Gautrain a big policy mistake – CompCom

‘No justification in a country like South Africa for government to subsidise the middle class’.
The subsidies allocated to the various modes of commuter transport are disproportionate, says commissioner. Image: Nadine Hutton, Bloomberg

The Competition Commission believes the Gautrain rapid rail system was a big policy mistake.

It now recommends that the Gauteng provincial government take over Metro Rail, and integrates it with the Gautrain to run “a single system that doesn’t separate people according to class”.

Tembinkosi Bonakele, the commissioner of the Competition Commission, on Wednesday also said the formula for the allocation of public passenger transport subsidies has led to distortions that impact on competition between the various modes of transport.

Increased funding for subsidies to the minibus taxi industry through the government’s taxi recapitalisation programme is one of several recommendations made in the commission’s preliminary report into its market inquiry into land-based public passenger transport released on Wednesday.

Bukhosibakhe Majenge, chief legal counsel and acting deputy commissioner at the commission, said the inquiry was initiated because the commission believed there existed features – or a combination of features – in this market that may prevent, distort or restrict competition.

Bonakele said the inquiry looked very closely at the Gautrain model and compared it with Metro Rail services in Gauteng and found “huge inequities”.

“The Gautrain is heavily subsidised and operates very differently from Metro Rail from a services and integration point of view,” he said.

“There is no policy justification in a country like South Africa for the government to subsidise the middle class and decide to have no or lesser subsidies for the working class.

“The service levels the middle-class love, the working class also love.

“The safety they love on the Gautrain, the working class also love.

“The convenience of being on time, the working class also love that.

“So there is no public policy justification for this,” said Bonakele.

‘Inherently inefficient’

He added that trains are not meant to compete with each other, stressing that trains are about the efficiency of aggregating demand and it is inherently inefficient to have two trains, both going from Johannesburg to Pretoria.

What is required is a single system that is more reliable, and more regular times with a lower price moving between the two cities because you have volumes from the other trains, he said.

Bonakele said the commission understands that the objective was to remove cars from the highways and improve congestion but believes “that was a little short-sighted”.

He said the commission is engaging with the Gauteng provincial government “as it thinks about expanding [Gautrain] to say please think about how this whole thing can be integrated”.

Attempts to obtain comment from the Gautrain Management Agency were unsuccessful.

Commenting on the distortions in subsidies, Bonakele said the subsidy system is highly fragmented with minimum coordination.

He said there is no formalised subsidy policy although the Department of Transport is in the process of developing this policy now.

Subsidies disproportionate

Bonakele said subsidies are not linked to ridership, with minibus taxis transporting over 66% of commuters but receiving about 1% of the subsidies through the taxi recapitalisation programme.

He said about 40% of the subsidies go towards rail, which transports 9.9% of commuters and is in decline, while buses transport 23.6% of commuters and receive about 20% of the subsidies – largely the provincial government subsidies provided to the integrated public transport system, sometimes called BRT (bus rapid transport).

The commission has recommended that municipalities, with guidance from the Department of Transport and National Treasury, review the BRT system.

“In most towns and cities it has not worked. There should be a review that takes into account the long term fiscal and financial sustainability of the system,” said Bonakele.

“Crucially, there needs to be a model for the inclusion and participation of the mini-bus taxi industry. It could be the easiest way to transition towards a more subsidised system if you integrate them into that,” he said.

Read: Transcap’s bet on taxis and debt collection pays off

Philip Taaibosch, president of the SA National Taxi Council (Santaco; the governing body of the taxi industry), said the taxi industry wants commuters to be subsidised.

He said commuters should have a choice when it comes to the transport services they want to use, and that the subsidy should be based on a commuter subsidy.

He said the taxi industry still wants the taxi recapitalisation programme, the introduction of which was largely driven by safety concerns and the aim to renew the taxi fleet in the country.

Other provisional recommendations made in the inquiry report are that:

  • Autopax, the holding company of two intercity bus services and a wholly-owned subsidiary of the Passenger Rail Agency of South Africa (Prasa), be separated from Prasa and become a separate state entity reporting directly to government.
  • Prasa CRES (Corporate Real Estate Solutions), a division that manages all intermodel terminal facilities and other ranking facilities in partnership with municipalities, be incorporated as a new and independent state entity outside of Prasa to eliminate conflicts of interest and perverse incentives.
  • The perpetual extension of subsidised bus contracts without going on tender inhibits competition be reviewed; and that where contracts are put on tender, government should consider breaking some into smaller contracts to create opportunities for new entrants and small bus operators.
  • Dedicated transport authorities be established at provincial level in each province to prioritise public transport by local government.
  • The Department of Transport promote an integrated public transport ticketing system.
  • The Department of Transport urgently (within 12 months) develop a strategy for the devolution of functions such as rail to lower levels of government to promote the integration of public transport services.
  • The creation of a specialised division with the South African Police Service to deal with all public transport-related matters, including conflict between metered taxi and e-hailing operators.
  • The removal of all area restrictions for e-hailing and metered taxi operators.

The inquiry’s recommendations are provisional. Stakeholders can make further submissions until March 31.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   57

You must be signed in to comment.

SIGN IN SIGN UP

Since when is the compcom expressing opinions on political issues?

Further proof of the ANC morons in power.

Why is it so difficult for those in power to understand that rail transport is the life line of any country. Transporting goods and people affordably by rail brings economic prosperity and curb road maintenance drastically by keeping trucks, many overloaded, off the roads. The answer is simple, get professionals to run Metro Rail. Ah but getting professionals is a problem with our dysfunctional schooling system and present dysfunctional managers.

Precisely!

But …. It’s so difficult because of one simple factor – you forgot to include the jobs for F&F – Friends & Family who take positions without a clue of how to do them but happily take all the benefits.

Not sure if you’ve ever seen the long queues of trucks going up and down the N3 between Gauteng and KZN?

15 years ago, rail transport was still going strong on that route. The ANC has chose to restrict Transnet freight rail on that route in favour of BEE truck transport deals.

All those kickbacks….

Thanks Roy – we really do need better and more integrated public transport. We should be aiming for something similar to Europe (we may be too spread out thought ). Thailand also has some great options.

Did the competition commission really spend as much time and commentary “slanging” the Gautrain (which is and remains world class) or did you lead with that as Clickbait?

Could you please post a link to the complex .commission report as I would like to see what it says for myself. Sounds as though there may be really good items there and some misguided commentary too.

PS what did they say about the ruinous loan sharing interest rates that SA Taxi finance charges?

How dare the middle class expect anything back for the taxes it pays. Its members should just STFU and allow government to continue to steal, destroy and sell off what’s left of SA to the highest bidder.

This is rather typical of utterances from the South African “ignoratti”. Take a successful organization and mess it up instead of using it as an example to correct the failings in those organizations (usually SOE’s) already messed up beyond belief.

This is the idiocy that is SA, or what passes for governance in the ANC regime. Why should anyone be subsidised? It encourages inefficiency at best and corruption at worst which is where we are now.

Public transport is subsidised all over the world. There are maybe a handful of systems that don’t have subsidies, and even then, they may enjoy hidden subsidies.

The thing is that public transport, in any world city, is usually a state owned and operated monopoly and in most instances subsidized. It needs to be like this to operate well with subsidies.
Public transport should be integrated and the part of Gautrain that is not been utilized by the working classes is mostly the busses.
The ANC really messed up the RBT system by pandering to the taxi industry which leaves the working class in the hands of the taxi Mafia.
The taxi industry is not publicly owned and is therefore a form of private mass transit which is very much unregulated and gets in the way of a proper functioning and integrated public transport system.
According to world class city standards the minibus taxi should only exist at the extreme periphery of the city and not interfere with the predictability of big people movers like trains and busses on set routes at set times and frequency.
So therefore the council and Province is hindering the working classes by keeping taxis as their primary mode of daily transport.
The other sad fact is that the taxi industry kills more people than any other industry in SA.
So Gautrain works and it’s big reveal is the commuters between Tshwane and Johannesburg. Metro rail (being a national incompetence) does not work and Province may or may not do a better job.
But the real answer is the better use of busses (owned and operated by the public) but that means dealing with the taxi industry.
They seem to be getting the strategy wrong.

Problem is : they are not going to fix the skewness between gautrain susbsidy per passenger mile and taxi subsidy per passenger mile by slashing the gautrain subsidy. So get ready for a massive tax cost amounting to fifty times the gautrain subsidy.

Free commuting is just another basic human right to go along with free water, free electricity, free housing, free healthcare, free school, free university, free mobile data, FREEDOM!

What is the last barrier? Free food?

Sounds like a country ideally suited to parasites. Entitled parasites to boot.

….and with SAA’s bailouts, Govt is subsidizing the UPPER CLASS here.

well – primarily subsidising the useless moronic politicians who can fly all over the world for free on SAA … the non-sheltered employment upper class folk can easily choose an alternate carrier !

The fools in charge, whoever they may be should be expanding the system. Not curtailing it.

It now recommends that the Gauteng provincial government take over Metro Rail, and integrates it with the Gautrain to run “a single system that doesn’t separate people according to class”.

Leave it to the ANC to f*ck things up – once again.

…..United Kingdom ….Bus fares are cheaper than rail, which are cheaper than taxis

People complain off high rail fee’s and those that cannot justify …take the bus or intercity taxi’s or just drive

Gautrain is disciplined and they do fine if one is caught chewing gum or drinking. No so with metrorail

Surely the taxpayers deserve a little something out of the massive amount of taxes they pay?

Compcom is beginning to sound like SAHRC (very biased).

“It now recommends that the Gauteng provincial government take over Metro Rail, and integrates it with the Gautrain to run “a single system that doesn’t separate people according to class” ”

This sentence explains the total misconception some people/ organisations has – once again the idea is utilize something that is in a 100% operative state (gautrain), mix it up with a much lesser / non- operative entity (prasa etc) – the result: nothing works – all to please the outdated anc’s political ideas and their superiors – small wonder south africa could not move forward for past 20 years – the ironical part: the same fatal mistakes are repeated time and again without learning anything out of the previous mistake – this is why south africa is where it is today – with political leaders with zero long term insight.

Perhaps the reason for the subsidy discrepancies is that the mini bus taxi industry is a private business (run for private profit on which, most likely, no tax is paid, and no VAT is collected, so you have your subsidy right there), while the other modes mentioned are public transport systems.

There are also millions of private cars users not being subsidised in their work commute (if that sounds absurd, some countries, like Austria and Germany do have that, the so-called ‘Pendlerpauschale’).

As for there being “no policy justification…for the government to subsidise the middle class and decide to have no or lesser subsidies for the working class”, it is a policy objective that the people who pay the bulk of personal income tax in this country should get nothing back at all for their money?

If yes, then mission accomplished.

Just wonder how many traffic rules are brazenly broken by the Gautrain and how much the Taxi industry contributes to the Taxman?

Gautrain needs to be expanded to areas where people actually live. A line going west through Randburg to Roodepoort would really help.

That is the plan. Have a look at next phase Gautrain route maps – Jabulani, Roodepoort, Little falls, Cosmo City, Fourways, and Lanseria to Sandton

I’ve seen those. I don’t think it will be easy due to the ridges. It might require another FIFA World Cup.

Well if the Gautrain is a policy mistake so too is the bloated overpaid civil servants, including the fat cats at the Competition Commission!!

Although I concur that a society based on a racial structure (the current one and apartheid) is wrong there is nothing wrong with a class structure. The driving force behind a class structure however, must be to create an enabling environment for the lower strata to move upwards into the middle class. Even first year students in Economics and Political Science will tell you that a country lives peacefully if there is a solid middle class.. The idea that the upper class should be dragged down to the lower class is just stupid and normally propagated by those that lack the intellect to create this enabling environment.

Government isn’t subsidizing the middle class – it is subsidizing a highly inefficient and unsustainable business model.

The fact that it is mainly used by the middle class is incidental.

The so-called “middle class”, is the tax paying class which is keeping the economy still going.

The Gautrain works because it spends little time at eye level. It is either underground, or elevated – like Brazil and Thailand. Just because the government cannot protect its infrastructure in Cape Town and Johannesburg – does not make the Gautrain subsidy a failure. All one needs to do is compare successful, completed, on-time trips taken, as % of total available, compare to Metrorail – and you may begin to cry

But the so-called “middle class” contribute the lions share of the anc’s tax revenue which they use to feed the poor and subsidise their voters?….see the nexus?

The middle class pay the taxes that subsidies the lower class and the gov’t. If the gov’t want taxes of course they should support and encourage the middle class!

All public transport is subsidised everywhere in the world. By coming out against middle class public transport subsidiaries, the Competition Commission is effectively stating that the middle class should not be using public transport and fend for themselves (by driving?).

This flies in the face of worldwide trends toward encouraging the use of public transport.

The Gautrain’s business case was to take traffic volumes off the freeways between JHB, Midrand, PTA, and the Airport to avoid expanding the freeway system. It was not designed to subsidise any class of person. The government entered into a public-private-partnership. These agreements contain strong contracts with regards to rider numbers and the related level government subsidy. In short, the more riders the less subsidy. It is therefore in the interest of the government to boost rider numbers.

Metrorail can be the best public transport system in Gauteng. Easily. But it isn’t. Why not? Any system rife with corruption and lawlessness fails. Taxis included. If you want Metrorail and taxis to give the same level of efficiency, comfort, safety then simply introduce accountability and enforce laws. Easy as falling off a log.

Another case of ideological destruction of excellence, muttered in socialist gobbledygook, just like in North Korea, Soviet Russia, Cuba and other communist hell-holes, once we’re ‘equal’ and ‘free’ then we’ve reached bliss. One day the UN will be feeding the ‘free’ citizens of Azania. I say: ” Let them eat cake”

What a narrow view taken by the Competition commission. First of all, one of the main considerations for the Gautrain project was to reduce the traffic on the M1 highway. Traffic congestion on the M1 was not caused by the power class but precisely by the middle class who almost exclusively used the M1 to commute to and from work between JHB and Tswane. In this regard the Gautrain does not therefor compete with Metrorail but rather with the Taxi industry. When considering the subsidy government pays to the Gautrain one has to compare that with the exorbitant cost of expansion to the road networks and the lack of available land space to significantly expand these road networks. Metrorail is simply unable to cater for the capacity requirements and will forever be inefficient and mis-managed. I’m sure the competition commission has far more important things to investigate to justify their existence.

Our cadre’s stupidity knows absolutely no bounds…how do we have the most stupid people able to influence our economy so much??
Mating a racehorse and a donkey does not make a winning combination…rather just shoot the donkey.
The middle and upper class get absolutely no value for 45% taxes paid so are leaving the country in numbers…some reasonable public transport like Gautrain to allow these people to actually add value and pay these taxes is a drop in the ocean compared to the SOE bail outs, social grants and unworkable labour legislation the workers of this country enjoy.

The stupid – it is making my ears hurt!

Who the F donated this one a brain cell? Go and get a real job in a competitive environment – IMBECILE!

Gautrain works, Metrorail doesn’t. We know where this ends, not with Metrorail as good as Gautrain but Gautrain at the level of Metrorail. Unfortunately the theory espoused is good, Europe has excellent rail transport. Developing countries? Not so much.

Ewc , Nhi , centralising pensions, Be AA .Eskom , sewerage, water. SAA
Now these idiots are fiddling with a world class metro system that business people and tourists are prepared to use which helps to decongest the roads. Whatever works these commies will ruin.
Reducing everybody to the lowest common denominator-
EXCEPT THE CADRES OF COURSE, DEY NEED GRAVY !

I believe that the ANC of circa 2005 was smart to know its own propensity for long-term destructiveness, and they got the Gautrain built to a different rail gauge to Metrorail knowing that there would be proposals from socialist mischief-makers to sabotage the system at some point in the future..

The trains aren’t interchangeable.

This is what happens when the inmates are allowed to manage the asylum.

But, Dear Messrs Bonakele and Taaibosch, come to Cape Town and use it as a model for your restructuring. The rail system and been methodically destroyed – (some say by the taxi industry) and the BRT is unable to run efficient links from the townships to the CBD through continual disagreement of routes with the taxi industry.

The Western Cape economy has suffered to the extent of billions of rands as a consequence of corrupt taxi operators and a rail system that cannot get up and running because of on going copper cable theft and torching of train carriages.

Put your money where your mouth is here; the City and the Province want to take control of transport but the central government thinks not.

The CompComm are commenting politically. Just get a smart transport engineer and urban development specialist in one room and you will get a far more meaningful comment.

I’m trying to see things from the compcon’s point of view, but I can’t get my head that far up my…

careful you will hurt yourself trying to get that far up………….

The competition commission has long since gone off the rails. That where the revamp is needed with the rest of Govt.

Subsidising Gautrain is appropriate as this so-called “middle class” are the people paying taxes. They get a service for their taxes.

That’s brilliant fund more taxes that refuse to obey the rules of the road, drive like a bunch of idiots and annoy the legal road users who actually pay taxes.

So tell us Mr Bonakele, according to you and your esteemed colleagues coming to this wondrous conclusion, which class uses SAA? The billions of bail outs using taxpayers funds over the years have been subsiding which class exactly? Would that perhaps qualify as treasonous? Or is it only opinions which fall into that class of judgement?

More anti middle class propaganda.

Ignoring the impact on tourism and business whilst also ignoring all the other numerous benefits of a world class rail system.

Compcom is clearly a political mouth piece now and should be shut down or at least pruned back to their original function.

The middle class fund a big chunk of tax revenue and it’s nice to see a tiny portion of that come back but apparently that’s not allowed by the Compcon.

The fact they want it run under the same rail system as the other trains which no one uses and want more taxis on the road paint a pretty clear picture of what the ANC want this country to be.

Other reason could be the ANC want more access to Gautrain projects and money to siphon off.

State of SA government is really a shambles.

The people catching Gautrain if these people were to check are many students without private transport. The really rich, who comprise numerous ANC cadres, BEE employees, Government officials etc do not take the train. Instead they drive to work in enormous Luxury cars, 4x4s etc. People like me drive in old cars, because we cannot afford Gsutrain.

It beats me why these bureaucrats want on interfere with a train service which is of an international standard.

Has anyone been robbed in their driveway after a trip home from the airport on the Gautrain? I doubt it.

A loftier goal would be to lift all trains to Gautrain standards – with government subsidies for all.

So basically they want the Gautrain to be as unsafe, run-down and unreliable as all the other train services in S. Africa. Or am I missing something?

“In August 2019, Prasa dismissed its group executive of information technology, Chris Mbhatha for his role in illegally awarding a contract to Siyangena Technologies. The company was hired to install automatic speed gates, electronic information boards and surveillance systems. Prasa is now trying to recover approximately R4.5bn paid to Siyangena”

And now suddenly Gautrain is all wrong – give me a break.

Funny that they have nothing to say about the billions be dropped down the bottomless pit that is SAA. A mode of transport that is arguably even more tilted towards higher income earners and were unlike with the Gautrain viable competitive offerings are available.

But het according to Malema “the masses” need SAA to nip down to Durbs for the July racing weekend…

Typical of this Govt… 1st they destroy everything they’ve inherited, then they pi*# away the country’s future and now their latest, final act… Take complete control of any remaining thing that can fill in the gap for their failures.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: