To subsidise or not to subsidise minibus taxis - Is that even the question?

The problem in context

South African households pay much more for transport than countries with similar public transport and non-motorized transport use. While apartheid-influenced spatial planning is to blame for this, the continued somewhat irrational location of settlements is not helping to address the problem. Households reliant on minibus taxis for daily transport services, and businesses employing such people, are especially susceptible to this self-inflicted anomaly.

From another perspective, the minibus taxi industry has over the years provided a premium social service that government could not or was not willing to provide. Is it not fair for the minibus taxi operators to be compensated for this?

More than half of minibus taxi input costs are imported from elsewhere in the world. So, not only is the cost of transport services high, but this household expense does relatively little to create jobs locally. If subsidies were to be paid to passengers and/or operators we would still have an outflow of the tax payer's money. It therefore looks like there are no South African winners in this conundrum.

The bottom-line is that there's a price tag for the country's inefficient spatial organisation, and South African households are paying for it. Is that fair? Is that just?

How much are we talking about?

The South African National Taxi Council (SANTACO) estimates that, on average, a minibus taxi drives about 8 500 km per month. With an average operating cost of R5 per kilometre, and a population of say 120 000 minibus taxis, it costs minibus taxi operators over R60 billion per annum to provide the services. A 10% direct subsidy on costs, for example, would cost the fiscus almost R6 billion per annum which is only equivalent to paying full fares for about 1.5 million passenger trips per day in urban areas. At similar subsidy levels to current bus operations, the subsidy levels would be in the order of R37 billion per annum. This is clearly not cheap.

Can the fiscus afford to subsidise minibus taxi operations?

The question is not affordability of subsidies. The fundamental question is what are the returns for subsidising minibus taxi operations or any other public transport service for that matter. Until this question is answered, we are not ready to make any proper decision on subsidisation of public transport.

Other countries have specific reasons for subsidising public transport. While we can learn from them, we should solve our own problems. Our main problem is gross spatial injustice, defined in this context as deliberate or negligent spatial development handicapping ease of access to basic social services and economic opportunities.

We should therefore ask: what price are we willing to pay for spatial justice? In that way it's not about minibus taxis but about improving the quality of life.

What then should the point of departure be?

Until we have a proper conversation on spatial justice, we are not ready to move forward. South Africa needs a comprehensive policy on spatial justice, and an articulation of how its implementation will be funded. This is at the heart of land reform. The subsidisation of minibus taxis or public transport in general, should therefore be elevated from a mere transport problem to the land reform agenda. In that way there will be more coherence in how the country addresses the problem. Land reform itself needs to be elevated from a mere transferal of land ownership to addressing spatial justice as embedded in the preamble of the South African Constitution:

"We, the people of South Africa, Recognise the injustices of our past; Honour those who suffered for justice and freedom in our land; Respect those who have worked to build and develop our country; and Believe that South Africa belongs to all who live in it, united in our diversity. We therefore, through our freely elected representatives, adopt this constitution as the supreme law of the Republic so as to – Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights; Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law; Improve the quality of life of all citizens and free the potential of each person; and Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations"

The implementation of our Constitution should be the point of departure.

Where and how do we start?

The National Development Plan (NDP) identifies a trajectory entailing four phases: (1) Broad social compact by 2012, (2) Reduction in inequality of opportunity by 2021, (3) Reduction in inequalities of outcomes by 2025, and (4) Rising living standards, falling poverty, and inequality by 2030.

Whatever interventions adopted, they must strongly align with the implementation of the NDP. Practically, this means in the next five years efforts must be made to strongly align transport plans to reducing inequality of opportunities. A national budget must be set aside to implement the NDP. In the case of transport, parts of the network that service vulnerable labour force should be prioritised, starting with areas connecting minimum settlement and employment densities. Transactions in this regard must be strongly linked to the country's industrialisation agenda in order to maximise return to the economy. The technical mechanisms to implement this are achievable if authorities take ownership of the network, and proactively plan and provide appropriate information and communications technology infrastructure. This in turn requires strengthened and focused transport authorities. In all these, the professionalisation of the minibus taxi industry is absolutely critical, but this will also come with additional costs.

Concluding remarks

The rationale for subsiding public transport in South Africa should be founded on principles of spatial justice. It is going to cost the fiscus an enormous amount of money to achieve this. However, the more focused the efforts, the closer South Africa will get to truly realising much need spatial redress and value for money for public transport subsidies.

About the author: Mathetha Mokonyama leads the transport systems and operations at the CSIR. He has research interests in the development and application of methodologies for translating society’s transport-related needs into appropriate transport policy, designs, plans and associated management systems.