University of Johannesburg: Fundamental reform of the Road Accident Fund is urgently needed

Professor Letlhokwa George Mpedi is the Deputy Vice-Chancellor: Academic (Designate) and former Executive Dean: Faculty of Law, University of Johannesburg. He recently penned an opinion article published in The Daily Maverick, 12 April 2021.

Despite its regular source of funding, the Road Accident Fund is technically insolvent. Clearly, something is fundamentally wrong with the system and something has to be done. Lump-sum payments must be replaced with a monthly disbursement.

The saying that “a picture is worth 1,000 words” must be tweaked to “a meme is worth 1,000 words”. I recently received a meme from an acquaintance that, as a social protection expert, motorist and, most importantly, a taxpayer, got me thinking. It was a picture of a man’s hand opening a lid of a potjie on a fire with a R100 note. It is captioned: “Your boyfriend at a family gathering after receiving Road Accident Fund money.”

As far-fetched as this may seem, such a phenomenon is plausible. For their benefit, doubting Thomases are kindly invited to watch the television show, I Blew It, which shares heart-wrenching stories about people in South Africa who received a monetary windfall and squandered it. Although there are odd cases of those who received inheritances, particularly death benefits and lottery winnings, the vast majority of the stories are about those who had Road Accident Fund (RAF) compensation.

The stories are invariably told by those who received the compensation, their families and friends. Each episode starts by introducing the person who became rich overnight, how they lived a lavish lifestyle following compensation, when they realised that they were running out of money, and the habitual conclusion of regret.

As the RAF system stands, the compensation paid is normally wasted on booze, fancy clothes, cars, impromptu holiday jaunts and everything that conjures up “a good time” in general. Some of the people who have cashed in from the RAF do outrageous things with the windfall. For instance, one of the beneficiaries described on I Blew It how he used to wash his hands with cognac after feasting on grilled meat. He further bragged about how, in a moment of excitement, he burnt R10,000. Destroying a wad of banknotes is not only madness, but is also a criminal offence, in terms of Section 34(1)(f) of the South African Reserve Bank Act 90 of 1989.

The phrase about an unwise person and wealth essentially being an incompatible combination is traceable to Proverbs 21:20 of the Bible (King James Version) which states that: “There is [a] treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up.” Furthermore, the expression “a fool and his money are soon parted” was often repeated by Thomas Tusser, an English poet and farmer, in his poem Five Hundred Points of Good Husbandry, published in 1557.

The association of foolishness, money that invariably evaporates, and the RAF compensation does and should not be interpreted as implying that all RAF payments end up being misspent. There are indeed cases where the money is prudently used to help the victims of road accidents to cope with social risks such as sickness, invalidity and unemployment. It should be recalled that the RAF is a statutory fund established to provide “payment of compensation… for loss or damage wrongfully caused by the driving of motor vehicles”.

The victims of road accidents can claim compensation for emergency medical treatment, non-emergency medical treatment, future medical expenses, past or future loss of income, past or future loss of support, funeral expenses and non-pecuniary loss (such as general damages for pain and suffering). Survivors of a deceased victim or victims of a road accident can claim compensation for the loss of support. The compensation provided by the RAF to road crash victims is financed largely from the RAF levy of R2.07 per litre of fuel purchased. More than R40-billion is collected annually.

Despite having a regular source of funding, the RAF is struggling financially. To be blunt, it is technically insolvent. Efforts have been made to replace the current system that has been branded as “unworkable, unsustainable and corrupt” with a no-fault based scheme, where compensation would be disbursed monthly to the road accident victims, called the Road Accident Benefit Scheme. Regrettably, the bill that was meant to introduce the scheme in South Africa was rejected by the National Assembly on 3 September 2020. It was, among other reasons, criticised for being out of touch with the realities on the ground, particularly when it came to the urban and rural poor.

Notwithstanding the rejection of the Road Accident Benefit Scheme Bill, it is abundantly clear that something is fundamentally wrong with the system and that something has to be done. It is indeed untenable that the payment meant to support victims of road accidents to cope with, for example, past and/or future loss of income and medical expenses is recklessly spent — overnight. Such beneficiaries invariably end up relying on the tax-financed social assistance benefits such as the disability grant and old-age grant. It is important that victims of road accidents are adequately informed about the purpose of the compensation.

Second, to minimise the abuse and subsequent destitution, compensation must be provided as a monthly benefit to the victims or survivors. A friend recently quipped that perhaps there should be a Fourth Industrial Revolution technology like Siri that detects and guides RAF beneficiaries each time they misspend money. As pointed out by Sir James Paul McCartney, “that would be something. It really would be something”.

When all is said and done, it will take willpower to introduce such a system. The truth of the matter is that there are many interested parties (such as legal practitioners and health professionals) who, apart from the victims and survivors, handsomely benefit from the RAF system.

It is a given that reconstituting the RAF in a manner that significantly reduces the involvement of or effectively takes such parties out of the compensation-for-road-accidents picture, will meet fierce resistance. However, attempts to improve the system should be informed by the need to provide a safety net to road accident victims and not the bottom line of those who make a living by rendering professional services to the victims.

Policymakers must protect myopic road accident victims or survivors, even if it means protecting them against themselves. South Africa is urgently in need of a redesigned system that is sustainable and effective. Until it is introduced, I Blew It is guaranteed a steady supply of depressing tales by those who almost had it all due to road accidents. To the road users who finance the RAF and taxpayers, the dismay and disgust that you feel are surely guaranteed to continue unabated.

In the final analysis, a fool and the RAF loot are certainly soon parted.