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Chairperson and Honourable Delegates

It gives me great pleasure, as Minister of Transport, to present my budget to the National Council of Provinces, for it allows us to reflect on the impact that transport has, and indeed must have, on the daily lives of people across the length and breadth of our country.

But first, allow me to take this opportunity to congratulate the Chairperson and Deputy Chairperson on their election as presiding officers of this house.

Transport, contributing between 7% and 13% to GDP (depending on whether the informal and taxi components are included), is at the centre of our Government's effort to achieving growth and development. I cannot over-emphasise the fact that a good and efficient transport system is vital to the functioning of the economy as a whole and the well being of our people. Transport is to the economy what the veins and arteries are to the body: namely, the conduit of life that determines the health of the system as a whole. Multimodal transport systems perform the vital task of moving people and goods efficiently, and there are many challenges that face us all to ensure that we keep them working.

The Department is allocated a budget of over R6bn, which will increase progressively over the Medium Term Expenditure Framework period. We have set the Department some very clear strategic priorities, which will define the work and activities of the Department over the next five years.

A critical area of focus is a seamless logistics system, characterised by an efficient flow of freight that promotes rather than undermines our economy's competitiveness. The poor performance of the transport system, as a key input sector in the economy, is imposing huge costs on business activity in South Africa. It is necessary to restructure the transport system to make sure that logistics does not act as a restraint on economic growth, employment and sustainable development. The need to remove blockages within our ports and rail systems is an urgent necessity.

However, the focus on freight logistics is not only about removing blockages within our systems. It is also about development of new strategic corridors within the country and the Southern Africa region as a whole. We will adopt an integrated approach to use transport systems as a catalyst to stimulate new development corridors in various regions of our Provinces.

The development of strategic corridors should also serve as a guide on where transport infrastructure will be located in the future. The development of these corridors must link into nodal and spatial development initiatives to prevent areas outside of the corridor being de-linked from the rest of the economy.

An example of one such initiative is the Kei Rail Project, the upgrading and development of new facilities along the Umtata-Amabele railway line in Eastern Cape. Linked to a new network of rural access roads and community projects, we envisage increased economic activity for one of the poorest areas of our country.

A second challenge is to establish a public transport system that is effective, efficient, safe, reliable and coordinated, in both urban and rural areas. The allocation of the subsidies for commuter rail and buses is now done in a transparent manner. I must remind Members that public transport subsidies are in fact financial interventions by government to foster equality of access to transport through the affordability of basic services in socio-economically depressed areas. However, subsidies must be targeted more coherently and effectively than before to make travel more affordable for the millions of commuters.

We are obliged, as a Transport Department, to ease the burden of a costly Transport system to the public. Thus, I have instructed the Department to complete a review of the subsidy system to align it with our stated objectives as soon as possible. This will include the question of subsidisation of taxis, for, as you know, more than 60 percent of commuters use mini-bus taxis, whilst of the estimated 2 million migrant workers in this country, 850 000 use unsubsidised public transport.

Allow me to highlight two interventions that are critical to the delivery of public transport. In the first instance, we have begun work on a merger of Metrorail, Shosholoza Meyl and the South African Rail Commuter Corporation (SARCC). The fragmentation of the institutional framework has made it difficult for Government to deliver a commuter rail service that meets the stated objectives of our public transport system. This will not be a simple exercise, and requires the participation of all stakeholders, including organised labour, as we tackle the problem of bringing together commuter and long-distance rail. We trust that a merged entity will ensure a more streamlined commuter rail service as well as focus investment in the rolling stock. At the same time, this should allow Spoornet to focus its capacity on the critical challenge of increasing volumes by 30% in the next period.

One area where there is closer collaboration between National and Provinces is in respect of bus subsidies. The Department, through Provinces, awards contracts by tender to bus operators for the provision of public transport services. Currently, there are 34 interim, 2 negotiated and 58 tendered contracts involving approximately 7 500 busses. On average passengers receive R198 in subsidies per month, which equals 6.7% of the average household income. Government will be spending more than R2, 1 billion on bus subsidies for the 2004/2005 Financial Year.

The tender processes should aim to achieve our objectives of a safe and effective public transport system whilst meeting other transformation objectives. We have therefore agreed with Provinces that a minimum of 30% of all contracted services should be set aside for companies with a 50% HDI Equity, whilst the remaining 70% should have an equity ownership of 35%. We believe that this is key to facilitating the entry of black players in the bus industry.

Another critical area that needs our attention is the emphasis on the construction and maintenance of roads in rural areas, including access roads. The lack of infrastructure and reliable public transport in rural areas continues to deny socio-economic opportunities, sustainable livelihoods, education and recreation to millions of people who cannot realise their full potential. The delivery of quality transport infrastructure in the rural areas is a pre-requisite for the eradication of asset and income poverty among our people.

Our socio-economic situation demands labour-intensive methods in the delivery of social and economic infrastructure. Some progress has been made to use labour-intensive construction methods already in the delivery of roads infrastructure. For example, the South African National Roads Agency (SANRAL) has begun to redirect increasing amounts of its expenditure (approximately 30% at present) towards roads construction and maintenance through labour based methods.

We are also encouraging Provinces to ensure a similar orientation. I am encouraged by initiatives undertaken by Provinces aimed at ensuring that infrastructure delivery meets the requirements of the public works programme. Some of the programmes being implemented in the Provinces include Zibambele in KwaZulu-Natal; Gundo Lashu in Limpopo; Vukuzakhe in Eastern Cape; Zenzele in Western Cape; Gauteng's Labmax; and Mpumalanga's Community Based Public Works Programme.

Labour-intensive technologies are fundamental to our efforts aimed at employment creation, skills development and creating critical assets for communities and for the economy. But more needs to be done, and not only in terms of access roads and small projects. It is important that we execute a significant shift towards labour -intensive technologies within the overall public spending on infrastructure.

Such is the poor state of maintenance of many of our roads that I must indicate to this house that, together with the Provinces and SANRAL, we will consider reclassifying certain strategic roads from provincial to national if this is the only way to ensure the allocation of sufficient funds for upgrade and maintenance work.

Finally, I wish to state that we will move with speed towards the completion of the process for the establishment of the Road Traffic Management Corporation (RTMC). I have instructed both the Department and CEO of RMTC that I am keen to launch this statutory body A.S.A.P, as soon as possible. The RMTC is a partnership between the three spheres of Government to strengthen Government's collective capacity for road traffic management. The establishment of the RMTC, based as it is on the principle of cooperative governance, will give concrete meaning to cooperation and will mobilize powers and resources across the three spheres of government to bring an end to the lawlessness on our roads. There can be no dilly-dallying in this regard.

I thank you.

Issued by: Ministry of Transport
11 June 2004