Opinion

Written by Collins Letsoalo

The Automobile Association’s (“AA”) Statements on RAF misleading

and its analysis of the fuel levy, all ‘Sound and Fury’

We have noted with dismay the misinformation perpetuated by the AA over the last
few months and shocked by the shallow analysis that leads to misleading
“recommendations” made.

We need to emphasize that we espouse the ideals of a free society where every voice
is important and is listened to; and, therefore, support the need for a robust discussion
aimed at finding sustainable solutions for the rising cost of living in the country. We
also understand that these rising costs of living impacts more heavily the poor and
deepens poverty.

This is, therefore, a very serious matter and must not lend itself to being
weaponized for profiteering interest of the private sector. One may ask how this is the
case in this fuel price increases discourse. We aim to expose this tendency that is
driven by the AA narrative about the RAF Fuel levy and the management of the RAF.
We seek to do this to enlighten those that may not see this and are misled by this
misinformation by AA masquerading as “private sector contribution” to a legitimate and
necessary discourse aimed at finding sustainable solutions for our country. This white
noise seems to mislead us into making structural changes to what can best be
described as a cyclical event or supply side shock.

Reading from the AA website about the “AA’s Call to #ReviewtheFuel” is painful, as
the content is shallow, not well researched, and one struggles to find the nexus
between the “findings” and “recommendations”. In trying to be relevant, the AA seems
to proclaim to be a “voice of the consumer” and the “voice of the private sector”. In a
closer analysis one will find that AA is neither. It may be more of the latter, but it is
NOT the voice of the consumer; it is purely a business, competing for clients and
“members”.

One must, therefore, not be misled to believe that they are the “voice of the consumer”.
AA actually provides various services from roadside assistance to even selling
insurance. We will later then expose why some “findings” and “recommendations” are
meant to create business opportunities for AA and their insurance industry collective.

Let’s then dissect the AA analysis based on facts.

AA Statement:
“The General Fuel and Road Accident Fund levies contribute significantly every litre
of fuel sold, but citizens don’t see tangible benefits from these taxes.”

Facts:

The fuel price over the last 14 months has been mostly driven by the exchange rate
and global oil prices which are underlying variables of the basic fuel price. The volatility
associated with these two variables clearly mirrors the increases in the fuel prices,
both diesel and petrol. To illustrate this, the fuel levies last increased in April 2021,
with the RAF levy increasing by 11.0 C/l to R2, 18 C/l, whilst the General levy
increased by 16.0 C/l to R3,85 C/l, (a combined increase of R27.0 C/l). However, the
fuel price (based on the price of 95 Petrol in the Inland region) increased by 39.5%
from R17,32 C/l in April 2021 to R24.17 C/l in June 2022. Furthermore, the basic fuel
price (excluding fuel levies) increased by 60.6% from R11,29 C/l to R18,14 C/l over
the same period.

The graph below illustrates this very clearly.

 Fuel Prices and Levies
Fuel levies and taxes 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
RAF fuel levy (cents/liter) 154 163 193 198 207 218 218
General Fuel Levy (cents/liter) 285 315 337 352 377 385 385
Average Fuel Price (cents/liter) 1163 1215 1411 1408 1416 1955 2309

It is therefore rather, misleading to focus on the fuel levies as the biggest contributor
to the fuel price increases.

In addition, the AA would like to have South Africans believe that “citizens don’t see
tangible benefits from these taxes”. This cannot be further away from the truth. The
RAF has paid compensation in the last financial year, of more than R40 billion. It
continues to provide for post-crash medical care through what is known as medical
undertakings. In a country with such high levels of poverty and unemployment, a RAF
payout for a loss of support to surviving dependents of a deceased breadwinner can
be the difference between economic survival and poverty, and to therefore suggest
that these life changing compensation payouts are “intangible benefits” is
disingenuous.

The AA must take South Africans into their confidence about their product known as
“AA Accident Claim Assist” where they claim, “We’ll help you lodge a claim with the
RAF- so you get the payout you deserve”. The AA is therefore duplicitous, in that it
promises payouts that offers no “tangible benefits”. As clearly illustrated above, road
accident victims benefit immensely from the RAF.
It is the objective of the new model to ensure that the road accident victim is the biggest
beneficiary, and this will be achieved by focusing on reducing administrative costs and
managing the RAF on efficient fund management principles.

AA Statement:
“RAF is poorly managed and a drain on country’s resources.”

Facts:

AA makes these astonishing and astounding claims, without adducing an iota of

evidence to support these statements. This is not only trite and misleading but also
insulting to the men and women who have over the past two years produced good
operational and financial performance. Under the political leadership of Minister
Mbalula RAF is a better organization and has been effectively and efficiently managed
by a permanent board and executive management. AA must acquaint itself with the
2020-25 RAF Strategic Plan and the new RAF model which are in their third year of
implementation.

We don’t regard the paying of compensation to road crash victims, majority of them
poor and African as, “a drain on the country’s resources.” It is not clear how AA arrives
at this conclusion. One must not forget that; it is only from 2008 that taxi passengers
could claim more than R25000 from the RAF. It is therefore curious why the payment
of compensation suddenly becomes “a drain on the country’s resources”.

The AA “recommendation” is “Privatisation of the RAF, or at minimum semi-

privatisation of claims management”. It seems, at least to us, that, this is at the core
of what AA seeks to dupe South Africans into believing the idea that, privatization is
the panacea of our fuel price “crisis” or if you frown upon that idea then, “at a minimum
semi-privatization of claims management.”

This is risible, at the least. Suddenly, the “drain of the country’s resources” become
valuable when “privatised” or better still, “managed by the private sector”. We must
reject with contempt this notion and understand why we need a capable and
developmental state in the first place.
Not everything private sector is effective and efficient: The recent events in the aviation
sector, involving a private sector entity bears testimony. The role of the state in
providing social benefit, which is the role of the RAF cannot be privatised.

We must continue looking for solutions to the rising cost of living and reject the
temptation of private sector interests masquerading as shallow “recommendations”.
Let’s rather improve our argument than increase the noise. We need sustainable
solutions that are based on facts and not sound and fury.

Collins Letsoalo is the Chief Executive Officer of the Road Accident Fund.