SA’s Regulation of Transport Bill (B1-2020) should be abandoned

The Economic Regulation of Transport Bill (B1-2020) published for public comment is problematic across three broad areas. It unnecessarily and unjustifiably expands the extent and potential scope of government interference in the transport sector; like much other legislation it vests executive officials, primarily here the Minister of Transport and the proposed Regulator, with discretionary powers that are not restrained by any objective guiding criteria; and it is clearly aimed at centralizing governmental power away from civil society and independent institutions into the hands of the Department of Transport and its Minister. Also, it contains vague provisions that do not meet the requisite quality of legislative drafting.

Inter alia the Bill seeks to “consolidate the economic regulation of transport within a single framework and policy”. The FMF is concerned that the Bill serves no other purpose than to add extra layers of bureaucracy and red tape, including price controls, during a time when this key sector is still reeling from the effects of Covid-19.

In its submission (here), the Free Market Foundation’s (FMF) Rule of Law project proposes that the Bill be abandoned in its entirety and that, at the very least, any mention or reference to price control must be removed.  It is imperative that the deficiencies in the legality of the Bill (mostly relating to the Rule of Law) be removed to encourage and incentivize free enterprise and economic growth.

Section 3(1)(a) states that the Bill seeks to “promote the development of a competitive, efficient and viable South African transport industry contributing to economic growth and development”. While this goal is laudable, the provisions in the Bill directly contradict it by creating a new regime of price-fixing and red tape. Instead of adding more, the government should repeal existing regulations to allow new entrants to the market to be free from compliance with onerous legal requirements.

The Rule of Law, enshrined in section 1(c) of the Constitution, provides that Parliament refrains from assigning unrestrained discretionary powers to the executive in the legislation it enacts. The Bill, however, is riddled with provisions empowering the Minister and the Regulator to, for example, appoint certain functionaries and direct certain people to carry out actions based on their own whims, without any of these decisions being subject to any restraint by legal principles or criteria.

The Bill of Rights in the South African Constitution secures that South Africans are protected from unwanted government intrusion. The FMF’s head of legal policy and research, Martin van Staden, said, “The Bill takes away so much power and right to choose from third parties and enforces regulation and red tape on a key industry during a time when South Africa is experiencing near-zero economic growth.”

He continued, “The Bill represents a grave infringement on South Africans’ guaranteed sphere of freedom and no cogent justification is made for such an infringement either in the Bill itself or in its accompanying socio-economic impact assessment. The right to freedom of trade, occupation, and profession, contained in section 22, is unjustifiably limited by the Bill.”

“We may express ourselves in certain ways without interference, we may own and keep property without interference, and we may choose our own occupations, religions, have our own opinions and beliefs, and may decide how we live harmoniously with our fellows. These liberties may be limited by the application of section 36(1) of the Constitution, but the justification for such limitation is strict and methodological,” said van Staden.

Price controls, which are the main feature of the Bill, are detrimental to a healthy economy and, at all times, will lead to distortions of market forces and incentives. The Bill is fundamentally at odds with economic reality and with the legal-constitutional paradigm in South Africa.

The FMF is an independent, non-profit, public benefit organization, created in 1975 by pro-free market business and civil society national bodies to work for a non-racial, free and prosperous South Africa. As a policy organization, it promotes sound economic policies and the principles of good law.