While the DA asked the Minister of Transport, Barbara Creecy, to urgently intervene in what it deems the Road Accident Fund’s “imminent implosion”, the entity has hit back.
It told the minister that there is “no RAF that is about to collapse” and that the fund is now stronger than what it was in some years.
The DA’s Chris Hunsinger wrote a letter to the minister last week in which he drew her attention to the fact that the RAF seems to have halted payments for nearly four months.
Hunsinger said this state of affairs seems to point to the fund’s imminent implosion without prompt intervention from either the Transport Minister or the Portfolio Committee on Transport.
But the RAF management responded that the last annual report, audited by the Auditor-General of South Africa (AGSA) bears testimony that the fund is stronger than it was in 2019.
“The RAF management notes with disappointment and regret the posture taken by Mr. Hunsinger on the RAF and its current management. What is concerning and irks the Fund’s management is being called ‘cruel’”, it said in a statement.
Hunsinger said in the letter that over the years, the DA have seen a worrying disconnect between the department of transport and one of its key entities, RAF.
“The RAF CEO and the board have been operating unchecked and without proper oversight for too long. Having six transport ministers in only seven years has produced a perfect environment in which the RAF, for example, can pick which sections of the RAF Act to apply and which not to apply, based on what works best for them,” he said.
In this regard Hunsinger pointed to the onerous new requirements the fund tried to impose on traffic accident victims, by the introduction of a new RAF form when issuing claims, without having followed the proper administrative channels.
This notice was subsequently overturned by the court.
Hunsinger said the RAF does all in its power to limit the rights of claimants and is actively working, for years now, unchecked and with little oversight, to limit, ignore and dilute their lawful responsibilities.
“Claims need to be paid and the minister must intervene to ensure that they are,” he said. He added that victims should not be subjected to the “cruelty of the existing RAF management”.
In hitting back, the fund’s management said the RAF Amendment Act of 2008 was a monumental disaster from a financial sustainability point of view. The fund in 2008 had a short-term deficit of R284 million which increased to R6.9 billion in March 2015. By December 2019 this short-term deficit had reached R19bn and was projected to reach R51bn by 2022/23.“
However, through the interventions of this “cruel” management, the short-term deficit has since reduced to R8.3bn as of the end of March this year, the fund said.
It added that in the 2022/23 financial year, the RAF spent R45bn of its R48.6bn fuel levy income on paying claims, which it said is a complete departure from the past when administrative costs took a significant chunk of the fuel levy income.
The RAF management said while legal and administrative costs amounted to billions in the past, this has since reduced significantly in the past four years.
“It is just blue lies that the RAF has not paid claims in four months… Contrary to the assertions by Mr Hunsinger, what the RAF currently has, is a successful turnaround strategy,” the RAF management said.