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Southern African Vehicle Rental and Leasing Association presentation to Gauteng e-Toll Panel Midrand, September 8 2014.

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Presentation on theme: "Southern African Vehicle Rental and Leasing Association presentation to Gauteng e-Toll Panel Midrand, September 8 2014."— Presentation transcript:

1 Southern African Vehicle Rental and Leasing Association presentation to Gauteng e-Toll Panel Midrand, September

2  SAVRALA welcomes the opportunity to again present its e-Toll concerns.  SAVRALA supports the delivery of the Gauteng highway upgrades, the current ongoing alternate road upgrades and the progress towards a reliable, safe, efficient and economical integrated public transport system.  Despite its opposition to the GFIP funding method, SAVRALA members have implemented e-Tolls. SAVRALA presentation to Gauteng e-Toll Panel 8 September OVERVIEW

3  SAVRALA would like to offer its input to assist the panel assess the socio economic impact of GFIP e-Tolls as outlined by the invitation; SAVRALA presentation to Gauteng e-Toll Panel 8 September WE SUPPORT THE PANEL, AND THE GAUTENG PROVINCE, EFFORTS TO FIND AN EFFICIENT, EFFECTIVE, EQUITABLE AND BROAD BASED ACCEPTABLE GFIP FUNDING SOLUTION OVERVIEW: PANELS GFIP AND ETOLLS SCOPE DIRECTINDIRECT COSTS a) Economical and Social Impacts b) Impact on the Environment c) How and where are the costs and benefits distributed across society and the economy BENEFITS

4 1.SAVRALA - introduction 2.“User pay’’ policy observations 3.Overview of SANRAL engagement 4.The system 5.Cost benefit GFIP analysis 6.Proposals to consider 7.Conclusion SAVRALA presentation to Gauteng e-Toll Panel 8 September CONTENT

5  Established to ensure that members maintain highest standards of service, ethical and trading practices.  Industry is self-regulated and members commit to SAVRALA’s Constitution and Code of Conduct (www.savrala.co.za).www.savrala.co.za  SAVRALA represents members interests and seeks to constructively engage with its stakeholders.  National Executive Council (NEC) is drawn from the industry but retains a General Manager. SAVRALA presentation to Gauteng e-Toll Panel 8 September SAVRALA - INTRODUCTION

6  General car rental forecasted statistics ; o Annual revenue to exceed R5bn o Average fleet 65,000 (utilisation 72%) o Annual number of rentals 2,7m  Some key car rental concerns: o Increasing cost of new vehicle prices o Poor driver/renter behavior o Impact of new Tourism B-BBEE scorecard o E-toll administration o Traffic fine/infringement redirection (ie: AARTO)  Positively engages with stakeholders to find mutually beneficial solutions SAVRALA presentation to Gauteng e-Toll Panel 8 September SAVRALA – INTRODUCTION (Cont’d)

7 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION  Policy suggests a change in behaviour through pricing Does not respond to ‘usage’ A usage charge for Tourism activity?

8 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION  Policy suggests the ‘user’ should pay for a service. Implies no cross subsidisation for an identified service. Source: Tax Statistics 2013

9 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION Source: Tax Statistics 2013

10 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION  Gauteng tax assessed rands has declined from 51.9% (R99bn) to 50.4% (R104bn) of growing total, while maintaining a similar 40% proportion of tax payers during period of GFIP Source: Tax Statistics 2013

11 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION Source: Gauteng remains dominant GDP contributor

12 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION Source: www. Treasury.gov.za Total Vat collections R215bn. At 35% GDP, as a proxy, Gauteng receives back just a little more than its Vat contribution of R75bn. Gauteng’s PIT, Corp tax, fuel levy etc effectively all gets redistributed to other Provinces.

13 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION Motor Vehicle Licence does not recognise actual local or national road (ie: GFIP) usage Source: www. treasury.gov.za

14 SAVRALA presentation to Gauteng e-Toll Panel 8 September “USER PAY” POLICY OBSERVATION Source: www. Treasury.gov.za

15 15 2. “USER PAY” POLICY OBSERVATION - SUMMARY  ‘ User pay’ theory offers an approach to change behaviour and manage resources when reasonable alternatives are available. A narrow view in the context of building a democratic development state is questionable. o Presidential Review Committee on SOE’s: Recommendation 21 “Funding of social infrastructure, including roads, should have less reliance on the ‘user pay’ principle and more on taxes” o NDP -2030: Transport (p184) “Decisions should take South Africa’s developmental goals into consideration and guard against adopting transport approaches not aligned with South Africa’s priorities or resources” “Instead of focusing on a particular transport mode, emphasis should be placed on a total transport network”  Gauteng tax payers contribute for delivery of services in other Provinces  Gautrain and other modes of public transport (excluding mini bus taxis) are subsidized by non-users nationally  Goal must be to develop equitable integrated public transport solutions

16 SAVRALA presentation to Gauteng e-Toll Panel 8 September OVERVIEW OF SANRAL ENGAGEMENT  Adequately traversed in the various legal records but SAVRALA was not pro-actively engaged to review the details of the proposed GFIP e-Toll plan.  SAVRALA introduced RMI and NAAMSA to e-Toll project team.  SAVRALA members engaged with SANRAL for almost 18 months prior to legal action.  Where the system permitted, some changes were made but industry wanted a simple solution. A proposed daily fee for vehicles, which could be reviewed monthly, was not accepted.  In other countries, car rental toll fees processed via an intermediary.  Industry argued need for efficiency and cost effectiveness of funding solution.

17 SAVRALA presentation to Gauteng e-Toll Panel 8 September OVERVIEW OF SANRAL ENGAGEMENT  SAVRALA members agreed to adopted parallel actions prior to launch: o Support the legal opposition process against e-tolls o Members to commence tagging of fleet and get e-toll ready  Since implementation, the e-toll system has generally stabilized but, as expected, the maintenance of the system remains a challenge  Once vehicles e-tagged, registered and IT systems integrated, the system processes transactions, however, the challenge becomes much greater when validation checks etc are applied  Delivery of late transaction files remains a challenge

18 Car Rental e-Tag Lifecycle Order tags and brackets for fleet Register e-tags on TCH Distribute e-tags to various depots Link e-tag and vehicle with TCH Vehicle goes on rent and accumulates toll fees Vehicle returns from rent. Check e-tag present Billing Cycle Vehicle defleeted and tag recycled to a new vehicle 4. THE SYSTEM

19 Billing Cycle Toll files received daily from Sanral. Owner responsible for payment not user Queries Raised Daily Financial file paid by Car Rental Company When vehicle returns, cumulative toll fees for period linked to vehicle registration Toll fees added to rental within +/- 24 hours of vehicle return Renter invoiced 4. THE SYSTEM

20 SAVRALA presentation to Gauteng e-Toll Panel 8 September THE SYSTEM  Given the movements, car rental fleets have to be e-tagged nationally. Some have e-tagged regional fleets.  E-tag brackets not universal but industry advised one type will be used. Remember, industry constantly upfleeting and defleeting, within 12 months both their own and lease vehicles from OEM’s.  While smaller members manage manually, larger members developed new systems to track boxes and individual e-tags between centres.  Industry had to implement new procedures, policies and training.  Industry must pay within 7 days while customers pay afterwards. Accounts/corporate might only pay after days after transaction.

21 SAVRALA presentation to Gauteng e-Toll Panel 8 September THE SYSTEM  Systems then had to cater for exemption categories on a pay now and claim back later process which is proving to be very cumbersome.  System requires an e-tag and matching registered vehicle to transact. Providing VLN alone will not trigger transactions which will proceed to VPC.  SANRAL allocates payment by oldest invoice and not invoice number which is problematic for account reconciliations.  Credit request system for cloned plates, old/incorrect eNatis details and redirecting (individually) charges is very cumbersome.  Billing of e-tolls does cause customer dissatisfaction with so many tariffs (eg: standard v’s e-tag rate, time of day etc) applicable.

22 a)Economical and Social Impacts SAVRALA presentation to Gauteng e-Toll Panel 8 September COST BENEFIT GFIP AND ETOLL ANALYSIS DIRECTINDIRECT COSTS Conservatively, members spent R18m on preparation costs Majority are not covering monthly e- Toll costs. No reports of revenue surplus An additional wage/salary factor e-Toll admin costs remain unacceptable in the face of alternative collection method Addressing customer billing queries. Fleet card only payment conduit Dispute resolution takes long Clients purchasing tracking systems to validate e-toll charges Invoicing is delayed Employee fringe benefit tax unclear BENEFITS Members unable to substantiate No evidence presented by Government/Gauteng/SANRAL to demonstrate claimed 8,4 : 1 economic benefits which motivated the project People consider travelling more on GFIP No evidence to suggest that vehicle wear and tear has improved on GFIP (note: impact of alternate routes on vehicle)

23 b) Impact on the Environment SAVRALA presentation to Gauteng e-Toll Panel 8 September COST BENEFIT GFIP AND ETOLL ANALYSIS DIRECTINDIRECT COSTS While key accounts benefit from online integration, individual e-toll transaction and dispute system is predominantly paper based In the absence of alternate incentives, new roads just create induced demand Emissions on alternate routes due to congestion will exceed previous levels System does not distinguish between low and high CO2 emitting vehicles BENEFITS Unaware of any substantiation of claimed emission/ environmental improvements due to GFIP as per project motivation No evaluation to identify if road users spend more quality time at home Note: Vehicles are constantly improving their CO2 emissions. Cleaner fuel would improve this further No empirical evidence to suggest that road safety has improved or decreased

24 a)How and where are the costs and benefits distributed across society and the economy SAVRALA presentation to Gauteng e-Toll Panel 8 September COST BENEFIT GFIP AND ETOLL ANALYSIS DIRECTINDIRECT COSTS E-tolls, as a separate charge, has increased the overall cost of car rental. Leasing members, are often intermediaries, and are absorbing costs while trying to resolve queries and streamline processes. Addressing customer billing queries Suppliers will start to pass their costs on to members Creates further cost /maintenance burdens on alternate routes Employment for staff at SANRAL BENEFITS Members unable to substantiate claimed benefits Revenue from SANRAL e-Toll expenditure Opportunity to use the technology for law enforcement

25 SAVRALA presentation to Gauteng e-Toll Panel 8 September PROPOSALS TO CONSIDER 6.1 Identify the objective to be achieved: URBAN GFIP UPGRADE FUNDING Fiscal transfer Shadow Tolling National road (?) funded locally Motor Veh Lic Fuel Levy National or Inland DECONGESTION Public Transport Alternate Routes Urban Planning Incentives  The primary objective to achieve has very separate dependencies  Funding solution should be driven by efficiency and a clear strategy to achieve an integrated and funded public transport system

26 SAVRALA presentation to Gauteng e-Toll Panel 8 September PROPOSALS TO CONSIDER 6.2 Pro-actively engage key stakeholders in advance Learnings from current e-toll implementation:  Publication of a Government Gazette and a few small ads cannot be regarded as reasonable notice and consultation for major projects. (The law is sometimes blind when looking for a reasonable man!) o Ref N1/N2 Winelands study in 2001  Pro-actively engage appropriate representatives from business, community and labour on plans with significant impact, not just inter-government  Public representatives must represent the interests of their constituents eg: could Gauteng Provincial government also have done more to highlight e-Toll concerns much sooner?

27 SAVRALA presentation to Gauteng e-Toll Panel 8 September PROPOSALS TO CONSIDER 6.3 Regulatory Impact Assessment’s (RIA) should be the norm not the exception Learnings from current e-toll implementation:  The risk of AARTO non-compliance/non-implementation was identified as a GFIP project risk but overlooked  A RIA would have highlighted the non e-toll payment prosecutorial risk (eg: AARTO v’s CPA) and the need to focus on building eNatis accuracy with the help of vehicle owners 6. 4 Investigate appointment of an Independent Regulator to assess appropriateness and fairness of general toll rates and policy  Current SANRAL regulator is Dept of Transport - its shareholder  Toll revenues on some concessions may need to support local authorities due to toll avoidance and impact on alternate routes

28 SAVRALA presentation to Gauteng e-Toll Panel 8 September PROPOSALS TO CONSIDER 6.4 GFIP technology can be used for non Gauteng e-toll purposes If urban e-Tolls in Gauteng are discontinued  Both private and commercial (eg: truck and car fleets) road users may still choose to use an e-tag when using long haul routes  E-tag could become a method of payment for a road user eg: use of e-tags to replace cash in parking centres, lic renewal  Gantries can be used for average speed over distance enforcement while creating incentives for people who comply o We now need the same (and more) focus for Road Safety  Explore commercial opportunities for e-Toll call centre and Customer Service Centres  Challenge will be to restore trust in any alternate potential use, particularly, if technology remains within SANRAL  Refunds unlikely

29 29 6. PROPOSALS TO CONSIDER 6.5 Allow SANRAL to be the competent road building focussed agency  As we continue to build a democratic development state, SANRAL should build and maintain key arteries as directed by Government  National routes must be viewed as benefitting the country, otherwise, their status should be changed. A good national network has national economic multiplier effects.  Re-align ‘user pay’ policy conversation in terms of roads: o National routes should be financially supported by the national fiscus from a national fuel levy funds etc. SANRAL’s own studies acknowledged the superiority of fiscal transfers. Current e-toll funding model has unacceptable collection costs. o Provincial routes should look to their Motor Veh Lic fees and, if required, a temporary additional fuel levy to assist fund public transport development. Transfers must be viewed strategically.  The focus on road building must match integrated public transport

30 SAVRALA presentation to Gauteng e-Toll Panel 8 September CONCLUSION  Gauteng, as an expanding economic hub has now made, what were national routes decades ago, local commuting highways.  Our conversation must move from ‘Gauteng’s roads, Gauteng’s debt’ to ‘Gauteng’s national roads are South Africa’s roads’.  SAVRALA members have e-tagged their fleet and are processing e-toll charges but would prefer an alternative funding method given the current administrative challenges.  SAVRALA believes that the current e-toll impasse is an opportunity to make tomorrow so much better than today WE THANK YOU QUESTIONS


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