Finance Minister Trevor Manuel indicated this week that the troubled Road Accident Fund is in line for major surgery. But the government’s fix is facing heavy opposition from lawyers associations and politi-cal parties who say the new policy might be challenged in the Constitutional Court.
The Treasury has given the fund a R2,7-billion bail-out to keep it going.
The fund, which has been rocked by corruption and fraud, has a R25,3-billion claims overhang. It only processed half of the new claims that were added this year. Despite reform plans it would continue to spend more than it would gain in the next three years, Manuel said.
He said a White Paper on the fix would be published this year, but the first phase of the fund’s revamp had started at the end of last year when the Road Accident Fund Amendment Act was passed.
The new Act implements recommendations of the Satchwell commission headed by Judge Kathy Satchwell. The commission tabled a report in Parliament in January 2003, which recommended 178 changes to the status quo, including a proposal that South Africa move away from a fault-based system to a “no-fault” system.
The no-fault system takes away the victim’s right to sue a party involved in the accident.
Those who support the no-fault system say it will reduce law suits, discourage the exaggeration of injuries and introduce quick and efficient methods of payment.
Andrew Donaldson, the Director General of public finance in the Treasury, said last year’s Act implemented the first part of the Satchwell recommendations while the 2006 White Paper would implement the final changes. “The new White Paper will change the underlying philo-sophy of the fund, which last year’s Act did not do,” he said.
According to the new Act, an injured person does not have to prove that the other party was negligent before getting compensation, as is the case now. There will also be a R160 000 limit on claims.
The Law Society of South Africa said that at present all road users are automatically covered for all losses caused by personal injury and protected against any personal liability in respect of any injury negligently caused to or by another person on the road.
The proposed system is likely to cost motorists much more, deliver negligible compensation and require every motorist to buy expensive top-up personal injury and indemnity insurance.
Estimates for this type of insurance in 1998 were between R3 000 and R4 000 a month for a family of four, the society said.
The Act would “remove the right of the injured party to sue negligent drivers”, Democratic Alliance transport spokesperson Stuart Farrow said when the Bill was tabled in Parliament.
“This means that no matter how intoxicated or irresponsible a driver may have been when he permanently disabled the sole breadwinner of a family, he cannot be asked for compensation for loss of income,” Farrow said.