Gauteng's e-Tolling Could Affect Property Prices

Gauteng's e-Tolling Could Affect Property Prices

Private Property South Africa

Despite country-wide marches held on the 7th of March by labour federation COSATU, Government is standing firm on its decision to implement the Gauteng e-tolls system at the end of April.

On the day of the protests, COSATU delivered a memorandum outlining the federation’s grievances relating to the system. Amongst the issues raised, COSATU stated that despite the fact that buses and taxes will be exempt from tolling, the toll system will make the roads too expensive for the poor to travel on and will raise food inflation by adding to the cost of transporting goods. COSATU General Secretary Zwelinzima Vavi warned that the federation would not permit e-tolling to go ahead.

Minister in the Presidency Collins Chabane told a post-cabinet media briefing the day after the protests: “Government has made a decision and Government is going to proceed to implement that decision. At the time when there's a necessity for that decision to be changed, cabinet will look at that, but at the moment, the cabinet decision stands.”

COSATU rejected his comments and vowed to continue with the campaign to make the toll system ungovernable. And they’re not alone. Various other organisations are considering legal action to halt the project. Government has remained unmoved on the topic. Indeed, President Jacob Zuma recently echoed Chabane’s remarks saying that the tolling of Gauteng's roads was an issue that had been consulted on and accepted by Cabinet.

He added that it was understood that the tolls would add to the financial burden of those affected by serious poverty and unemployment but that the infrastructure development would also create jobs which would help eradicate the burden. Government’s attitude has not gone down well with the general public and rumours regarding punitive action are adding fuel to what could well become a bonfire.

It has been suggested that the South African National Roads Agency Limited (SANRAL) will gain ‘uncontrolled access’ to the bank accounts of those registered for e-tolling. SANRAL dismissed this and added that road users would not be fined if they had insufficient funds in their bank accounts, nor would drivers’ licences be suspended should outstanding fees not be paid. Paradoxically, Chabane recently announced that a draft bill brought by the transport department providing for civil action against those who didn’t pay tolls or refused to pay e-tags would be submitted to Parliament shortly.

It remains to be seen what will transpire. Unfortunately, in this instance it could well be a case of ‘the one with the biggest stick wins.’ In addition to the immediate implications, there are other spinoffs which could arise from the tolling system says FNB’s Household and Property Sector Analyst John Loos.

According to Loos, property prices in the Northern suburbs could escalate as people from the East and West Rand try to move closer to the North’s business nodes in an attempt to cut transport costs. He adds that a huge urban redesign and property densification would be required to accommodate high transport costs.

“We have a low density lifestyle and our cities sprawl. This does not create an environment for viable mass public transport,” says Loos. He remarks that property densification is occurring but on a low scale partly in response to rising transport costs which have, until now, only manifested in the form of congestion and time costs. “But densification is a long, slow process as one cannot demolish, redesign and rebuild large parts of a city overnight.”

Loos adds that by tolling the freeways, much of the shorter-haul commuter traffic will revert to the smaller, un-tolled roads, thereby increasing congestion and wear and tear on these thoroughfares.

“Whether or not the tolling goes ahead, the level of opposition towards the toll road system suggests that the ‘paying public’ has limits as to how much it is going to tolerate. We may not have reached the limit yet but in the seeming absence of a co-ordinated and well-publicised strategy for urban infrastructure funding, the key concern must surely be that the sharp increases in the various taxes and tariffs may not end any time soon.”

Given this scenario, Loos advocates a fuel levy over the tolling system. “A fuel levy would appear far fairer and less likely to create negative transport and property distortions. A few extra cents per litre would hardly be noticed by motorists across the country and would be more than adequate.”

In conclusion, Loos says a co-ordinated urban transport and infrastructure strategy is needed and that Government needs to take a far more gradually phased - in approach to taxes and tariffs to take into account the slow pace of costly adaptation required.


Found this content useful?

Get the best of Private Property's latest news and advice delivered straight to your inbox each week

Related Articles

Commercial property market insights - It's not all doom and gloom out there
The commercial property market has the potential to rebound depending on a number of factors.
Interest rate disappoints, but South Africans will buy property this festive season, says Seeff
Despite the South Africa Reserve Bank's decision to keep the interest rate at 3,5% South Africans are predicted to still purchase property this festive.
Stable interest rates lead to housing market boom
There's a huge spike in homebuyers in South Africa.
What it means to buy a property in distress
Everything you need to know about the process of purchasing a distressed property.