy to achieve
an integrated and funded public transport system
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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6. PROPOSALS TO CONSIDER
6.2 Pro-actively engage key stakeholders in advance
Learnings from current e-toll implementation: Publication of a Government Gazette and a few small ads cannot be
regarded as reasonable notice and consultation for major projects. (The law is sometimes blind when looking for a reasonable man!)o Ref N1/N2 Winelands study in 2001
Pro-actively engage appropriate representatives from business, community and labour on plans with significant impact, not just inter-government
Public representatives must represent the interests of their constituents eg: could Gauteng Provincial government also have done more to highlight e-Toll concerns much sooner?
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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6. PROPOSALS TO CONSIDER
6.3 Regulatory Impact Assessment’s (RIA) should be the norm not the exception
Learnings from current e-toll implementation: The risk of AARTO non-compliance/non-implementation was
identified as a GFIP project risk but overlooked A RIA would have highlighted the non e-toll payment prosecutorial
risk (eg: AARTO v’s CPA) and the need to focus on building eNatis accuracy with the help of vehicle owners
6. 4 Investigate appointment of an Independent Regulator to assess appropriateness and fairness of general toll rates and policy Current SANRAL regulator is Dept of Transport - its shareholder Toll revenues on some concessions may need to support local
authorities due to toll avoidance and impact on alternate routes
SAVRALA presentation to Gauteng e-Toll Panel 8 September 2014
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6. PROPOSALS TO CONSIDER
6.4 GFIP technology can be used for non Gauteng e-toll purposes
If urban e-Tolls in Gauteng are discontinued Both private and commercial (eg: truck and car fleets) road users
may still choose to use an e-tag when using long haul routes E-tag could become a method of payment for a road user
eg: use of e-tags to replace cash in parking centres, lic renewal Gantries can be used for average speed over distance enforcement
while creating incentives for people who complyo We now need the same (and more) focus for Road Safety
Explore commercial opportunities for e-Toll call centre and Customer Service Centres
Challenge will be to restore trust in any alternate potential use, particularly, if technology remains within SANRAL
Refunds unlikely
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6. PROPOSALS TO CONSIDER
6.5 Allow SANRAL to be the competent road building focussed agency As we continue to build a democratic development state, SANRAL
should build and maintain key arteries as directed by Government National routes must be viewed as benefitting the country,
otherwise, their status should be changed. A good national network has national economic multiplier effects.
Re-align ‘user pay’ policy conversation in terms of roads:o National routes should be financially supported by the national
fiscus from a national fuel levy funds etc. SANRAL’s own studies acknowledged the superiority of fiscal transfers. Current e-toll funding model has unacceptable collection costs.
o Provincial routes should look to their Motor Veh Lic fees and, if required, a temporary additional fuel levy to assist fund public transport development. Transfers must be viewed strategically.
The focus on road building must match integrated public transport
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7. CONCLUSION
Gauteng, as an expanding economic hub has now made, what were national routes decades ago, local commuting highways.
Our conversation must move from ‘Gauteng’s roads, Gauteng’s debt’ to ‘Gauteng’s national roads are South Africa’s roads’.
SAVRALA members have e-tagged their fleet and are processing e-toll charges but would prefer an alternative funding method given the current administrative challenges.
SAVRALA believes that the current e-toll impasse is an opportunity to make tomorrow so much better than today
WE THANK YOU
QUESTIONS