Donwald Pressly
The Road Accident Fund (RAF) faces a pickle over how to fund thousands of cases of road accident victims who were limited to compensation of no more than R25 000 if they happened to be passengers in taxis where the drivers of the vehicles were at fault.
The Constitutional Court has ruled that this is inequitable and unfair.
The National Assembly’s transport portfolio committee considered yesterday the RAF (Transitional Provisions) Bill which seeks to provide for interim measures in dealing with claims that were limited until 2008.
If the law is not changed, the fund – which has a backlog of claims estimated at well over R42 billion – may face unlimited claims. If the amendments are passed by Parliament the claims will be limited. One of the limits would be that victims can’t claim compensation for loss of income for more than R200 000 a year.
Department of Transport officials including legal adviser Adam Masumbuka estimated that if the legislation was not passed, total claims could come to R2.2bn. If they were limited, the costs would be about R1.3bn.
At the meeting, DA transport spokesman Ian Ollis asked whether another fuel levy increase would be pursued by the RAF management in the next budget to cover the additional costs.
“I am concerned about the funding model as we are facing a big debt hole… I am worried about the motorists and the commuters who will be stuck with this (bill). Do you have a method to fund this additional R1.3bn?” asked Ollis.
The new RAF chief executive, Eugene Watson, who was appointed on July 1 and appeared before the committee for the first time, noted that the RAF had been insolvent “for 30 years”.
What had kept the fund afloat was that the liability had never been called for “all at once”. If the outstanding claims were to be called in all at once, the RAF would, indeed, be in a financial pickle.
“If the RAF ceased to trade, we would have to come up with that money in the short term.”
Committee chairman Ruth Bhengu agreed that there were concerns about the significant obligations of the RAF.
The committee decided to meet again next week to finalise the bill.
Transport Minister Ben Martins said in reply to a parliamentary question that 250 000 claims to the RAF remained either unpaid or unresolved.