As Government, we acknowledge that the taxi industry has not benefited from the subsidy regime in public transport. Closely related to this issue is the fixed nature of the R50 000 scrapping allowance which is not inflation linked and has an impact on the affordability of a new vehicle. A fixed scrapping allowance over a 7 year period will have an accumulative negative impact. The price of new vehicles will have continued to rise throughout this period.

The Department, in correcting the situation and being responsive to these realities, is currently looking into various options for the subsidization of the taxi industry, to be tabled before Cabinet. This will be coupled with a funding model for the taxi recapitalisation programme for the balance of the seven year period. Underpinning the continued success of the TRP, is the efficient and effective process of converting permits to Operating Licence (OLs) which have posed a particular challenge. The formulation of a turnaround strategy for the provincial Operating Licence Boards (OLBs) has therefore been essential. Key to the turnaround strategy is the identification of challenges and process weaknesses and the introduction of interventions to deal with them. This will be supported by a critical intervention on the effective regulation of the taxi industry which we will be discussing with stakeholders and forms a critical part of the Taxi Recapitalisation Programme.

Honourable Members, on the issue of passenger rail, which is another important pillar of our public transportation, Government has increased funding for passenger rail transport services to the tune of R18 billion over the MTEF. This funding is vital for the turnaround strategy being implemented by the South African Rail Commuter Corporation (SARCC) aimed at immediate and significant improvements through the upgrading of the current rolling stock fleet as well as the upgrading of the signalling infrastructure.

I am proud to say that over the past 18 months, the SARCC has been able to upgrade and take through its general overhaul programme over 790 coaches which have since been deployed back into service. The SARCC has already committed another 700 coaches to be refurbished in this current financial year at an estimated cost of almost R2 billion in this regard. This is vital because a key factor in the deterioration of rail services has been under-investment in rolling stock.

The recent launch of the Tshwane Business Express between Tshwane and Johannesburg was yet another milestone in the turnaround of passenger rail, particularly after the Soweto and Khayelitsha Express Services were launched last year. It is important that we demonstrate in practice that Metrorail is positioned as an organisation that could offer high-quality passenger services. In addition, the programme to upgrade key rail stations for the Confederations Cup next year and for 2010 World Cup is already underway, and construction or improvement at stations such as NASREC, Doornfontein near Ellis Park, Moses Mabhida, Cape Town, Loftus and North End Station in Port Elizabeth will be completed by end of April 2009. Furthermore, the SARCC has allocated an additional R300 million over the next 3 years to cover the basic improvement of facilities such as ablution facilities, lighting and subways in over 130 stations this year, with over 75 stations either nearing completion or completed.

I am glad, Comrade Maxwell Moss, to report to you that the SARCC has finalised its policy and programme on Special Needs and ensured that problems at both Mandalay and Lentegeur Stations here in the Cape Town have been fully addressed so that the facilities already in place in some of the stations are fully utilised to the benefit of passengers with special needs. Our plans are to ensure all new station improvements make them fully accessible to people living with disability.

Whilst we are beginning to see visible improvement in Metrorail services, there are still many challenges facing us. In the short-term, the cost of materials as a key input to the refurbishment of coaches has risen quite substantially. Whilst the SARCC has increased allocations for maintenance by 18% to a record R707 million, the rising cost of materials is proving to be a serious constraint.

I am pleased to report to Parliament that the second phase of the consolidation of passenger rail entities is entering its final phase with the transfer of the long distance passenger service, Shosholoza Meyl, already underway. Shosholoza Meyl is with effect from 1 April 2008 part of the SARCC business. However, Transnet will continue to manage and run the business on behalf of the SARCC until September 2008 when the parties conclude a Sale of Business Agreement to allocate assets and the accompanying risks facing Shosholoza Meyl. Parliament is expected to consider and pass the Amendments to the Legal Succession Act in June this year so that we create the enabling framework for this important process, and plan all passenger rail transport from a single point.


An important recent development is the Cabinet approval of the Moloto Rail project which forms part of ASGISA and will have life changing effects on the people of Tshwane and Mpumalanga. We are hard at work to ensure that Metrorail responds fully to the growing demands of passengers. However, criminal actions like the burning of trains and property will not be tolerated. We have made it very clear that when members of our communities burn or destroy rail assets and communities, we will be left with no other option but to shift these resources to other communities who need them most and are willing to protect them.

In the medium-term (i.e. over the next 3 – 5 years) the success of the turnaround strategy for rail passenger services, will present the country with new difficulties if no urgent steps are taken today to recapitalise the current Metrorail fleet. The average age profile of the fleet of 40 years is such that continuing to refurbish without a replacement strategy being implemented will have dire consequences and could even reverse the gains that would have been made through the current turnaround plans. A further delay would also mean that the cost of buying new trains at a later stage, will even be much higher than it is today with lead time of over three years. We need to move with speed to ensure that we do not miss the historic opportunity to introduce into our system a new generation modern fleet.