The end of e-tolls, but not the end of the story

At the stroke of midnight on 12 April 2024, South Africa will cross one of the most seminal moments in public policymaking when the electronic tolling system in Gauteng will finally cease to exist in its current form.

The e-tolls that were introduced in December 2013 to fund the Gauteng Freeway Improvement Project have been at the centre of a social and political headache that has dribbled politicians and policymakers in a manner rarely witnessed since 1994.

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Read:


Mamabolo confirms e-tolls will be switched off on the 31st


Don’t want e-tolls? Then pay for GFIP roads, Treasury tells Gauteng

At the core of the headache was the question of how the improvements to Gauteng’s roads, which were desperately needed, would be financed.

From the moment government conceptualised the idea of large-scale improvements to the province’s transport infrastructure, critical questions regarding the process have been canvassed with mixed results, and often a lot of confusion.

Trade-offs and consequences

The normal playbook regarding the financing of large-scale public infrastructure indicates that funding can either come from the general fiscus in the form of new taxes and levies, or by simply charging the users directly.

Each option comes with the type of trade-offs that affected roleplayers must accept as the inevitable cost of execution.

Similarly, each option provides a range of consequences and implications that must be understood and accepted by everyone as inherently embedded into the process.

This makes the process of substantive public consultation fundamentally important in the planning and execution of financially binding long-term projects.

If the general fiscus is to be the source, it must be clear whether this comes from preexisting resource allocation frameworks, the introduction of new taxes for the specific purpose, or borrowing to fund the mission.

In South Africa’s case, National Treasury is historically averse to earmarked taxes as they create allocation headaches that its bureaucrats prefer to avoid – especially when the earmarked funds are unable to fund the specified mandate.

South Africa’s history of earmarked taxes also provides little comfort as institutions like the Road Accident Fund (RAF) and the SABC continue to illustrate the shortcomings of earmarked funding models.

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In the case of electronic tolling, the decision-making process seems to have gravitated towards a rejection of earmarked taxes similar to the fuel levy that is supposed to fund the RAF (without much success); or the TV licence fee which should be a primary source of funding for the SABC.

The difference between the two examples and what eventually became the proposed model for e-tolls is that compliance rates in respect of the SABC were so low no one imagined a similar model would achieve better outcomes. The inability to enforce continuous compliance beyond the point of purchase and the impracticality of litigation against millions of households completely undermines the SABC’s model.

The fuel levy model’s limitation is that it seeks to fund an unquantifiable quantum of liabilities associated with road accidents across the country, hence the correlation between resources mobilised and commitments inherited simply doesn’t exist.

With this in mind, the clever bureaucrats resolved that a user-pay model for e-tolls could somehow overcome the compliance and truancy hurdles.

Additionally, because the funding commitments relating to the initial construction were known at the point of launch, the mapping of the fees to be charged in relation to what needed to be funded would be more scientific than the RAF speculation that currently exists.

Read: Government corruption to blame for non-payment of e-tolls

Conceptually, one can understand the move towards a user-pay model. What has always been less clear is why government failed to engage on questions related to the practical implementation of the scheme.

Compliance

The evidence of low compliance rates in relation to earmarked funds was already clear from the SABC funding crisis.

The inability to prevent access and usage meant the scheme’s lifeline hinged on the ability to promote compliance in spite of the administrative inconveniences associated with the model.

Regrettably, the consultations predating implementation were so opaque and truncated they served to embolden the truancy rather than endearing the system to road users.

Sanral’s response – its threats to litigate the public towards compliance – destroyed the essence of any goodwill that a system of this nature needs.

Read:


E-toll summons: Sanral has a strong case – law expert [Mar 2016]


E-tolls: Outa has ‘enough’ funds to defend members [Apr 2016]


Time is running out for e-tolls, yet the summons blitz kicks into high gear [Oct 2018]


Sanral yet to receive any ‘firm instruction’ on e-toll refunds [Jan 2023]


Lesufi backtracks on e-tolls refund plans [Oct 2023]

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The groundswell of civil disobedience against e-tolls, championed by institutions like the Organisation Undoing Tax Abuse (Outa), alerted even those who rarely engage in matters of public policy to the fact that public engagements are actually embedded in the South African public governance framework.

Rather than concede that the flaws were pervasively fatal, the government insisted that Gauteng road users would eventually yield.

In 2019, the then-minister of finance, Tito Mboweni, reiterated that the government remained convinced that the user-pay model was the only correct one to be applied.

In an infamous Twitter spat, Mboweni cautioned then-premier of Gauteng – David Makhura – against picking a fight with a minister of finance. Makhura retorted by stating that Mboweni could ‘continue to Tweet as he cooks; he is a minister, not the president’.

Such spats reflected a longstanding dispute between national government and the provincial government motivated by slightly divergent considerations.

The former’s primary motivation was to maintain the credibility of its financing model for public infrastructure assets while also insulating the South African National Roads Agency (Sanral) from the fallout of a public policy debacle in which Sanral was the implementation agent caught in a crossfire.

The provincial government’s motivation was to be seen as responsive to the citizens’ call for the scrapping of the system.

Deepening the disconnect between the two structures was the question of how any solution would eventually be funded.

The ‘solution’ …

Over the past few months, the meeting of the minds resulted in a splitting of the burden between the national and provincial government on a 70:30 basis.

The province’s share of this arrangement is estimated at R12 billion and Gauteng Premier Panyaza Lesufi’s achievement in getting the ministers of finance and transport to finally reach a deal and issue the all-important gazette that kills e-tolls should definitely be lauded.

Far less clear, however, is the question of what happens next.

The difference between the impasse of the old system and the new iteration is that what was previously a matter of deliberation at the national level has now been localised to the province only.

So the old questions about how best to fund the 30% share of legacy debt remain pertinent.

Fewer options now …

What is rather different is that having moved the burden to provincial government, the multiple instruments that were previously possible –including new taxes and levies and a general fiscus allocation that could only be pursued at national government level – have been drastically reduced to the debt option that the province has to explore.

Whether the province’s balance sheet can withstand the introduction of a new debt albatross that represents the sins of the past rather than new investments is a matter of fundamental concern to the province’s finances.

It is so fundamental that whoever emerges as the government after the elections on 29 May will have no option but to immediately address it without the long runway the national government invented for itself over a whole decade of indecision.

Read: Next Gauteng government urged to challenge e-toll payment agreement

That is even before the questions of the funding of continuous maintenance and future upgrades are even considered.

In essence, this is a victory for citizens that comes with the reward of new headaches everywhere you look.

Harry Byrne

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