Bus subsidy from Dept. of Transport

[Dave A]

This story raises some questions in my mind. Like what is this bus subsidy all about?
And is this the unpaid portion that all the fuss is about?

The South African Bus Operators' Association (Saboa) will be filing papers against the Transport Department if it fails to come up with a R1,2-billion bus subsidy, it was announced on Monday.

"I can confirm instructions that we have been advising Saboa, in relation to the bus-subsidy matter," said director Robin Carr from Bowman Gilfillan attorneys.

According to Saboa vice-president Adolph Komane, millions of bus passengers across South Africa may be left without public transport should the subsidy not come through.

He said almost three million passenger trips and a total of 1,5-million passengers will be affected each day if subsidies are not paid out.
full story from M&G here

And then there is the value. By my maths that claim works out at R800 per passenger being ferried back and forth.

Can anyone shed any light on this?

[Dave A]

UPDATE: Apparently it is money owed on an existing subsidy, the Dept. of Transport is over budget and hasn't got the money to pay.

Or put another way, they've got to make a special request for additional funds to be able to pay out.

That R800.00 per passenger has still got me thinking though.

[duncan drennan]

That R800.00 per passenger has still got me thinking though.

R2.20/day (if the R800 is over a year)...what exactly has is got you thinking?

[Dave A]

Would the subsidy be payable annually?

[duncan drennan]

Well, there is the crunch. What are the terms of the subsidy? Annual, or maybe it is linked to the contract term (e.g. R1.2bil for a 5 year contract)

[Dave A]

Dunno - that's why I'm asking.

All I do know is that subsidies have a knack of producing unexpected, undesirable side-effects. I'm trying to get a handle on the scale of the perversion potential.

[duncan drennan]

All I do know is that subsidies have a knack of producing unexpected, undesirable side-effects. I'm trying to get a handle on the scale of the perversion potential.

Someone needs to tell that to the American government and motor industry - oh, whoops, didn't the president mention some concerns?

[Dave A]

In similar vein - look at food subsidies and their effect on nations which don't have a food subsidy system in place. I recall the argument being made somewhere that European food related subsidies in particular are contributing to food production problems in Africa.

[Dave A]

This is going to be interesting.

A court order forcing government to pay about R300-million towards its outstanding bus subsidy payments was only an interim solution, the South African Transport and Allied Workers' Union (Satawu) said on Thursday.

"We're happy as an interim measure but to be honest we need a permanent solution," said Satawu's policy research officer Jane Barrett.

Barrett was speaking outside the Pretoria High Court after it ruled that the Gauteng transport department had until noon on Friday to pay about R300-million to the South African Bus Operators' Association (Saboa).

This amount was for subsidies for November 2008.

The application for payments for December, January, February and March would be heard next Wednesday.

The full amount outstanding to Saboa in Gauteng is about R1,2-billion.
full story from M&G here

The crux of the problem seems to be the Department of Transport is over budget and treasury is not releasing additional funds.

[Yvonne]

The bus subsidies were put under to spotlight years ago, and then discussion just "Vanished". At the time there were hints of questionable irregularities.
I thought the subsidies were history when ""Putco" downsized!
I used to know someone who worked for Putco, she said at the time that the business of Putco was not transporting but subsidies!
All companies who receive subsidies should be forced to a public enquiry with full disclosure of their financials.

Could this be considered a "forced" bail out and support of one industry over all the others?

The increased fuel price has affected every business in South Africa to some degree.

Subsidies never ever work, there are always more negative factors that positives.
How come we don't take lessons from history, but we repeat them and dream of a different outcome.

My sense watching the interviews last night was: "We don't care where the money comes from", just pay it or else!

I too have questions with the calculations?

Heard or read something really interesting the other day, and now cannot find it, so this is hearsay!
Regarding the strength of the "Taxi" industry and a comment was made that the taxi industry had no concerns about "Rail" taking a slice of the cake for 2010, but the bus industry could.
And then a discussion about the number of drivers which would need to be trained between now and 2010, which was not happening!

Will the added costs of transporting during 2010 have added cost to South Africa for subsidies if buses are used?

Wheels with wheels?

Yvonne

[garthu]

Is another word for subsidy not profiteering? Thats all it really is. I know of a private bus owner, he was running 5 buses privately, no subsidy, had a long chat with about it and he admitted it was hard business, but then thats it what bus is? An audit would reveal new methods to all of us how to really make money

[reuben]

In my humble opinion subsidies has always shown to have someone creaming it from the top,thinking in the older day's of overseas contracts,for every employee taken on the government paid up to sixty percent of the hourly wage.result scam,!1000 employees listed but in fact only 300 max were actually employed ,just a thought

[Dave A]

I see the "dispute" drags on.

The question about how well managed this subsidy might be is certainly valid, particularly since it seems the department obviously can't manage their own budget.