Mbalula highlights Road Accident Fund financial woes
MPs slam transport minister over 'empty promises' on e-tolls
Transport minister Fikile Mbalula has decried the financial challenges facing the troubled Road Accident Fund (RAF).
Addressing parliament in his department’s budget speech on Friday, Mbalula acknowledged the financial challenges facing the RAF.
“There is a symbiotic relationship between the carnage on our roads and the state of health of the Road Accident Fund. Despite this, there has not been a nexus between the fuel levy and number of accidents that occur on public roads.
“However, to exacerbate this challenge there are the ever-increasing administrative costs of the RAF scheme. The RAF has operated on a financially unsustainable model for a number of decades,” said Mbalula.
He said the long-term liabilities of the RAF were the government’s largest contingent liability.
“In recent years, the fund has also experienced liquidity challenges as claims against the fund have outpaced the growth in the RAF levy. Claims against the fund have increased at an average annual rate of 8.4%, from R61.3bn in 2017/18 to R78.2bn in 2020/21, and are expected to increase to R102.9bn by 2023/24.
“As a result, the accumulated deficit is expected to increase to R518.7bn in 2023/24. The other biggest cost drivers for the RAF are legal fees the entity has to settle, both in terms of its own legal costs and those of the claimants,” said Mbalula.
He said Covid-19 disruptions were expected to worsen the liquidity of the RAF and the effects of the disruptions were expected to be felt in the 2021/22 and 2022/23 financial years.
“Although the lockdown levels resulted in revenue loss, this has narrowed to an expected R5bn for the year ending March 31 2021.
“The most significant change going into the 2021/22 financial year is the new RAF operating model. The operating model represents a new approach to the investigation, settlement and litigation of claims.”
Today the Road Accident Fund is almost bankrupt, leaving thousands of road victims with nowhere to go.EFF MP Nontando Nolutshungu
Mbalula also told the sitting that as he has promised to the National Council of Provinces (NCOP) earlier this month, a solution to Gauteng’s e-tolls would be found.
He said he had presented nine possible solutions to the problem but consultations were still ongoing.
EFF MP Nontando Nolutshungu slammed Mbalula about the state of transport in SA. She said the minister had allowed the RAF to be looted by legal firms, which pocketed most of the money meant for road accident victims.
“Today the Road Accident Fund is almost bankrupt, leaving thousands of road victims with nowhere to go,” said Nolutshungu.
IFP MP Petros Sithole criticised Mbalula over the e-tolls.
“The minister provides us with empty promises for finding a solution to e-tolls. Early this month, it seems minister Mbalula was bored with himself as he made a sort of proclamation to the NCOP about resolving the e-tolls,” said Sithole.
He said the IFP was disappointed with the lazy attitude of Mbalula in his approach to resolve the e-tolls issue.