Delivered during the 2016 Southern African Transport Conference (SATC), held in Pretoria, South Africa.

1. THE PUBLIC TRANSPORT
INTEGRATION CHALLENGE:
WHAT ROLE FOR THE FISCAL
SYSTEM?
Southern African Transport Conference
4 July 2016

2. Why public transport?
• It makes economic sense:
– promotes economic benefits of agglomeration improving efficiency
– enables trade
– facilitates access to markets and services
– makes efficient use of resources
– enhancing employers’ access to a larger labour pool at lower costs
• It makes social sense
– enhances access to job opportunities
– enhances personal choice
– even creates jobs eg in European cities, such as Brussels,
Amsterdam, Barcelona and Paris, public transport is largest city
employers
• It makes environmental sense
– Reduces carbon footprint and reduces fuel consumption
2

3. Public Transport Funding in South Africa
Have we done enough?
• Over last 10 years, over R 167 billion in infrastructure and
operations subsidies with average annual growth 18%
• This spending is still on the increase BUT:
• It is not enough:
• Still, too many poor households spend too much on PT
• more than 60% households earning less than R 500 spent
more than 20% on transport (rural as high as 31%)
• From the public sector, our spend is also not efficient as it
should be as shall be seen
• And we are playing catch up to private transport use
3

4. Some particulars of spend
4
Who are the big beneficiaries of
this increased spend?
Rail and PRASA is
• Almost 40% growth in spend
2013/14-2015/16) mostly
CAPEX
• Between 2012/13- 2016/17
rail to absorb > 60% of spend
• Allocations for bus are more
modest between 5-13%
-­‐
5
10
15
20
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
Billions
Rail
spend
-­‐
capital
and
ops
for
Gautrain
and
PRASA
2004/05-­‐2014/15
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
PTOG
PTNG
Billions
Bus
Subsidies
(MTEF
2016/17
-­‐
2018/19)
2016/17
2017/18
2018/19

5. We need to subsidise operations of public
transport
Indeed the world over
public transport is
almost always
subsidised
Prov Bus and Gautrain
most subsidised
service relative to
ridership
Mini bus taxis not
We are subsidising the
middle class the most.
5
Mode
Operating
subsidy
per
passenger
per
trip
Fare
Box
Recovery
rates
Municipal
Bus
R
16.75-­‐
R
24.36 13%-­‐31%
Conventional
Bus
R
11.40
-­‐
16.89
31%-­‐44%
Bus
Rapid
Transit
R
11.76
-­‐
15.12 28%-­‐44%
Mini
bus
taxis
0 0
Gautrain
R60.30 57%
PRASA
Metrorail
R3.73 R
39%
Reference: National Treasury
Expenditure Performance Review of
South Africa’s Public Transport and
Infrastructure systems, 2014.
Provincial
bus
,
39%
Municipal
bus
,
9%
BRT
,
8%
Mini-­‐bus
taxi
,
0%
Gautrain
,
15%
Metro
rail
,
29%
Share
of
total
operaPng
subsidy
Pie

6. Comparatives on efficiency (operations)
6
On face value mini bus taxis
are the most efficient…. BY
FAR … and they serve the
poor largely.
They serve the most (67%);
collect the most (71% fares)
BUT receive no operating
subsidy.
Provincial
bus
Municipal
bus
BRT
Mini-­‐bus
taxi
Gautrain
Metro
rail
No.
of
passengers
carried
8% 1% 2% 67% 1% 21%
Fare
revenue
9% 1% 2% 71% 7% 10%
Operating
costs/
passenger
(R)
22.00 24.42 20.90 8.09 140.11 9.20
Fare
revenue/passenger
carried
(R)
8.60 4.39 7.77 8.09 77.75 3.62
Operating
subsidy
39% 9% 8% 0% 15% 29%
0%
20%
40%
60%
80%
Provincial
bus
Municipal
bus
BRT
Mini-­‐bus
taxi
Gautrain
Metro
rail
Fare
Revenues
vs
OperaDng
subsidy
share
per
mode
OperaDng
subsidy
Fare
revenue

7. Some key highlights on PT operations
• By and large our public transport provision is very costly and not efficient
– In our current constraint fiscal environment, there must be better way
• Provincial bus: Apartheid service for black townships to places of work.
– Very costly because of distances and extreme peaking
• Municipal bus: Metro Bus, Brakpan Bus, Tshwane Bus etc
– High operating costs, although shorter trips
• Bus Rapid Transit
– Heralded shift in thinking; attention to spatial transformation
– Has relatively good user satisfaction where it operates
– Has however resulted in very high deficits
• Gautrain
– High user satisfaction
– Very costly (between 2005/6-2013/14 represents 20% of total PT
7

8. Some pointers
• Mini bus taxis: carry more than 2/3 of people in metro areas:
– effiicient carrier esp. over shorter routes
– no operational subsidies
– rely on informality
– high societal costs linked to service
• Metro rail (PRASA):
– Provided through 4 regional operators that is Western Cape (Cape
Town); Gauteng (Joburg, Ekurhuleni, Tshwane) Kwa Zulu Natal
(Ethekwini) Eastern Cape (Buffalo City and Nelson Mandela Bay)
– Very low prices for passengers
– Significant capital infusion over the next couple of years including
recapitalisation and line extensions
8

9. Some pointers on Public Transport Subsidies
9
0%
20%
40%
60%
80%
100%
Provincial
bus
Municipal
bus
BRT
Mini-­‐bus
taxi
Gautrain
Metro
rail
Fare
box
coverage
Fare
box
coverage
It is a struggle world
wide but better results
have been achieved eg
fare box recovery
Taiwan and Hong Kong
> 100%
USA- 26%-56%
Canada – 39%-84%
Europe – 40%-91%

10. And despite spend ….
Use of private transport
is growing faster than
public transport
While mini bus taxis
dominate market > 3 mill
trips, growing by 50%
BUT
There has been
remarkable growth in the
car; by 62.5% trips and
5.8% of market share
growth
10
-­‐0,50%
-­‐1,30%
2,60%
5,80%
-­‐6,50%
-­‐0,10%
-­‐10,00%
-­‐5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
-­‐20%
20%
60%
100%
Trains
Bus
Taxi
Car
Walk
Other
Public
transport
Private
Transport
Modal
Share
and
modal
share
change
over
10
years
Modal
share
(2013)
Modal
share
change
%
26,4%
11,5%
50,7%
62,5%
8,1%
28,3%
0
2
4
6
8
10
Trains
Bus
Taxi
Total
Car
Walk
Other
Total
Public
transport
Private
Transport
Millions
of
trips
Total
trips
per
mode
and
growth
in
no.
of
trips
over
10
years
Total
daily
trips
(2013)
%
change
daily
trips
per
mode
(2003-­‐2013)

11. Then where are the challenges?
• There is a lot of inefficiency in the different public modes
– Part of the challenge is creating greater efficiencies within
the modes themselves
• There is high fragmentation of institutions and funding flows
– The increased investment could be enhancing
inefficiency!
• We are not doing nearly enough for the poor
– Public transport continues to be a social inhibitor for poor
households: affordability, access to jobs and opportunities
• It is costing our economy
– We are not creating the agglomeration benefits we so
desire with the spend
11

12. But a bigger challenge and at the heart of it is..
Providing public
transport in
South Africa is
inefficient
because we
have inherited
inefficient
spaces.
12

13. Without changing spatial form it will always be
costly to all
Our public
transport demand
is:
One way, highly
peaked, with little
seat turn over
This is COSTLY and
unsustainable
13
All
passengers
travel
long
distances,
in
the
morning
peak,
from
residential
areas
to
centres
of
employment
and
return
in
the
evening;
densification
on
this
basis
is
not
efficient
Origin
Destination
Passengers
make
short
trips
–
some
in
the
forward
direction
and
others
the
reverse
–
along
a
corridor
throughout
the
day
Reference: National Treasury
Expenditure Performance
Review of South Africa’s Public
Transport and Infrastructure
systems, 2014.

14. We need to…
• Rethink the role of PT spend: it can be potent spatial
influencer and it is not just about transport.
– With other built environment functions such as housing,
infrastructure e.g BEPP uses public financial levers
including PTNG and other grants (ICDG; NDPG; INEP;
USDG; HSDG) and aim to leverage private capital to
spatially target and drive change
• Better align and integrate to:
– obtain greater modal integration, and integration of PT
planning, and operations and
• Be more innovative
• leverage off efficiencies of mini bus taxis
• current “disruptive opportunities” presented by technology :14

15. We need to…
Empower our cities and towns:
• To plan better through their IPTNs: the NLTA envisaged well
planned transport systems that guides all public transport
investments
• To facilitate inter modal integration and coordination within
their space (harmonisation of fare structure, scheduling, and
ticketing) – key for passenger experience of public transport
system
• To control their other built environment functions: assignment
should happen when and where appropriate
• To capacitate themselves
15

16. 16
THANK YOU
Malijeng Ngqaleni
Malijeng.Ngqaleni@treasury.gov.za
www.treasury.gov.za