The eTolls of Gauteng

(And for my email subscribers, here’s the link to the video).

The video is awesome. And artistic. And coherent. And sensible.

Consider this applause. And, for a novelty, I have nothing to add. So I’m going to summarise for those that have youtube blocked in their offices.

e(vil) tolling

The players:

Sanral – the South African National Roads Agency (a parastatal)
Outa – the Opposition to Urban Tolling Alliance

The background:

Gauteng needed to upgrade its highways
So Sanral launched the GFIP (the Gauteng Freeway Improvement Project).
Based on this fairly awesome spreadsheet, the highways themselves cost about R18 billion to upgrade.
If you add a few extras (like gantries and the cost overruns), you get to the R23 billion figure that floats around on streetlight headline boards.

After these had been built, the Ministry of Transport (which owns 100% of Sanral) appears to have realised that it needed to get some funding. And Treasury, kindly, offered them R5 billion of tax revenues collected.

So, like, not enough.

At which point, after some hasty and muted “consultations”, Sanral conveniently decided to put those gantries to use, hire a foreign company called ETC to manage the collection process, and launch a publicity campaign to promote the good-tax-paying-citizenship-of-paying-your-etolls.

And this spun into outrage (and OUTA).

The main complaint: ETC (that foreign collection company) was going to bill Sanral R1.3 billion a year in management and administration fees before a single rand of contribution would go toward the repayment of the initial capital outlay.

The alternative: a R0.09 fuel levy. Which would have no additional collection cost; that is, there would be a R1.3 billion saving each year versus the e-Tolling plan.

The Minister of Transport’s Position

On moral imperatives:

“It’s imported and we have to pay for it. Just like your cellphone, just like any other technology that we use.”

Yes – but do we have to pay through the nose for it? When there’s a reasonable alternative?

On nothing-related-to-the-argument:

“As a transport sector we’d be very happy to say give us all the money that the government has and reduce the money for schools, reduce the money for building other social infrastructure, reduce the money for pensions for the aged, reduce the money for feeding children in schools. Is that what South Africans want?”

No one wants that. No one is suggesting that. No one, not even OUTA, is suggesting that these improvements should be part of the current budget. Everyone agrees that you need something extra.

What are you talking about?

On options:

“We have also created alternative routes to make sure that those who are unable to get onto the freeway, those who don’t want to get onto the freeway, those who don’t want to pay, can use the alternative routes.”

Where? And if you had created them, surely these too would cost money?

Unless by “created” what you mean is “identified” on Google maps.

On the proposed fuel levy alternative:

“Somebody who is in Mbizana, who does not even have a road to get to school, must pay for the Gauteng freeways… Do we want to exacerbate the inequalities in the country?”

Firstly, as a general observation, why would someone who does not have roads be buying the petrol/diesel that would be required for them to contribute to any fuel levy?

Secondly, your inequality point is a bit unreasonable. Gauteng is already the largest contributing province of any type of tax revenue that you identify. It is responsible for 44% of all fuel levies collected, 51% of all personal income tax collected, 35% of all company taxes collected and 35% of all VAT collected. That is: vastly more than gets allocated back in national and provincial government budgets. So it would not be entirely unfair to ask the rest of the country to pay R0.09 extra in fuel levy on every litre of fuel*.
*If this kind of thing excites you, here is an excellent article on the topic.

But thirdly, you wouldn’t even need to go that far. Because government could impose a province-specific fuel levy that applies only in Gauteng. Cape Town and Durban could relax, and the Gauteng motorists would still be paying $1.3 billion less every year in management and administration fees.

However you cut it, e-tolling will always and forever cost motorists more than a fuel levy.

Because of that pesky R1.3 billion annual cost.

What are the e-tolling benefits?

So yes – e-tolling seems like one of the most insane economic policies. And I thought that there must be a justification for this. Something like “but e-tolling allows for future privatisation of the Gauteng freeway system”. Or anything really that can vaguely be worth an extra R1.3 billion per year.

If you google “the benefits of e-tolling”, what you get is Sanral head Nazir Ali saying “better infrastructure”. Which is bizarre – how would e-tolls magically result in better roads than roads financed in alternative ways?

So I went onto Sanral’s website, and I read their “background to e-tolling”. And here is the trouble:

Sanral is responsible for national roads, which are funded by the national fiscus (ie. tax revenues and government borrowings).
And Sanral is responsible for the 19% of national roads that are declared tolled roads, which are funded by the collection of toll fees.
There is no alternative financing option mentioned for tolled roads.
I’d bet that this is a policy disconnect – no one could mention a fuel levy option as that’s not part of Sanral’s policy for tolled roads.
Also, I’d put money on there being a bit of inter-ministerial power-play. e-Tolls can be directly collected by the Ministry of Transport (even if it takes place via ETC). Fuel levies have to be collected by SARS and then allocated via National Treasury.
In the end, I think everyone just got excited by the idea of electronic toll gates that would tax road usage without having to build physical toll gates.

Anyway, here’s Sanral’s response to the fuel levy suggestion:

Admittedly, I see their point. There does seem to be a math issue here – more vehicles means more road maintenance required. Better fuel consumption means less money raised per vehicle. Equals a shortfall.