BUSA has in previous years recognised the “user-pays” principle as a necessary and proportionate funding mechanism for infrastructure projects, especially where fiscal constraints militate against direct fiscal support. However, BUSA has equally recognised that the adoption of the “user-pays” principle, insofar as the Gauteng Freeway Improvement Project (GFIP) is concerned, was an inefficient choice under the circumstances.
This is not to say, however, that business did not support the upgrades to Gauteng’s highway system or that industry denies the significant economic and social benefits accruing from improved infrastructure. Indeed, business consistently maintains that investing in world-class infrastructure, including roads, not only directly benefits the economy through positive second-round effects (i.e. generating greater efficiencies), but also has the potential to serve as a significant impetus for economic growth in its own right.
The option of the fuel levy (itself a variation on the “user pays” principle) remains both viable and economically sound, with a fuel levy increase of between R0.11 – R0.26 per litre needed to repay the GFIP Bond (including interest) over the next 20 years. In BUSA’s view, increases in the fuel levy to fund the GFIP should be ringfenced to ensure its allocation as intended.
Considering the above, BUSA strongly urges the government to abandon e-tolling as the funding mechanism for the GFIP. It is the view of business that the system has proven unworkable and introduced economic distortions that prejudice compliant businesses. BUSA proposes that the GFIP be funded – where alternative savings within the current expenditure ceiling are possible – through allocations from the fiscus. Any shortfalls from reprioritised government expenditure may be funded through moderate increases in the fuel levy, which remains an administratively and economically efficient mechanism to collect revenue.
BUSA further urges government to work with speed in moving towards an alternative funding model for the GFIP, a move which would go considerable distance in signalling to the market government’s ability and resolve to change course for the benefit of the economy.