Insights from Parliament: the Economic Regulation of Transport Bill
Feb 10, 2021
Metered taxi in Cape Town

The Economic Regulation of Transport Bill was introduced to the National Assembly on 31 January 2020. The aim of the Bill is to promote economic growth through efficient regulation of the transport sector. To this end, the Bill consolidates the regulation of the transport sector — currently regulated by a number of different bodies, including the Ports Regulator and the National Public Transport Regulator — under a single policy and regulatory framework. A central component of this is the establishment of two independent but integrated regulatory agencies, the Transport Economic Regulator and the Transport Economic Council. These bodies will replace the various specialised sector regulators.

By the Department of Transport’s approximation, this plan is expected to be realised within the next five years.

The Bill has been tagged as a Section 76 Bill. This is because of the effects its enactment will have on functional areas that fall within the jurisdiction of both national and provincial governments. The Bill therefore has to pass through both the National Assembly and the National Council of Provinces in order to be validly passed into law.

The bill is currently being dealt with in the National Assembly.

Today, 10 February, the Portfolio Committee on Transport begins its deliberations on the matters raised in public hearings that were held in October 2020. This includes an opportunity for the Department of Transport to answer questions which committee members may have.

Once the Committee completes its deliberations and submits a report to the National Assembly, members will vote on the Bill. If passed, the Bill will progress to the National Council of Provinces and undergo a similar process before the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure.

Following the findings of the Competition Commission’s provisional Market Inquiry Into Land Based Public Passenger Transport Report (Metered Taxis and E-hailing Services), some view the price controls introduced by the Bill as a positive step. The Commission found, for example, that some e-hailing drivers in South Africa now earn less per trip than they did in 2013, resulting in some drivers’ calls for price regulation. The Bill’s provisions would allow stakeholders a hearing on pricing in the industry. It would also empower government to approve the regulatory proposals it considers most fair after having taken these views into account.  

Notwithstanding the potential benefits of streamlining the regulatory framework and the regulation of prices in stakeholders’ best interests, there are significant arguments against the Bill.

E-hailing companies have expressed concern about the price controls introduced in the Bill. They have argued that price controls, especially in the early stages of the e-hailing industry’s growth in South Africa, will lead to price hikes for riders, which will ultimately negatively impact drivers.

“As with any legislation that significantly expands the discretionary power granted to a minister, the Bill leaves open significant questions about accountability and the prevention abuse in an environment in which corruption is rife”

Another criticism is that the Bill lacks clear criteria for determining which entities and services the Bill will apply to. This uncertainty could open the Bill to future legal challenge. A further potential issue — and one that a number of other recent Bills have faced — is that it purports to vastly (but unclearly) expand the powers of the Minister of Transport. This too would leave future decisions made under the legislation vulnerable to legality challenges. 

As with any legislation that significantly expands the discretionary power granted to a minister, the Bill leaves open significant questions about accountability and the prevention abuse in an environment in which corruption is rife. Empowering a single regulator to implement price controls and other measures could greatly compound concerns about corruption and abuse of power.

There are also critical commercial considerations regarding the effect of the Bill on the Transport industry. One concern is that, contrary to its stated intentions, the Bill may actually increase bureaucratic red tape in the sector, increasing the administrative costs and delays for existing participants and new entrants. Similarly, provisions like price controls may have the effect of increasing the barriers to entry, closing rather than opening the sector to new participants.

The time is now for all stakeholders in the sector to participate in the legislative process, and have their interests taken into account in the version of the Bill that is passed by Parliament.

Image credit: Leo Moko/Unsplash

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