Road Accident Fund gets temporary relief

The treasury will alleviate the R98-billion funding shortfall of the Road Accident Fund (RAF) by adding 50c a litre to the road accident fund fuel levy.

This increases the levy by 48% from 104c to 154c. It will come into effect from April 1.

The fund currently raises R21-billion a year from the levy, so the 50c increase will raise its annual revenue to R31-billion.

In his budget speech, Finance Minister Nhlanhla Nene described the increase as “substantial”.

“It is required in order to finance the progress made by the RAF administration in clearing the claims backlog,” he said. “But it also reflects the unsustainability of the current compensation system, which has accumulated a R98-billion unfunded liability.

“Legislation to establish the new Road Accident Benefit Scheme will be tabled this year to provide for affordable and equitable support for those injured in road accidents. Once the legislation has been passed, the levy will be assigned to the new scheme.”

Criticised
The Road Accident Benefit Scheme draft Bill has been sharply criticised by the legal fraternity and some have said it is unconstitutional and will be challenged in the Constitutional Court.

Several lawyers said the new system would leave victims worse off than before.

“The structure of the RAF is unaffordable and inequitable, with benefits skewed by income level and absorbed by legal representation,” the budget review states.

It says the deterioration in the RAF’s financial position has been exacerbated by an improvement in the processing of claims lodged, and the 50c increase in the fuel levy will not be enough to close the funding gap the RAF faces.

The fund’s chief executive, Eugene Watson, said in a statement released after Nene’s speech that, although the money would go a long way towards addressing the fund’s financial challenges, it would not eradicate all its legacy problems.

“Motorists’ additional contribution towards the fuel levy guarantees that South Africa’s road users will still get cover under the current compensation scheme in the unfortunate event of them being maimed or killed in a motor vehicle accident.”

Confidence
Watson added that the fuel levy increase was an indication of the government’s confidence in the RAF’s administration and delivery of its mandate, despite the financial challenges it has experienced in recent months.

“Initially, the extra fuel levy will not speed up claims payments,” he said. “If we continue to maintain our high productivity levels, receive no further increases from the fuel levy and delay the implementation of the Road Accident Benefit Scheme, our backlog will simply continue to grow.

“This makes an overhaul of the entire current compensation system all the more imperative.”

Watson said the fund would continue to manage its financial challenges in a constructive manner by partly meeting stakeholders’ expectations, and he appealed for their support and co-operation.

“Detailed payment plans have been communicated to all relevant service providers and legal representatives, and will be reviewed in line with the extra funding,” he said. 

“While we understand the situation has placed tremendous pressure, financially and otherwise, on all service providers and claimants, we again respectfully request that writs be stayed to a reasonable extent. Writs are continuing to disrupt our payment plans and only benefit a few firms,” he said.

See “On the bumpy road to RAF reform”, in this week’s Law Report.

Lloyd Gedye
Lloyd Gedye
Lloyd Gedye is a freelance journalist and one of the founders of The Con.
Advertisting

Mabuza’s ‘distant relative’ scored big

Eskom’s woes are often because of boiler problems at its power plants. R50-billion has been set aside to fix them, but some of the contracts are going to questionable entities

ANC faction gunning for Gordhan

The ambush will take place at an NEC meeting about Eskom. But the real target is Cyril Ramaphosa

What the law could clarify this year

Lawfare: Major developments are on the cards where law and politics meet, including the first amendment to South Africa’s Bill of Rights

The secret ‘Warmonger’ at the SSA

A listening device acquired by the agency is at the centre of an alleged R600-million fraud operation
Advertising

Press Releases

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.

Innovate4AMR now in second year

SA's Team pill-Alert aims to tackle antimicrobial resistance by implementing their strategic intervention that ensures patients comply with treatment.

Medical students present solution in Geneva

Kapil Narain and Mohamed Hoosen Suleman were selected to present their strategic intervention to tackle antimicrobial resistance to an international panel of experts.