Motorists in future might have to pay a separate amount to fund the Road Accident Fund (RAF) when they first buy and annually renew their vehicle licence disc.
Minister of Transport Barbara Creecy confirmed during an exclusive interview with Moneyweb on Monday that the Department of Transport (DoT) believes it needs to introduce a vehicle owner contributory scheme – apart from introducing the no-fault system and a standard schedule of benefits.
RAF funding
Creecy said the DoT has two concerns regarding RAF funding.
She said the first is the increased uptake of electric vehicles by consumers, as the current RAF funding model is a levy on petrol prices.
Her comments refer to the expected decline in income from the RAF levy in the fuel price and the fact that the levy will not be a sustainable source of income for the fund into the future.
Creecy said the second issue is that the DoT knows that the RAF’s contingent liability and the risk to the fiscus is very high.
She said the DoT will partially address this issue by introducing a no-fault system and a standard schedule of benefits. This will be done through the planned reintroduction of the Road Accident Benefit Scheme Bill (Rabs).
Another concern by DoT
Creecy said the introduction of a vehicle owner contributory scheme has been punted in the public domain, and the DoT believes it has merit.
However, the DoT is concerned about how to manage such a scheme in the context of public transport vehicles and affordability.
“I don’t have the model yet, but these are the issues that we are asking those who are researching this issue to take account of,” she said.
Third-party insurance
Creecy was reluctant to comment on whether this scheme would be similar to the old compulsory third-party insurance scheme, which covered damage to another motorist’s vehicle or property plus their medical costs if that motorist caused an accident but did not cover their own damages.
She indicated that she was unsure of the economic modelling of the previous scheme and that of the new scheme that was being investigated.
However, she did confirm that the planned scheme will involve a motorist “paying something when you get your vehicle licence”.
Tito Mboweni, the late former Minister of Finance, said in his 2020 Budget speech that the RAF’s liabilities were forecast to exceed R600 billion by 2022/23, warning that urgent steps were needed to reduce this risk to the fiscus and bring about a more equitable way of sharing these costs.
“One option is to introduce compulsory third-party insurance,” he said at the time.
Contingent liability revs up
It was claimed recently in parliament’s Standing Committee of Public Accounts (Scopa) that the RAF’s contingent liability now exceeds R500 billion.
The fund could face an additional liability of about R400 billion because of the Supreme Court of Appeal’s (SCA) dismissal last month of an appeal against a high court ruling that the RAF Act does not exclude illegal foreign road accident victims from claiming compensation for loss or damage.
Moneyweb on Monday was sent a copy of a successful application by the RAF to the Constitutional Court to appeal this judgment. It set the SCA order aside and granted the RAF leave to appeal the whole of the SCA order in the Constitutional Court.
Rabs Bill and Aarto
Creecy was asked to comment on a suggestion in a recent Scopa meeting that there should be an off-the-record meeting with her to urge her to consider delaying the introduction of the Rabs Bill because it may not solve the RAF’s financial woes.
Scopa member Patrick Atkinson of the Democratic Alliance (DA) claimed the Rabs Bill will exacerbate the RAF’s problem even further, because it will require the running of two parallel schemes.
Atkinson said this will cost between R70 billion and R80 billion a month, even though the RAF receives only R48 billion a month from the fuel levy, and he expressed doubt that Minister of Finance Enoch Godongwana would allow the DoT to do so.
Creecy said she has no idea where Atkinson got his figures from or what his modelling was, but asserted that there is a separation of powers in South Africa.
“It’s my job to develop policy and it’s their job [Scopa] to do oversight and they will have plenty of opportunity when the bill arrives,” she said.
Aarto rollout
She was also asked if she was confident that the planned nationwide rollout of the Administrative Adjudication of Road Traffic Offences (Aarto) Act would take place on 1 July 2026, without any last-minute hitches.
She indicated that the DoT has a war room and is monitoring its planned rollout weekly.
She said 69 municipalities were originally scheduled to implement Aarto in phase two, and the DoT will likely finalise assessments for those municipalities this week.
Creecy added that if some municipalities say they do not yet have the equipment, their officers are not trained, or they do not have the forms, and that this cannot be achieved over the next four weeks, “we will take them out of phase two and put them in phase three”.
“But I expect that we will be able to implement [Aarto in] between 50 and 60 municipalities by 1 July 2026,” she said.
Phase four of Aarto is difficult
Creecy said it is her intention to implement phase three of Aarto next year and then phase four.
She said phase four is the difficult phase as it involves endorsements on driving licences for incorrect behaviour. This will be achieved through Aarto’s demerit points system.
Creecy said the amendment of Section 65 of the National Road Traffic Act to ensure drivers cannot drink any alcohol before they get behind the wheel of a car is currently in the cabinet system and should be released for public comment in the near future.
She added that a number of developed and developing countries have introduced zero-alcohol limits for motorists.
This article was republished from Moneyweb. Read the original here.
