OPINION | AA statements on RAF misleading and its analysis of fuel levy is 'all sound and fury’

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

We need to emphasise 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 impact more heavily on the poor and deepen poverty.

This is, therefore, a very serious matter and must not lend itself to being weaponised for profiteering interests 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 who may not see this and are misled by this misinformation by the 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 the AA and its 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 to every litre of fuel sold, but citizens don’t see tangible benefits from these taxes.”

Facts: The fuel price over the past 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 11.0c/l to R2.18c/l, while the General levy increased by 16.0c/l to R3.85c/l, (a combined increase of R27.0c/l). However, the fuel price (based on the price of 95 Petrol in the Inland region) increased by 39.5% from R17.32c/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 R11.29c/l to R18.14c/l over the same period.

The table below illustrates this very clearly.

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 from the truth. The RAF has paid compensation in the last financial year, of more than R40bn. 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 its confidence about the product known as “AA Accident Claim Assist” where it claims, “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 offer no “tangible benefits”. As clearly illustrated above, road accident victims benefit immensely from the RAF.

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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 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 the RAF is a better organisation and has been effectively and efficiently managed by a permanent board and executive management.

The 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, the majority of them poor and African, as “a drain on the country’s resources”. It is not clear how the AA arrives at this conclusion. One must not forget that it is only from 2008 that taxi passengers could claim more than R25,000 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 the AA seeks to dupe South Africans into believing, that privatisation is the panacea of our fuel price “crisis” or, if you frown upon that idea then, “at a minimum semi-privatisation of claims management”.

This is risible, at the least. Suddenly, the “drain of the country’s resources” becomes 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.

Letsoalo is the CEO of the Road Accident Fund