The Road Accident Fund’s (RAF’s) inefficiency and utter disregard for the courts signal complete disdain for the very people it is intended to protect.
The fund was established to compensate road traffic accident victims for injuries and loss of earnings, and is funded by a fuel levy that is currently pegged at R2.18 per litre of petrol sold.
Technically insolvent, it has been an albatross around the Treasury’s neck for decades, as it accounts for more than 80% of the total liabilities racked up by SA’s social security funds. Others include the notoriously slow Compensation Fund for workers injured on duty and the Unemployment Insurance Fund (UIF), which provides income support to workers who have lost their jobs.
Under CEO Collins Letsoalo’s watch, the RAF has lurched into increasingly contentious territory as it reversed a series of well-established practices with scant regard for the consequences. Among the more high-profile of these moves was the introduction of a new accounting policy in its 2020/21 financial year that miraculously got rid of its more than R300bn contingent liability for future claims, and a directive to staff in August 2022 to stop reimbursing medical schemes for claims lodged on behalf of their members.
A desire to change policy is one thing, pressing ahead without consultation and then refusing to back down when directed to by the courts is another entirely.
The auditor-general, the Treasury and the Accounting Standards Board all rejected the RAF’s new accounting policy, but it dug in its heels and triggered litigation that continues. It took a similarly obdurate stance when medical scheme administrator Discovery Health secured an urgent high court ruling that effectively ordered the RAF to resume processing medical scheme claims. The RAF took that fight all the way to the Constitutional Court, where it lost its bid to appeal against the high court ruling, but it still insists it won’t cough up.
Its startling stance sets the stage for yet another legal battle with Discovery Health, which is poised to launch an application for contempt of court and an enforcement order.
The chaos and conflict directs attention away from the deep-seated administrative problems confronting the fund, which takes years to pay out legitimate claims, and the tough policy questions about what kind of social security net best meets SA’s needs.
MPs from parliament’s standing committee on public accounts have rightly sounded the alarm over the RAF’s internal disarray, after their oversight visit to its Centurion office found boxes of documents lining the office walls and a basement car park. They also pointed out that the fund has repeatedly had its assets seized by the sheriff of the high court for failing to pay its debts.
The RAF is not the only social security fund racked by dysfunction, as neither the Compensation Fund nor even the UIF, once a beacon of relative efficiency, are paying claims timeously.
It is clear these funds are riddled with problems that are not going to fix themselves. Tackling them head-on should be a priority for anyone in the government who cares about protecting some of society’s most vulnerable people.
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