Now on a serious note, let us talk about why the mention of South Africa’s run-down railway network is important here. The City of Cape Town (the City) has been pushing for the devolution of the railway function. The City wants to manage passenger rail in the metro. In a recently published newspaper article the Mayor, Geordin Hill-Lewis, announced that the City issued a tender for a feasibility study to be undertaken from 1 July 2022 to determine the City’s capability to undertake the function, after receiving the go-ahead to do so from National Treasury.

The legal framework regulating railway, and public transport generally, is extensive and quite complicated. Who are the parties responsible for the passenger rail service?

Who is responsible for railway services?

There are two role players responsible for the function of passenger railway services in South Africa, both placed at the national level of government. First is the national department of transport. In terms of Schedule 4A of the Constitution, ‘public transport’ is a concurrent function of national and provincial governments, meaning Parliament and the provincial legislatures may pass laws that regulate (the execution and administration of) public transport in the country. The passenger railway service function forms part of ‘public transport’. The executive authority is then undertaken by the Minister of Transport, through the national department of transport. The National Land Transport Act of 2009 (NLTA), which is undergoing reform, further regulates land transport and provides for the roles of national, provincial and local government in the performance of the function. National government is empowered to formulate transport policy and strategy (for air, maritime, public transport and road transport); regulate these matters; ensure coordination between the three spheres of government and public entities to guarantee efficient and effective performance of the land transport function; provide capacity building in all functional areas and exercising monitoring, evaluation and oversight over all functional areas.

The second role player is the Passenger Rail Agency of South Africa (PRASA), a national government business enterprise (national public entity) in terms of Part B of Schedule 3 of the Public Finance Management Act (PFMA). It is a company whose ownership control lies with the national department of transport. PRASA, however, enjoys financial and operational authority to provide rail services to South African citizens. It is responsible for the actual rail infrastructure network and the provision of passenger rail services.

Why City of Cape Town wants passenger railway service function?

Why does the City want to take over the rail management function within its jurisdiction? Is there a legal framework that supports the City’s quest? First, to paraphrase, the City argues that it cannot meet the objectives to integrate land use and transport planning, overcome traffic congestion and meet climate change commitments without having a safe, efficient, attractive, affordable and integrated public transport system, with passenger railway being the backbone of its public transport system. This, in its argument, is because majority of the citizens depend on and use the railway system as the main transport source into and out of the city.

Secondly, although national government is responsible for developing transport policy for the country, local government is responsible for executing the transport policy mandate through by-law regulation, municipal plans, Comprehensive Integrated Transport Plans (metros and districts), local Integrated Transport Plans (locals) and the implementation and funding of an integrated transport system (National Land Transport Strategic Framework, 2017 (NLTSF)). Local government’s role in the performance of the municipal public transport function is further provided for in the NLTA that sets out municipal public transport responsibilities under sections 11(1)(c), (2) and (3) of the NLTA. Most of these are planning responsibilities – with specific reference to railway services, municipalities are required to include service level planning in their transport plans for passenger rail in their areas on a corridor network basis (section 11(1)(c)(iv) and (xix) of the NLTA).

Thirdly, in terms of Schedule 4B of the Constitution ‘municipal public transport’ is listed as a local government function. The Municipal Demarcation Board defines ‘municipal public transport’ as the regulation and control, and where applicable, the provision of services for the carriage of passengers, whether scheduled or unscheduled, operated on demand along a specific route/s or where applicable within a particular area. The NLTA provides for service level planning by municipalities for passenger rail service on a corridor. The law further imposes a number of obligations on a municipality to integrate passenger rail planning in its integrated public transport networks. Where a municipality carries out the aforementioned functions, the above could be read as supporting an argument that railway services within the City constitute ‘municipal public transport’.  Such a reading, however, ignores the broader network nature of railway services and has the unintended consequence of placing the railway service function within the ambit of all municipalities that have railway infrastructure and a railway service within their jurisdiction, irrespective of whether they have the capacity to perform the function or not.

Legal framework enabling the City of Cape Town to make  railway advances

According to section 99 of the Constitution, a Cabinet member has the discretion to assign any executive power or function that is to be exercised or performed in terms of an Act of Parliament to a municipality, by agreement. The assignment must be consistent with the law regulating the exercise of the said power or function to be assigned. With reference to transport/rail services, ‘executive function’ refers to the implementation of national laws on transport/rail services, implementing national policy on transport/rail services, initiating transport-related laws and the provision and/or regulation (or financing) of transport/rail services. The discretionary nature of section 99 is changed by section 156(4) of the Constitution, which makes it mandatory for a Minister to assign, to a municipality, the administration of a Schedule 4A function that necessarily relates to local government if the identified municipality has the capacity to administer the function and the function would most effectively be administered locally. This must, of course, also be by agreement. As explained above, ‘public transport’ is a schedule 4A function and therefore falls within the ambit of the functions that may be assigned according to section 156(4), subject of course to the prerequisites set out in the section. Although the provision requires unpacking and interpretation to determine what it actually means in practical terms, the good news is that even the Constitution says assignments can happen.

There is also a detailed process governing the fiscal, capacity-building, support and planning requirements of assignments in the Municipal Systems Act 2000 and the Financial and Fiscal  Commission Act 1997 (read together with the Municipal Systems Act: Guidelines on the allocation of additional powers and functions to municipalities). Important to highlight is section 9, 10 and 10A of the Municipal Systems Act, which collectively require the involvement of multiple stakeholders in the spirit of co-operative governance, capacity assessments and assessments of the financial implications of the assignment. The sections also require assessments of the possible financial risks or liabilities for the receiving municipality and guarantees on the provision of funding for the function to be assigned (to mitigate against unfunded mandates). Lastly, the sections require the provision of capacity-building and support to a municipality where needed.

Lastly to note is section 11(2) of the NLTA, which states that the Minister of Transport may assign any of the transport functions set out in section 11(1)(a) to a municipality, subject to sections 99 and 156(4) of the Constitution and sections 9 and 10 of the Systems Act, to achieve the objectives of the Constitution and [the] Act.’ Additionally to note is section 11(4) of the NLTA that enables a municipality to ask the Minister of Transport to assign a national function in the NLTA where that municipality has an acceptable integrated transport plan, subject to section 156(4) of the Constitution, as well as sections 9 and 10 of the Systems Act.

The above brief discussion shows that the legal framework for the assignment of the passenger rail function to the City clearly exists and speaks to the policy intention set out in the [Revised] White Paper on National Transport Policy of 2021 to make metropolitan and larger cities the centre of responsibility for public transport, integrating with the municipalities’ land use planning responsibilities. Even the NLTSF (under 3.2.14 institutional arrangements) echoes that the assignment of the transport responsibility to metropolitan and large cities needs to be accompanied by appropriate mechanisms to effectively manage financial risks, which mechanisms are provided in the Municipal Systems Act.

The legal framework also speaks to the policy intention provided in the recently gazetted White Paper on National Rail Policy of 2022. The Policy stresses that the NLTSF is clear that urban commuter rail management is a local government function and that the New Growth Plan envisions the devolution of transport management to local government. The Policy requires the development and approval of a Devolution Strategy for Commuter Rail to guide the assignment of the passenger rail function to municipalities, which strategy will be aligned with the Integrated Urban Development Framework for the next restatement of the NLTSF in 2023. In noting section 11(2) of the NLTA, mentioned above, the Minister endeavours to work on a framework with SALGA to capacitate municipalities as necessary and devolve operational subsidies for urban commuter rail to capacitated municipalities. The Department of Transport will also address the assignment of urban rail functions to metropolitan municipalities, including planning, funding, procurement, operations and maintenance once the strategy for devolution has been concluded and approved. In acknowledging that the abovementioned process will take time, the policy notes that requests from metros for assignment, before the conclusion of the Strategy, will be considered ‘sympathetically’.

Commentary

When citizens use the train, they do so having purchased tickets. It is a service for which they pay, not a free service rendered by PRASA. This service should, therefore, be of a good standard to fulfil the value for money that ought to attach to paid service. This has not been the case, not only in Cape Town but generally across South Africa. If the City wants to be assigned passenger rail management for its jurisdiction, it needs to prove capacity to take over the management through financial capability, human resource capability, resource capability, financial sustainability and non-interference with the City’s original functions. Further, the City must prove that it can indeed give an overall better rail service to the residents dependent on the trains for daily commuting. In short, the City will need to demonstrate that it will be able to give value for money to the end user.

Although spearheaded by the City of Cape Town, the move to have passenger rail services devolved to local government is relevant for other cities as well. The City’s ‘less talk, more action’ deed is commendable and is certainly one to keep our eyes and ears on. Through the City’s action, the possibilities to test the constitutional and legislative framework governing executive assignments have opened up and will force all three spheres of government to start thinking about the interpretation and application of section 156(4) of the Constitution and what it could mean, not only for railway services but also for other Schedule 4A and 5A functions that meet the prerequisites set out in section 156(4) of the Constitution.

By Thabile Chonco