Bus subsidies and the transformation of public transport in Gauteng
In May 2009, following the tabling of the investigation report by Peter Harris of the Resolve Group, I raised a number of objections to both the report and the process that was followed.
In my response document, I reiterated my earlier statement that the then-MEC of the Gauteng Department of Public Transport, Roads and Works, Ignatius Jacobs, had issued irregular instructions to departmental officials, and I demonstrated that these allegations were not a figment of my imagination. To my utter disgust, Mr Harris failed to attend to these matters – thus my complaint to the Public Protector.
I reiterated my earlier submission that the MEC had acted unlawfully and he was challenged to provide evidence to rebut this allegation. Mr Harris thought this was not important; what was important for him was the politically motivated resolve to get me out at all costs. Any facts that stood in the way of this determined objective were simply ignored.
The Bus Transformation Project was one of the major projects undertaken by the department in my last few months as HOD. This initiative was aimed at improving public transport services in Gauteng and entailed, among other things, monitoring the efficient utilisation of the bus subsidy allocated and ensuring that the department received value for money with regard to the bus subsidy payments.
The public bus transportation system in Gauteng and elsewhere in the country is subsidy-based, which loosely means that bus operators provide public transportation services and thereafter claim certain amounts for tickets sold from the department. In terms of this model, the department can only pay the operators once it has received money from the national department of transport (NDOT).
This system was, however, fundamentally flawed, as the department never really knew the value of the subsidy claims from the operators until these were submitted or when the NDOT would eventually transfer money into its account. There was therefore always a delay in the payments of these subsidy claims.
This system left the operators in the unenviable position of continuing to provide services based on historical patterns. Commuters, on the other hand, demand uninterrupted reliable service from the bus operators.
In view of this anomaly, the department and the operators had been in consultation on several occasions to resolve this matter, but these efforts invariably resulted in failure. These failures ultimately compelled bus operators to approach the high court for an order compelling the department to settle their claims.
The department made representations on its inability to pay, but unfortunately the court did not find such argument persuasive and instead found in the operators’ favour. This situation was not only endemic to Gauteng, but prevailed in other provinces as well, thus becoming a national crisis.
In an attempt to extricate provinces from this crisis, the NDOT evolved a plan to restructure the subsidy model. This plan would have implications for all provinces, and necessitated the development of a new subsidy model in Gauteng. In terms of this new subsidy model, the funds meant for the public transport subsidisation would be transferred to the provinces in accordance with the provisions of the Division of Revenue Act.
Provinces would then be required to make a determination regarding the utilisation of the said funds for public transport subsidies. In keeping with the new subsidy regime, the department initiated a plan for Gauteng that entailed terminating all the month-to-month contracts and taking over the provision of public transport. This would have enabled the department to renegotiate new terms with public transport operators.
The department identified one of its trading entities, G-Fleet, as the most suitable entity to manage public transport services, procure the vehicles and appoint operators to run subsidised bus services on its behalf. It was envisaged that this plan would be implemented from April 1 2009.
The MEC at the time, Mr Jacobs, was advised of these plans and declared his principled support for such interventions. However, and to my surprise, the MEC addressed a letter to me on February 25 2009 suddenly withdrawing his support and effectively stopping the department from implementing these interventions.
In particular, Mr Jacobs instructed me as follows: “Any planned short-term interventions must be temporarily suspended with the view of enabling the new Executive Authority to consider the proposals and make determinations based on the 4th Term policy direction and, most importantly, within the context of the new mandate; any attempts to introduce any new projects must be stopped ...”
The core of my grievance in this regard was that by stopping all planned short-term and new projects, the MEC had effectively stopped me from discharging my duties as the accounting officer of the department. This matter was brought to the attention of Mr Harris, and, as already stated, he did not think it warranted any consideration.
As indicated elsewhere in my blog, accounting officers are the custodians of financial management and systems of internal control in terms of the Public Finance Management Act. I submitted to Mr Harris that the MEC had acted beyond his powers by effectively divesting me of power conferred on me by legislation.
This act by the MEC put the department in an invidious position as it meant the department could not continue implementing projects that were aimed at getting it out of the subsidy crisis – more especially as there was already a court order against it and probably more to follow if the department did not change course.
The department was effectively prohibited from implementing other critical projects, and the head of department was also unable to make critical decisions. This adversely affected the department, and ultimately the public. A detailed memo to the MEC in this regard was also ignored, except for an email, the first sentence of which reads, “Hi Sbu, my decision stands …”