THE USER PAYS PRINCIPLE

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Presentation transcript:

THE USER PAYS PRINCIPLE THE CASE FOR THE USER PAYS PRINCIPLE

The state of road transport in SA today The National Development Plan refers to the SA road network as South Africa’s largest single public asset with a replacement value of some 1.7 trillion ZAR. Vehicle ownership has doubled since 1994 to 12 million registered owners. 39% of these in Gauteng.

The state of road transport in SA today 83% of total freight transport on SA roads 94% of motorised person trips are road based Increasingly challenging to maintain and upgrade around 724,000 km network.

The state of road transport in SA today SANRAL manages 22, 043km of road Only 2.9% of 750,000km of total SA roads But this network carries 33.1% of the traffic, more that 70% of all long distance road freight.

The state of road funding today 85% (19,105 kms) of national roads funded through fiscus and 16% (over 3,092 kms) of SA’s national roads are tolled. Comparatively in USA 18,500/47,662 or 38.8% miles are tolled. 2015 Survey in USA indicated 85% of road users prefer this principle of user pay.

Global trends in infrastructure funding Harnessing the power of the private sector Changing funding models – PPP model Political risk and corruption impacts government’s ability to attract investors.

Why not the fuel levy? 5 reasons Unfair contributions. Not ring fenced Bias towards high income users Diminishing fund Estimated increase to fuel price of between R0,40 and R1,10 per litre

Why not increase tax? 5 reasons why Govt unable to meet funding requirements of basic services Govt already funds 84% of non-tolled national roads R42, 8 billion shortfall in tax revenue from last year - revenue growth has slowed Weighty tax burden – 12th highest in the world! .

Operating Cost % of Toll Revenue USA varies between 24% - 54% In South Africa, assuming only 90% compliance: cost would amount to approximately 18.5%. GFIP

Why not a complete hybrid model? 5 reasons why Costly to administer and manage Indiscriminate tax Can’t isolate the income

The User Pays System – Explained Accepted as part of the National Development Plan.

Who we are Established in 2010 Technology and toll collection services for SANRAL 1,200 South Africans employed Presently owned by Kapsch

Gauteng Freeway Improvement Project (GFIP) Designed to support Gauteng’s growth and reduce congestion – traffic increase of 3% per year Planned lanes: 201km Future upgrades: 423km Planned new routes: 158km User pays / tolling required to fund expansion.

History of the User Pays Principle Originated from the polluter pays concept First mentioned in 1972 1996 White Paper on Transport Policy Remains government policy and is in the new and updated road policy

Examples of successful user pays Rail networks Carbon Tax

Fair and balanced remedy Only affluent road users pay Gautengers pay for Gauteng Roads Registered emergency and public transport vehicles don't pay No increase in living costs for poorer communities Registered users have maximum cap

Gauteng generates 38% of all SA's economic activity Gauteng as the Powerhouse Expanded lanes = efficient movement = boost economy Nodal development greatly facilitated Improves supply chain logistics

Downstream benefits Expansion and growth accelerated Creation of job opportunities Collected taxes can be used to help eradicate povery.

Santiago Open Road Tolling: Case Study Chilean legislation first contemplated tolling on 1835. Investment: 4,300m USD (2010) Total Length: 158 km Total Gantries: 73 Compliance: 99.7 %

Santiago Open Road Tolling: Case Study Approximately 5.0 million vehicles daily. Four Concessions: North South System – 600mUSD(2001), 61.2km, 28 gantries San Tiago East West – 600mUSD(2005), 44km, 16 gantries. Vespucio North West – 350mUSD(2003), 29km, 15 gantries. Americo Vespucio – 650mUSD(2005), 24km, 14 gantries.

Our biggest challenges Poorly communicated Public consultation not visible enough Public trust in the system – very low Compliance levels are currently at 30%

ETC’s future plans Our approach Political support and clarity for Gauteng road users Address and resolve road-user debt Ensuring ongoing affordability and fairness of toll fees Local ownership of e-Toll operations Provide added value and services for e-tag registered users

THANK YOU CONTACT ME +27 (0) 11 083 2030 +27 (0) 11 083 2030 coenie.vermaak@etcsolutions.co.za