Gauteng aims to use RAF medical expenses claims to pay e-toll debt

Says this is but one example of several elements of the province’s revenue enhancement strategy.

The Gauteng Provincial Government plans to use claims against the Road Accident Fund (RAF) for the treatment of road accident victims in public hospitals in the province as one of the income streams to pay for its almost R20 billion e-toll-related debt and financial commitments.

Gauteng MEC of Finance and Economic Development Lebogang Maile confirmed this to Moneyweb earlier this month when the provincial government announced it was paying its first e-toll debt instalment in line with an agreement with the National Treasury that facilitated the scrapping of e-tolls on the Gauteng Freeway Improvement Project (GFIP) at midnight on 12 April 2024.

ADVERTISEMENT CONTINUE READING BELOW

Read: Gauteng may or may not pay the GFIP R4.1bn

Maile cited claims from the RAF as an example of one of the provincial government’s revenue enhancement measures to ensure the province increases and optimises its revenue.

He said that when a person is injured in a road accident in Gauteng and treated at a public hospital in the province, the RAF is supposed to pay the provincial government for those medical expenses.

“But for the longest time, we have not been collecting that money the way we are supposed to because we’ve not had the proper systems.

“It’s what I call a leakage. We use money and we are supposed to be [re]paid and we don’t get paid,” he said.

Listen: RAF still owes R8.3bn in unpaid claims

Maile said there is also a situation where people from different provinces come to Gauteng, and if they are treated at public hospitals in the province, in terms of the law, the Gauteng Provincial Government is supposed to charge the provinces these patients are from for these medical expenses.

“I’m just giving you an example of money that we are already not collecting, which we will soon be collecting.

“That alone is about R10 billion as we speak now, which we should be having in our coffers,” he said.

Maile said the Gauteng government is”constantly” engaging with the RAF about payment for these medical expenses.

“The RAF has said to us, ‘It’s not our problem. You must claim what is rightfully yours but must prove it’.

“That is why we must have systems and it’s not their [RAF’s] problem. It’s our problem. That is why we are fixing it,” he said.

Gauteng starts claiming from RAF

Maile said the Gauteng government has started the process of claiming the medical expenses of road accident victims from the RAF.

RAF head of corporate communications McIntosh Polela confirmed last week that the RAF has regular engagements with the Gauteng government, which take place four times a year.

Polela said claims from the state, including the Gauteng government, are nothing new and “it is something that has always been happening and is currently ongoing”.

He said the RAF does not have any view on Gauteng’s plan to claim the medical expenses of road accident victims at its public hospitals from the RAF.

“It’s a commitment to the provincial government, driven by existing legislation,” he said.

Polela added that claims from the Gauteng government for the medical expenses of road accident victims at public hospitals in the province “will have no impact whatsoever” on the finances of the RAF.

Read: RAF says improvements in financial performance not sustainable without legislative changes

“The fund will continue to pay as it has always done over the years,” he said.

Licence fee increases ruled out

ADVERTISEMENT: CONTINUE READING BELOW

The bulk of the revenue raised by provincial governments is from vehicle licencing fees and gambling and liquor licences.

However, Maile ruled out Gauteng increasing vehicle licence fees to pay the e-toll debt and backlog maintenance on the GFIP roads.

“We can’t rush into increasing vehicle licences and all of that because the cost of living is too high.

“When we take those decisions, because we are human beings ourselves and have to be rational, and can’t just say we increase here. No!” he said.

Maile added that the provincial government’s revenue enhancement strategy also plans to collect payments from people who have put up billboards on government land in the province but are not paying for them as well as those who use government properties without paying for them.

“We have got land, properties, a lot of things that we just need to commercialise and we have not commercialised because for the longest of time it was not our business to do so but now times are tough [economically] so we have to think outside the box.

“We will raise that money [to pay the e-toll debt],” he said.

Balancing act required 

Maile added that the implications of the e-toll debt require the provincial government to manage finances prudently while carefully balancing the service delivery needs of the citizens but is adamant that Gauteng will not go bankrupt in 2025.

He said the Gauteng government’s fiscal trajectory must be addressed through a combination of active debt management strategies and spending restraint, which will improve the primary fiscal balance and eliminate wastage and leakages in the system.

Read: How Gauteng plans to pay the R17bn it owes Sanral for e-tolls

“The province will need to allocate a substantial amount of funds each year for the next five years to meet the [e-toll] repayment obligations.

“Therefore, to address these fiscal challenges, Gauteng Provincial Treasury is working with revenue-collecting departments to identify alternative sources of revenue.

“This aims to ensure that frontline services remain uncompromised, prioritising programmes that foster growth, safeguarding essential social services for vulnerable members of society, [and] maintaining the provision of basic services in the province,” he said.

E-toll debt agreement

In terms of a memorandum of agreement signed by National Treasury, the SA National Roads Agency (Sanral) and the Department of Transport, the Gauteng Provincial Government agreed to pay 30% of Sanral’s R43 billion historical e-toll debt and interest obligations, with National Treasury paying the 70% balance.

Gauteng will pay R12.9 billion in five equal annual instalments at the government’s five-year interest rate towards Sanral’s e-toll debt and interest obligations, plus a further R4.1 billion towards the maintenance backlog on the GFIP.

The first instalment the province paid on 30 September 2024 amounted to R3.8 billion, consisting of R3.2 billion in historical e-toll debt and the maintenance portion of R546 million.

Read:
Confusion over how much Gauteng must pay Sanral to settle e-toll debt
Outa wants clarity on Sanral’s debt before bailout is finalised
New Minister of Transport plans to deal with the multi-billion rand e-toll debt of motorists

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.