The RAF’s growing liability is well documented and is the result of a legislative history of more than 70 years. Photo: Supplied
JOHANNESBURG - The spiralling fuel price and ensuing outcry over its adverse impact on the economy and consumer’s pockets is justifiable.

However, the accompanying allegations about the mismanagement of the Road Accident Fund (RAF) have clouded the issue, as certain groupings continue to conflate the adverse impact of international oil prices and the volatile dollar-rand exchange rate with how the RAF conducts its day-to-day operations.

This is not only opportunistic; it also weakens the legitimate argument that the government must urgently review its high fuel taxes. Critics of the RAF would do well to remember that any changes to the fuel levy would have an impact on service delivery to the thousands of accident victims who are seriously injured or killed on South Africa’s roads.

In addition, any grouping that argues that the RAF misappropriates its funds, despite receiving four clean audits in recent years and achieving more than 90 percent of its annual performance targets, is being disingenuous.

Recent factually incorrect allegations about the awarding of a so-called furniture contract have been escalated to the media regulatory body.

Sweeping, baseless accusations are disruptive, particularly when they are devoid of context.

The RAF’s growing liability is well documented and is the result of a legislative history of more than 70 years. Over the years, numerous amendments were enacted in relation to the different acts. All these acts and the current one are based on common-law principles.

No less than seven commissions of enquiry have been appointed throughout the years to consider solutions to the challenges faced in helping car-crash victims in terms of the various acts, the most recent one being the Satchwell Commission on June 1, 1999.

The commission identified numerous challenges within the RAF scheme, and concluded that it is unaffordable and not equitable, reasonable or sustainable.

The RAF receives a monthly income of R3.2 billion, while claims to the value of R4.3bn are settled monthly.

Consequently, the RAF is not able to pay claims when they are due. Meanwhile, the RAF deficit stands at R206.1bn, and continues to grow. Notwithstanding this, that RAF is able to pay more claims with less money is an indication of the fund’s improved efficiency, and not mismanagement.

Challenges facing scheme

The RAF scheme is based on exclusion, rather than inclusion. Many victims are barred because of the need to establish fault, which is incompatible with the concept of social security.

Instead of the focus being on the car-crash victim, it is on the establishment of the presence or absence of fault or the degree of fault. The result is that the cause of the car crash takes priority over the need for healthcare and rehabilitation.

Macroeconomic and social considerations limit the levy that may be raised on fuel consumption. There is no rational correlation between the fuel levy; the risks created by individual motorists; motor vehicles; the number of road users or roads used; and the type and extent of cover provided to road users.

It is unreasonable to expect a developing country such as South Africa to provide unlimited benefits or compensation to road users.

The lack of moderation in the system that allows for and perpetuates disparities of wealth among road users cannot meet the standard of reasonableness. An absence of any relationship between the fuel levy and the compensation to which a victim may be entitled is not economical and is therefore unaffordable.

A system of compensation without limits or boundaries is unreasonable. And the absence of any equivalence between the fuel levy, risk and cover is inequitable, unaffordable, unreasonable and unsustainable.

The payment of compensation in lump sums offers no security to disabled road accident victims. These payments are based on “guesstimates” of future needs and costs, which are frequently inaccurate or not borne out by experience, and are often overtaken by events that cannot be anticipated. Patients cannot be reassessed, needs cannot be reviewed, and benefits cannot be adjusted.

Some payments are frequently used for other purposes, while victims are often left destitute or fall back upon the state’s overburdened resources. Claimants may die earlier than anticipated of causes unrelated to the car crash, and compensation monies are then retained by heirs for whom the system of road accident compensation was not intended.

Transaction costs enrich facilitators and not the victims of road accidents. The costs of experts utilised both by the RAF and by claimants consume tax revenues intended for those who have suffered injury and loss. Attorneys acting for claimants take more than 25 percent of the claimant’s compensation. Apart from the attorney’s “success fee”, advocates, medical experts, assessors and actuaries also recover fees and disbursements.

Intermediaries have a financial interest in, and dependence on, the claims made by victims of road accidents. More litigation equals more fees for intermediaries, with some speculating that up to 75 percent of the RAF fuel levy does not reach victims.

Addressing the challenges

The RAF’s existing scheme must be replaced with a new arrangement that is equitable, reasonable, affordable and sustainable. The Road Accident Benefit Scheme (Rabs) Bill which is being evaluated during public hearings by the transport portfolio committee, proposes the following:

  • A move away from common law delictual principles to social security principles.
  • Access to expanded benefits by removing fault as a requirement to claim.
  • Need as opposed to loss should be recognised.
  • The provision of predefined benefits, subject to caps, limits and a tariff.
  • Emphasis on rehabilitation and return to work.
  • Provision for benefit review.
  • Payment of benefits in a structured manner.
  • Simplification of the claim procedures.
  • Provision for expeditious dispute resolution.
  • The provision of proactive assistance to road accident victims to claim.

What will happen to the existing RAF claims, undertakings and claims that arise before the Rabs Bill comes into effect? The RAF Act will continue to apply to such undertakings and claims.

The Rabs administrator will administer such undertakings, existing claims, and all new claims in terms of the current RAF Act.

Meanwhile, the RAF will continue to implement its three-year-old cash management plan to maintain regular payments to creditors.

Several law firms have disrupted this plan by attaching the RAF’s assets, thus inconsiderately prioritising themselves over those who have patiently been awaiting payment.

Despite this, the fund appreciates the patience shown by thousands of claimants and its service providers and will endeavour to continue delivering on its mandate within the prescripts of the Public Finance Management Act and National Treasury rules.

Lindelwa Jabavu is the Road Accident Fund’s acting chief executive.

The views expressed here are not necessarily those of Independent Media.

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- BUSINESS REPORT