No-fault road accident fund bill a setback
If it’s passed, it won’t matter who’s at fault, so even drunk and reckless drivers will get away with breaking the law and still be compensated for it, say critics
PICTURE the scenario: a drunk, unemployed driver skips a traffic light, smashes into a car, kills the breadwinner and severely injures the family. Under the current Road Accident Fund (RAF), only the crash victims are able to lodge a claim against the scheme. They are likely to receive lump sum compensation factoring in career path and inflation, will be paid out for lost earnings, medical costs, funeral expenses, general damages and more.
Under the proposed, no-fault Road Accident Benefit Scheme (RABS), it doesn’t matter who caused the crash because anyone can claim, say critics.
So the victims might receive little-to-no payout, while the drunk driver immediately qualifies for medical treatment, rehabilitation and an income based on the average annual national income (AANI).
The breadwinner, who might earn above the statutory cap of around R248 000 a year and has medical aid cover for the family, will receive no benefits, despite fuel tax contributions, and the family has no legal recourse. That could be me. Or you.
The DA, academics and lawyers have called RABS a setback for crash victims, which will double the administrative load, cost significantly more and could incentivise desperate people to be injured, so they can claim from the fund.
And consumers need to pay attention because the bill is being fast-tracked through Parliament, where it’s been debated over the past four weeks.
DA shadow minister of transport Manny de Freitas said he feels strongly about RABS in its current form because it doesn’t matter who’s at fault, meaning drunk and reckless drivers will get away with breaking the law.
“Because of the high unemployment rate, we estimate the non-employment benefit in terms of RABS alone to be in the order of R20 billion a year.”
But if medical costs, loss of support, loss of income, funeral expenses and legal costs are added, the RABS benefits will exceed the current budget of R30bn annually by a “very large margin”.
“Our (DA) concern is due to the limited budget, the only way that RABS will be able to function will be through the limitation of rights and benefits… We are deeply concerned the introduction of RABS means further erosion and worsening of the position of the road accident victim in South Africa, especially for the more productive tax-paying section of this constituency.”
De Freitas said not only is RABS unaffordable to implement, but it isn’t aligned to the needs of the average crash victim. It abolishes victims’ constitutionally-enshrined common law rights to access to the courts.
The party has called for more consultation with stakeholders and that those consultations be factored into decisions.
Gert Nel of Gert Nel Attorneys, which is representing the Law Society of the Northern Provinces in the matter and attended the presentations, said the RAF is a good system, but its administration is problematic, which doesn’t justify changing the law.
“If it did, we wouldn’t have these issues. Rather than make our roads safer and employing more traffic officers, they want to introduce new laws.”
Kirstie Haslam of DSC attorneys, who also attended the presentations, said as much as 65% of crashes are caused by drunk drivers, but since that isn’t a schedule 1 offence, such drivers could end up being compensated. Then there’s the moral hazard risk: “There’s provision for unemployed people to get the monthly benefit based on the AANI. That temptation will be significant.”
Nel agrees: “It incentivises being in an accident, a beggar on the street corner, who is desperate, might get somebody to drive over their foot. They would immediately qualify for an annual national income of about R44 000 a year.”
Haslam said the Transport Department based its statistics on a single actuarial study, which is “highly speculative”.
“All actuaries who came to Parliament said that study should be subject to peer review. The department’s own study showed huge variance if you adjust one aspect, it could have massive impact.”
The department, which wasn’t able to comment on this by deadline, has also not ironed out its tariffs, Nel said.
“But how do you know the system is cheaper if you don’t know at what rate you’re going to pay? You can’t rely on public health and it’s a constitutional issue to have access to private health.”
Nel said a no-fault system won’t work because it’s too expensive. “To justify why no-fault will work here, they (Department) compared us to Namibia with a much smaller population and not a third of the vehicles or accident rate.”
Buried in the report, Haslam notes a section speaking about funding requirements mentions doubling the fuel levy to subsidise it. “It’s going to cost a vast amount of money to fund this.”
The public consultation process, De Freitas said, is likely to take place from next month until September, but Haslam believes it’s “paying lip service” to the process.
“At the end of the parliamentary hearings, they passed a motion of desirability, which is a very important step in this process.”
But the RAF said the legal profession and intermediaries have the most to lose if RABS is passed. “(They) have a significant vested financial interest in and financial dependence on retaining the status quo.
“In the past financial year, the RAF paid R8.3bn (unaudited figure) in intermediary costs. In addition to the aforementioned figure, these intermediaries also retain a substantial further amount as contingency fees recovered from the compensation paid by the RAF to the claimant. In a report prepared for the RAF in 2009 by a professor at the University of Pretoria, a view was expressed that as much as 70% of the fuel levy collected to pay claims does not reach its intended beneficiary, the road accident victim.”
The RAF has denied the department tagged the bill to bypass muster.
“Parliament has tagged the bill as a section 75 bill. Contrary to what the Law Society states, section 75 bills do go to the National Council of Provinces.”
They said consultations has been thorough and inclusive, starting with a commission of inquiry appointed in 1999, headed by Justice Kathy Satchwell.
There were also “widespread” stakeholder consultations over the years with industry groupings from commuter groups, the insurance, funeral, medical and legal industries as well as disability groups. “At no point was the process of consultation rushed and claims of this nature are irrational. There has been extensive consultation to date with further consultation still to take place.”
The fund said RABS does provide for earning thresholds. “If you earn above the earning threshold you are not excluded from claiming a benefit, as alleged by the Law Society, but the benefit you are able to claim is then capped at the upper threshold. This is also the position under the current RAF dispensation and is therefore not new. As regards those who do not earn, or earn below the average annual national income, their benefits are based on a deemed income equal to the average annual national income.”
As regards so-called lifestyle benefits (or general damages), the proposed RABS scheme “prioritises need over loss and expands access to 40% more claimants, especially the poor, who will gain access to benefits they do not have at present”.
“The Law Society has in the past and will likely continue to publicly criticise the bill, but this is to be expected from an industry that stands to lose billions if the bill comes to fruition.”