The Road Accident Fund (RAF) may have been thrown a R2,5-billion lifeline by treasury in the medium-term budget, but a rethink is required as to the funding and structure of the statutory body.
RAF chief executive Jacob Modise says the R2,5-billion is just a temporary relief that will assist with short-term liquidity constraints.
Earlier this year Modise announced that the fund had a R30-billion deficit, but stakeholders dispute this, claiming the figure is greatly exaggerated.
Ronald Bobroff, vice-president of the South African Association of Personal Injury Lawyers (Saapil), says a substantial amount of the claims in the R30-billion deficit would not be successful or would not be paid out in full.
Boboff says the only thing he agrees with Modise on is that the RAF is underfunded.
“It needs more money,” says Bobroff who advocates raising the fuel levy.
The RAF is a statutory body that compensates people injured as a result of negligent driving on South Africa’s roads and it is funded by a fuel levy of 46,5c a litre.
Bobroff says the fuel levy is a fair funding model for the RAF because it ensures that users pay an equitable amount based on the time they spend on the roads, but says the fuel levy should be doubled because the RAF has serious cash flow problems.
Modise claims that the RAF receives R700-million from the fuel levy every month, but that the claims it processes each month are close to R1-billion.
He argues that an economic model that takes into account economic drivers such as increases in the number of accidents and the increase in road volumes should be used to determine the fuel levy.
It has been reported that Transport Minister Jeff Radebe convinced Cabinet to approve the bail-out after the RAF was forced to deliberately slow down its processing of claims because of limited cash and also had vehicles attached by the Johannesburg Sheriff of the court.
The RAF has been in the headlines of late, firstly when it paid out a record R500-million to Swiss citizen Joachim Schoss who was injured in a motorÂcycle accident in the Cape six years ago.
It made the headlines again in August because of the controversial amendments to the Road Accident Fund Act that came into effect.
The amendments introduced a R160Â 000 annual cap on the amount any claimant could receive for future loss of earnings.
Bobroff says this is unacceptable as this equates to R9Â 000 a month after tax and the amendments also take away the victim’s right to sue the wrongdoer or the negligent party for damages.
Modise argues that the average South African earns way less than R160Â 000 per year.
He says the personal injury lawyers are only trying to look after their own selfish interests.
Bobroff says the amendments also stipulate that the fund will only cover healthcare at public rates and has upped the criteria for victims to qualify for compensation for serious injuries.
“A serious injury is one in which you are found to be 30% whole person impaired,” says Bobroff. “I’m trying to work out what that means and I’ve been practising in this field for 38 years.”
Another aspect of the amendments that has caused an outcry is the move to a direct payment system, where the victims are paid the money, rather than the lawyers who then pay the victims.
Bobroff says this is a disingenuous way of making sure that the RAF receives fewer claims because poorer South Africans who have no money or assets as security will not be able to find lawyers to take up their cases.
This amendment irked the Saapil so much they went to the Cape High Court to get an interdict to prevent the RAF from making direct payments.
Bobroff says that Saapil and other stakeholders are preparing legal papers to strike down the amendments or at the very least to allow victims the right to sue negligent parties.