TRANSPORT TRENDS/FUNDING IN SA July 2019 Hein Stander Pr Eng Johan Brink Pr Eng ITS

QUESTIONS 2016 Paper - illustrating transport trends Any major changes? Criticism on little research – effort to contribute to debate/understanding of situation Further question – financing public transport? Balance between investment on private vs public transport correct?

CONTENTS SA Demographics and Transport - population - economy - registered vehicles - vehicle sales - driver licenses - fuel taxation - fuel consumption SA Social Services Spending Public Transport Transfers FFC Investigation BRT Cape Town Example Tygerberg, Cape Town Conclusions

SA POPULATION 2018 – approx 58m people Growth 2008 to 2018 1.5% p.a. – now ±1m/year Trend continue – 69m by 2030

SA – GDP GROWTH Declining since 2011 (3.3%) – 2018 (1.1%) – ave since 2015 1.1% Considering pop growth - on ave everyone getting poorer Affording improved transport infrastructure more difficult than before

NUMBER REGISTERED VEHICLES 2007 - 2017 Growth – 3% pa on ave – 2017 only 2% Higher than growth in population and GDP

NEW VEHICLE SALES NAAMSA (LOCAL + EXPORT) SA sales show decline 2013 to 2016 Positive growth 2017 and 2018 Industry vision ±1 mil local + export by 2020 (2018 930k+)

VEHICLE OWNERSHIP SA 2017 - 211 veh/1000 population Compare developed countries: 500 to 800 Conclude: - Vehicle ownership potential to grow substantially - Pressure for road space, congestion - Car industry ±7% of GDP – work opportunities, exports, economic well being

DRIVER LICENSES 2004 - 2017 Growth – 4.4% pa – higher than growth in vehicle numbers Confirms high rate of motorisation Impact MAAS (eg Uber) – difficult to predict Persons with licences ± = number of reg vehicles

FUEL TAXATION Fuel levy past decade > 250%, RAF >315% Productivity is reducing, revenue retained strong growth real terms Distance based tax – expected problematic in view of e-tolling – collection expensive

FUEL CONSUMPTION 2007 – 2018 Petrol cons declined 0.6% pa Same period diesel cons grew 1.8% pa Total cons 2018 – 7% higher than 2007 Ave fuel price increase past 12 years ±7.3% p.a. In view of electric car growth - remain at this level for next 5 years?

SA SOCIAL SPENDING SA most unequal country in world – Gini 0.63 (2015) 2018 - 60% of R1.67 trillion budget for social services – social grants/education 60% of this Transfers for pt – 4% of this – R38.6 billion Social spending 20% of GDP

INTERGOV PUBLIC TPT TRANSFERS (FFC, 2016/17) 60% to PRASA SANRAL/Prov Maintenance grants included here? PT Operating and Network Grants included Gautrain R1.6 billion excluded? SAA could also be listed Order of magnitude believed correct

FINANCIAL & FISCAL COMMISSION FFC – advise parliament on financial matters related to gov – identified need for appropriate funding model PT – investigation 2017 Resultant Div of Rev Submission (2018/19) concluded: - Funding gap urban mun’s – additional taxation can assist – national transfers still required - Settlement patterns need reversal to address cost challenges - Current Implementation PT Strategy unaffordable, instead reduce PT costs, implement incrementally Recommendations: - DOT review PTNG, shift to local revenue, ring fence local sources for pt (eg portion fuel levy generated in city) - DOT approve/pilot consolidation pt functions - defined NLTA - DOT should support IPTN’s that are financially sustainable

PRIVATE TRANSPORT Balance between spending on modes required Fuel levy general revenue (not dedicated to anything) – even so, tax revenue exceed spending on roads – important source – 19/20 R80b, new carbon tax R2b, RAF R45b, licences R10b, etc Why some argues that private road users need to pay for pt not clear – not considered for hospitals, schools, etc Vehicle manufacturing very important for economy – 30% of manufacturing output, 7% of GDP Balance between spending on modes required

CITY OF CAPE TOWN BRT 2032 Transport Forum March 18 (Fortune/Moore) – Business Plan 47% Recovery of operating cost Subsidisation thru: Nat grants, 6% portion property tax, parking and other revenue Cities requested to earmark 4% own revenue for IPTN’s

EXAMPLE TYGERBERG AREA CT 250 ha north of N1 in Bellville, surrounded medium to high income residential (incl regional shopping centre, offices) Business land use growth: - past 20 years – ±300k to ±600k GLA - next 40 years – to ±1500k GLA (eventual ave bulk 0.6) With planned BRT (3 trunks + feeders) and road upgrades - Same levels of service - 10% Shift from private to public transport is predicted - Development contributions approx cover road upgrade cost - Future pt subsidies substantial (based on current practice)

PRESENT WORTH COST – 40 YEARS

CONCLUSIONS SA unique financial situation – not comparable with developed first world Population growing faster than economy – on average everyone getting poorer – improving tpt infrastructure more difficult Growth in registered vehicles and driver licenses point to increasing motorisation Vehicle ownership (211/1000 pop) low relative to developed world (500 to 800) Fuel taxation – even though productivity is reducing – grown in real terms – replacement by distance based tax considered problematic (e-tolls experience) – need thorough investigation Fuel consumption – petrol usage declining, diesel growing – in total no indication yet of turning point SA social spending – 60% of budget – 2018/19 R1trillion - pt low at 4% of total

CONCLUSIONS CONTINUED 8. PRASA receives 60% of pt transfers – network and operational grants also substantial – Gautrain and SAA tend not to be mentioned FFC investigation – shift to increased local funding of pt, consolidation of pt functions, IPTN’s sustainable Argument that private road users should pay for pt, questioned – search for balance between usage of modes Projection Cape Town BRT – subsidise thru nat grants and inter alia 6% of property tax – in line with FFC recommendation Investigation Tygerberg – consequences planned pt network – serious financial implications SA AT CORRECT INVESTMENT BALANCE BETWEEN PRIVATE/PUBLIC TPT? Status quo is being afforded – changes can have major financial consequences – should be understood/considered

FINALLY, SO WHAT OPTIONS MOVING FORWARD? Tax differently? – fuel taxation grows, productivity down, EV’s medium term impact, investigate options Tax more? – SA 8th highest tax/GDP (2017/18 – 26%) – Min Finance “ceiling” Distribute revenue differently? – suggested, happening eg CT Other side coin – operate more efficiently/honestly

Thank you