Public transport policy failing the South African taxi industry

• Jan 13, 2014
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In a paper written by JJ McCarthy and Mark Swillingⁱ in 1985 dealing with issues of public transport in an apartheid city, they attend to the question of the relationship between community politics, working-class mobilisation and state power in the context of collective consumption.

The paper is of relevance in that it traces the trends and historical review of the politics of bus transportation of black commuters, while also attending to other aspects such as the working-class struggles for national liberation, which are not in the scope of this discussion.

The taxi industry has evolved over a period of more than 80 years. The rise and development of the taxi industry will be the subject of another discussion. The purpose of this particular discussion is to address the evolution of government policy in as far as it relates to the taxi industry. Of particular significance is how the backward racist recommendations of the Van Brenda and Welgemoed Commissions are finding expression in the democratic South Africa.

In the early years, the taxi industry operated under conditions of illegality – it was virtually impossible for the taxi industry to acquire permits to operate. A suite of legislation had been put in place by successive racist governments aimed at limiting legal access to business opportunities for black people in general and Africans in particular.

After the promulgation of the road transport legislation in 1930, black bus operators were rendered illegal and they had to retreat to the sedan vehicles that could easily blend with the general traffic on the roads. Most of the sedan vehicles were big American cars such as the Chrysler Valiant, Dodge Monaco and the “six mabone”, just to name a few.

With increased urbanisation and groundswell resistance in various communities in the 1970s, the taxi industry also grew in confidence. There was also the effect of economic sanctions against the apartheid regime, which led to the availability of big American sedans shrinking. Thus the taxi industry began introducing 10-seater minibus Japanese vehicles in the late 1970s, such as the Toyota Hi-Ace and other such models.

The taxi industry was never considered part of public transport by successive racist regimes; it was the industry itself that ensured its continued existence, notwithstanding constant harassment by the state. The key policy instrument of the racist administrations was the suppression of the taxi industry from the 1930s to the deregulation of the industry in the late 1980s.

In the period following the deregulation of the industry, the minibus taxi industry has grown at a rapid rate. According to Jane Barrett^ii, by 1990 the industry was already showing signs of over-saturation in some areas and sparked intense (and often violent) battles between associations of owners, fighting for commuter routes.

It is against that background that relatively recent moves to recapitalise, formalise and reduce the size of the industry have come into being.

Background

The origins of the public transport policy in South Africa can be traced to the 1930s with the Motor Carrier Transportation Act of 1930 (Act 39 of 1930). This legislation had been preceded by the Road Motor Competition Commission that was chaired by JC le Roux in 1929. The terms of reference of the Le Roux Commission were to investigate the effects of emergent motorised road transportation on the rail and road services of the South African Railways Administration, and to consider measures that might be taken to regulate, coordinate and control road carriers. The commission found that road transportation was disordered, unrestricted and uncontrolled. It recommended that it be subjected to public-sector regulation, principally to protect the railways from competitionⁱⁱⁱ.

Act 39 of 1930 also introduced a Central Road Transportation Board (CRTB) and 10 Local Road Transportation Boards (LRTBs), covering 10 “proclaimed transport areas”. The LRTBs were given powers to consider applications for “motor carrier certificates” in their areas of jurisdiction and to set up quotas of certificates in order to minimise competition. This legislation was primarily intended to squeeze many African bus companies and taxis out of business.

The LRTBs effectively rendered black business in the public transport sector illegal. It was on the back of this legislation that many black bus and taxi operators had to surrender their businesses to a handful of white emerging bus operators. This provided the framework for the monopolisation of the public transport sector, specifically the bus industry. By 1940 the commuter bus industry was dominated by cartels, and by 1945 several companies merged to form the Public Utility Company (PUTCO)^iv.

The racist government established another commission of inquiry into road motor transportation, chaired by Major SM Page, between 1945 and 1947. The terms of reference of the Page Commission were to investigate road transportation conditions and make recommendations on the coordination and further regulation of operators. Following the Page Commission, the Transport Coordination Act of 1948 was passed (Act 44 of 1948). The 1948 legislation abolished the CRTB and established the National Transport Commission (NTC). The NTC assumed the responsibilities of overseeing and advising LRTBs in the exercising of their powers^v.

With the benefit of being the monopoly, PUTCO then began to increase fares, which triggered the Alexandra and Evaton bus boycotts in the late 1940s and early 1950s. Thus, community politics and other popular resistance campaigns forced the government at the time to agree to subsidise black transport costs with the introduction of the Bantu Service Levy Act of 1952 (Act 64 of 1952).

This was followed by the Bantu Transport Services Act of 1957 (Act 53 of 1957), which provided for the transfer of responsibility for black transport subsidies from the then-Native Affairs Department to the Department of Transport. Act 53 of 1957 made provision for the black transport subsidies to be drawn from compulsory contributions from employers. In later years these employer levies were supplemented by funds voted by Parliament. The Transport Services for Coloured Persons and Indians Act of 1972 (Act 27 of 1972) extended the structures and procedures established under Act 53 of 1957 to allow the collection of employer levies to provide subsidies for coloured and Indian workers.

Jane Barrett^vi gives an interesting analysis of how a market for the taxi industry carved itself out as a response to apartheid policies. She argues that, from the early 1960s onwards, urban African people were increasingly relocated through forced removals to reside in areas far from the commercial and industrial centres of all South Africa’s cities. These relocations were part and parcel of the policy of apartheid, designed to keep racially defined groups separate.

In the Pretoria area, for example, as a consequence of population removals in terms of the Group Areas and Bantustan policy and as result of the accelerating process of proletarianisation of the black workers, bus commuters from nearby Bantustans and townships to central Pretoria increased more than threefold in just eight years, from 1969 to 1977. The movement of these workers from their peripheralised sites of reproduction to centralised points of production was accomplished through an alliance of state and capital in the form of the mushrooming parastatal bus transport industry^vii.

Apartheid spatial planning impacted directly on the public transport provided by buses and trains. Public transport became increasingly expensive for commuters (and also for the state to provide the subsidies required). Increasingly buses and trains operated at peak times only, and routes became less and less flexible. The growth of the minibus taxi industry in the late 1970s was in large part a response to this. Initially the state acted to protect the existing bus and rail public transport systems, and prevented entrepreneurs from operating minibus taxis by refusing to issue road carrier permits to the taxi industry^viii.

In the 1970s, the apartheid government established the Driessen Commission, whose mandate was to investigate issues around the planning, provision and financing of transport facilities in urban and metropolitan areas. The Driessen Commission recommended that the functions of the NTC be extended to include the formulation of urban transport policy, and the broad supervision and coordination of urban transport matters.

Most significantly for the taxi industry, the Driessen Commission recommended a subsidy of 20% on revenue for all public urban bus services that were not already subsidised. It further recommended that these subsidies be financed through an Urban Transport Fund (UTF) and central Consolidated Revenue Fund. The Driessen Commission led to the promulgation of the Urban Transport Act of 1977 (Act 78 of 1977), which formalised the establishment of the UTF and Consolidated Metropolitan Transport Funds (CMTFs)^ix.

The taxi industry had a legitimate expectation to benefit from this proposed 20% subsidy as recommended by the Driessen Commission, for want of permits, from which they had been excluded as a direct result of the racist policies of successive governments. And for tactical reasons, the taxi industry defined itself outside of the bus sector, while continuing to provide public transport services to the black workers and communities in general.

In 1975 the apartheid government established yet another commission of inquiry, the Van Breda Commission. The terms of reference of the Van Breda Commission were to advise on the draft Road Transportation Bill, which had been initiated by a select committee in the then-House of Assembly. The purpose of the draft Bill was to provide a system of control for unauthorised road transportation, undoubtedly the taxi industry.

The Van Breda Commission rejected free competition in the public transport arena on the grounds that this could lead to an oversupply of services in urban areas and an undersupply in outlying areas. The Van Breda Commission recommended a regulated competition that was to evolve gradually. This led to the enactment of the Road Transportation Act of 1977 (Act 74 of 1977), which served to replace Act 39 of 1930^x. Most specifically, Act 74 of 1977 defined a bus as a vehicle carrying more than nine people.

In the aftermath of the Driessen and Van Breda Commissions, prominent leaders of the taxi industry such as Jimmy Sojane and Pat Mbatha found a loophole in Act 74 of 1977, which allowed them to apply for a road carrier permit and operate legally if they left one seat of a 10-seater empty. This was because any vehicle carrying 10 passengers or more for reward was defined in this legislation as a bus and was therefore subject to particular controls.

But permits remained almost impossible to acquire, as the NTC and the LRTBs, responsible for issuing permits, were hostile. The NTC was under considerable pressure from the bus industry not to issue permits to the taxi industry.

However, the demand for minibus taxi transport was growing and the taxi industry defiantly operated without permits. The taxi industry was subjected to fines, and often to forfeiture of their vehicles. In addition, municipalities exercised control over the growth of the industry by restricting access to taxi ranks. Permission had to be granted by the traffic departments of local authorities for minibus taxis to park in designated areas for loading and offloading purposes in the cities. Refusal to grant such permission would impede the minibus taxi industry by making operations illegal and operators subject to prosecution. While many continued to operate without permission, such operations were subject to constant harassment, including the confiscation of vehicles^xi.

The deregulated dispensation

In 1981, the Welgemoed Commission was established to study the industry. Its primary task was to investigate the fiscal crisis in order to find ways of reducing the cost of subsidisation^xii – this was in response to the increasing transport subsidy bill and fiscal crisis of the apartheid state, as well as the escalating popular protests against raising fares that had occurred in the 1970s and early 1980s.

The terms of reference of the commission were thus to make recommendations on bus tariffs and subsidies, the provision of bus infrastructure, the emergent mini-bus taxi industry and its relationship to the bus industry, and various associated institutional issues. Its primary task was to find ways of reducing the cost of public transport subsidisation, while adjudicating between monopolistic bus companies concerned with the erosion of their market and the minibus taxi industry, which was making inroads into the black commuter market^xiii.

The second interim report of the Welgemoed Commission concerned itself with the problem of tariffs and subsidies, and it specifically recognised the basic causes of rising costs in the relocation of large numbers of black workers to outlying areas and the increasing volume of passengers and associated costs as result of urbanisation and longer trip lengths. While it considered the cost of subsidisation to be high, it proposed that the bus subsidy framework be retained in the short to medium term, albeit with some changes in the formula for calculating subsidy adjustments. The second interim report concluded that in the long term, the bus subsidies be phased out.

More significant for the taxi industry, though, was the final report of the Welgemoed Commission. This recommended that, if subsidies were to be phased out (in the medium to long term), then PUTCO and the subsidised bus industry in general will be compensated by the gradual legislative elimination of the unhealthy competition from the minibus taxi industry – and that they be afforded quasi-monopolistic rights.

It thus recommended that mini-bus taxis carrying more than four passengers be phased out. It argued that smaller buses were unable to physically render an efficient flow of passengers in South African cities. As part of this logic, the Welgemoed Commission recommended that minibus taxis be made illegal by closing the one loophole that existed in Act 74 of 1977, and granting no more permits to the taxi industry.

While the Welgemoed Commission’s report and resultant draft legislation was being publicly debated, the results of a separate government-sponsored National Transport Policy Study (NTPS) were published in 1986. The NTPS was established in 1982 to assist the NTC in formulating recommendations to bring transport policy in line with broader national policy. The passenger transport advisory committee of the NTPS made recommendations on policy principles, institutional arrangements and responsibilities, subsidy allocation methods and minibus taxi regulation. It recommended that bus companies be given a period of protection through “interim contracts”, which would convert the existing subsidy based on passengers into a fixed-price contract, and be valid for a period of three years.

During this time, a new process of competitive tendering would be developed and tested. Bus services operating under both the interim and competitive tendering arrangements would be protected from competition from other bus services, but the minibus taxi industry would be allowed to compete at will with buses^xiv. It is worth noting that the NTPS ignored the Driessen Commission recommendation of a subsidy of 20% on revenue for all public urban bus services that were not already subsidised.

The NTPS recommended that 16-seater vehicles should be allowed to operate as minibus taxis and that the local authorities set quotas and restrict new permits. Another government structure, the Competition Board established in 1985, vehemently opposed the quota system, arguing instead for a totally unregulated industry. The Competition Board recommended that entry to the industry should be controlled only by considerations of whether the operator had met roadworthiness and road-safety requirements. The White Paper on Transport Policy, tabled in January 1987, in conjunction with the Transport Deregulation Act of 1988, effectively deregulated the entire taxi industry overnight, making minibus taxis legal. The idea of issuing a restricted number of permits was finally implemented in 1989^xv.

The NTPS also recommended that the transport functions and financial responsibility be devolved from the central state to Regional Services Councils (RSCs). In this regard, passenger public transport subsidies would be borne by RSCs out of employer levies, with some assistance from national government. RSCs were established in terms of the Regional Services Councils Act of 1985 (Act 109 of 1985). Act 109 of 1985 enabled specified transport-related functions to be undertaken by RSCs, including but not limited to land use and transport planning, passenger transport services, traffic matters and airports. Sources of revenue for the RSCs were to come from a regional services levy of employers and a regional establishment levy on businesses. In the process, the employer levies on black, coloured and Indian workers, introduced in terms of Act 53 of 1957 and Act 27 of 1972 discussed above, were repealed.

The RSCs were replaced as the recipients of transport-related functions by the Local Government Transition Amendment Act of 1996 (Act 97 of 1996). Again, the Driessen Commission recommendation of a subsidy of 20% on revenue for all public urban bus services that were not already subsidised, which would have potentially benefited the taxi industry, was lost in the detail – largely because the voice of the taxi industry was drowned by the then-ongoing violence and conflict that had engulfed the taxi industry.

The 1996 White Paper and Moving South Africa strategy

The National Transport Policy Forum was established in 1992 and operated until about 1995 when it was replaced by the National Transport Policy Review (NTPR) panel established by then-Minister Mac Maharaj. The NTPR was initiated as a consultative process to formulate a new transport policy. This resulted in the publication of the Green Paper on National Transport Policy for public comment in 1996. The National Taxi Task Team (NTTT) was established in 1995 to deal specifically with the policy issues involved in the re-regulation of the mini-bus taxi industry (the NTTT recommendations will be attended to in detail in a separated discussion). Following a number of consultative sessions and written submissions, the White Paper was published in September 1996^xvi.

The White Paper proposed policy goals and objectives that emphasised overcoming the negative transport effects of apartheid and the promotion of public transport over car travel. Essentially, it set targets in relation to these goals – most specifically, the White Paper proposed an 80:20 percentage modal split between public and private transport, and also proposed the introduction of “regulated competition” with regard to public transport, which implies competition for a route or network of routes, rather than competition on the route between different operators^xvii.

The elements of the White Paper found expression in the National Land Transport Transition Act of 2000 (Act 22 of 2000). It is noteworthy to state that the NTTT recommendations relating to the empowerment of the taxi industry never found their way into Act 22 of 2000 – the focus was only on regulation and control.

While the White Paper was still being debated, in 1997 the government initiated the Moving South Africa (MSA) project. The MSA was intended to be a “Vision 2020” perspective on strategic action to extend the short- to medium-term policy formulation. This was driven by strategy consultant Harold Harvey who (I presume) reported directly to the minister and the then Director General, Ketso Gordham.

Save for the impressive and slick PowerPoint presentations, I have not had the privilege of perusing any of the MSA reports. I do, however, remember reference to “action agendas” and “corridors”, which would later gain prominence in the 2007 Public Transport Strategy. But one thing is for sure: the MSA strategy was a monumental failure in as far as consideration of the taxi industry is concerned – this notwithstanding my personal appeal and representations to the MSA team that any policy that does not consider the taxi industry as a nucleus is bound to fall flat.