Mamelodi and the key taxi industry issues
The taxi industry subscribes to the initiatives currently being pursued by government aimed at transforming the taxi industry from a strategic and an operational perspective.
A key aspect of the current initiative is a policy review aimed at ascertaining the availability of funding for all participants within the public transport sector. This is intended to ensure that the taxi industry in particular is fully capacitated to effectively participate in the transformation and operation of public transport on a sustainable basis.
Without overstating the significance of the taxi industry within the public transport sector, it is worth noting that to date the industry is yet to fully access the benefits set out in legislation, policies and various programmes designed for the industry, particularly section 41 (1) and (2) of the National Land Transportation Act (NLTA), being Act 5 of 2009:
“Section 41(1) Contracting authorities may enter into negotiated contracts with operators in their areas, once only, with a view to—
(a) integrating services forming part of integrated public transport networks in terms of their integrated transport plans;
(b) promoting the economic empowerment of small business or of persons previously disadvantaged by unfair discrimination; or
(c) facilitating the restructuring of a parastatal or municipal transport operator to discourage monopolies.
“Section 41(2) The negotiations envisaged by subsections (1) and (2) must where appropriate include operators in the area subject to interim contracts, subsidised service contracts, commercial service contracts, existing negotiated contracts and operators of unscheduled services and non-contracted services.”
This could be due to the fact that either the taxi industry is not well structured enough to tap into these benefits, or that the interests of the industry have been relegated by government as being secondary to those of the subsidised public transport operators.
Both the Gauteng Taxi Council (GATACO) and the Gauteng National Taxi Alliance (GNTA) have done a self-reassessment to ascertain how the industry can better position itself to make its case for funding and its interests to government – hence their commitment to working together for the benefit of the taxi industry at provincial, regional and local association levels.
To this end, and as part of the initiatives being undertaken by GATACO and GNTA, the following instruments have been reviewed:
- White Paper on National Transport Policy 1996
- The Public Transport Strategy 2007
- The Public Transport Action Plan
- National Land Transport Act 5 of 2009
- Division of Revenue Acts 12 of 2009 and Act 10 of 2014
- The 2012 National Budget Speech – Vote 37
In the course of reviewing the above instruments, it has been noted that there are indeed various unexploited opportunities for the taxi industry. In this regard, the industry has noted the following:
- That Integrated Rapid Transit Networks (IRPTNs) are the focal point for the ongoing public transport transformation agenda
- Participation in the IRPTNs is a precondition for accessing the Public Transport Operations Grant (PTOG)
- Emphasis is placed on integrating the taxi industry into the IRPTNs to enable it access to the PTOG, either on the basis of negotiated or tendered contracts
- The involvement of the taxi industry in the IRPTNs will be determined on a case-by-case basis guided by the particular transport needs of each Planning Authority
It is therefore very clear that for the industry to benefit from the programmes and policies geared towards the public transport arena, a robust pursuit of the above needs to be initiated.
It is specifically worth noting that the withdrawal by PUTCO from the following tendered contracts:
1. PUTCO Mamelodi (D23, D24, D25 and D26)
2. PUTCO Boksburg (GT1187/1, GT1187/2 and GT1187/3), and
3. Comuta Vaal (GT667/1)
provides a very unique opportunity through which the taxi industry can immediately be incorporated into the scheduled subsidised operations to participate and derive full benefit in the short term while medium- to long-term interventions are still being formulated.
The 1996 White Paper on National Transport Policy calls for the “Promotion of a safe, reliable, effective, efficient, coordinated, integrated and environmentally friendly land passenger transport system in South Africa ...”
In 1999, the Moving South Africa Action Agenda (MSA) set an Urban Transport Vision for 2020: ”By 2020, urban customers will be able to participate fully in the various activities of city life by using a public transport network that provides as much citywide coverage as possible and which is affordable, safe, secure, fast and frequent.”
The Public Transport Strategy and Action Plan adopted in March 2007 set out the basic principles for a public transport restructuring programme and emphasised the transformation and empowerment of taxi operators as key in this arena.
Public transport context
Minibus taxis are the most accessible and cost-effective means of public transport for all South Africans. A taxi to almost any destination can be found most of the day. Minibus taxis move an estimated 16-million people a day, which is 65% of daily commuters nationally; this amounts to 5.84-billion trips per annum.
These trips are mainly people from the townships and rural areas going to and coming from their workplace or school. There are estimated 165 000 taxis in Gauteng. Taxis provide transport to the most vulnerable and socially deprived South Africans. Owning and operating a taxi remains one of the most accessible forms of owning a business by a black person. On average, taxi fares are 50% cheaper than bus fares and in some instances 80% cheaper than Gautrain fares.
Violence has continued to plague the industry due to a large extent to government policy failures and lack of regulation of the industry. A careful analysis of taxi violence reveals that all the incidents are linked to fights around routes.
While the average taxi owner makes just about enough money to feed their family, the pressure of rising costs is putting strain on their income and livelihood. Existing operators need new routes or to protect existing routes to sustain their livelihood, hence the fights over who operates what routes, which have led to the loss of innocent lives. The policy failures can be squarely blamed on the government despite popular belief that the industry is difficult and antagonistic towards government policy.
The government at all levels – national, provincial and local – tends to employ an “avoid the industry” strategy when developing interventions for the industry. This was evident in the Taxi Recapitalisation Programme.
One key sticking point, the proverbial elephant in the room, in the government policy failure is the government’s position of not subsidising the taxi industry.
The Gautrain gets on average R400-million a month in patronage guarantees; this will take the total lifecycle costs of the system to over R130-billion, assuming the current trends. Gautrain receives this amount despite the fact that it does not even transport 5% of the people transported by the taxi industry.
The Gauteng provincial government (GPG) pays 12 bus operators no less than R2-billion per annum, while the taxi industry that transports 16-million people per day gets not a cent of this money. These bus operators have been subsidised since 1947, resulting in them making tens of billions in profit.
PUTCO earns at least 80% (R1.6-billion) of the minimum R2-billion in subsidies, while transporting only about 350 000 commuters. Over this period, the company has provided despicable service to the commuters it is paid billions of rands to serve.
When driving on major routes in Johannesburg, one is likely to encounter no less than 20 broken-down buses on daily basis (this number is much higher on Mondays). This is because of low penalties the bus operator takes on private trips over the weekend, which in turn means most buses are not ready to transport people on Mondays. These broken-down buses mean that some of those commuters will lose their jobs.
Most of these buses have broken windows that expose passengers to weather elements, a clear violation of the right to dignity of all passengers who are forced to use the buses. About 60 people a year die in accidents involving buses. Moloto Road (operated by PUTCO) typically accounts for 80% of these deaths. Despite receiving billions in subsidies, most of the buses are not roadworthy; this has been exposed even by government’s own raids where, in Moloto over 200 buses were impounded in one raid.
While it made sense for the apartheid government not to subsidise taxis, it makes no sense for the ANC-led democratic government to continue to perpetuate the economic discrimination and marginalisation of the taxi industry. This continued economic discrimination and marginalisation perpetuates denial of access to public transport grants to the millions of people who use minibus taxis as means of transport daily. This is indeed an assault on the poor.
Public transport is one sector where the government has not even attempted to implement meaningful empowerment in 20 years of democracy. By failing to provide subsidies to the minibus taxi industry, the government has deprived the millions of South Africans forced to use taxis equal access to the public transport. Failure to provide subsidies to the taxi industry is not only unconstitutional but is the worst form of “class and race discrimination”.
The average taxi commuter is a low-income earner staying mostly in a township or rural area who already faces other social challenges not faced by the majority of white South Africans. This also defies the very logic of public transport’s objective, which is to offer a social protection net for the poor by keeping their transport cost at less than 10% of their income.
While the current Public Transport Operations Grant (generally referred to as subsidies) policy framework does not forbid direct subsidisation of commuters, a plethora of reasons are given why it can’t be done.
A significant amount of money has been spent on academic studies that have no logic or basis and are mostly done by people who have not spent a day living in a township or rural area. Most of these studies understand subsidisation of the taxi industry in the current form of PTOG contracts, which have no logical basis, are biased, anti-poor people, and are deeply rooted in the apartheid history. This view is not only flawed but very discriminatory against the 16-million commuters, and is therefore unconstitutional.
Around the world there are two methods of implementing public service subsidies, being direct or indirect subsidisation.
Direct subsidisation means the money is allocated directly to the beneficiary, who then decides where to use it subject to pre-set conditions. Indirect subsidisation takes form where government contracts subsidise service providers, who must then offer discounted services to the intended beneficiaries.
Direct subsidisation is the widely used form due to the fact that it offers more equal access, is more flexible to implement, and can be tailored according to government objectives. An example is that a sliding discount scale can be implemented on income or usage levels – low-income earners or frequent users can receive more subsidies.
Although the public transport subsidy, through the use of the PTOG contracts, can be seen as indirect, a careful analysis of the NLTA and transport policy indicates no prescription of indirect public transport subsidy. This has, however, happened by bureaucratic application (perpetuation) of the apartheid-era contracts throughout the PTOG without even a single attempt to change. This has mainly been a result of the government merely extending the current PTOG contracts to the detriment of the 16-million daily commuters.
Through these extensions of the contracts, the government has poured more money into an unconstitutional and discriminatory process. The extension of these contracts is unlawful (does not comply to S217 of the Constitution, PPPFA and PFMA – to be discussed more fully below), protects monopolies (PUTCO) and is discriminatory. A recent Prodiba judgement by the Appeals Court has affirmed this view.
As indicated above, the national policy framework does not prescribe indirect public transport subsidisation. On the contrary, section 41 of the National Land Transport Act provides that when the government wants to implement subsidised contracts it must consider both scheduled (mainly buses and passenger trains) and unscheduled transport services.
The question is why then a democratic government continues to discriminate against 65% of public transport users, who also make up 80% of the country’s population. Even more sad is these users are black and stay in the townships and are forced to travel considerable distances in order to access government services and economic opportunity.
These people on average spend at least a minimum of 40% of their meagre income on transport costs due to the failure of government to implement direct public transport subsidies. Furthermore, due to a lack of regulation of the taxi industry, these commuters are also subject to the worst treatment in that they have to wait longer and have to put up with impatient taxi drivers.
Problem definition
There are key obligatory areas of governance, institutional mechanisms and contracting requirements that have been debased by the GPG, DRT (Gauteng Department of Roads and Transport) and Autopax in the development of the IRPTNs in general, and in the implementation of the temporary arrangements for the replacement of PUTCO in Mamelodi, Boksburg and Sedibeng in particular.
Governance, stakeholder analysis and consultation process
The process of stakeholder analysis and the consultation process are legislated under the Municipal Systems Act, 2000 (Act No 32 of 2000), which clearly stipulates, without alternatives, that the municipality must establish appropriate mechanisms, processes and procedures to enable the local community to participate in the affairs of the municipality. It further promotes that a municipality must communicate to its community information concerning municipal governance, management and development.
Furthermore, section 15 of the NLTA calls for the establishment of Intermodal Planning Committees and states as follows:
“(1) Every municipality that is establishing an integrated public transport network or has significant passenger rail services in its area must, by not later than the prescribed date, establish an intermodal planning committee consisting of the prescribed technical officials, prescribed representatives of rail operators, other public transport modes, users and organised business.”
As the wording above makes clear, the NLTA provides for an intermodal planning committee to include representatives of “other public transport modes”. The taxi industry has never been invited nor capacitated to participate in these committees.
Institutional mechanisms for vehicle operating companies
GATACO and GNTA, representing the taxi industry and various taxi operators in Gauteng, object to the institutional arrangements and structure followed by the GPG and DRT in imposing Autopax as a substitute Vehicle Operating Contractor (VOC) upon the withdrawal by PUTCO from the routes listed above.
The Gauteng Department of Roads and Transport (DRT) has justified its actions through the argument that it is a “government to government” arrangement. GATACO and GNTA maintain that this argument is hollow and cannot withstand legal scrutiny.
By imposing Autopax, DRT has violated section 217 of the Constitution of the Republic of South Africa read with section 38(1)(a)(iii) of the Public Finance Management Act (PFMA), which requires that all procurement must follow a system that is fair, equitable, transparent, competitive and economical. Indeed, the provisions for deviation are also provided for in Treasury Regulations 16A and SCM Practice Note 6 of 2007, but there is no evidence that these have been complied with.
Furthermore, section 11 of the NLTA does make provision for the minister to “assign” a function. In this case, the function has been assigned to provinces by the minister, so, if the Autopax arrangement is to be implemented, then DRT should have requested the minister to withdraw this assignment.
The minister can reassign the function to PRASA, and since the subsidy funding is governed by the Division of Revenue Act (DORA), the minister of finance must also amend DORA and reallocate the subsidy funding away from Gauteng to PRASA.
The taxi industry believes that the Autopax arrangement is not only prejudicial, but is also irrational and unlawful.
The other issue that has not been traversed fully is that of operating licences. The taxi industry is not aware of any process that has been followed to issue operating licences to Autopax.
Contracting arrangements
GATACO and GNTA, representing the taxi industry and taxi operators in Gauteng, object to the process of contracting arrangements followed by the DRT to unduly propel and conclude contracts with Autopax.
The only mechanism that the taxi industry is aware of for concluding negotiated contracts is described in the NLTA as follows:
“Section 41(1) Contracting authorities may enter into negotiated contracts with operators in their areas, once only, with a view to—
(a) integrating services forming part of integrated public transport networks in terms of their integrated transport plans;
(b) promoting the economic empowerment of small business or of persons previously disadvantaged by unfair discrimination; or
(c) facilitating the restructuring of a parastatal or municipal transport operator to discourage monopolies.
“Section 41(2) The negotiations envisaged by subsections (1) and (2) must where appropriate include operators in the area subject to interim contracts, subsidised service contracts, commercial service contracts, existing negotiated contracts and operators of unscheduled services and non-contracted services.”
The words “promoting the economic empowerment of small business” and “unscheduled services and non-contracted services” are instructive. The state-owned enterprises are competitors within the meaning of transport operators in terms of the Act. A basic interpretation of the Act, read with broad-based black economic empowerment legislation and the Constitution, is quite clear that the taxi industry ought to have been given an opportunity to tender for services currently in dispute, to break the monopoly and empower previously excluded small business.
There are various legislative instruments that guide DRT in terms of executing administrative processes of procurement.
Without exhausting all applicable instruments, the Treasury Regulations uphold provisions of the Preferential Procurement Policy Framework Act (Act No. 5 of 2000) and provide that DRT may determine a preference for categories of service providers in order to advance the interest of persons disadvantaged by unfair discrimination, as long as the manner in which such preference is exercised does not compromise or limit the quality, coverage, cost and developmental impact of the services.
The Act emphasises that the procurement process must be fair, equitable, transparent, cost-effective and competitive. The selection of the current operator is flawed and contradictory to the requirements of legislative instruments.