AA Budget Speech Commentary 2012

Gary Ronald, Head of Public Affairs at the AA:

Road Funding Commentary

The lack of maintenance on our roads remains a bone of contention, with arterial routes further deteriorating due to congestion. This budget, the question of the user-pay principal will be on the tip of everyone’s tongues as Minister Gordhan rolls out his plans for 2012.

For this year’s budget, we predict that the allocation to road maintenance will be similar to 2011 – in the region of R28 billion. We hope that further measures are employed to ensure the taxpayer gets the best benefit from the contractors appointed to do the work.

Tolls remain a continous debate and the hope is that the issue will be reconsidered and an alternative source of funding will be identified – preferably through the fuel levy.

Petrol Pricing

International demand has historically dictated the cost per litre of diesel, which has been higher than petrol, and it is likely that this trend will continue.

Political tensions in the oil producing regions could serve to keep international oil prices above the $110 mark with a potential to even exceed $120. A stable or strong Rand exchange rate will assist in mitigating fuel price volatility.

Looking to April, we predict that there will be a guaranteed increase of at least R0.25 per litre as a direct result of the fuel levy and Road Accident Fund contributions. If Treasury decide to fund the Gauteng Freeway Improvement Plan from the fuel levy it is likely that the consumer will experience an additional R0.25 to the cost of fuel.

This increase will likely see freight and public transport costs increase, as will commodities on supermarket shelves – all negative influences on steadily diminishing disposable income of most families.

Derek Hall-Jones, DM Road Services & Technical at the AA:

Skills Shortages

The skills shortage issue continues to be a major concern, with organisations such as the AA Technical Training College filling a critical gap to provide skilled workers to the industry.

In the 2011 budget speech, spending on South African education received high priority, with Finance Minister Pravin Gordhan allocating more than R189-billion to the sector for 2011/12. That was up by 9.7% over 2010/11.

This year, we are expecting more of the same figures with a view to further improve South African education and deal with the skills shortages a major focus and priority for government.

The proliferation of new legislation, like employment equity legislation and the mining charter for women, reflect the governments concern for this issue. The legislation aims at developing the skills and employability of all citizens in order to alleviate poverty, address historical inequalities, create employment opportunities and improve the competitiveness of the national economy.

TJ Hanekom, DM Fleetcare at the AA:

Carbon Emissions Tax

We predict that the Minister will announce the first carbon emissions tax for the commercial market including rail, marine and air – all of whom are major consumers of fuel. As a result, there is likely to be a direct effect on commercial vehicle sales.

While the need to protect the environment is critical, the knock on effect of higher costs to the commercial sector inevitably filter down to consumers.

Automobile Association of South Africa (AA)
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