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Cape Town - The current Road Accident Fund (RAF) model is inequitable and unaffordable. The fund’s long-term liabilities are estimated at R98.5bn and projected to grow at 15% each year, states the Budget Review.
The deterioration in the RAF’s financial position has been exacerbated by an improvement in the processing of claims lodged, which has reduced the number of open claims from 253 111 in 2011/12 to 198 407 in 2013/14.
As the claims backlog has been processed, the average value of claims concluded has increased substantially.
The result has been a substantial cash shortfall as reserves are exhausted. While the proposed 50 cents per litre increase (a rise of almost 50%) in the fuel levy will reduce pressure on the RAF, it is insufficient to resolve the liquidity shortfall in 2015 to 2016, according to the Budget Review.
Further increases in fuel taxes, however, are not proposed at this time. In 2002, the Road Accident Fund Commission recommended moving to a no-fault system that would provide equitable, sustainable and affordable support to accident victims. This system would replace the current fund and its compensation system with the Road Accident Benefit Scheme.
During 2015, government will table legislation to replace the RAF with the new scheme, the Budget Review says. From 2016 and 2017, fuel levies will be reserved to finance the new arrangement. National Treasury is considering options to address the RAF’s accumulated liability. The intention is to pay down outstanding claims over a reasonable period of time.
