Aarto implementation could result in municipal traffic services ‘shutting down’

A Swellendam Local Municipality council report has warned that the implementation of the controversial Administrative Adjudication of Road Traffic Offences (Aarto) Act system will have significant financial implications and could result in municipal traffic services shutting down.

In terms of the Aarto Act, 50% of traffic fine revenue will be diverted from municipalities to the Road Traffic Infringement Authority (RTIA) when the act is implemented.

The date on which the Aarto Amendment Act will be implemented nationally has not yet been gazetted by President Cyril Ramaphosa.

However, the Swellendam municipality said the new date for its implementation is 1 July 2024, the start of the municipal financial year.

Losses to be expected

The Report on the Impact of the Implementation of the Aarto Act published in the council agenda for 30 January said the Swellendam municipal manager reported that various scenarios show losses of between R3.7 million and R5 million or more because of the implementation of Aarto.

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The municipal manager said traffic services currently generate a surplus, which is crucial to the financial wellbeing of the municipality.

“A loss of R3 million to R5 million will mean not just shutting down the traffic services but also a reduction in other posts and functions that are dependent on the surpluses generated by the Traffic Services Department.”

The report said for Aarto to function properly as it currently stands, the municipality must enter into an agreement with the South African Post Office (Sapo) for the issuing of notices to alleged infringers.

It said this is also a huge stumbling block “as we now know the Post Offices are closing down and they cannot guarantee sustainable delivery of mail”.

“This cost is also for the municipality to cover.”

The report said the RTIA does not enter into this agreement at all and puts the financial burden on the municipality, which rightfully should be a three-party agreement.

The report also included inputs from the municipality’s directors of corporate services, community services, financial services and infrastructure services.

Impact on services

The municipal director for infrastructure services highlighted that the proposal entails that Sapo will obtain a revenue stream from the process without the successful collection of the payment from the infringement.

The obligation to make use of Sapo for the notices “feels like a funding method to keep a failing state institution unduly alive,” the director said.

The municipal director for financial services said the implementation of Aarto will have a serious financial impact on the municipality, adding that the main revenue from traffic fines is on the N2, which is a provincial road.

“If the fine is not paid within 32 days, all the funds go to RTIA,” according to the director for financial services.

“This means that council can only retain traffic fines if paid within 32 days after an automatic discount of 50% was granted.

“Based on the current traffic fines history, the paid municipality traffic fines will decline from ± R7.4 million to ± R360 000. This means that the traffic department budget net position will decline from a surplus of R3.7 million to a deficit of R1.9 million.”

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The financial services director said the cost to pay for the 32 days’ notice and other items is included in this calculation, adding that the revenue loss must then be recovered through cross subsidisation with other tariffs to balance the budget, or alternative expenditure must be reduced.

“The municipality does not have the revenue base to absorb the revenue loss,” the director said.

“It is recommended that the impact [report] be submitted to the relevant stakeholders and SALGA [the South African Local Government Association] national to reconsider the implementation of Aarto.”

High risk … and complicated

The report said the financial implication of implementing Aarto “will be a high risk for all municipalities”.

It said the offender can pay their fine within 30 days and automatically get a 50% discount, but this money will have to be paid over to RTIA within 10 days and RTIA will pay it back to the municipality.

However, the report said there is no guarantee on payback timeframes, the municipality will have to procure new infringement books to correspond with Aarto infringement notices, and new software and ICT equipment will have to be procured.

“It is still unclear if RTIA will supply municipalities with speed cameras and handheld devices and when this will happen.

“Most Western Cape municipalities are still not comfortable with Aarto and indicated that they are not ready for implementation and did not feel comfortable with the implementation of Aarto,” it said.

“They are also of the opinion that the RTIA is also not in a position to deal with the administrative burden it will cause.”

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‘Bureaucratically clumsy’

The Organisation Undoing Tax Abuse (Outa) successfully challenged the constitutionality of the Aarto Amendment Act in the High Court in Pretoria in 2020, but this ruling was overturned by the Constitutional Court in July 2023.

Outa has repeatedly said that valid and effective measures to improve traffic safety should be supported, but Aarto is bureaucratically clumsy and appears to be primarily a fundraising system that appears unlikely to contribute to road safety.

Outa senior legal project manager Andrea van Heerden said on Monday that Aarto on paper might look like “the silver bullet” that will improve road safety but “in fact the practical issues surrounding the implementation of this flawed system will do the exact opposite”.

Outa reiterated that merely legislating policy does not make it rational or workable.

“Governments often suffer from the false belief that if the laws and regulations are in place, the people will simply comply.

“Irrational or impractical laws and a lack of transparency results in pushback from society, making systems ungovernable. The sad reality is that government begins to suffer from a crisis of legitimacy when it cannot effectively enforce its legislation and policies,” it said.

Comment was requested from both the RTIA and Salga but responses have not yet been received.

This article was republished from Moneyweb. Read the original here.