E-tolls are dead, but could lead to budget cuts elsewhere for years to come

Gauteng’s e-tolling system might be dead and gone after a near decade-long fight, but experts have lamented that its ghosts will haunt the province’s citizens for years, in the form of possible budget cuts to health and education.

This is due to the remaining portion of the more than R40-billion debt which still has to be covered.

Last week, in his medium-term budget policy statement (MTBPS), Finance Minister Enoch Godongwana told parliament that, as far as paying for the cost of the infrastructure goes, “e-tolls is closed”.

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Who will pay for getting rid of e-tolls?

As part of the deal, the Gauteng provincial government has agreed to cover 30% of the debt, while the government, through the National Treasury, will finance 70% of the SA National Roads Agency’s (Sanral’s) outstanding R47-billion debt

The question now on everyone’s lips is where the province will get this money from.

While it is unclear how much Gauteng’s portion of the debt will amount to and whether this covered Sanral’s total R47-billion or the R43 billion debt racked up through the Gauteng Freeway Improvement Project (GFIP), it is estimated this could be between R12 billion and R14 billion.

Passing the buck

Pundy Pillay, economics and public finance professor at University of Witwatersrand’s School of Governance, said everybody was so delighted that the e-tolls were finally being scrapped that it didn’t occur to consider the implications on the delivery of services within provincial government.

He argued the passing of the portion of Sanral’s debt to Gauteng will have serious implications for the spending patterns of the provincial government in coming years.

Pillay said the two mentioned portfolios could not afford budget cuts, but in fact, needed more due to the devastation of covid pandemic, saying though Gauteng agreed to cover a portion of debt, this amounted to national government passing the buck.

He explained that provinces had no external revenue sources other than tax levied on gambling, which amounts to no more than 3% of the total revenue.

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Pillay said the rest of the province’s revenue came in the form of transfers from the national government, in what is called a revenue sharing formula.

“So, what this implies is that the provincial government will have to find this money from this [allocated] budget and that means it has to cut somewhere else.  It is going to have to cut from important portfolios and services like education and health, the two big items in the provincial budget.”

E-tolling has not been scrapped

While Dr Caryn Abrahams, senior lecture at the University of Witwatersrand’s School of Governance, echoed Pillay’s sentiments, she said the first task was to deal with the fundamental misconception that the e-tolling system had been scrapped.

“The e-tolling system has not been scrapped. The debt owed to the national fiscus by Sanral is part of the bail-out plan, which will be covered 70% by national and 30% by GP… Irrespective of the amount, this has a broader implication for the use of taxpayer money, which could have gone to more worthy sources,” she said.

Abrahams said more specifically, the budget cuts of R11.4 billion from education, R6.9 billion from health and over R10-billion from employment directly fund the national debt portion for funds that some argue should never have been spent on something like e-tolls.

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She explained that from the holistic view, these austerity measures were also based on conditional requirements covering the recent World Bank and International Monetary Fund loans, effects of corruption and maladministration at state parastatals like Prasa, Transnet and Eskom.

According to Abrahams, in other words, the austerity measures were partially related to recouping e-toll debt, as well as funding massive maintenance projects for Eskom. 

“…we will have less money in Gauteng for education and health … more pertinent, there will be fair and proper consultations about the new structures of payment for use, maintenance and upgrading of national roads, which will most likely include tolling anyway. Motorists should not be so quick to celebrate,” she added.

Long road ahead

The demise of the scheme not only poses an alternative funding quandary, but also presents the mammoth task of legally putting it to rest.

Transport Minister Fikile Mbalula is this week expected to announce the way forward to legalise the end of e-tolls, including retracting notices declaring the GFIP roads as toll routes, which enabled tolls to be charged in the first place.

The transport department would not respond to questions, including whether those who had been paying would be refunded, until back-to-back consultations on the way forward had been concluded.

The deadline for Sanral’s six-year tender to take over the failed e-tolling system and implement value-added systems — including selling data already collected via e-tolling, as well as a speed infringement system – was in September.

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Louw Kannemeyer, Sanral’s engineering services executive, said various engagements are ongoing between the transport department, Treasury, Gauteng government, and Sanral to formalise the announcement on e-tolling. 

“Only once these are finalised and a Memorandum of Agreement has been signed between parties will we then be able to quantify the impact on the current ORT (Open Road Tolling) tender,” he said.

Gauteng premier Panyaza Lesufi has said that the solution to how Gauteng’s 30% portion of the debt would be funded will be sourced through consultations.

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