Cabinet’s solution to Gauteng e-tolling elegant

By Time of article published Feb 26, 2012

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In his budget, Minister of Finance Pravin Gordhan announced the government’s solution to Gauteng’s e-tolling problem. This generated mixed reviews. Some feel the new proposals are a good compromise to resolve the problem, while others disagree.

Those who disagree advocate civil disobedience by all who travel on these Gauteng highways. My view is the cabinet’s proposed solution is an elegant one.

The government’s infrastructure development programme is an important driver for economic growth. It has a stimulating effect on the economy in terms of job creation and economic growth.

This programme’s intention is similar to the New Deal US President Franklin D Roosevelt introduced in the 1930s to counter the negative effects of 1929’s Great Depression. The New Deal helped create US jobs, while increasing national confidence levels and inspiring Americans to be more productive.

The 2012 Budget Review document explaining budget items contains a chapter on infrastructure that explains how the government will execute its infrastructure projects. It outlines the phases of project development and details of the actual pipeline of infrastructure projects.

It is very important for the government in its execution of the programme to activate various funding sources to accelerate the delivery of tangible results. Obviously, the private sector will play an important role to fund these projects. Therefore, the government’s decision to decrease the proposed toll fees, provide the R5.75 billion for Sanral to service its debt and cap the amount users need to pay is a practical one.

This sends an important signal to local and international private investors that the government’s handling of infrastructure development allows for the levying of fees, which helps them recoup their investments in such projects.

The user-fee principle is universally accepted and has been applied with great success for toll roads in South Africa and the rest of the world. Most infrastructure projects rely on this user-fee business model to convince investors, like pension funds, to come aboard.

If the government took the stance it would pay all costs to develop and finance the Gauteng toll road, all taxpayers would be subsidising the Gauteng roads projects.

To be fair, this would have to be done for all provinces, which is not feasible. Furthermore, the money would have to be deducted from some others items’ budgets.

If money were to be taken from money budgeted for social development, education or even health, it would have unintended consequences by negatively affecting our country’s social fibre.

The fuel-levy approach – advocated by many opponents to the e-tolling project – has a major downside in its inflationary effect, especially at a time when inflation needs to be controlled.

My view is the user-fee principle is a sound one.

The government has no choice but to implement it if it is serious about job creation and infrastructure development.

Minister Gordhan conceded there were lessons to be learnt from this saga.

Public outrage was healthy, as it showed a lively citizenry with the chutzpa to stand up to its government.

The consultation process resulting from the outrage was a useful platform to express public anger and keep the government accountable.

It is also good the government was forced to reconsider its infrastructure processes and ensure transparency, which would allow citizens to actively engage in projects of national importance.

The government’s response shows the public’s concerns were taken into account and a compromise was reached, although not everyone will readily accept it.

But that is the nature of governance worldwide – a balance between competing priorities is necessary for the good of all.

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