1. Department of Transport Joint Budget Committee Theme 3: Employment and Economic Development 1 November 2006 1

2. Introduction Sustaining growth and accelerating development Economic policy and outlook Fiscal policy Taxation Spending priorities and public service delivery Division of revenue and medium term expenditure estimates Proposed projects: Public Transport Infrastructure Fund – 2010 FIFA Soccer World Cup Contents of presentation Department of Transport 2

3. Introduction The vibrant economic growth projected for the South African economy needs to be sustained and supported by a sound and sustainable transport system. The Department of Transport’s major role is the development of policies, programmes and initiatives that provide an overall framework in which coordinated, integrated and targeted transport systems support the country’s socio-economic development. The Department of Transport is committed to have transport systems in place that enhances job creation, economic development, and poverty eradication; and that reduces the cost of doing business and traveling times. Furthermore, transport is a responsibility that cuts across provincial boundaries and spheres of government; it requires consistent inter- government cooperation and coordination at all levels. 3

4. Department of Transport Sustaining growth and accelerating development The economy grew by an average of 4,2% over the past 4 years, and is expected to grow by 4,5% in the next year, rising to 5,5% by 2009. The economic challenges are to sustain this growth, broaden participation, strengthen industrial development and trade performance, and accelerate the pace of job creation. These challenges will be met, amongst others, by continued expansion in public spending. Key public spending priorities over the MTEF include: Investment in stadiums and public transport to support the 2010 FIFA World Cup Contributing to economic efficiency through investment in roads and rail. 2010 FIFA World Cup: Successful management of an event of this magnitude requires the rapid and efficient movement of large numbers of people without unduly disrupting normal traffic. 4

5. Department of Transport Sustaining growth and accelerating development (cont.) 2010 FIFA World Cup: (continued) The Department of Transport has prepared a comprehensive plan for transport network extensions and upgrades encompassing road, commuter rail and the airports. Key Requirements for Public Transport Infrastructure Fund Funding for the 2010 FIFA World Cup: Projects to prioritise public transport. Projects to satisfy both long term mobility (legacy) and event specific mobility requirements. Projects to have continuity from planning to execution. Projects to be executed in accordance with EPWP requirements. Projects to be based on local IDPs and ITPs, addressing community access and mobility needs. Projects to be practical and implementable ahead of 2010. 5

6. Department of Transport Sustaining growth and accelerating development (cont.) 2010 FIFA World Cup: (continued) Public Transport Infrastructure Fund Projects for 2010 FIFA World Cup: Request areas predominantly road and rail public transport and non-motorised transport. Project types include planning, physical infrastructure and systems. Planning includes transport planning, detailed project plans and designs. Infrastructure and systems projects include:  Public transport road infrastructure  Public transport interchange facilities  Rail upgrades  Inter-modal facilities  ITS infrastructure and systems  NMT infrastructure  Inner-city mobility systems  Call centre systems 6

7. Department of Transport Economic policy and outlook Construction and refurbishment of stadiums in preparation for the 2010 FIFA World Cup, the Gautrain and a series of local transport, commercial and residential projects will generate wide-ranging economic spin-offs and opportunities. Investment in freight, roads and public transport will help to lower costs in the economy and expand capacity. Construction grew by 11,4% in the first half of 2006, driven by strong investment in the economy, and employment in this sector grew by 14,3%. Civil construction is expected to grow by 9 per cent in 2006 as major projects such as Gautrain and stadium construction and refurbishment get under way. Gautrain: The Department of Transport paid the first claim of R928,8 million for the Gautrain project to the Gauteng Province on 30 October 2006. 7

8. Department of Transport Economic policy and outlook (continued) Freight logistics: Rapid economic growth has increased the demand for distribution and logistics services. Significant improvements continue to be made in transport infrastructure to lower the overall cost of logistics. Transnet investments amounting to R64,5 billion will be spread across the five years to 2011. Approximately 50 per cent of the investment will be in rolling stock and port infrastructure. Transport: The National Freight Logistics Strategy was finalised and approved by Cabinet in 2005. The first draft of the Branch Line Strategy was developed to revitalise non-core rail lines to ensure economic sustainability of small towns and rural communities. The Department led the revival of some rail branch lines, which include the Nkwalini Branch Line and the Belmont – Douglas Branch Line. 8

9. Department of Transport Economic policy and outlook (continued) Freight logistics – Transport (continued): The revival of these rail branch lines led to 1170 job opportunities and included training of communities in train trades. The revitalisation of these lines has helped stop cargo shifts of 430,000 tons of sugarcane and 500,000 tons of grain from rail to road respectively. Completed 4 provincial databanks & started process in other 4 provinces. Developed the National Freight Databank – 80% complete with 2 Provinces left. Developed National Freight Information Systems – completed 50% of user requirements. Established corridor and freight forums in the various provinces. Aviation sector and tourism: Tourism played a relatively small role in the South African economy before 1994. Tourist arrivals grew from 1 million in 1990 to 7 million in 2005, now generating in excess of R 48 billion in revenue per annum, with volumes growing between 4% and 6% since 2000. 9

10. Department of Transport Fiscal policy Fiscal policy supports sustainable economic and social development through an appropriate balance between government expenditure, taxation and borrowing. Substantial allocations are provided for investment in infrastructure that will contribute to increased capacity in support of long-term sustainable growth, amongst others: 2010 FIFA World Cup – R12,1billion Rail rolling stock and signaling equipment R1,1billion Roads infrastructure R1,1billion Provincial infrastructure grant R4,2billion Public Private Partnerships – Maputo Corridor and N4: The concession contract for the N4 Platinum Highway completed the link with Maputu in the east to Walvisbay in the west, linking Namibia, Botswana, South Africa and Mozambique. Serving mining, agriculture, forestry, manufacturing and others. The distance saved between Gauteng and Walvisbay is 500km and exports from Gauteng through Walvisbay can reach European markets 10 to 15 days earlier. 10

11. Department of Transport Roads - possible toll financing / financing through loan funding: Proposed national road projectsEstimated Cost N1 Huguenot (second tunnel)575 million N4 Magalies Toll Road Extension / R512725 million N1 South Toll Road and R30 Welkom to BFN 390 million N1 Sandton – Pta & other Gauteng motorways 5 489 million N2 Knysna Toll Highway 592 million N2 Tsitsikamma Toll road 187 million N3 Durban to Pietermaritzburg Toll 720 million N17 East Toll Road extension 1 138 million Other bridges900 million TOTALR 10 716 million Fiscal policy (continued) 11

12. Department of Transport Taxation Taxi recapitalisation: Qualifying taxi operators will be paid an allowance of R50 000 for each taxi being scrapped. Such payments will not trigger any income or capital gains tax. South-South co-operation: SARS signed a customs agreement with China at the end of September 2006, and similar agreements are contemplated with Brazil and India. Transport: Trilateral maritime and aviation agreements were signed between South Africa, India and Brazil in September 2006. The Airports Company of South Africa (ACSA) was awarded the tender for the concessioning of the New Delhi Airport. In 2005/06, the Department of Transport concluded Merchant Shipping Agreements with Gabon, Russian Federation, India and the Democratic Republic of Congo. 12

13. Department of Transport Spending priorities and public service delivery Adjusted Estimates of National Expenditure - Transport: Additional funds allocated: South African Rail Commuter Corporation Ltd. R439,732 million for liabilities arising from the consolidation with Metrorail. R180 million to cover operational losses. R45,1 million to cover a shortfall in bus subsidies due to increases in the fuel price. Rollovers of R211,5 million, of which R204 million for the taxi recapitalisation process. Total additional allocation R 876,332 million 13

14. Department of Transport Spending priorities and public service delivery (continued) Proposed revisions over the MTEF – Transport: R1,1 billion to the South African Rail Commuter Corporation Ltd. to improve ageing signaling systems and deteriorating rolling stock. R1,1 billion for maintenance and rehabilitation of national roads. Earmarked allocations to provinces for rural access roads, accelerating labour based construction. R5,5 billion for transfers to local government for investment in public transport. R4,75 billion for supporting infrastructure for the 2010 FIFA World Cup Special Investigating Unit (SIU): The Department of Transport contracted with the SIU to investigate fraud and corruption with issuing of driver and vehicle licenses. Some statistics after one year: Current criminal cases 3072 Current prosecutions 519 Convictions 480 14

15. Department of Transport Division of revenue and medium term expenditure estimates Strategic projects falling under the accelerated and shared growth initiative require joint funding and intergovernmental cooperation. These include: Selected road and rail networks linking provincial economic centres to domestic and international markets. Provincial infrastructure grant – increased by R4,3 billion over the next three years. An additional R6,7 billion for pubic transport and systems improvement to host cities for the 2010 FIFA World Cup. Provincial infrastructure grant - scaling up EPWP in the roads sector: Strategic objective: Maximisation of job creation and skills development using labour intensive methods for the provision and upkeep of the much needed road infrastructure. 15

16. Department of Transport Division of revenue and medium term expenditure estimates (cont.) Provincial infrastructure grant - scaling up EPWP in the roads sector (continued): Key focus: Application of labour intensive methods to: Capital road works. Road maintenance. National replication of best practice: Gundo-Lashu through Vuk’uphile guidelines and roll-out. Zibambele through Zibambele guidelines and roll-out. Prioritisation of Access Roads development. Expansion of this approach to other road types. Streamlining this approach within roads authority budget and service delivery programmes. Recent performance: Created 52000 work opportunities in 2005/06. Collectively Provincial Road Departments spent 98.4% of Budgets, despite an overall increase of 25% in budgets. 16

17. Department of Transport Division of revenue and medium term expenditure estimates (cont.) Provincial infrastructure grant - scaling up EPWP in the roads sector (continued): Outputs over MTEF: 3 600km of roads constructed or upgraded using labour intensive construction. 58 000km of roads maintained using labour intensive methods. 194000 job opportunities created: 117 000 job opportunities during construction. 77 000 job opportunities at maintenance stage. Contractor development and worker training through Vuk’uphile programme: Will be informed by the amount of learnerships awarded (contractors vs. km of roads per budget). Labour use per km (70-120 per km). Other: In 2005/06, evaluation of road maintenance projects in rural areas indicated that 575 transport projects were in the pipeline with the potential of 223 410 job creation opportunities for local people. 17

18. Proposed projects Public Transport Infrastructure Fund 2010 FIFA Soccer World Cup Department of Transport 18

19. Projects for 2005/06 EntityProject Cape TownITS system and public transport call centre EthekwiniITS system, Warwick junction upgrade and Reunion station upgrade TshwanePlanning and preparations for construction of interchange JohannesburgNorth/South public transport corridor (Phase 2: Soweto to Parktown) Nelson Mandela Khulani public transport corridor 19

20. Projects for 2005/06 (2) EntityProject RustenburgPlanning for taxi facilities and Non Motorised Transport PolokwaneRoad upgrading for public transport and Non Motorised Transport Infrastructure MangaungMangaung activity corridor and Elizabeth street pedestrianisation MbombelaPlanning support KlerksdorpPlanning support 20

21. Projects for 2006/07 EntityProject Cape TownN2 Airport-City link, Klipfontein corridor, City wide NMT system, ITS EthekwiniPublic Transport Call Centre TshwaneInner City Distribution System, Pedestrian link (Loftus stadium to rail station) JohannesburgPublic transport network improvements, ITS, Stadium precinct improvements, Inner City Distribution system Nelson Mandela Coastal cycle & pedestrian ways, Uitenhage &Stanford corridors, completion of Khulani corridor, disabled facilities and ITS 21

22. Projects for 2006/07 (2) EntityProject SARCCStation upgrades, pedestrian facilities, communication and safety systems PolokwaneNMT infrastructure upgrading (Phase 1) MangaungBloemfontein public transport interchange, Selbourne Ave pedestrianisation EkurhuleniNMT facilities for Tembisa, Vosloorus, and inter-modal facilities in metro MbombelaHazyview pedestrian bridge 22

23. Proposed Projects for 07/08 onwards Entity Projects07/08 (Rm) 08/09 (Rm) 09/10 (Rm) Total (Rm) EthekwiniWarwick Junction Precinct, Inner City Distribution, M4 Highway-PT Lane, Park and Ride 556,4568,65201,645, 0 RustenburgPublic Transport Facilities, Feasibility for Commuter Rail Service, PT Corridors design, Parking Areas, Improve selected Intersections & Accesses, Signage 2139,613,974,5 MangaungBloemspruit Pedestrian Route, Nelson Mandela Drive PT Upgrade and Widening at Parfitt Avenue intersection 313,6124,50438,1 MbombelaMataffin Stadium Precinct, Eastern Residential Areas,NMT, Airport/City Link, TDM, Business Node 321,4243,70565,1 23

24. Proposed Projects for 07/08 onwards (2) Entity Projects07/08 (Rm) 08/09 (Rm) 09/10 (Rm) Total (Rm) Nelson Mandela Khulani Corridor, Standford Corridor, Uitenhage Corridor, Heugh Road Corridor, Stadium Precinct, Airport Projects 89,5133,669,2292,3 City of Tshwane CBD PT Projects, PT Operations, Wonderboom Airport Upgrade, ITS, TDM, Light Rail Proposal 1,060, 21,432,3656,93,149,4 City of Johannes- burg Nasrec PT Projects, ITS, International Transit Shopping Centre, SPTN, Ellis Park PT Projects 441,6244,70686,3 PolokwanePT Ranks and Holding Areas, PT Security, TDM, Road Upgradings, NMT Infrastructure, 135,8119,948303,7 24

25. Proposed Projects for 07/08 onwards (3) Entity Projects07/08 (Rm) 08/09 (Rm) 09/10 (Rm) Total (Rm) Ekurhuleni Metro PT network Improvements, NMT Facilities, Park and Ride Facilities, PT Operational Plan 16,854,87,378,9 Gauteng Province Rehabilitation of R21 and Kya Sands-Lanseria Road, Bus Rapid Transit Planning, Gauteng OLS, Integrated Ticketing Systems, PT Information Systems, 203164,921388,9 KwaZulu Natal Integrated Inter-modal Facilities, PT Corridors Development, Road Signage, Road Upgradings 92,378,81171,1 25

26. Proposed Projects for 07/08 onwards(4) Entity Projects07/08 (Rm) 08/09 (Rm) 09/10 (Rm) Total (Rm) Free StateSetsotso, Mantsopa and Naledi Transport Centre 51,800 Eastern Cape Mthatha Airport upgrade, Grahamstown inter-modal facility, R72 road upgrade 104,7107,735247,4 GRAND TOTALS3,408,73,313,11,372,38,092,5 26

27. Department of Transport Thank you 27