Cape Town - The need for urgent government action to prevent "an almighty cash crash" in the Road Accident Fund emerged yesterday during the weekly meeting of parliament's standing committee on public accounts (Scopa).
Humphrey Kgomongwe, the chief executive of the fund, and three of his top officials faced intense questioning by committee members.
While some Scopa members seemed partially satisfied that the fund officials were desperately trying to put the fund on a sounder financial footing by streamlining operations to cut costs and rooting out fraud, the need for urgent action could not be avoided .
The Road Accident Fund's deficit has grown steadily from R7.2 billion in 1997 to R13.3 billion now, while claims are steadily rising and investment income is falling.
The fund's main source of income is from a levy on fuel sales, which has continued to shrink in real terms because of sluggish growth in sales and the discounts given to certain sectors, such as agriculture and fisheries.
Kgomongwe said the fund had approached the government earlier this year to ask it to inject some cash into the system.
The fund was also working with the department of transport to reduce deaths and injuries related to road accidents. About R50 million was transferred from the fund to the Arrive Alive programme this year.
Steps were also being taken to deal with fraud, which was estimated to have cost the fund about R300 million a year.
"We have worked very hard to bring in order and discipline to our operations," Kgomongwe said. "The cost of delivering the service to society should be lowered."
The commission of inquiry into the fund, which should release its findings later this year, would give the government a good opportunity to state its position on the fund and whether it was willing to bail it out if necessary, he said.
When asked what the fund was doing in the meantime to become more viable, Kgomongwe said the anti-fraud campaign was key to the new plan to improve the fund's cash position, while the handling of claims was speeding up. Internal controls were being beefed up and payments streamlined.
The team admitted the fund was digging into its reserves.