File picture: Dumisani Dube
File picture: Dumisani Dube

Road Accident Fund is broke

By Fatima Schroeder Time of article published Oct 22, 2016

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Cape Town - The wheels have come off the Road Accident Fund (RAF). It’s paying out more to accident victims than it’s receiving from the fuel levy every month.

And, if the fuel levy was increased enough to make the RAF sustainable, no one would be able to afford to drive.

That was the grim message this week from RAF senior manager Chris Willemse.

He and other fund personnel told journalists the RAF was technically insolvent and had accumulated “unfunded” liabilities of a staggering R145 billion.

The R3 billion it gets monthly from the fuel levy doesn’t cover the claims it has to pay out. In June for example, these totalled more than R9.5 billion.

However, legal and medical professionals say the fund’s bankruptcy claims are nothing but a ploy to push through the controversial Road Accident Fund Benefit Scheme (RABS) Bill which has been met with fierce opposition.

The proposed legislation works on a “no fault” system and pays out only certain, pre-defined and limited benefits - payouts which do not take a person’s individual circumstances into account.

The bill has been rejected twice by the portfolio committee on transport and it was also rejected by Nedlac.

Pieter de Bruyn, chairperson of the Association for the Protection of Road Accident Victims (APRAV), claimed the RAF’s plea of insolvency was a misleading scare tactic, aimed at pushing through the RABS law.

Bodily integrity, he said, was a guaranteed constitutional right, in the same way that citizens have guaranteed rights to health and safety.

“So the government cannot plead insolvency on constitutional rights,” he said.

De Bruyn also claimed the supposed RAF deficit was an actuarial deficit and not a true deficit.

APRAV is a non-profit organisation that aims to protect the rights of South African citizens affected by road accidents.

Medical and legal professions form part of the organisation.

Personal injury lawyer Tzvi Brivik also dismissed the fund’s claimed bankruptcy as nonsense.

“It doesn’t make sense that the fuel levy is not enough because the more motorists there are on the road, the more levies the fund receives,” he said.

The primary source of income for the RAF is a levy raised on fuel, measured in cents per litre and set annually by the National Treasury. Currently, that levy is 154 cents per litre of fuel.

RAF chief marketing manager Phumi Dhlomo and several of his colleagues presented figures to show that because of a zero-cent increase in the fuel levy, “it is clear that the RAF’s financial challenges are here to stay”.

Brivik said the RAF legislation makes provision for payment within 14 days, but the fund was taking 120 days or longer.

Brivik said he has many clients whose claims have been settled but who have still not been paid.

At the press briefing, the RAF revealed that it spent more than R5 billion in legal costs and R4.5bn on settling writs of execution issued against it.

However, its financial situation did not stop it from flying employees from Pretoria to Cape Town for the “media engagement session” at the 4-star Cape Town Lodge, close to the RAF offices in the city.

Weekend Argus

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