COMMUTER RAIL IS AN ESSENTIAL PUBLIC TRANSPORT MODE AND ITS SYSTEMS GENERALLY SERVE THE LOWER INCOME GROUPS OF THE ECONOMY, PROVIDING THEM TRANSPORT AT AN AFFORDABLE COST. THUS, HOW THIS MODE IS FINANCED, MANAGED AND DEVELOPED IS AN IMPORTANT INDICATOR OF ECONOMIC HEALTH PROGRESS.

The Corporation and its contracted operator, Metrorail, have suffered from a difficult economic environment, facing reduced subsidy and increasing costs. This unfortunate situation was partly offset by better patronage and fare revenues, which because of the nature of the majority of rail commuters cannot be increased to levels comparable with other transport modes. It has meant further emphasis on labour and cost control, and consequently improvements to services could not be implemented. Unfortunately the funding problem is forcing us to look at curtailing some services.

Despite the financial difficulty, our contribution this year to the fiscus from VAT and services levies was in the order of R90 million and other indirect taxes amounted to more than R180 million.

During 1998, the Department of Transport finalised a detailed strategy study of transport, called Moving South Africa, which will provide the first comprehensive framework in decades for taking train, bus and minibus taxi transport forward into the millennium. At the same time the Cape Metropolitan Council has been involved in a similar project, called Moving Ahead, in the Western Cape. Other provinces will no doubt follow suit.

From the point of view of the Rail Commuter Corporation, these studies will underpin commuter rail as an important public transport mode and establish the conditions for a fully concessioned commuter rail transport scenario.

REVIEW

In the year under review, negotiations between Metrorail and the unions finally reached consensus on the key aspects of the exclusive concessioning agreement to be concluded with Metrorail and on the demonstration project that will see about 10 percent of the business put out for private tender.

The progress made on the concessioning agreement has been disappointing, reason being that the negotiation process was hindered by complexities. I am similarly disappointed by the progress made on the demonstration project, however, I realise the importance of consulting widely.

Management has been able to achieve the wide communication that was necessary and I am hopeful that the demonstration project will become a reality in the year 2000.

While movements on this front may have been slow, other issues continued to move in the right direction and show satisfactory results. I am pleased that the dispute with Transnet over penalties was settled in a satisfactory manner, a good win-win solution.

The Japanese OECF loan of $60 million for five new train sets has been finalised and allocation to the Corporation for capital expenditure has, therefore, increased. The tenders have been published and the date for the final tender acceptance is mid-1999. The introduction in time of these train sets will provide a much needed improvement to services rendered to rail commuters.

I commend the dynamic approach of the Intersite management team to generate income for the Corporation from sources other than the Corporation. Negotiations with the National Roads Agency to manage its property portfolio have been finalised and the benefits will be realised in 1999.

At the same time, the Corporation's transformation programme has been finalised and it will address the past imbalances in employment and ensure that more black people occupy decision- making positions throughout the management structure.