What can the country afford and what does it need?
This was one of the main topics at the Transport Forum’s series of discussions held between December 2018 and April this year. Difficult choices on funding lie ahead.
The forum is a platform for all transport stakeholders to meet, mingle and discuss major sector issues. Attendees come from government, civil society, academia and the private sector to discuss policy, technology and regulation.
At a recent meeting on road funding, SANRAL Engineering Executive Louw Kannemeyer said the estimated funding requirement to sustain the road network is R86bn a year. An additional R23.3bn is needed to catch up on the backlog, making the total annual requirement R110bn a year while the total budget for roads in 2017/18 was only R52bn.
He doubted that the fuel levy is a way out. To meet the funding shortfall, the levy would have to go up from R3.37 per litre to R6.21.
The rise of hybrid and electric vehicles will also influence revenue collection through the fuel levy.
Globally, the fuel price in South Africa is ranked 19th. But households spend almost 7% of their daily wages on fuel, which pushes the country down to 56th on the Bloomberg Fuel Price Index’s affordability ranking.
Kannemeyer said South Africa has to decide what length of road network it can sustain and in what condition.
Various experts added their voices:
- Gavin Kelley, acting CEO of the Road Freight Association, predicted the fuel levy is going to decrease dramatically. “The funds from the fuel levy need to be ring-fenced for roads.”
- Economist Mike Schüssler said the reality is that the fuel tax in itself is not enough for roads.
- Dr Paul Nordengen, manager of network asset management at the Council for Scientific and Industrial Research, said that road funding is critical for future development, but the fuel tax is unlikely to exist in future.
- Prof Stephan Krygsman of the Department of Transport Economics at Stellenbosch University said: “We should pay for roads. The question is how much and how to do it.”
- Whity Maphakela, acting chief director of road infrastructure at the Department of Transport, said new revenue sources would have to be found to fund future road development. The government supports the user-pay principle as a primary funding mechanism. There are serious implications if roads aren’t maintained. Delaying maintenance by up to five years can increase costs by up to 18-fold. And warned: the road user carries the cost of poor roads – an additional R20bn a year due to failures in the current road network.