Warning for municipalities over South Africa’s new driving laws

While the second phase of the Administrative Adjudication of Road Traffic Offences (AARTO) Act rollout has been delayed, municipalities are starting wake up to the cost and difficulties of implementing the controversial system – which could see local traffic services shut down, according to a new report.

The AARTO Act is a set of new laws and regulations which will govern traffic offences and violations across South Africa once fully rolled out.

The system has been in force in Johannesburg and Tshwane since 2008 – but not the points demerit system, which will be entirely new to all motorists in the country.

The system moves the handling of fines and traffic violations out of the ambit of the country’s courts and the Criminal Procedures Act and transfers it to the Road Traffic Infringement Authority (RTIA) on a national basis.

Various municipalities have raised concerns around this particular aspect of the laws, noting that the new laws will lead to revenue losses from fines, ultimately forcing local governments to find other ways to bring in money.

According to the Organisation Undoing Tax Abuse (Outa) a report flagging this issue was recently tabled at the Swellendam local municipality council meeting, where it noted that as much as 50% of traffic fine revenue could be diverted from the municipality to the RTIA, leading to millions of rands in lost income.

In an AARTO impact report, the municipality noted that the many aspects of the AARTO would have a detrimental effect on municipal finances – from administrative complexities to uncertain timelines in recovering money owed. Specifically, it flagged these main issues:

• Under the system, municipalities must cover all the costs of notices to alleged infringers – including working with the South African Post Office, which has an uncertain future. There are questions about whether these costs are fully recoverable.

• Fines issued by the municipalities will have to be paid over to RTIA: all payments will first be paid over to RTIA for reconciliation purposes, after which the municipal part will be paid back. There is no guarantee on payback time frames, however.

• For all electronic payments received by the municipality, the municipality may reclaim 3% for administrative costs. However, once again, these must be paid over and reconciled by the RTIA before anything comes back to the municipality.

• All provincial fines go directly to the provincial government and not to municipalities, as is currently the case.

• With camera fines, these get loaded onto RTIA software. Notices are issued via the Post Office at R32 per notice. The normal process plays out if the fine is paid within 32 days. However, if the fine is not paid within 32 days, all funds go to the RTIA and nothing gets paid back to municipalities.

The Swellendam municipal manager noted that the financial implications of AARTO are significant to the financial sustainability of traffic services and the municipality as a whole.

“The various scenarios show losses of between R3.7 million and as much as R5 million and more. Currently, the service generates a surplus and is crucial to the financial well-being of the municipality,” he said.

“A loss of R3 million to R5 million will mean not just shutting down the Traffic Services but also a reduction in other posts and functions dependent on the surpluses generated by the Traffic Services Department.”

The report noted that the loss of revenue from provincial traffic fines could be R5 million to R7 million, while municipal fines could decline about R7 million.

“The traffic department budget net position will decline from a surplus of R3.7 million to a deficit of R1.9 million.”

This raises questions on how the municipality will balance the budget. The wider implication is that the lost revenue will have to be made up elsewhere – with suggestions that this may be done through cross-subsidies from other tariffs or cutting expenditures. Either would have an impact on households and service delivery.

Additionally, municipalities will have to pay for new infringement books updated to AARTO requirements, new software and ICT equipment, and staff training on all this.

“Many municipalities do not have the revenue base to absorb the revenue loss,” the report added.

The report also noted that the Western Cape was supposed to have run AARTO pilot sites, but this didn’t go ahead after the Municipal Managers’ Forum asked the relevant MEC not to agree to this due to concerns over the financial impact and “the impracticality of AARTO”.

Postponed

On February 6th, the Road Traffic Infringement Agency announced that the implementation of the second phase of the Administrative Adjudication of Road Traffic Offences (AARTO) Act will be postponed.

The new AARTO system was initially planned to be rolled out across the country in phases after the Constitutional Court affirmed its constitutionality in mid-2023.

Phase 1 of the AARTO rollout started back in 2021 and has already been completed.

However, Phase 2 of the AARTO rollout, which includes the introduction of AARTO in 69 municipalities, has been postponed until further notice.

The RTIA said that the delay in launching phase 2 of the rollout is due to the agency and the Department of Transport still being in the process of “finalising certain issues” which would have to be included in the Proclamation of the AARTO Amendment Act.

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