By Minister Dipuo Peters
The prospects for accelerated economic growth in South Africa and the capacity of the country’s infrastructure to support this, will rekindle the debate about how our roads should be financed in the future.
Unfortunately, this debate has, in recent years become bogged down in the mire of political contestation. People have taken entrenched positions about the “how” of funding, while the “why” questions have fallen by the wayside.
It might, therefore be an opportune time to lift this debate out of the current ebb and to conduct a more sober and rational exchange of views on the options and resources available to fund our much-needed road infrastructure.
Today South Africa has the best road highway network on the continent and the 10th largest in the world. However, the research shows that most of the freeways have reached their capacity and are simply getting clogged. The time spent in traffic jams during peak hours is extended every year – with the resultant knock-on effects on productivity, vehicle costs and carbon emissions.
Clearly, people want more and better quality roads. But the debate is raging on how do you fund the maintenance of the existing roads and pay for the construction of the much-needed future infrastructure.
A key feature of the first 20 years of democracy has been the roll-out of social infrastructure to address basic needs and redress the inherent inequalities within the society. The next phase, as indicated by Government’s multibillion investment programme, is to address economic infrastructure backlogs that have become constraints on economic growth.
The National Development Plan provides a good starting point for a new debate about the role played by road infrastructure in the country’s economic development and the need to consider various funding options. There is a broad agreement about the principles underlying the NDP among the bulk of the South African electorate, the political parties who represent their opinions and across the public and private sectors.
A fundamental question to consider is how do we deal with the enormous backlog in road maintenance and rehabilitation? The reality is that more than 75% of South Africa’s road network of nearly 750 000km is 20 years or older and that R150-billion is needed to address just the maintenance backlog.
When you add to this the requirements for new roads and rehabilitation, the monetary value of the road infrastructure backlog is estimated at R340-billion, about one third of the national budget.
The shift away from rail freight onto road over the past three decades has placed significant pressure on the road network and resulted in the deterioration of the pavement structures and major congestion within major urban areas. Our long term strategy is to reverse this trend and revive the rail freight sector, but the pressures on road infrastructure will remain for the foreseeable future.
Provincial road infrastructure has gradually deteriorated because of low levels of maintenance and rehabilitation. The South African National Roads Agency (SANRAL) has taken over the responsibility for a number of provincial roads in the North West, the Eastern Cape and Limpopo but it will require significant future investments to restore these roads to acceptable levels and to ensure safe road conditions for its users.
The direct user-pay principle was introduced by SANRAL to arrive at a sustainable model for the financing of the national road network. In many circles the opposition appears to be not against the principle of user pay through toll roads – but about the specific method used on the Gauteng network.
After all, toll roads have been a feature of our road network on many highways since 1996 and the majority of road users have accepted it as a legitimate way of paying for infrastructure although they might raise objections about the specific fee structures.
The National Development Plan also supports the long term view that users must pay for the bulk of the costs of economic infrastructure. Quite correctly it qualifies this approach with the need for protection of the poor as well as the need for greater transparency regarding the full costs associated with services.
Another option is to grow the model of partnerships with the private sector where SANRAL issues concessions to private companies to finance, build, operate and maintain national roads while collecting toll fees. After a fixed period the roads revert back to SANRAL at no charge and in a specified condition.
Government has already indicated that it sees a bigger role for the private sector and development finance institutions to fund the multibillion rand infrastructure drive.
Strategic infrastructure programmes represent large and long-term financial commitments and state-owned companies are already making substantial investments to fund these projects from their own balance sheets. However, we also want to mobilise more funds from the private sector.
It is important to heed the warnings expressed by the Development Bank of Southern Africa in its recent (2012) report on the State of Economic Infrastructure: “… the failure to deliver the infrastructure required for the economy to grow will effectively act as a brake on an inclusive growth path in South Africa.”
It is quite clear that we need the private sector to help fund our infrastructure needs.
But we also need a mature debate on the models that are available, taking into account best practices and international experiences.
Dipuo Peters is the Minister of Transport.