GAUTRAIN - OUR JOURNEY TO A BETTER GAUTENG. Economic impact of the Gautrain system and future expansion on the Province.

Transcription

1 GAUTRAIN - OUR JOURNEY TO A BETTER GAUTENG Economic impact of the Gautrain system and future expansion on the Province Main Report November 2014

2 Glossary AADT APR AR ASGISA BBBEE CBD CO2 DFDS MEIA EMM enatis EPWP FIFA GARA GDP GDS GEAR GIPF GLA GMA GPG GCR GTC HRD IPAP IRPTN ITMP25 LSM NDP NEPAD NLTTA ORTIA PAX PICC PPP PRASA RDP SAM SED Average Annual Daily Traffic Actual Patronage Revenue Labour Absorption Rate Accelerated and Shared Growth Initiative for South Africa Broad Based Black Economic Empowerment Central Business District Carbon dioxide Dedicated Feeder and Distribution Services Macro - Economic Impact Assessment Ekurhuleni Metropolitan Municipality Electronic National Administration Traffic Information System Expanded Public Works Programme Federation of International Football Association Global AirLink Alliance Award Gross Domestic Product Growth and Development Strategy Growth, Employment and Redistribution Gauteng Industrial Policy Framework Gross Lettable Area Gautrain Management Agency Gauteng Provincial Government Gauteng City Region Gauteng Transport Commission Human Resource Development Industrial Policy Action Plan Integrated Rapid Public Transport Network Gauteng 25-year Integrated Transport Master Plan Living Standards Measure National Development Plan New Partnership of Africa's Development National Land Transport Transition Act OR Tambo International Airport Persons Presidential Infrastructure Coordinating Commission Public-Private Partnership Passenger Rail Agency of South Africa Reconstruction and Development Programme Social Accounting Matrix Social Economic Development

3 SIPs SMME UR Strategic Integrated Projects Small, Medium and Micro Enterprises Unemployment Rate

4 Preface 1.1 Acknowledgements We would like to express our appreciation for the time and cooperation provided to the project team by the management and staff of the Gautrain Management Agency (GMA). 1.2 Disclaimer This report has been compiled by KPMG for the sole and exclusive use of the GMA. It should not be quoted in whole or in part, by any party other than the GMA, without our prior written consent. KPMG s findings in connection with this report are intended solely and exclusively for the benefit, information, and use by the GMA. No party, other than the GMA, may rely on the findings, either in whole or in part. KPMG (including its directors or employees or anybody or entity controlled, owned or associated with KPMG) accepts no liability or responsibility whatsoever, resulting directly or indirectly from the disclosure of our findings to any third party and/or the reliance of any third party on the findings, either in whole or in part. KPMG s findings are related to prevailing conditions and information available at the time of issuing our report. 1.3 Limitations We have relied upon the sources of information referred to in this report. Except where specifically stated, we have not sought to establish the reliability of those sources. We have however reviewed the information and have sought explanations for key trends and salient features identified by us. We have also satisfied ourselves, as far as possible, that the information presented is consistent with other information obtained by us in the course of the work undertaken to prepare this report. Our engagement does not comprise a due diligence review or constitute an audit or review, other assurance engagement or an agreed-upon procedures engagement, performed in accordance with International Standards on Auditing (ISAs), International Standards on Review Engagements (ISAEs) or International Standards on Related Services (ISRS). Consequently, an audit opinion or assurance conclusion will not be expressed nor will there be a report on factual findings. As such, this report may not necessarily disclose all significant matters about the project or reveal errors or irregularities, if any, in the information and representations made to us and upon which we have relied. Estimations made embody assumptions on the behaviour of factors in the macro and micro economy, and the project itself. These assumptions were based on evidence available as at

5 the time of this report. Users of the forecasts may consider other assumptions to be more appropriate, which may materially change the outcome of the forecasts. Please note that any advice, opinion, statement of expectation, forecast, or recommendation supplied by us as part of the service shall not amount to any form of guarantee that we have determined or predicted future events or circumstances Limitations to the report Limitations to the findings of the report include the following: Determining the micro-economic impact of the Gautrain s micro-economic impact of specifically on supply chain and market structures from an industry point of view. Investigation of the impact on South Africa transformational goals as a result of the construction and operation of the Gautrain as well as verification of whether BBBEE businesses that were positively impacted by the construction of the Gautrain are still operating and the financial viability of those businesses.

6 Contents 1 The journey begins 4 2 Approach to our journey Approach to our journey to capturing the economic impact Approach to our journey to capturing the qualitative and social elements 12 3 Pre-Gautrain Vision for the future Need for expansion in Gauteng s transport sector to serve its people better Maintaining Gauteng s economic relevance required improvements in transport infrastructure Investing in transport infrastructure would contribute to national and provincial objectives Vision of freedom of movement: Dreaming of a world-class rail system to connect our people Gautrain s strategic objectives to serve Gauteng and South Africa Gathering momentum to meet the World Cup deadlines 30 4 Construction Laying the tracks Construction on track Gautrain construction yields positive spin-offs Fulfilling the Gautrain system s strategic objectives 38 5 All systems go Gathering traction Green light to operations Gautrain operations yield positive spin-offs Fulfilling the Gautrain system s strategic objectives 45

7 6 Getting you connected Signalling the future Safe and sound boarding Connecting you beyond the rail Province-wide mobility Fulfilling the Gautrain system s strategic objectives 70 7 Getting you there The transfer point People on the move Moving public opinion Providing a better quality of life Connecting you to the world Fulfilling the Gautrain system s strategic objectives Adding value to Gauteng Powering the future Developing our communities Empowering business activity Home is where the Gautrain is Fulfilling the Gautrain system s strategic objectives Platform to a better tomorrow Gautrain on the move to a better tomorrow Building on our track record Trends and dynamics shaping the future Arriving home: the future of the Gautrain 165

8 List of Diagrams, Figures, Graphs and Tables Diagram 1: Where GMA s mandate falls Diagram 2: Snapshot of commuters using the Gautrain to ORTIA, Diagram 3: Economic value-add derived from the ORTIA link, Figure 1: Gautrain Rapid Rail Link connects Johannesburg and Pretoria, two important transport hubs Figure 2: Gautrain Rapid Rail Link and DFDS (Gautrain bus services) Figure 3: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and Metrorail Figure 4: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and Metro Bus routes Figure 5: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and BRT routes Figure 6: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses), Metrorail, Metro Bus and BRT routes Figure 7: Number of fatal accidents per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor Figure 8: Number of fatalities per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor Figure 9: Aerial view of total Gautrain route (2014) Figure 10: Aerial map - central section (2005) Figure 11: Aerial map - central section (2014) Graph 1: Gauteng s average annual daily traffic (AADT) from 2001 to Graph 2: Fatal accidents in Gauteng from 2001 to Graph 3: Cost of fatal accidents in Gauteng between 2004 and Graph 4: Usage of parking facilities at Gautrain stations Graph 5: Mode of transport of Gautrain commuters travelling from home to Gautrain stations on weekday mornings Graph 6: Revenue collected from parking facilities as a percentage of APR Graph 7: DFDS average weekday passenger numbers, 2012/ / Graph 8: Mode of transport of Gautrain commuters travelling from Gautrain stations to their final destination weekday mornings... 56

9 Graph 9: Revenue collected from DFDS services as a percentage of APR Graph 10: Proportion of commuters using each Gautrain link, that is, commuters getting on or off the system at particular Gautrain stations, Graph 11: Median travel time to station, Graph 12: Reasons for travelling, Graph 13: Description of knowledge of Gautrain, n = Graph 14: Gautrain's overall reputation, n = Graph 15: Description of knowledge and experience of Gautrain, n = Graph 16: Perceived reputation of the Gautrain, top ten responses, % of total Graph 17: Number of incidents per 1 million commuters, Graph 18: Opinion of the Gautrain, top ten responses, % of total Graph 19: Gautrain users: Convenience outweighs price considerations Graph 20: Non-users: Pre-considerations outweigh convenience Graph 21: Gautrain users alternative transport mode Graph 22: Rosebank GLA and vacancy rates Graph 23: Rosebank rental rates (deflated) Graph 24: Sandton area GLA and vacancy rates Graph 25: Sandton area rental rates (deflated) Graph 26: Rhodesfield area industrial rental rates (deflated) Graph 27: Marlboro South (Alexandria): Real industrial rental rates (deflated) Graph 28: Freehold residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2008/ Graph 29: Freehold residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2011/ Graph 30: Sectional title residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2008/ Graph 31: Sectional title residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2011/ Table 1: Monthly DFDS service availability and punctuality statistics, 2013/14 financial year Table 2: Key carbon emission indicators Table 3: Key road traffic indicators 1 April 2010 to 31 March Table 4: Average travelling time: Hatfield station - Park station

10 Table 5: Average travelling time: OR Tambo - Sandton Table 6: Key traffic congestion and income indicators - Gauteng Table 7: Retail shopping centres within a 0km -10km distance from a Gautrain station s

11 An advanced city is not a place where the poor move about in cars, rather it s where even the rich use public transportation Enrique Panelosa Mayor of Bogota 2

12 Network diagram: Journey to a better Gauteng 3

13 2 The journey begins Over the past decade, the Gauteng Province embarked on a project to implement a state-of-the-art rapid rail network in Gauteng. The project was conceptualised in 1997 and implementation started in The goal of the project was not only to radically upgrade public transport in the Province, thereby making a contribution to the goals and objectives of a large range of national and provincial policy plans 1, but also to improve the economy of the Province and the quality of life of the people of Gauteng (see figure below). Unlocking growth potential Changing demographics Need for convenience A clear realisation emerged that structural constraints to faster socio-economic development needed to be lifted. It was seen as important to address the shortage of public transport and the strain this places on other modes of transport. Growing urbanisation and population numbers mean additional pressure on present transport infrastructure and future capacity. Rising importance of empowering commuters to reach their destination of choice safely, conveniently and on time. Moving perceptions Striving for equality Changing negative perceptions about public transport and encouraging increasing buy-in from non-users and the general public. Factors fast-tracking the formulation of the vision for the Gautrain System Bridging the mobility gap thereby helping to overcome inequality and promoting access to opportunity. Greater freedom of movement contributes to economic empowerment and higher quality of life. Promoting urban regeneration Stimulating the revitalisation of the Johannesburg and Tshwane CBDs through transport expansion, thereby giving impetus to faster development in the entire region. Promoting sustainability Address the problem that traffic and congestion was having an increasingly negative impact on air quality due to emissions from vehicles. Addressing productivity Prevent the Gauteng economy from being increasingly undermined by traffic congestions, with negative implications for time lost, accident costs, transport costs and delivery costs of goods, in turn, implying heavy productivity losses. Sources: Various national and provincial policies, Gautrain Feasibility Study, 2001, KPMG analysis 1 See for example, GEAR, ASGISA and GDS 4

14 The Gautrain Rapid Rail link is a state-of-the-art rapid rail network for Gauteng. The rail connection comprises two links: one between Tshwane (Pretoria) and Johannesburg and the other between OR Tambo International Airport (ORTIA) and Sandton. Apart from four terminus stations on these two links, six other stations are linked by some 80 kilometres of rail along the complete route. The Gautrain project has certainly made the world sit up and take note of South Africa s innovative project management expertise and its vision to provide solutions that will improve the lives of its people and enhance economic growth. Mr. Jack van der Merwe, CEO: Gautrain Management Agency It is with this in mind that the Gautrain Management Agency ( GMA ) undertook this project to determine the impact that the Gautrain system has had on the Gauteng Province including its economy, job creation, perceptions of users and non-users, lifestyle changes, transport patterns, property values and links to government policy. In addition, this study would support GMA s plans to extend the services of the Gautrain to the eastern and western areas in order to better serve the people of Gauteng. In this document, we therefore consider the economic impact of the development of Gautrain on the Gauteng province. We also contemplate the nodal development and commuter trends since the operation commencement of the Gautrain. The remainder of this document is set out as follows: 5

15 6

16 In the big picture, architecture is the art and science of making sure that our cities and buildings fit with the way we want to live our lives Bjarke Ingels 7

17 Approach to our journey 8

18 3 Approach to our journey The approach to our journey comprises of a two-fold method. A brief explanation of these two methods are be explained below. Capturing the economic impacts Capturing the community impacts The economic quantification is centred mainly around Economic Impact modelling that assesses the Gautrain s impact on the provincial economy through indicators such as GDP, job creation, poverty alleviation, etc. The qualitative and social analysis is mostly qualitative in nature, but where possible has been quantified in order to capture Gautrain s impact on social aspects. 3.1 Approach to our journey to capturing the economic impact The Macro - Economic Impact Assessment (MEIA) approach considered for this project is an important tool to assist the GMA in assessing how the current Gautrain system contributes to achieving the outcomes of the National Development Plan (NDP) targets, such as, GDP growth, employment creation and poverty alleviation. The MEIA captures the Gautrain system s economic contribution by showing the interdependence between different sectors of the Gauteng economy. The structure of the MEIA has been incorporated into a national accounting system, and is therefore able to measure indicators such as GDP. It is also used to identify the 9

19 economically related industry clusters and so-called key or target industries that are most likely to increase the internal coherence of the Gauteng economy. This is done by analysing the linkages between Gautrain and the different sectors in the economy. Linkages refer to forward and backward linkages that occur between consecutive steps of the production value chain. A forward linkage exists where the product of a particular firm or industry was used as an input or raw material by Gautrain. Conversely, a backward linkage occurs where Gautrain uses the product of another firm or industry as raw materials or inputs. The benefit of having an increased number of such backward linkages within the Gauteng economy is that they centre local demand for raw materials and reduce dependence on imports, as local suppliers can be relied upon for the supply of raw materials. When estimating the economic impacts of Gautrain s construction and operations, different types of impacts are taken into consideration, specifically direct, indirect and induced economic impacts. These impacts are usually sustainable if they materially affect operations of the local economy. Since the operations of the Gautrain are longer-term in nature and necessitate a large degree of capital and operational expenditure, it is expected that these impacts will continue to be felt beyond the period in which the expenditure is incurred. 10

20 The direct impact includes the first round effects where increased demand for particular goods/services leads to increased business activity and thus a direct change in sectoral production. This is the impact associated with the capital and operational expenditure undertaken by Gautrain. The indirect impact includes the second round effects that change the demand for factors of production and household income, which can be explained by the inter-linkages of sectors in the economy. With reference to this project, these impacts emanate from the increased demand for goods and services acquired by Gautrain from external service providers, as well as increased employment opportunities created on the back of this economic activity. The induced impact includes the multiplier effect that could arise through the second round of spending. This is the increase in household income and the additional spending that arises from the change in income levels from the new employment opportunities created as a result of expenditure by Gautrain. The sum of the direct, indirect and induced impacts is equal to the total impact. The output of the MEIA will provide Gautrain with a detailed picture of its direct, indirect and induced economic impact on the following economic indicators. Gross Domestic Product (GDP) is a good indicator of economic growth and welfare, as it represents, amongst others, the remuneration of employees and gross operating surplus (profits) as components of value added to the economy. In the construction phase, the GDP consists of the labour remuneration paid, as well as the contractors gross operating surplus plus all the indirect and induced effects flowing therefrom. In the operational phase, the GDP amounts to total labour costs involved in running the train services, as well as the gross operating surplus plus all the indirect and induced effects flowing therefrom. As indicated above, capital together with labour and entrepreneurship form the primary productive factors needed for the Gautrain operations. The number of people employed by the Gautrain system is determined by the MEIA. The Gautrain impacts the government directly in terms of the collection of direct and indirect tax revenue. The broader fiscal impacts that are generated through linkages with other economic sectors are quantified via the MEIA. 11

21 South Africa has very high levels of poverty, with over 45% of the population (est. 2.4 million) living in poverty on an average income of less than R3 000 per annum. One of the components of the MEIA is to determine whether the Gautrain has a positive impact on poverty alleviation. It is possible to show whether the Gautrain s operations benefit low income households, which is in turn shown through the additional income that low income households receive 2. The economic impact of the Gautrain is also evaluated in terms of efficiency and effectiveness. These criteria measure the extent to which the Gautrain utilises resources efficiently. Since capital is a scarce resource in South Africa, these criteria measure the efficiency with which the Gautrain utilise capital in terms of job creation and GDP, compared to the average for the Gauteng economy. The Gautrain s contribution towards economic growth and job creation, relative to the capital employed in the process, is established through the ratio of GDP to capital and the labour/capital ratio. This methodology is used in sections 4, 5, 6 and 8 of this report in order to determine the economic contribution that the construction of the Gautrain has made to Gauteng, the current economic impacts generated by the daily operations of the Gautrain and its ancillary services, as well as the additional economic impacts of new property development around the Gautrain stations. 3.2 Approach to our journey to capturing the qualitative and social elements This section provides a summary of the main methodology and approaches that were used in the quantitative and qualitative analysis throughout this report, including the data sources consulted, and the type of data used in each section of the study. Approach In order to determine comparable figures for CO2 emissions, the average theoretical electricity usage per kilometer for a standard 4 cart Gautrain was converted to grams of CO2 emissions per kilometer using other bituminous coal as the energy conversion factor. The average number of passengers per Gautrain trip for 2013 was then used to estimate the carbon footprint per 2 The definition of low, medium and high income household categories follows from the definition in the Income and Expenditure Survey (IES) 2010/11 by StatsSA. Low income households include households with a monthly income of up to R9 886; medium income households include households with a monthly income of between R9 887 and R21 002; high income households include households with a monthly income of R and above. 12

22 Section 7: Getting you there The transfer point passenger (g CO2/km/passenger). This number was then compared to recent data from two international academic papers for the average motor car to establish the saving on carbon emissions per passenger when using the Gautrain instead of a typical passenger vehicle. In order to estimate the number of cars removed from the Pretoria Johannesburg corridor per business day by the introduction of the Gautrain, the average number of commuters utilising the Gautrain on business days was obtained for the period between April 2013 and March The proportion of these commuters that have indicated their private vehicles as alternative transport source in a recent survey was then calculated. This number was then divided by the total estimated average number of vehicles travelling on the Pretoria Johannesburg corridor per business day to give the effective proportion of vehicles taken off this route each business day by the Gautrain. In order to estimate the number of fatal car accidents and resultant fatalities that are avoided by the use of the Gautrain, daily average number of passenger trips on the Gautrain was obtained for the period 1 April 2013 to 31 March The proportion of these commuters that have indicated their private vehicles as alternative transport source in a recent survey was then calculated. Data on the fatal accidents and resultant fatalities per registered vehicles in Gauteng was then divided by and multiplied by the number of cars effectively removed from the Pretoria Johannesburg corridor per day by the Gautrain to produce the number of fatal accidents and resultant fatalities avoided by the Gautrain for the period 1 April 2013 to 31 March Lastly, official unit cost figures for road traffic accidents were inflated to represent 2013 figures and applied to these fatal accident numbers to determine the associated cost saving by the reduction of fatal accidents and resultant fatalities. 13

23 Assumptions The assumption was made that other bituminous coal with a conversion rate of 860 g CO2/kWh would be the most appropriate energy source for South Africa's electricity generation. An average number of 1.2 passengers per motor car on the freeways was calculated using three different estimates from publications. The assumption was made that South Africa's fleet of cars in the Pretoria Johannesburg corridor will resemble a combination between UK and US vehicles in order to obtain an estimate for typical passenger vehicle carbon emissions. The assumption was made that cars use the Pretoria Johannesburg corridor every day as this number could never be verified from a direct source. The assumption was made that the ratios for fatal crashes and resultant fatalities per registered vehicles in Gauteng that was published in March 2011 still holds to utilise for the period 1 April 2013 to 31 March Data sources Galarraga, I. et al. (2014) and United States Environmental Protection Agency (2014) academic papers for motor vehicle carbon emissions data, Gautrain Management Agency for the Gautrain electricity usage per passenger kilometre and the International Energy Agency's 2012 edition of "CO2 Emissions from fuel Combustion" document for the energy conversion data. The number of passengers per vehicle was difficult to obtain and therefore an average was calculated by utilising figures obtained from the South African National Energy Development Institute (SOC) Ltd., the South African Government's transport overview page and an article published by Engineeringnews.com. To find the direct source for the number of cars in the Pretoria Johannesburg corridor remained elusive. However, this number was indicated on a number of different web-sites and web-based articles including City 14

24 of Johannesburg, Engineeringnews.com, Newton Heritage Trail and IOL Property. The Gautrain Management Agency for ridership statistics and Catalyst Research and Strategy for the alternative transport survey data. The Road Traffic Management Corporation for accident statistics, Gautrain Management Agency for ridership statistics, Catalyst Research and Strategy for the alternative transport survey data and the National Department of Transport for accident costs (increased with annual inflation to represent 2013 values). Type of outputs Comparable g CO2/km/passenger emissions numbers for an average motor car and the Gautrain, providing the saving in carbon emissions per passenger when utilising the latter instead of the former mode of transport. An estimate on the percentage reduction in traffic congestion on the Pretoria Johannesburg corridor each business day resulting from the introduction of the Gautrain. An estimate on the number and cost of fatal road accidents and resulting fatalities avoided per year by the Gautrain by the removal of vehicles from the Pretoria Johannesburg corridor. 15

25 Section 8.2: Empowering business activity Approach Assumptions Data sources In order to indicate the relative rental rates in each of the areas close to the Gautrain stations, the current or nominal rates were deflated to remove the effect that inflation has on these prices. No assumptions were required. Rode property data, IPD data Type of outputs Vacancy rates, gross lettable area and rental rates per relevant area Section 8.3: Home is where the Gautrain is Approach Assumptions Data sources Type of outputs In order to determine whether the close proximity of a property to a station has had any effect on its growth in value, the average inflation growth for properties within a 0-1km and 1-2km radius were compared with the average growth for properties within 5-8km of the station for the same year. The difference in average inflation per year for properties further (5-8km) away vs properties very close (0-2km) is calculated and has been interpreted as the average percentage inflation increase owing to the properties' proximity to the station. The previous sale price for the same property would be used to calculate the growth in the property s value over the ownership period. To account for the sale of a property at different times of year, the growth for the portion of the ownership period of the year is annualized to represent the growth over a full year. Deeds Office Property Registrations Lightstone Residential property analysis Property value growth by station. This methodology is used in sections 7, 8, and 9 of this report. 16

26 Efforts & courage are not enough without purpose and direction - JFK 17

27 Pre-Gautrain Vision for the future 18

28 4 Pre-Gautrain Vision for the future 4.1 Need for expansion in Gauteng s transport sector to serve its people better Throughout the early 2000 s, the majority of Gauteng s population still had no direct access to reliable and affordable public transport. In 2005, the average person in Gauteng lived far from economic opportunities, did not have access to social and recreational infrastructure and generally had poor access to government and administrative institutions. This created demand for road transport, mainly from poor communities living in the peripheral townships. At the time, an estimated 84.7% of the Province s population used all modes of public transport, i.e. bus, train and taxi. Additionally, these commuters continued to register significant levels of dissatisfaction with each mode of transport, ranging from distance between home and station, travel time, security to, at and on mode, crowding, safety from accidents, frequency, punctuality, fares, facilities and overall service. This lack of access to safe and reliable transport was further exacerbated by Gauteng s spatial landscape, which included rapid urbanisation, sprawling urban townships removed from markets and other points of economic activity and demographic changes including urban poverty and unemployment. Population growth registered 21% during 2001 and 2007, impacted by a net migration influx of people during the same period. Population growth heavily impacted on Gauteng s road infrastructure network, with close to additional vehicles on the road between 2000 and On Gauteng s busiest road, i.e. the N1 between Pretoria and Johannesburg, additional vehicles were reported between 2001 and Overall, within the borders of Gauteng, the number of vehicles increased by more than between 2000 and 2005 (see Graph 1). As a result, escalating congestion led to a larger number of reported accidents and fatalities (see Graph 2). The economic burden of such high accident and fatality rates have had a significant impact on the country and the Province s budget each 19

29 year, with the cost to the latter topping R2 billion in This represented 4.5% of the size of Gauteng s transport sector in the same year (Graph 3). Graph 1: Gauteng s average annual daily traffic (AADT) from 2001 to 2003 Average Annual Daily Traffic (AADT) continued to increase between the major metropolitan areas Vehicles Thousands Johannesburg (West) to Pretoria (East) Source: Arrive Alive Graph 2: Fatal accidents in Gauteng from 2001 to 2004 The number of total accidents in Gauteng constitutes approximately one quarter of the national total Fatal accidents Thousands % 23% 22% 22% 26% 25% 24% 23% 22% % 20% Gauteng National Proportion contribution Source: Arrive Alive 20

30 Graph 3: Cost of fatal accidents in Gauteng between 2004 and 2005 The cost of fatal accidents was totalled at over R2 billion by 2005 R Million % 20.6% % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % Gauteng Gauteng's percentage of national value Source: Road Traffic Management Corporation, 2005 From the above, it was evident that new strategic policy would have to be implemented to curb these trends of rising dependence on road-based transport and improve safety, accessibility and affordability for Gauteng s commuters. 4.2 Maintaining Gauteng s economic relevance required improvements in transport infrastructure Prior to the construction of the Gautrain, Gauteng was going from strength to strength as the economic powerhouse of South Africa. By 2005, Gauteng was classified as Africa s fourth largest economy (after South Africa, Egypt and Algeria) and served as the economic, corporate and transport hub of the sub-continent. By this stage, Gauteng contributed roughly one third (R539 billion) of the national GDP (R billion). Rather than posing as a structural impediment to continued and accelerated development in the region, the Province s transport system had to be transformed to serve as an enabler of faster socio-economic growth. In the words of MEC for Roads and Transport, Dr Ismail Vadi, [C]entral to the development of any economy lies the country s transport infrastructure development. It was apparent that a vibrant Gauteng economy would serve as an engine for driving the achievement of 21

31 national growth objectives. Strong recognition existed that the faltering transport network desperately needed substantial upgrading in order to meet the growing needs of Gauteng residents. Only by meeting the Province s transport needs would it be possible to sustain Gauteng's economic significance within South Africa and Africa at large. Conversely, a sub-par transport system in Gauteng was expected to constrain the Province s economic growth in the following ways: Road congestion would have serious implications for time and productivity losses. This, in turn, would impact on the cost of labour and diminish productivity levels. Increasing number of vehicles on the road would lead to escalating numbers of fatal accidents, with Gauteng already accounting for a quarter of total national fatal accidents in This would cost the Gauteng economy R2 billion by 2005, representing 4.5% of Gauteng s transport sector in that year. With people being forced to opt for road based transport, carbon emissions were on the increase, threatening sustainability and quality of life for Gauteng s residents. In order to unlock Gauteng's growth potential, it was clear that the transport sector needed to be improved to bridge the mobility gap, thereby promoting access to economic opportunity for Gauteng's residents. In that way, it would be possible to address the shortage of public transport in the Province and the strain this places on other modes of transport. As the powerhouse of South African economic activity, the Gauteng Province illustrates its commitment to the broader objectives of Government with the Gautrain project. Minister of Transport, Mr Joel Sibusiso Ndebele,

32 Sources: StatsSA, enatis, Arrive Alive, Road Traffic Management Corporation 23

33 4.3 Investing in transport infrastructure would contribute to national and provincial objectives The growing understanding of the importance of building a stronger transport system that would promote the achievement of a variety of socio-economic objectives such as creating more jobs, alleviating power and reducing inequality was also highlighted in important economic policies at the time, including GEAR (1996). GEAR policies prompt initiatives to uplift the South African transport sector and have implications for the objectives of the Gautrain project In June 1996, the Department of Finance announced GEAR as its new five year macroeconomic economic strategy. This strategy was aimed at strengthening economic, development, broadening employment, and redistribution of income and socioeconomic opportunities in favour of the poor. In this document, several interrelated developments were called for: Accelerated growth of non-gold exports; A brisk expansion in private sector capital formation; An acceleration in public sector investment; An improvement in the employment intensity of investment and output growth; and An increase in infrastructural development and service delivery making intensive use of labour based techniques. Among the core elements of this integrated package, an expansionary public infrastructure investment programme was a specific focus. This was to provide for more adequate and efficient economic infrastructure services in support of industrial and regional development and to address major backlogs in the provision of municipal and rural services. Investment in social and economic infrastructure would therefore play a continuously important role in increasing the productivity of labour and business and thus the achievement of higher growth rates. As both GEAR, and later ASGISA and the GDS recognise, at the heart of the development of economies, lies their transport infrastructure. Therefore, great importance was placed on lifting the structural constraint on growth through a rapid rail link that would connect Gauteng to South Africa and indeed the world via OR Tambo International Airport. This was a central driving force that was the background to the formation of the vision to build an accessible, high quality public transport rail link in Gauteng. 24

34 Gautrain supports key provincial policies To address these new challenges and exploit the new opportunities, The Growth & Development Strategy for Gauteng (GDS) was penned and adopted in Specific contributions that the Province would make towards achieving the National Government s goal Halving unemployment through ensuring high levels of labour absorbing programs and projects, ensuring that economic growth contributes to reduced inequality and leads to the development of our Province, nation and continent; and Halving poverty levels through growing secure and prosperous communities with jobs, schools, clinics and other services, ensure safe communities and create a healthy environment, which supports families, social, cultural and volunteer activities. This document coincided with the release of the Gauteng Department of Public Transport, Roads and Works Strategic plan for The strategic objectives were as follow: Provision of accessible, affordable, reliable, integrated and environmentally sustainable public transport system; Effective management and transformation of transport and socio-economic infrastructure related institutions, systems and processes; Support economic growth and investments through the provision of appropriate transport systems and socio-economic infrastructure; Integrate transport systems and socio-economic infrastructure systems in the Gauteng Growth and Development Strategy and development plans of other spheres of government; Implement the Expanded Public Works Programmes in a manner that optimizes employment and addresses economic and social needs of the poor; and Efficient and effective management of the Department. These six strategic objectives aim to enable the department to improve its services, whilst simultaneously creating job opportunities for the youth, women and people with disabilities. As such, the department committed to contribute to the growth of the economy through public transport systems that enable its people to get access to social and economic opportunities. The socio-economic infrastructure development plan will also ensure that public infrastructural backlogs are cleared whilst creating further job and other opportunities for the most vulnerable members of society. The construction of the Gautrain would serve as one of the strategic levers to accomplish these goals. Source: GDS, 2005, Gauteng Department of Public Transport, Roads and Works Strategic plan for

35 Additionally, this emerging vision was shaped by the National Land Transport Transition Act (Act 22 of 2000, hereafter, the Act ) (see box below), which placed an obligation on the Gauteng Department of Public Transport, Roads and Works to take a proactive role in implementing national government policies that promote public transport, affording it priority over private transport. The National Land Transport Transition Act (NLTTA), Act 22 of 2000 The main aspects of the Act include: Metropolitan municipalities and other large municipalities may decide to form transport authorities. Transport authorities are obliged to prepare a range of transport plans, as specified in the Act; The NLTTA also makes allowance for transport areas and hence transport authorities that extend across provincial boundaries; and Municipalities, which do not become transport authorities are designated planning authorities and will have to carry out some transport planning. In the Act, it was emphasised that the public transport system must be improved to enhance land-use development, to minimise congestion, to reduce the number of road accidents and decrease pollution levels from road vehicles, as well as move towards the provision of an integrated transport system that includes public transport. Overall, a sense of urgency emerged that a public transport system needed to be developed that would become a mode of choice and not merely one of necessity, thereby encouraging commuters to switch from road based transport to public transport. The aim was therefore to build continued socio-economic growth in Gauteng around transit-oriented development. This would entail encouraging transport nodes to serve as enablers of economic activity in emerging hubs. Improving access to economic opportunities via transit is also very important to households with lower incomes, who spend a greater proportion of their income on housing and transportation and often have to travel long distances to find good-paying jobs and the training needed to get them. 26

36 Source: The Monitor Group, Vision of freedom of movement: Dreaming of a world-class rail system to connect our people From the above driving forces, the vision of a broader provision of integrated transport emerged, which entailed at its core a rapid rail link system that would connect with various other nodes of transport in Gauteng. The pledge to invest in critical infrastructure projects by implementing the Gautrain flagship project in partnership with the private sector was coordinated with national government s increased emphasis on infrastructure investment projects. This is reflected by the launch of ten Spatial Development Initiatives (including the Gautrain) under which provincial government embarked on a path to stimulate long-term, sustainable economic growth and job creation. Gautrain is a partnership amongst three levels of government and with parastatals [w]e tell the story of how successful such a partnership can be Premier, Gauteng Provincial Government, Mrs Nomvula Mokonyane,

37 Soon after the initial announcement, these projects were grouped together and called Blue IQ projects. Additionally, they all had wider goals, such as, in the case of the Gautrain, to form an integral part of a comprehensive public transport system in the Province and to stimulate the use of public transport and improve its image. Through the emerging commitment to the realisation of the Gautrain project, Gauteng s provincial government and the Gautrain Management Agency portrayed their unhindered dedication to achieve the vision of national government for an inclusive and enabling transport system, as well as enhancing its service to the people of Gauteng. In that way, Gauteng s provincial government and the GMA, through the pursuit of the Gautrain dream, were committed to make a lasting contribution towards entrenching Gauteng s continued status as the economic powerhouse of the South African economy. Diagram 1: Where GMA s mandate falls National government vision and objectives GMA receives priorities from national and provincial government and contributes to their realisation. Provincial government is guided by priorities from national government and is mandated to facilitate their achievement. Provincial government vision and objectives GMA vision and objectives 28

38 4.5 Gautrain s strategic objectives to serve Gauteng and South Africa The process of the formulation of the vision of the Gautrain also lead to the creation of a set of objectives, which were highlighted as key success factors against which the performance of the Gautrain could be viewed. Throughout this report, we will refer back to this set of objectives to determine the extent to which the Gautrain in its current form is able to meet these objectives. Gautrain s strategic objectives The Gautrain Rapid Link (Gautrain) must facilitate development in the Province. It must develop an integrated public transport system, inter alia through the use of feeder and distribution systems. The project must contribute directly and indirectly to job creation and thereby support Socio- Economic Development (SED) goals. It must assist in unlocking the economic development potential of the Gauteng Strategic Development Initiative projects and strengthen existing development nodes in Gauteng. It must improve accessibility and mobility in this development corridor. It must integrate land-use and transportation planning in the corridor. It must utilise the concept of value capture in developing the station precincts. It must promote tourism. It must promote the use of public transport. It must assist in improving the image of public transport. Source: Gautrain Feasibility Study,

39 4.6 Gathering momentum to meet the World Cup deadlines In addition to strong commitment to better service delivery and increased quality of life, the implementation of the Gautrain vision gained momentum through the announcement that South Africa would host the 2010 FIFA World Cup. On 15 May 2004, the president of the Federation of International Football Association (FIFA), Joseph "Sepp" Blatter, announced that South Africa will host the 2010 Soccer World Cup. Despite never having been an official 2010 FIFA World Cup project, Gautrain s project managers and stakeholders felt an obligation to South Africa to have the link between the OR Tambo International Airport and Sandton commissioned in time for the Soccer World Cup held in South Africa. Indeed, with only a few days before kick-off, Gautrain started its operations with the spirit of the soccer flying high on its trains and platforms. All those using the system reflected the joy of access to a safe, comfortable and reliable public transport service that contributed to the success of the 2010 FIFA World Cup. 30

40 I m an idealist. I don t know where I m going, but I m on my way. - Carl Sandburg 31

41 Construction Laying the tracks 32

42 5 Construction Laying the tracks 5.1 Construction on track Initial works for the Gautrain started in May 2006 and construction commenced after the signing of the Concession Agreement between the Gauteng Provincial Government and the Bombela Concession Company on 28 September Construction took place in two concurrent phases: the first phase involved the construction of the section between Sandton and ORTIA, as well as the Midrand Station. The second phase included the remaining seven stations. Source: GMA 33

43 Various capital intensive items were used during the construction of the Gautrain system: Source: GMA Even though the Gautrain was a capital-intensive project by nature, it is still seen as a major facilitator of income and job creation in Gauteng and elsewhere in South Africa. 34

44 5.2 Gautrain construction yields positive spin-offs The construction phase of the Gautrain lasted for about 5 years and the economic spin-offs involved multipliers emanating from the construction of the Gautrain system. During this development period, significant contributions to Socio-Economic Development (SED) in Gauteng were made, including the following: Source: GMA The project provided a number of substantial economic benefits to Gauteng, such as economic growth, the creation of jobs and poverty alleviation. The additional GDP that was created during the construction phase of Gautrain was in the order of R20 billion, representative of 1.7% of the province s GDP. The direct impact accounts for 50% if compared to the total GDP impact. This emphasises the importance of the so-called multiplier effects which the construction of the Gautrain has had on the Gauteng economy. The Gautrain s construction sustained jobs in Gauteng over the entire 6 year construction period, representing about 2.5% of the total formal employment in Gauteng during

45 Source: KPMG analysis About jobs were created directly by construction process. Over the 6 year period, approximately jobs were created in those sectors that provided inputs to the construction components of the system and due to the economic impact from the Gautrain construction that resulted from the payment of salaries and wages to people who were directly employed at the various consecutive stages of construction of the Gautrain. The total government revenue increased by an estimated R5 billion over the 6 year period, due to the construction of the Gautrain. This is through both the collection of direct and indirect tax revenue by Gautrain, as well as the broader fiscal impacts generated through the linkages the Gautrain construction has had with other economic sectors. Households in Gauteng benefited from the construction of the Gautrain through the downward stream of income sources, i.e. salaries and wages. The total income received by households over the 5 year period was nearly R12 billion, an estimated R2 billion of which was received by lower income households. 36

46 37

47 5.3 Fulfilling the Gautrain system s strategic objectives Linking to the strategic objectives set out in the original Feasibility Study of the Gautrain: Gautrain s strategic objectives The Gautrain Rapid Link (Gautrain) must facilitate development in the Province. The project must contribute directly and indirectly to job creation. How the Gautrain contributes to achieving these objectives The construction of the Gautrain added to the Gauteng economy s GDP over the 6 year construction period. The Gautrain s construction sustained about direct jobs over the 6 year construction period, with the majority in the semiskilled category. 38

48 How wonderful it is that nobody need wait a single moment before starting to improve the world Anne Frank 39

49 All systems go Gathering traction 40

50 6 All systems go Gathering traction 6.1 Green light to operations The first part of the system, between Sandton and OR Tambo Airport, opened to the public on 8 June 2010, in time for the 2010 FIFA World Cup. The route from Rosebank to Pretoria and Hatfield commenced operations on 2 August 2011, while the remaining section from Rosebank to Johannesburg Park Station opened on 7 June Source: Gautrain, 2014 and Monthly revenue and patronage reports, 2013/14 Although many of the benefits are not quantifiable in monetary values (for example significant decrease in air pollution), those benefits that can be quantified are already substantial, highlighting the positive economic contribution to the Province stemming from the Gautrain project. These contributions include increased national 41

51 GDP and improvements in both the government s fiscal position as well as the country s balance of payments. 6.2 Gautrain operations yield positive spin-offs Economically, the Gautrain system has gone from strength to strength. From a SED perspective, all targets set-out by the Concessionaire were met and most were exceeded. The SED performance up to the end of March 2014 can be summarised as follows: Source: GMA and SED report, 2013/14 42

52 The economic benefits for the tax-payer, the economy of Gauteng, as well as the users are apparent and the extent to which the Gautrain contributes to the Gauteng economy is shown below. Further economic spinoffs due to the operations of the Gautrain The operation and maintenance of the Gautrain added approximately R1.7 billion to the Gauteng GDP during 2013, representative of 0.14% of the province s GDP. R 704 million R 513 million R 411 million The direct impact accounts for 43% when compared to the total GDP impact. This emphasises the importance of the so-called multiplier effects which the Gautrain has on the Gauteng economy, contributing Direct impact Indirect impact Induced impact 57% of the remaining impact. The GDP/capital ratio for the Gautrain is lower than the average for the provincial economy (0.45), owing to the level of capital intensity of the Gautrain itself (0.29). The Gautrain s operations sustained about jobs in Gauteng in 2013, representing about 0.1% of the total formal employment in Gauteng during jobs were created directly by Gautrain. Indirectly, Gautrain s operations and maintenance created approximately jobs. This refers to the jobs created in those sectors that provide inputs to the components of the system. In 2013, approximately jobs were created due to the economic impact from the Gautrain that resulted from the payment of salaries and wages to people who were directly employed at the various consecutive stages of beneficiation of the Gautrain. 43

53 The Gautrain had a higher impact on the skilled and semi-skilled labour than in unskilled labour: About 60% of the jobs created was in the semi-skilled category. In terms of the labour/capital ratio (1.37), the operational portion brings the Gautrain s average down well below the provincial average (2.67) once again an indication of its high capital intensity and levels of automation. Governments at various levels received additional tax and levy incomes as a result of the Gautrain: the total government revenue increased by an estimated R400 million in 2013, due to the operations and maintenance of the Gautrain. This is through both the direct collection of direct and indirect tax revenue by Gautrain, as well as the broader fiscal impacts generated through the linkages Gautrain has with other economic sectors. The Gautrain contributes towards poverty alleviation through its impact on household income, more specifically where low income households benefit from the system: households in Gauteng benefited from the Gautrain through the downward stream of income sources. The total income received by households was nearly R1 billion in 2013, an estimated R200 million of which was received by lower income households. The Gautrain s percentage contribution to low-income households (22.4%), is Source: KPMG analysis about the same as that of the provincial economy (20%) as a whole. 44

54 6.3 Fulfilling the Gautrain system s strategic objectives Linking to the strategic objectives set out in the original Feasibility Study of the Gautrain: Gautrain s strategic objectives The Gautrain Rapid Link (Gautrain) must facilitate development in the Province. The project must contribute directly and indirectly to job creation thereby supporting Socio- Economic Development goals (SED). How the Gautrain contributes to achieving these objectives The operation and maintenance of the Gautrain adds to the Gauteng economy s GDP on an annual basis. The Gautrain s operations sustains on average about jobs in Gauteng annually, with the majority in the skilled and semi-skilled categories. 45

55 Eventually everything connects people, ideas, objects. The quality of the connections is the key to quality per se Charles Eames 46

56 Getting you connected signalling the future 47

57 7 Getting you connected Signalling the future The N1 (Johannesburg to Pretoria corridor) north and south-bound freeway is one of the most congested transport corridors in Gauteng, carrying more than vehicles single direction on a daily basis. Given this situation, the building of a more efficient public transport system was inevitable. As a way of preventing an increase in the rate of private transport entering into city centres, the Gauteng government realized the need for effective alternative travel modes to improve this situation. 3 The introduction of the Gautrain would not have had the capacity to reduce congestion on this corridor by itself: The support of the Dedicated Feeder and Distribution Services (DFDS, i.e. the bus service) would therefore act as a catalyst to change the negative image of public transport, facilitating a switch from private to public transport. In addition, the decision to implement the DFDS was necessary, given the poor state of the available public transport system in the Province at the time and its inability to support the Gautrain. The DFDS currently plays a very important role in attracting Gautrain users. By providing Gautrain passengers with safe, efficient and reliable transport services to and from the train station, the feeder and distributions service is an important contributor to ensuring that sufficient levels of ridership rates are achieved on the Gautrain and that maximum conversion is obtained away from private transport. The shift away from use of private vehicles as a mode of transport aids in reducing road congestion, air pollution and energy consumption and improves overall transport mobility. The Gautrain parking facilities also play an important role in the entire Gautrain system supply chain. The provision of adequate, affordable, safe and convenient 3 Gautrain Management Agency Patronage data 2013/14 48

58 parking facilities to Gautrain commuters at all stations (except the ORTIA station) contributes to increased ridership rates and, in return, reduced traffic congestion. Source: GMA The ancillary services not only generate socio-economic benefits but also contribute positively to the economy through increased business activity offered through these services. The transmission mechanism of the additional business activity created as a result of these services offered by Gautrain is illustrated below. 49

59 The diagram shows the importance of economic linkages and the transmission mechanism of expenditure in an economy with specific reference to the ancillary services offered by the Gautrain. This mechanism is further illustrated below: The introduction of the ancillary services offered drives additional business activity resulting from the direct jobs creation required to provide these services, as well as the additional revenue generated to provide these services. This increase in business activity in the economy creates additional employment opportunities in the transport sector. As the Gautrain increases business activity through these ancillary services, additional corporate tax is also generated and directed back into tax revenue. In addition to this, other businesses that supply the Gautrain with goods and services also experience an increase in their business activity as the construction company demands more. It is important to note that as business activity increases, employment also increases and additional profit is generated. This results in some re-investment back into business and increases the corporate tax base. The additional employment created as a result of increased business activity now means that more people have money to spend on goods and services in the economy. This thus generates more tax revenue that is directed back to national government. These impacts are quantified in the section below. 7.1 Safe and sound boarding At the start of operations in 2010, the average weekday usage of parking across all stations averaged per day, while weekend usage was lower, averaging approximately 1400 occupied parking bays per day. Demand for parking facilities has, however, increased over time and in the 2013/14 financial year averaged about occupied parking bays per day over an average weekday and occupied parking bays per day on an average weekend. 50

60 Graph 4: Usage of parking facilities at Gautrain stations The usage of parking facilities at stations has far surpassed the expected demand, specifically during business days, at specific stations Average parking per weekday "2011/12 "2012/13 "2013/14 Centurion Hatfield Marlboro Midrand Park Pretoria Rhodesfield Rosebank Sandton Average number of occupied parking bays per Gautrain station Source: Monthly revenue and patronage reports, As a result of the safety and convenience of the parking service offered at most Gautrain stations, the demand for the service has far surpassed initial projections, specifically during business days. The stations that are most affected by parking shortages included the Pretoria, Centurion, Midrand, Rhodesfield and, occasionally, Rosebank and Park stations. According to a survey conducted at the end of , the stations noted above are also the stations where the majority of Gautrain commuters make use of their private vehicles as a mode of transport to the station on weekday mornings. 4 Urban Studies, Gautrain commuter survey, November

61 Source Graph 5: Mode of transport of Gautrain commuters travelling from home to Gautrain stations on weekday mornings 5 A large portion of Gautrain commuters make use of the parking facilities at stations 70% 60% 53% 59% 58% 56% 54% 50% 40% 41% 37% 45% 36% 30% 20% 10% 14% 17% 26% 10% 20% 21% 12% 20% 16% 0% Centurion Hatfield Marlboro Midrand Park Pretoria Rhodesfield Own car parked in Gautrain parking garage Dropped off Gautrain bus Other modes of transport Rosebank Sandton Source: Urban Studies Gautrain commuter surveys, 2012 Due to the increased demand for parking facilities, short-term measures to enhance parking availability have been implemented. Additional parking bays were added to the Rhodesfield station in December 2012, while additional processes were put in place to expand parking facilities at the Midrand, Centurion and Pretoria stations. The increased demand for parking facilities attracted additional revenue over time, which has contributed positively towards economic activity. The parking services offered have resulted in increased business activity through revenue generated from the parking facility and additional employment being created. 5 Other modes of transport includes shuttle services, city bus, metro rail, aeroplane, motorcycles, walk, taxi and own car parked elsewhere 52

62 Revenue from parking services rendered to Gautrain commuters has increased from just over 2.6% of Actual Patronage Revenue (APR6) in the 2011/12 financial year, to more than 5% of APR in the 2013/14 financial year. It is worth noting, however, that not all parking facilities at all stations were fully operational during the 2011/12 financial year, thus resulting in the lower contribution to APR during that year. The economic benefit resulting from the increased revenue generated from the parking services is described in more detail in the section to follow. It is important to emphasise, however, that the economic spinoffs resulting from the parking revenue, are not the primary benefits derived from the parking services. Perhaps most important is that the uptake of Gautrain s parking services induces demand for the Gautrain s train services, by generating train rides. In that way, both parking and DFDS play a central role in attracting commuters to the Gautrain services, as many transition from one mode of transport (private vehicles or DFDS) to the Gautrain rapid rail system at the Gautrain stations. Graph 6: Revenue collected from parking facilities as a percentage of APR Revenue collected from parking facilities, as a percenatge of total APR, has been on the increase since the inception of the Gautrain 6.0% 5.0% 4.0% 4.2% 5.1% 3.0% 2.6% 2.0% 1.0% 0.0% Parking (General, airport and non-rail user)% of total APR FY 2011/12 FY 2012/13 FY 2013/14 Source: Monthly revenue and patronage reports, Actual Patronage Revenue is the actual revenue earned by the concessionaire during a period, which excludes patronage guarantee 53

63 The indirect/secondary economic spinoffs garnered from increased parking revenue is as follows. The total revenue for the 2013/14 financial year generated by Gautrain parking bays makes up Parking 5.1% of total APR. The revenue generated through the parking bays added R47 million to the Gauteng economy s GDP during The parking bays sustained about 618 jobs in Gauteng in 2013, 83% of the jobs created was in the semi-skilled and unskilled category. The total government revenue increased by R10 million in 2013, due to the parking bays. The total income received by households was nearly R26 million in 2013, R7 million of which was received by lower income households. Source: KPMG analysis Improving reliability reduces the uncertainty and risk associated with transportation networks in supply chain logistics. This in turn creates economic activity by increasing efficiency (e.g., promoting just-in-time delivery type paradigms) and reducing operating costs (e.g., eliminating the need for warehousing facilities). An efficient transportation system also increases the competitiveness of a region and attracts new businesses. Source: KPMG, HS2 Regional Economic Impacts Report,

64 7.2 Connecting you beyond the rail Over the past three years the demand for DFDS increased significantly, exceeding expectations: Between the 2011/2012 and 2012/2013 financial years, DFDS passenger demand grew by more than 40% from to The figure 7 below indicates the average weekday usage of the DFDS services on a month on month basis during the 2012/13 and 2013/14 financial year. This figure illustrates a similar trend to that stated above with demand also increasing during that period. During the 2012/13 and 2013/14 financial year, passenger demand increased by 30% on an annualised month-on-month basis, with the largest increase experienced during December. The increased demand during December was the result of a R1 per trip promotion running from mid-december 2012 to January Graph 7: DFDS average weekday passenger numbers, 2012/ /14 Demand for DFDS has gained momentum over the past year, increasing on average by 30% between 2012/13 and 2013/ % 25 50% Pax Thousands Apr* May* Jun* Jul Aug* Sep* Oct Nov Dec* Jan* Feb Mar* 40% 30% 20% 10% 0% Annual percentage change Average Weekday (FY 12/13) Average Weekday (FY 13/14) % Change Source: GMA Quarterly performance report, 2012/ /14 From a commuter survey 8 conducted in late 2012, it appears that the majority of Gautrain users rely heavily on the bus service as a main mode of transport to transfer them to their final destination. Depending on the station, the DFDS currently 7 It is worth noting that even though the DFDS commenced in 2011, the passenger numbers for only the past two financial years are illustrated below for ease of comparing the year-on-year growth. 8 Urban Studies, Gautrain commuter survey,

65 transports between 35% 40% of Gautrain users to their final destination during weekday peak periods. This clearly illustrates the importance of the DFDS and the value it adds to Gautrain services. The above indicates that the DFDS plays an important role also in inducing demand for train rides, as it enables commuters to transition seamlessly from the DFDS to the train services offered by the Gautrain and vice versa. Graph 8: Mode of transport of Gautrain commuters travelling from Gautrain stations to their final destination weekday mornings 9 DFDS is in most cases used as the main mode of transport to transfer Gautrain commuters to their final destination. % of commuters 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 35% 42% 44% 37% 25% 38% 35% 37% 32% Gautrain bus Walk Company shuttle Other Source: Urban Studies Gautrain commuter surveys, 2012 Safety, reliability and punctuality play an important role in public transport service for South Africans. The perception of public transport will only change if there is significant development that offers a safe and reliable mode of transport. The DFDS currently operates an average of trips per month at an average punctuality level of 99% and an average availability level of 99%, above the respective norms of 98.5% and 94%, making it a very safe, reliable and punctual mode of transport. In light of this, the perception of the DFDS that it offers a safe, reliable, and punctual service is central to its increased attractiveness. 9 Other modes of transport includes shuttle services, city bus, metro rail, aeroplane, motorcycles, walk, taxi and own car parked elsewhere 56

66 Table 1: Monthly DFDS service availability and punctuality statistics, 2013/14 financial year FY 2013/14 APRIL MAY JUNE JULY AUG SEP Oct Nov Dec Jan Feb Mar Ave pm Actual trips Service availability 100% 100% 99% 99% 99% 99% 99% 99% 99% 100% 100% 100% 99% Service punctuality 99% 100% 99% 99% 98% 98% 99% 99% 99% 99% 99% 99% 99% Source: GMA Quarterly performance report, 2013/14 In addition to the abovementioned value being added to the Gautrain commuters, the DFDS also contributes positively to the economy. The additional business activity created in the transport sector as a result of the revenue generated from users of the service and the additional employment created, contributes positively to economic activity. As a result of the increased passenger demand for the DFDS over the past few years, revenue collected from these services has increased over time: DFDS revenue as a percentage of APR has increased from 1.4% in 2011/12 to close to 4% in 2013/14. Additionally, and perhaps most importantly, the DFDS plays a central role in inducing demand for train rides, as it enables commuters to transition seamlessly from the DFDS to the train services offered by the Gautrain and vice versa. 57

67 Graph 9: Revenue collected from DFDS services as a percentage of APR Revenue collected from the feeder and distribution services, as a percenatge of total APR, has been on the increase, adding to increased business activity in the transport sector 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1.4% 2.9% FY 2011/12 FY 2012/13 FY 2013/14 3.9% Source: Monthly revenue and patronage reports, The economic benefit resulting from the increased revenue generated from the DFDS is as follows. The total revenue for the 2013/14 financial year generated by Gautrain DFDS makes up 3.9% of total APR. The revenue generated through the DFDS added R26 million to the Gauteng economy s GDP during The DFDS sustained about 500 jobs in Gauteng in 2013, 94% of the jobs created were in the semi-skilled and unskilled category. The total government revenue increased by R7 million in 2013, due to the operation of the DFDS. The total income received by households was nearly R15 million in 2013, R4 million of which was received by lower income households. Source: KPMG analysis 58

68 7.3 Province-wide mobility ITMP25 and its role in promoting a more integrated public transport system in Gauteng The ITMP25, Gauteng s overarching transport master plan officially adopted to ensure province-wide mobility in future for all Gauteng residents (Dr Ismail Vadi, 2013), has identified rail as an essential component and backbone for an integrated and efficient public transport system in Gauteng. Importantly, the ITMP25 strives to enable the Gauteng Department of Roads and Transport to regulate, plan and develop an efficient and well integrated transport system that enhances mobility and is safe, secure and environmentally sustainable. The ITMP25 adopts the policy directions of a number of national and provincial policy documents to ensure coordination and provide a suitable context for the implementation of the ITMP25. In relation to transport, the GTIP5, in particular, provides the basis for the 25-year transport vision for the Province, as well as guidelines in inter alia the following focus areas: A transport network in support of economic development; A transport integration with spatial development in pursuance of greater efficiencies and social integration; Transport, environmental soundness and sustainability; Optimum utilisation of existing and new transport infrastructure (smart solutions); and Development, maintenance and operation of an efficient transport network and system. Physical, social and economic integration, emphasised as being a central objective of the ITMP25, is only possible through improving the extent of integration in the public transport system in Gauteng. In turn, through promoting the integration of different modes of transport, allowing for easy transitioning from one transport mode to another, it is expected that much headway could be made in terms of promoting spatial development and social integration and developing an efficient and effective transport network that is better able to serve the residents of Gauteng. 59

69 The ITMP25 also places emphasis on the importance of promoting institutional efficiency in the transport sector, through driving the following outcomes: Co-operative governance and partnership between all spheres of government, private sector, media and citizens; Leadership and management excellence in the Department of Roads and Transport; Customer focus; Integrated management systems; Regulatory efficiency; and Sustainable funding and financing mechanisms. As will be discussed in more detail below, the implementation of the ITMP25 is in full swing supported by the recent inception of the Gauteng Transport Commission (GTC) in Bedfordview in September The GTC is mandated to oversee the effective and coordinated roll-out of the vision of the ITMP25 for a more integrated transport system in Gauteng. Through the creation of the GTC, much progress can be made to strengthen the institutional capacity that drives the integration of different modes of transport in Gauteng The ITMP25 envisions concrete initiatives and discussion are underway to advance the integration of transport modes in Gauteng In its vision of developing a highly integrated transport system in Gauteng, the ITMP25 offers clear guidelines regarding the optimal focus areas that would allow Gauteng to turn this vision into reality. The ITMP25 recommends a number of key initiatives for urgent consideration by the Gauteng Department of Roads and Transport. Among these is the proposal for the One Province One Ticket initiative. The initiative seeks to offer passengers seamless door-to-door public transport, facilitated through the use of one ticket for all modes of transport in Gauteng. Additionally, these efforts of integration will entail seeking and implementing ways to coordinate schedules and fares. 60

70 As a result, it will be possible to switch conveniently between different modes of public transport including buses, Metrorail trains and taxis. Commuters will benefit from shorter waiting times, reduced overall travel time, greater flexibility and accessibility. Furthermore, passengers will be able to plan their trips better, facilitating the increased move to public transport as a mode of choice. Not only are discussions currently underway to implement the One Province One Ticket initiative, but discussions are also in progress to make it easy for commuters to transfer between BRT and Gautrain. Plans are discussed to integrate BRT routes with Gautrain feeder bus routes. Similarly, plans for the development of BRT stops in close proximity to Gautrain stations are well advanced GTC to empower policy implementation and drive integration of Gauteng s public transport system The recent official opening of the new offices of the Gauteng Transport Commission (GTC) based in Ekurhuleni, gave further impetus to the realisation of the ITMP25 vision for Gauteng s transport system. The GTC is mandated to act as an overarching transport structure composed of the Gauteng Department of Roads and Transport and all local authorities in Gauteng. It will co-ordinate the implementation of the ITMPT25 that was approved in 2013 by the provincial government. With regard to the GTC, Dr Ismail Vadi said that the Commission will facilitate joint planning and co-ordination in the following core transport areas: Integrated rail planning in the province; The development and integration of Bus Rapid Transport Systems (BRT); The promotion of standardised Intelligent Transport Systems, particularly in respect of integrated ticketing, integrated fare management, passenger transport information and traffic management; Promoting non-motorised transport; and Effectively implementing travel demand management. The GTC is overseen by a Governing Body consisting of the MEC of Roads and Transport and the Members of the Mayoral Committees responsible for Transport in each participating municipality. Also, it is supported by an Advisory Panel of transport specialists and experts. 61

71 The participating municipalities are: City of Johannesburg; City of Tshwane; Ekurhuleni Metropolitan Municipality; West Rand District Municipality; Sedibeng District Municipality; Lesedi Local Municipality; Midvaal Local Municipality; Randfontein Local Municipality; Westonaria Local Municipality; Merafong City Local Municipality; Mogale City Local Municipality; and Emfuleni Local Municipality. 10 The inception of the GTC is seen as key to the ITMP25 s success in moving from a suboptimal institutional arrangement that is dependent on strong intergovernmental cooperation to a strong and legislated institutional arrangement that depends on legislative compliance. Jack van der Merwe, CEO of Gautrain Management Agency, stated with regard to the GTC, that this new body can make a strong contribution to streamlining decision making and focusing on rapid improvements in the public transport system, developing bus and tax lanes, Gautrain routes and other bus networks Interaction of different modes of transport in Gauteng and the example of Gautrain s Park station The requirement for the integration of the Gautrain Rapid Rail Link into the existing public transport system in Gauteng was a central objective since the start of the Gautrain Project. The optimal way in which such an integration ought to take place was investigated in a comprehensive study carried out in and strongly influenced the development of the Gautrain Rapid Rail Link, as well as the determination of the routes for the DFDS (Gautrain bus services). 10 Government of South Africa, Engineering News, City of Joburg,

72 Three cities become one The integration of three vital cities was facilitated through the development of the Gautrain link, connecting Johannesburg, Tshwane and Ekurhuleni, central hubs for Gauteng and South Africa. As the figure below shows, while a number of public transport modes exist linking commuters within the hubs of Johannesburg, Tshwane and Ekurhuleni, much fewer choices existed for commuters wanted to travel between these. This changed with the initial opening of the Sandton-ORTIA link, as well as the opening of the Gautrain Rosebank-Hatfield and Park-Rosebank links in mid-2011 and 2012, respectively. By connecting Johannesburg and Ekurhuleni, it has been possible to connect Johannesburg with an important industrial hub, known as the workshop of Africa (see Section 7.4 for more detail). Furthermore, through taking a substantial number of vehicles off the highways between Johannesburg and Tshwane (see Section 7.3 for further detail), it has been possible to ease congestion, particularly during the critical morning peak hours that tend to be most prone to congestion. Additionally, due to the ease and convenience with which commuters can now travel between Johannesburg and Tshwane, where traffic congestion has been most problematic, we expect that Gauteng can more easily leverage off the potential synergies between these cities. Overall, with people coming together more easily, the vision of a more unified Gauteng city-region, as conceptualised in the ITMP25 or GCR concept for example, moves within reach. 63

73 Legend Figure 1: Gautrain Rapid Rail Link connects Johannesburg and Pretoria, two important transport hubs Source: AfriGIS, The case of Gautrain Park station: How other modes of transport link to Gautrain s Park station and DFDS services As noted earlier, an important objective from the inception of the Gautrain Project was to ensure that the Gautrain feeder system, shuttling rail passengers to and from Gautrain stations, would also be integrated with other public transport systems and services operated within the vicinity of the Gautrain stations. Such integration was particularly emphasised with respect to the BRT stations and Gautrain stations. Furthermore, discussions of integrated ticketing and the integration of routes continue to be central to the integration efforts emphasised in the ITMP25. 64

74 On the basis of the example of Park station and surrounding areas within roughly a 3km radius (shown on the AfriGIS and NASA maps below) it is possible to gain an impression of the way in which different modes of transport currently service the areas surrounding Park station. The maps below show different modes of transport in conjunction with the Gautrain system (i.e. the Gautrain Rapid Rail Link and the Gautrain bus services). Legend The first figure below shows the Gautrain Park station and the DFDS routes (Gautrain buses). Figure 2: Gautrain Rapid Rail Link and DFDS (Gautrain bus services) Source: AfriGIS,

75 When combining the Gautrain station and DFDS routes with the Metrorail routes and stations (see figure below), it emerges that the proximity of the Gautrain and Metrorail stations is striking. In terms of geographical proximity, the Gautrain and Metrorail systems are integrated, although going forward the implementation of the One Province One Ticket initiative could further facilitate easy transitioning for commuters using both transport services. Figure 3: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and Metrorail Source: AfriGIS,

76 Gautrain s Park station, DFDS routes (Gautrain buses) and the Metro Bus routes in conjunction cover a large number of service points within only a 3km radius. While a Metro Bus stop is not situated immediately at a Gautrain station, it is comparatively close, potentially reachable within two blocks of the station. This suggests that some integration is present, especially when considering that a number of DFDS stops coincide with Metro Bus stops, which is likely to facilitate transitioning between both public transport systems. Figure 4: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and Metro Bus routes Source: AfriGIS,

77 In the map below, Gautrain Park station and DFDS routes (Gautrain buses) are shown in conjunction with BRT bus routes. Bus stops for the DFDS and BRT services are within close proximity of one another, where a number of these are reachable by foot. However, in view of the potential synergies between both bus systems, it may be worth integrating both systems further, thereby garnering the benefits for commuters of being easily able to reach a wide range of destinations within the Johannesburg CBD area. Figure 5: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses) and BRT routes Source: AfriGIS,

78 When viewing a number of different public transport modes in conjunction, as shown in the map below, it emerges that the Gautrain station and DFDS (Gautrain bus services) are already integrated to some extent with other public modes of transport, although potential for integration exists, which could be harnessed. This could be achieved through implementing the ITMP25 suggestions for integration in terms of placement of bus stations, coordination of schedules, fare structures and ticketing systems. Through the inception of GTC, the implementation of such integration initiatives in the public transport system in Gauteng is likely to gain momentum through better co-ordination and collaboration of different stakeholders. Figure 6: Gautrain Rapid Rail Link, DFDS routes (Gautrain buses), Metrorail, Metro Bus and BRT routes Source: AfriGIS,

79 In summary, while the case of Gautrain s Park station was used above as an example of the degree of integration of public transport modes around Gautrain stations and DFDS routes, a similar picture is likely to emerge from a number of other Gautrain stations and their surrounding areas. Total integration is not yet the norm, due to the independent manner in which the different public transport modes have been developed in the past. Nonetheless, there is a notable improvement in integration due the connectivity, which the Gautrain system adds. It is also important to note the Gautrain s large contribution to integration, which is achieved through the effortless and fast connection of Johannesburg and Pretoria, in turn, empowering the Gauteng s city region. Moreover, we anticipate that transport integration will continue to be propelled forward through the concerted drive to implement the initiatives of the ITMP25, as well as potentially through the expansion of Gautrain routes that could allow for the development of further strategic nodes to enable commuters to transition conveniently from one mode of public transport to the next. 7.4 Fulfilling the Gautrain system s strategic objectives Linking to the strategic objectives set out in the original Feasibility Study of the Gautrain: Gautrain s strategic objectives It must improve accessibility and mobility in this development corridor. How the Gautrain contributes to achieving these objectives The DFDS system assist in improving access for people living remotely from economic hubs. It also extends the reach of commuters wanting to travel safely and reliably to their It must promote the use of public transport. destination. It integrates with other modes of transport. This is indicated for example by the extended catchment areas that serve the different stations. 70

80 It must develop an integrated public transport system, inter alia through the use of feeder and distribution systems. It must assist in improving the image of public transport. It integrates with other modes of transport. This is shown by the overlapping points of entry and exit of different modes of public transport. The safe, reliable, punctual, high quality service offered by the DFDS has also changed the general perception of public transport facilities. 71

81 The more complex the network is, the more complex its pattern of interconnections, the more resilient it will be Fritjof Capra 72

82 Getting you there the transfer point 73

83 8 Getting you there The transfer point In the following section, we offer a snapshot of the profiles of Gautrain commuters, how the Gautrain links them to their work and other travel destinations and what their perceptions of the Gautrain are. Additionally, we paint a picture of a number of lifestyle changes associated with the arrival of the Gautrain system, including gains related to convenience, time savings, reduced car accidents and fatalities, and a reduced carbon footprint. Furthermore, we specifically take note of the link to OR Tambo International Airport and the ways in which the airport link supports the realisation of Ekurhuleni s Aerotropolis vision and thus connects Gauteng to the world and the world to Gauteng. 8.1 People on the move An analysis of a collection of ridership data, survey results and reputation audits 13 allowed us to generate a picture of the profiles of Gautrain commuters and their behaviour patterns. In addition, this information will provide an indication of the potential demand for the expansion of Gautrain s services Profile of commuters and its implications The following findings regarding the profiles of commuters are particularly noteworthy: The different profiles of commuters largely reflect the demographics of the residential areas that serve as catchment areas to the respective Gautrain stations. In other words, not all Gautrain commuters are the same. Depending on which station serves as an entry point for a Gautrain commuter, he/she is likely to reflect characteristics about the catchment area of that particular Gautrain station. For example, commuters who get on the Gautrain at ORTIA are likely to be business travellers, possibly from other parts of South Africa or beyond, travelling alone, and earning a medium- to high 13 Ridership data supplied by GMA and Bombela; Gautrain AM Commuter survey, Urban studies, 2012; Service Audit Track, Catalyst, June 2013; Gautrain Brand Valuation Audit, Letsema Consulting and Mazars, July 2014; Service Audit Track, Catalyst, June 2014; Gautrain Reputation Audit, Catalyst, June 2014, amongst others. 74

84 income. On the other hand, commuters entering the Gautrain system at Park Station are more likely to be from Johannesburg, Soweto or Alberton, travelling by taxi to the station and using the Gautrain for work or study related purposes. Depending on where future Gautrain stations and DFDS routes will be placed, commuters with different commuter profiles are expected to utilise and benefit from the Gautrain services. A large majority of Gautrain commuters tends to travel alone. This implies, in conjunction with a number of other indicators, that Gautrain commuters are likely to be on their way to work or to a learning institution. Overall, Gautrain users are to a large extent middle to higher income earners. This explains that a large number of people park their vehicle at a Gautrain station and then commute to their destination on the Gautrain. Parking, therefore, must be viewed as an enabler that generates train rides. In other words, parking (and similarly DFDS) induce demand for Gautrain s train services, and therefore play an important role in making the Gautrain overall a successful service. In turn, we can expect, that if Gautrain s parking and DFDS facilities did not exist, the demand for Gautrain s train services would be significantly reduced. It is therefore clear, that commuters perceive much value in the Gautrain s ability to integrate several modes of transport, such as for example, through parking or DFDS. Additionally, the fact that a large part of commuters transitions from car transport to the Gautrain system, implies: Reduced congestion on the roads, with implications for time savings and productivity gains; 75

85 Reduced strain on the roads with implications for reduced demand for public funding needed for road maintenance; and Reduced emissions (see Section 7.3) and thus increased sustainability and quality of life for Gauteng residents Commuter travel patterns A number of typical commuter travel patterns emerge from an analysis of commuter surveys and ridership data: Fact 1 A large number of commuters travel to and from Sandton station (over 21% of commuters in 2013 used the Sandton link, see graph below 14 ), which indicates the economic importance Sandton has attained in recent years. It also highlights Sandton s popularity as a point of connection for commuters travelling from and to OR Tambo International Airport. We anticipate that a feedback loop exists, with the placement of the Gautrain station in Sandton being influenced by the relative economic importance of the area, guaranteeing substantial demand for transport services stemming from the Sandton catchment area, as well as, in turn, promoting its economic significance and status as a business hub for Gauteng, through promoting access for commuters to the area. 14 See, for example, Urban Studies, Gautrain Morning Commuter Survey, Commuters who use a link, will be getting on, or off at that particular station. When a commuter uses the Sandton link, for example, he/she may be getting on the Gautrain system at Sandton station, or he/she may be getting off the rail system at this station. In either case, the commuter will be counted as having used the Sandton link. 76

86 In view of the importance of transport connectivity and physical access in transit oriented development, it is expected that the Gautrain is central to facilitating continued growth in the Sandton area. With traffic congestion in Sandton progressively proving more problematic, the access offered by the Gautrain is increasingly essential for the area. Not only, is the Gautrain serving an important function for Johannesburg, and indeed Gauteng as a whole, by addressing congestion in Sandton and surrounding areas, but we expect that additionally, wherever a future Gautrain station (or DFDS route) will be placed, the area will substantially benefit from eased congestion as well as greater access that promotes business activity and growth. Fact 2 Another notable commuter behaviour pattern is that commuters tend to utilise the Gautrain in order to travel relatively long distances. They are less likely to use the Gautrain to travel short distances, i.e. one or two stations. Additionally, the stations of Pretoria and Park are particularly large entry and exit points for commuters. They attract a larger number of people due to extended catchment areas. This is also shown by the graph below, where the time to station is longest for Pretoria and Park stations, indicating geographically larger distances travelled to station. Source: GMA ridership data, 2013 Even for commuters travelling 20 or so minutes to reach a Gautrain, the service still adds substantial value in enabling commuters to reach their destination quickly, conveniently and safely. The implication of this is that current and future commuters would perceive a substantial value add, if a Gautrain station or DFDS route were to move closer with a possible expansion of the system. 77

87 Graph 10: Proportion of commuters using each Gautrain link, that is, commuters getting on or off the system at particular Gautrain stations, 2013 Most commuters use the Sandton link % of commuters in % 20% 15% 10% 5% 0% 12% 9% 11% 8% 3% 7% 7% 8% 21% 8% Source: GMA ridership data, 2013 As noted above, and indicated for example in the graph below, commuters travel longer to get to Pretoria and Park Gautrain stations relative to their travel time to other stations. This is explained through the extended catchment areas for these stations. The observation that commuters in the catchment areas of Pretoria and Park are willing to travel longer to reach their nearest Gautrain station also indicates that demand for suitable transport in these catchment areas is especially pronounced, with likely implications for a particular shortage in these areas. The implication is also that demand for expanded Gautrain services is marked, suggesting that commuters would perceive substantial value add from being able to more easily access a Gautrain station or DFDS node, as the Gautrain network grows. 78

88 Graph 11: Median travel time to station, 2012 Commuters generally travel longer to get to end of line stations that service larger areas Minutes Time to station Source: Urban Studies, 2012 We can also better understand the typical Gautrain commuter and his/her travelling behaviour on the basis of the results shown in the graph below: the majority of commuters use the Gautrain to commute to and from work. In fact, over the past two years, the proportion of commuters using the Gautrain for work purposes has increased by nearly ten percentage points. The implication is that the Gautrain is, in particular, meeting the demand of commuters seeking to reach their place of employment and return home after work. This also explains why surveys found that Gautrain commuters tend to travel alone (95% of commuters 15 ) and are likely to return to the station they entered initially, when they return home. We anticipate that the Gautrain therefore plays an important role in bringing commuters closer to economic opportunities, serving as an enabler of socio-economic development in Gauteng. Thus, a potential expansion of the Gautrain services could multiply these gains and provide more people with high-quality public transport that affords them greater access to opportunity. This would make a large contribution to bridging the mobility gap that puts a cap on faster growth and development in the region. 15 Urban Studies, Gautrain Morning Commuter Survey,

89 Graph 12: Reasons for travelling, Most commuters travel for work purposes 60% 50% 46% 54% 51% 55% 40% 30% 20% 10% 0% 34% 27% 31% 17% 21% 22% 19% 13% 3% 2% 2% 1% July-Dec 2012 Jan-June 2013 July-Dec 2013 Jan-June 2014 Catching/coming from a flight Commuting for private purposes Commuting for work purposes Other Source: Catalyst Service Audit Tracks, 2013 and Ridership by station: how commuters travel using the Gautrain The travel patterns of commuters to and from particular stations mirror each other. For example, many commuters get on the Gautrain at ORTIA and exit the Gautrain at Sandton. Conversely, commuters who get off the Gautrain at ORTIA would have entered the Gautrain system at Sandton. As a result, the graphs below are grouped by entry and exit point per station. This facilitates an understanding of the two-way relationship exhibited in commuter travel patterns, where we see that commuters who get on the Gautrain at station X to go to station Y, will also get back on the Gautrain at Y, likely to return to X. This, in turn, reinforces the impression that Gautrain commuters are in the majority business travellers and people travelling to education institutions, implying that they tend to travel relatively consistently from one station to another in the morning and back at the end of the day. These travel patterns have significant implications for the degree of congestion on Gauteng s roads, which will be highlighted further on in this section. The legend below indicates how to read the following set of graphs, as well as, which commuter travel behaviour patterns are relevant in each case. 80

90 Legend Point of entry for commuters Point of exit for commuters Fact 1: The Sandton link is dominant Fact 2: Larger distances are more popular Stations relevant to Fact 1 Stations relevant to Fact 2 relative to with commuters. other links. Fact 1: Sandton attracts the largest share of Gautrain commuters, illustrating the area s economic strength and relevance for the Gauteng economy The popularity of the ORTIA Sandton link suggests that business travellers constitute the largest group of commuters using the airport link The ORTIA link is most important for commuters arriving by aeroplane (96%). Most of ORTIA commuters are travelling for work purposes (77%) and a large percentage of commuters are from the rest of South Africa (61%) 16. In that way, the ORTIA link differs substantially from the other stations, with a far larger catchment area and strong relevance for national and international business travellers. 16 Urban Studies,

91 % of commuters Commuters who get on the Gautrain in ORTIA reach their destination at the following station, % of total 57.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 4.5% 6.6% 10.0% 4.8% 3.8% 0.1% 0.0% 9.3% 3.9% At which station commuters get on the Gautrain if their destination is ORTIA, % of total 70.0% 58.7% 60.0% 50.0% 40.0% 30.0% 20.0% 9.1% 4.3% 5.9% 10.0% 4.6% 4.4% 0.1% 0.0% % of commuters 8.9% 4.1% Source: GMA ridership data, Sandton attracts the majority of commuters, shown by a dominant Rhodesfield-Sandton link Commuters travelling from Rhodesfield station are predominantly from the broader Ekurhuleni area (96%) and on average travel 15 minutes to reach the station. This exceeds the average travel time to destination of 10 minutes and suggests that an expanded catchment area feeds Rhodesfield station. This is also confirmed by a primary catchment area of radius 10.1km, coming in largest after ORTIA 17. In turn, the implication is that relatively unmet demand for suitable, high quality transport exists in the broader Ekurhuleni area, which is being addressed through the services offered by the Gautrain system and which would be further enhanced by the extension of the service. Additionally, the large majority of commuters entering the Gautrain system at Rhodesfield station are on their way to work or are embarking on a business trip 17 Urban Studies,

92 (92%). As a result, most of them travel alone (97%) and use the train 5 days a week (76%), returning home on the same day (93%) 18. This suggests that a number of commuters, traveling during peak hours to and from work, are being diverted away from road traffic, likely easing the pressure on roads and reducing related congestion. Overall, it is clear that Rhodesfield commuters generally travel on the Gautrain system for work purposes, which also explains the popularity of the Sandton link, given its status as an important business hub and place of work for Gauteng residents. Commuters who get on the Gautrain in Rhodesfield reach their destination at the following station, % of total 60.0% 55.7% % of commuters 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 6.5% 3.3% 5.5% 5.0% 3.4% 0.1% 11.6% 9.0% At which station commuters get on the Gautrain if their destination is Rhodesfield, % of total % of commuters 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 6.6% 3.3% 5.5% 5.1% 3.8% 0.1% 54.9% 11.5% 9.3% Source: GMA ridership data, Urban Studies,

93 Fact 2: Gautrain commuters tend to travel longer rather than shorter distances much appeal for commuters therefore lies in the convenience and cost effectiveness of being able to cover larger distances using the Gautrain For Rosebank station, the Hatfield and Centurion Gautrain link is most popular Rosebank link commuters exhibit a strong work focus. Thus, commuters entering the Gautrain system at Rosebank station tend to travel alone (96%) to go to work or embark on a business trip (74%), to travel to the airport (14%), or to an educational facility (9%) 19. Noticeably, in the case of the Rosebank link, commuters take advantage of the possibility of travelling to remote, northern stations like Hatfield and Centurion. It is likely that commuters opting for the Rosebank-Hatfield, or Rosebank-Centurion link are being taken off the road, particularly the N1, which is purported to be the busiest stretch of road in South Africa. In that way, the Gautrain helps absorb commuters and alleviates congestion on the roads between Johannesburg and Tshwane. 19 Urban Studies,

94 Commuters who get on the Gautrain in Rosebank reach their destination at the following station, % of total % of commuters 25.0% 20.0% 15.0% 10.0% 5.0% 22.1% 12.1% 19.8% 9.3% 1.6% 7.4% 9.6% 10.7% 7.5% 0.0% At which station commuters get on the Gautrain if their destination is Rosebank, % of total 25.0% 20.0% 22.3% 19.7% % of commuters 15.0% 10.0% 5.0% 0.0% 12.0% 9.3% 1.6% 7.5% 9.6% 9.7% 8.3% Source: GMA ridership data, Commuters who get on or off the Gautrain in Sandton are most likely to travel to and from ORTIA and Hatfield Commuters entering the Gautrain system at Sandton are generally slightly older than commuters entering at other stations (37 years on average), tend to be male (58%) and tend to be more affluent (often falling in the LSM 10 and 10+ brackets, 65%) 20. This is reflective of the role Sandton plays for Gauteng and South Africa: the area increasingly serves as a key commercial node and financial hub for South Africa, with related business service activities, such as retail, equally booming. Therefore, as expected, the profile of commuters utilising the Sandton station as an entry point reflects the characteristics of the catchment areas surrounding the station. 20 Urban Studies,

95 Additionally, it is important to note that Sandton fulfils the demand for transport to and from the more remote stations, such as Hatfield and serves as a popular mode of transport for commuters traveling on the ORTIA link. Commuters who get on the Gautrain in Sandton reach their destination at the following station, % of total 20.0% 18.5% 16.0% 15.4% 17.1% 15.0% 10.0% 9.0% 8.0% 5.0% 1.6% 0.0% % of commuters 3.7% 10.7% At which station commuters get on the Gautrain if their destination is Sandton, % of total % of commuters 20.0% 15.0% 10.0% 5.0% 0.0% 16.1% 9.1% 15.3% 8.0% 1.8% 17.1% 17.1% 3.9% 11.6% Source: GMA ridership data, Commuters getting on and off the train at Marlboro station are most likely to travel on a northbound link Commuters on the Marlboro link are most likely to be travelling to and from more remote, northern stations (see graphs below). This, in turn, shows that commuters perceive much value in the Gautrain s ability to allow them to travel large distances, maximising on benefits such as time savings, reliability and convenience. Furthermore, Marlboro serves as an industrial hub in the area, providing many job opportunities for people residing in Alexandra. As a result, by connecting the industrial area of Marlboro with other important nodes in Gauteng, it is likely that the Gautrain contributes to the expansion and increased relevance of the Marlboro area. 86

96 Commuters who get on the Gautrain in Marlboro reach their destination at the following station, % of total % of commuters 20.0% 15.0% 10.0% 5.0% 0.0% 19.0% 14.4% 14.2% 5.6% 10.1% 8.7% 13.9% 4.5% 9.4% At which station commuters get on the Gautrain if their destination is Marlboro, % of total % of commuters 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 19.8% 15.3% 14.9% 5.1% 9.3% 8.5% 12.4% 4.8% 9.8% Source: GMA ridership data, 2013 For the following Gautrain links, both Facts 1 and 2 are relevant. We can see that Sandton is an attractive station for Gautrain commuters, similarly as stations furthest from the station of entry Park and Sandton are the most important links for Pretoria commuters Pretoria commuters, mostly from the core Pretoria suburbs (83%), female (59%) and predominantly representing LSM 6-9 (59%), are most likely to make use of the Sandton or Park link. The popularity of the Pretoria-Park and Pretoria-Sandton link indicates the most recurring patterns in commuter behaviour, with commuters indicating their demand for transport to and from Sandton (Fact 1), as well as their demand for transport connecting them to far-reaching destinations (Fact 2). Furthermore, with commuters entering the Gautrain system at Pretoria station generally travelling for work purposes (96%) and representing less affluent commuters than those entering at Sandton for example, the Gautrain plays an 87

97 important role in connecting Pretoria commuters with economic opportunities that will support greater upward social mobility 21. Commuters who get on the Gautrain in Pretoria reach their destination at the following station, % of total % of commuters 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 3.2% 6.3% 15.0% 4.5% 3.2% 2.4% 22.0% 10.7% 32.7% Source: GMA ridership data, Urban Studies, 2012 and GMA ridership data for

98 What is applicable for Pretoria is also relevant for the case for Midrand: commuters are most likely to travel between Midrand Sandton and Midrand Park, respectively In essence, the same observations are relevant for Midrand, which we noted above for the case of Pretoria. The only differences may arise from the respective catchment areas for both stations and the resulting differences in the profiles of commuters. Nonetheless, the profiles of commuters entering at Midrand are similar to Pretoria, with a large proportion of these commuters falling into the 6-9 LSM groups (47%) and in the majority constituting younger, female commuters 22. Commuters who get on the Gautrain in Midrand reach their destination at the following station, % of total % of commuters 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 15.4% 14.7% 10.4% 1.6% 3.6% 4.0% 20.4% 8.7% 21.3% At which station commuters get on the Gautrain if their destination is Midrand, % of total % of commuters 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 15.2% 15.7% 10.4% 1.9% 3.7% 3.9% 19.7% 8.6% 20.9% Source: GMA ridership data, Urban Studies,

99 The most southern Gautrain station, Park, is popular for commuters travelling to and from Sandton, as well as to and from the northern stations, Centurion, Pretoria and Hatfield Park station is especially important as it operates as Gautrain s most southern station. As a result, its catchment area is particularly large, with people from a large range of areas from the south commuting to Park station. This pattern manifests itself also in the extended average time to station (on average 27 minutes and median time 20 minutes) 23. Additionally, the profiles of commuters entering the Gautrain system at Park station is slightly different to other stations, in that commuters are typically younger (on average 22 years old), with slightly more females. Similarly to a number of other stations, however, the majority of commuters fall in the 6-9 LSM categories (with an average household income of R per month). As typically observed for other stations, Sandton, as well as northern stations (Hatfield, Pretoria and Centurion), attract the majority of commuters on the Park link. 23 Urban Studies,

100 % of commuters Commuters who get on the Gautrain in Park reach their destination at the following station, % of total 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 18.6% 19.8% 18.4% 12.6% 1.8% 1.9% 4.3% 17.8% 4.7% At which station commuters get on the Gautrain if their destination is Park, % of total 25.0% % of commuters 20.0% 15.0% 10.0% 5.0% 0.0% 19.1% 20.8% 18.9% 12.9% 1.9% 1.8% 4.2% 16.1% 4.2% Source: GMA ridership data, At the opposite end, for Hatfield, the most northern Gautrain station, the same pattern of commuter behaviour is apparent, with the Hatfield Sandton and Hatfield Park links most popular with commuters Hatfield is the northernmost Gautrain station and therefore plays a particularly important role by attracting commuters from a large range of areas. The breadth of service to the north is to a large extent determined by the areas that can currently be served by the Gautrain system from Hatfield station. Expanding the route of the Gautrain would therefore be an important way to broaden access to the Gautrain and would ease the pressure for commuters travelling, on average 20 minutes, to reach the Hatfield station Urban Studies, Median travel time is 15 minutes. 91

101 As with other Gautrain stations, commuters entering the Gautrain system at Hatfield station show a strong work focus, with 95% travelling for work purposes. As a result, a large proportion of Hatfield commuters use the train 5 times a week (73%) and are likely to exit the system at Sandton, Rosebank or Park 25. Commuters who get on the Gautrain in Hatfield reach their destination at the following station, % of total % of commuters 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1.6% 11.3% 10.5% 4.2% 4.8% 3.5% 28.1% 14.4% 21.6% Source: GMA ridership data, Urban Studies, 2012 and GMA ridership data for

102 As for the above stations, for commuters entering or exiting the Gautrain rail system at Centurion, the link to Sandton and farther stations, like Rosebank and Park, are most popular Centurion commuters are very similar to commuters at other stations in the north, with a large proportion falling into the 6-9 LSM category (47%), travelling for work purposes (89%) or to an educational facility (5%). As a result, the role the Centurion station plays is closely linked to its ability to promote easy access to commuters places of work and study, thereby supporting the socio-economic development of the Gauteng area. Commuters who get on the Gautrain in Centurion, reach their destination at the following station, % of total % of commuters 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 11.9% 4.3% 7.8% 3.4% 3.4% 3.2% 29.0% 13.7% 23.2% 0.0% Source: GMA ridership data,

103 In summary, the above patterns show that pronounced demand for high-quality public transport exists, particularly for people using the services regularly and for work purposes. Given that the majority of Gautrain commuters (55% 26 in 2014) otherwise most commonly use private transport, the impact of taking business travellers off the road and thereby mitigating congestion on Gauteng s main roads, is substantial. This effect will likely have the largest positive influence on traffic flows on Gauteng s roads during the morning peak hours, when congestions tends to be most problematic. With economic growth in Gauteng on the rise, it is central for the sustainability of development in the region that public transport continues to gain popularity, becoming increasingly recognised as a mode of choice. With commuters opting for modes of transport like the Gautrain, instead of road based transport, Gauteng will be empowered to achieve faster rates of socio-economic development than before. 26 Catalyst, Gautrain Reputation Audit, June

104 Overall, there are strong indications that an expansion of the Gautrain to reach additional catchment areas and thereby increase the reach of attractive public transport options (for example surrounding the proposed stations Menlyn and Modderfontein), would be met by substantial demand from potential commuters. In turn, we expect that an expansion of the Gautrain will multiply the current positive impacts garnered from diverting road users to train-based public transport. 95

105 8.2 Moving public opinion A substantial perception shift has occurred following the successful roll-out of the Gautrain vision, with the public s approval and opinion of the Gautrain rising each year to enviable levels 27. Additionally, the Gautrain has changed perception in terms of what South Africans believe public transport can do for the country. In that way, the Gautrain has met some of the essential strategic goals set out in the Feasibility Study that paved the way for the construction of the Gautrain system (see table below). Gautrain s strategic objectives It must assist in improving the image of public transport It must promote the use of public transport How the Gautrain contributes to achieving these objectives Through the perception shift associated with the Gautrain, by extension, it has been possible to assist in improving the image of public transport in general, moving commuters from private to public modes of transport. Through conveying the characteristics that the public seeks in high-quality public transport, the Gautrain has been able to attract more commuters over time, thereby assisting in reducing congestion on Gauteng s roads Winning over the public But, it has not all been smooth sailing. Prior to construction and even during construction, segments of the public have not always been in favour of the Gautrain. Understandably, a number of Gauteng residents that had to relocate as a result of construction, as well as others, who doubted that the Gautrain would be successfully able to meet its objectives, were in opposition to the construction of the Gautrain. 27 Synovate, 2006; Service Audit Track, Catalyst, June 2013; Gautrain Brand Valuation Audit, Letsema Consulting and Mazars, July 2014; Service Audit Track, Catalyst, June 2014; Gautrain Reputation Audit, Catalyst, June 2014, amongst others. 96

106 In order to align with the Gauteng Transport Infrastructure Act of 2001, the Gautrain project had to ensure that it would work within the Act s parameters. Through an emotionally difficult process, the task of negotiating and arranging relocations had to be managed. Formal legal objections against the Gautrain route and relevant expropriation were received from a few residents and representatives. In some instances the objections were withdrawn and in some instances it was possible to settle out of court. In those cases that were not resolved outside of court, all court rulings were in favour of Gautrain. With regard to the concern voiced by members of the public that the project would not be financially feasible, a concerted effort by a committed team of stakeholders provided proof that the Gautrain would in fact be a viable project, as predicted in the initial Feasibility Study. Through careful structuring of the responsibilities and risk allocations of all parties in the largest Public Private Partnership (PPP) launched in South Africa yet, it was possible to ensure that the Gautrain would be developed within the costs originally agreed upon, thereby ensuring that taxpayers funds would be optimally utilised and the danger of large financial over-runs could be avoided. Overall, in working to overcome the challenges associated with the realisation of such an ambitious infrastructure project, the public increasingly bought into the Gautrain project, and as recent opinion surveys and reputation audits indicate, users as well as non-users of the Gautrain system view it in a highly favourable light. In conjunction with growing Gautrain ridership numbers (94% annual growth in 2011/12 and 27% annual growth in 2012/13 28 ) and indications of pronounced demand for high-quality public transport in Gauteng, it is clear that an expansion of the Gautrain system would be met by both broad approval from the public, as well as substantial utilisation of its services. Below, we outline the change in public perception that occurred with the successful roll-out of the Gautrain project. We show that while in 2006 doubts were still rife that 28 GMA,

107 the Gautrain project would be successful, by 2014, Gauteng residents viewed the Gautrain system in a highly favourable light Pre-construction: Perception is mixed, but the public gives the Gautrain the green flag Part of winning over the public at the start of the implementation of the Gautrain project entailed spreading the word about what the Gautrain project looked to achieve and how the Gautrain planned to enrich the lives of Gauteng residents. A 2006 survey of respondents primarily based in Gauteng revealed that all respondents had at least heard about the Gautrain, with the majority knowing enough to explain the Gautrain to others. Nearly 20% of respondents were familiar with the Gautrain s mandate and objectives. Graph 13: Description of knowledge of Gautrain, n = Description of knowledge of Gautrain Heard about Gautrain 24.5% Know enough about the Gautrain to explain it 56.1% First hand knowledge of the mandate & objectives 19.4% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Percentage of respondents Source: Gauteng Provincial Government, Gautrain Rapid Rail Link Perception Audit, 2006 Although all respondents had heard about the Gautrain, some doubts still prevailed at the time. As shown in the table below, while a number of statements were met with agreement (highest ranking 1 3), some did not find overwhelmingly positive responses (lowest ranking 4 6). Respondents particularly agreed with the statements that Gautrain is innovative and progressive, characterised by strong vision and leadership as well as showing excellence in the way it communicates with its stakeholders. Indeed the fact that all respondents were at least aware of the 98

108 Gautrain project, and in the majority would be able to explain the Gautrain project to others, supports the assertion that the Gautrain s communication was effective early on. At the time, respondents were most reluctant to agree with statements that the Gautrain has a high level of corporate governance, that they have confidence and trust in Gautrain and that the role players of the Gautrain are clear to them. In 2006, doubts were rife among the public that the Gautrain project would indeed be completed in time and would be able to fulfil its objectives. As we show below, such perception changed with the successful and timely completion of the project. Statements about the Gautrain that received the highest and lowest frequencies of agreement (n=1 776) Statements about Gautrain Highest frequency of positive response (%) Lowest frequency of positive response (%) 1) Gautrain is innovative and progressive ) Gautrain is characterised by strong vision 63.5 and leadership 3) Gautrain shows excellence in the way it 63.3 communicates with its stakeholders 4) Gautrain has a high level of corporate 56 governance 5) I have confidence and trust in Gautrain ) The responsibilities of the Gautrain role 50.9 players are clear to me Source: Gauteng Provincial Government, Gautrain Rapid Rail Link Perception Audit, 2006 A similar picture emerges from the analysis of an accuracy versus importance matrix for the Gautrain s core business objectives, based on the results of the 2006 Gautrain perception audit. According to respondents, those activities that have the smallest difference between the accuracy and importance of Gautrain s current core business (and thus seen as positive) are in rank order: Statement Gap (%) 1) Investment in BBBEE ) Employment creation 9.4 3) Improvement and transformation of land use co-ordination 11 4) Promotion of urban restructuring and development 11.7 Source: Gauteng Provincial Government, Gautrain Rapid Rail Link Perception Audit,

109 The table above indicates that respondents saw the Gautrain project as capable of supporting BBBEE transformation objectives, supporting job creation, improving land use, as well as urban renewal. Conversely, the activities that have the largest difference between the accuracy and importance of Gautrain s current core business (and thus seen as negative) are in rank order: Statement Gap (%) 1) Alleviate the traffic congestion on existing roads between Johannesburg and Tshwane 2) Ensuring the provision of adequate public transport infrastructure, facilities and services 3) Accelerated economic growth, development and infrastructure delivery Source: Gauteng Provincial Government, Gautrain Rapid Rail Link Perception Audit, 2006 In 2006, respondents convey a sense of doubt regarding the Gautrain s ability to ease traffic congestion on the roads between Johannesburg and Tshwane, to support the provision of relevant transport infrastructure, as well as facilitate faster economic growth, development and infrastructure delivery. At the time, respondents were unsure that sufficient numbers of commuters using private vehicles to travel to and from work between Johannesburg and Tshwane would adopt the Gautrain services, thereby having a noticeably impact on lowering congestion and its inhibiting effect on Gauteng s growth prospects. As we will highlight in the following sub-sections, the completion of the Gautrain project and widespread uptake of its service led to a substantial shift in public opinion regarding these core activities rated negatively in The 2006 survey also revealed that opinion surrounding the Gautrain project differed among respondents who relied on different types of transport at the time. The statements about the Gautrain according to the current type of transport used were as follows: Private transport users: no statistical difference between their responses and responses of all respondents; Bus users: much more positive than responses of all respondents; 100

110 Train users: much more positive than responses of all respondents and responses of bus users; and Taxi users: much more positive than responses of all respondents and comparable to responses of bus users. It is clear that respondents dependent on public transport were substantially more hopeful that the Gautrain project would be successful and would be able to contribute to fulfilling their transport needs. Overall, in 2006, the Gautrain s general reputation, was somewhat muted in the public s eye. As shown in the graph below, most respondents felt indifferent about the Gautrain, possibly waiting for more information and news on the progress of the Gautrain project in order to form a more positive or negative opinion on the Gautrain. Therefore, in 2006, the public seemed somewhat on the fence regarding the Gautrain project and much was still to be determined in terms of how the public would perceive the Gautrain going forward. Graph 14: Gautrain's overall reputation, n = In 2006, most respondents feel indifferent about the Gautrain 15.0% 14.9% 70.1% Detractor (Score 0-24) Indifferent (25-75) Promoter (Score ) Source: Gauteng Provincial Government, Gautrain Rapid Rail Link Perception Audit,

111 Jon Salters, managing director of Synovate Sub-Saharan Africa, stated in 2006 regarding the outcome of a Synovate opinion survey: "Immediate acceptance is unlikely, and the success of the Gautrain will be largely dependent on the trendsetters or early adopters in the targeted groups taking the 'risk' of using the new system." As the following years would show, however, through the successful and timely roll-out of the Gautrain and its consistent performance, the public was quick not only to accept the Gautrain, but also to associate it with a sense of achievement and pride. It would eventually be seen as an aspirational project that would uplift the standing and reputation of public transport in South Africa to its residents and the world Operation roll out: A winning performance sways the public By 2011, the Gautrain had started to roll out operations. Of the respondents interviewed in 2011, nearly half had already used the Gautrain services (see graph below). Clearly, the public was much more willing to test the Gautrain than critics had predicted. Graph 15: Description of knowledge and experience of Gautrain, n = 801 In 2011, nearly half of respondents have already used the Gautrain Only know about Gautrain 53.0% Used Gautrain 45.0% Don't know anything 2.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Percentage of respondents Source: Business Enterprises University of Pretoria, Gautrain Stakeholders and General Public,

112 In addition to the high uptake of Gautrain services, public perception of the impact of the Gautrain on public transport was largely positive. A public survey conducted in 2011 showed that people in general were very positive about the Gautrain. The perception audit showed the following: In 2011, public perception was resoundingly favourable: Gautrain is seen as improving and transforming public transport, with 78% of the public agreeing with this statement Gautrain s leadership is seen as having the ability to compete on an international level 87% of respondents stated they think the Gautrain was a good idea 87% of stakeholder respondents indicated that it has a positive, distinctive and recognisable brand perception Source: Business Enterprises University of Pretoria, Gautrain Stakeholders and General Public, 2011 While in 2006, most respondents still doubted that the Gautrain would be able to achieve its objective of taking car commuters off the roads between Johannesburg and Tshwane, in 2011, the public stated that they would make use of the Gautrain to go to work instead of using other means of transport (81.6%) and that they would also make use of the Gautrain in other instances (such as going to OR Tambo International Airport) (80.6%). This shows that the public was increasingly confident in the Gautrain s ability to move people from congested roads at peak times and to shift them to commuting via Gautrain, thereby easing pressure on the highways in Gauteng. Additionally, 80% of the public agreed with the statement that the Gautrain improves accessibility and mobility in the Johannesburg and Pretoria corridor. 29 Statement Percentage of respondents who agree with the statement, n = 801, (%) In general, I think the Gautrain was a good idea 87.0 If I had the option of using the Gautrain to go to work instead of another means of transportation, I would use it Source: Business Enterprises University of Pretoria, Gautrain Stakeholders and General Public,

113 I am likely to make use of the Gautrain in other instances (like going to OR Tambo International Airport) 80.6 Gautrain has transformed the image of public transport 78.3 Source: Business Enterprises University of Pretoria, Gautrain Stakeholders and General Public, 2011 As shown in the table below, in 2011 the public furthermore described the Gautrain brand s personality in the following manner: Statement (top ranking) Percentage of respondents who describe the Gautrain in this manner, n = 801, (%) Professional 80.5 Progressive 79.9 Efficient 78.1 Innovative 78.0 Reliable 77.7 Convenient 76.4 Leader 75.0 Credible 74.3 Proactive 72.3 Notably, the Gautrain s personality is most commonly described by positive attributes like professional, progressive, efficient and innovative. This shows that by 2011, the public had become more positive about the Gautrain, than at the start of the roll out of implementation in 2006, when the majority of respondents still felt indifferent towards the Gautrain. 104

114 /14 Consistently connecting Gautrain users: The public signals high approval ratings The trend of rising public approval ratings continues, as indicated in the most recent user surveys, non-user surveys and reputation audits 30. When Gautrain commuters were recently asked to describe the Gautrain s reputation in their own words, the three most common responses were: 1) Good reputation, highly respected; 2) Safe; and 3) Top/first/world class/best/quality service. Similarly to the perception audit results of 2011, in 2014, the public perceives the Gautrain as highly reputable, delivering safe and top quality services. This suggests that the public has developed a sense of trust in the Gautrain. This stands in stark contrast to the perception audit results of 2006, where the public lacked a sense of trust and confidence in the Gautrain and conveyed doubts that the Gautrain would be completed in time as well as capable of fulfilling its objectives. As shown below (Graph 17), commuters sense of safety is indeed justified, with the Gautrain, particularly since June 2013, consistently meeting its benchmark security targets of one or fewer incidents per one million commuters. 30 Service Audit Track, Catalyst, June 2013; Gautrain Brand Valuation Audit, Letsema Consulting and Mazars, July 2014; Service Audit Track, Catalyst, June 2014; Gautrain Reputation Audit, Catalyst, June

115 Graph 16: Perceived reputation of the Gautrain, top ten responses, % of total In addition to being highly respected, the Gautrain also delivers in terms of safety Good reputation/highly respected 36% Safe Top/first/world class/best/quality service Fast/saves time Reliable Convenient Costly/expensive/for rich people Clean Punctual/always on time Very fancy/smart/classy/upmarket/exclusive 11% 11% 11% 9% 8% 8% 7% 6% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Catalyst, 2014 Graph 17: Number of incidents per 1 million commuters, 2013 Source: Bombela Quarterly Report,

116 The Gautrain s airport service (Sandton to OR Tambo International) was recently awarded the Global AirRail Alliance Award (GARA) for customer service excellence in Oslo, in May The GARA is awarded for the best services of delivering an enjoyable and stress free journey between air and rail travel. Additionally, Gautrain commuters overwhelmingly emphasise the speed of the Gautrain and the fact that it allows for time savings. As of 2014, a large proportion of respondents, when asked what their opinion of the Gautrain is, emphasised its speed, ability to save time and convenience (see figure below). Graph 18: Opinion of the Gautrain, top ten responses, % of total Most top of mind for Gautrain commuters are its speed and time savings Fast/saves time 38% Convenient Costly/expensive 18% 20% Safe Smart/classy/upmarket/exclusive 14% 14% Top/first/world class/best/quality Clean 9% 10% Punctual/always on time Comfortable Reliable 5% 6% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Catalyst, 2014 Additionally, the public perceives the following five statements to be most applicable for the Gautrain brand (see table). The outcomes are decidedly favourable. 107

117 Five highest rated brand related statements (brand average rating 76.4/100) The Gautrain brand represents freedom 87.2/100 The Gautrain logo and brand are recognisable and distinctive 82.8/100 The Gautrain brand represents pride 81.5/100 The Gautrain's slogan ("For people on the move") is relevant 81.1/100 The Gautrain brand reflects the objectives of the project 80/100 The fact that Gautrain users appreciate the speed of service offered by the Gautrain is also shown by the two graphs below. In contrast to non-users, Gautrain commuters perceive convenience as more relevant than pricing. Even where the market perceives the Gautrain as comparatively more expensive in relation to lower quality public transport options, for commuters who do choose to travel using the Gautrain, the aspect of pricing recedes and speed of service and convenience take centre stage. This is contrary to non-users, who, likely for affordability reasons, rank the pricing element as more important, with the element of convenience receding further into the background, moving to third position. It is important to note in this regard, that non-users, nonetheless, view the Gautrain in a highly favourable light, as emerged from a number of surveys and reputation audits. 108

118 Graph 19: Gautrain users: Convenience outweighs price considerations Gautrain users responses to: What is the first thing that comes to mind when I mention the word Gautrain? Speed of service 22% Convenient 18% Pricing 6% Reliabillity 6% Safe 6% 0% 5% 10% 15% 20% 25% Source: Letsema Consulting and Mazars, 2014 Graph 20: Non-users: Pre-considerations outweigh convenience Non users responses to: What is the first thing that comes to mind when I mention the word Gautrain? Speed of service 21% Pricing 11% Convenient 9% Comfortable 5% Reliability 5% 0% 5% 10% 15% 20% 25% Source: Letsema Consulting and Mazars,

119 In view of the gains that the public associates with using the Gautrain system and simultaneously the marked need for expanded, high-quality public transport, it is apparent that an expanded reach of the Gautrain, would make a large contribution to meeting the public s needs and better enabling their mobility such that they can indeed, easily, pursue the opportunities that Gauteng has to offer. 110

120 8.3 Providing a better quality of life The dawn of the Gautrain provides alternative transport with lifestyle, environmental and financial advantages. This is especially true for motorists opting to commute via the Gautrain Lower carbon emissions The Gautrain brings a greener transport alternative, particularly to car transport, in the province. The table below sets out some specific indicators relating to carbon emissions: Table 2: Key carbon emission indicators Transport type Ave motor car (1.2 pax) Gautrain g CO2/km g CO2/km/passenger g CO2/km/passenger saved 89 0 Sources: Gautrain Management Agency, International Energy Agency, KPMG calculations A standard 4 cart Gautrain has a theoretical energy consumption of kwh/km and transported an average of 170 passengers per trip in Converting these figures, it indicates that each passenger had a carbon footprint of 82 g CO2/km 32. Data for the average number of passengers per car in Gauteng is very difficult to obtain. Therefore, assuming the number of passengers per vehicle to be and that a typical passenger vehicle emits 205 g CO2/km 34 on average, each would-be motorist commuting on the Gautrain instead, reduces his/her carbon footprint by roughly 52% 35 per trip. 31 Gautrain Management Agency ridership data Theoretical energy consumption per kilometre of a standard 4 cart Gautrain s times 860 g CO2/kWh (combustion rate of other bituminous coal ) = carbon emissions per kilometre (g CO2/km). Therefore, carbon emissions per kilometre (g CO2/km) divided by 170 passengers = The number of carbon emissions per passenger (g CO2/km/passenger) for the Gautrain 33 The average passengers per car was calculated by utilising the respective estimates of 1.1, 1.2 and 1.4 obtained from the transport page of South African Government. (2014), an article published by Engineeringnews.com. (2003) and the South African National Energy Development Institute (SOC) Ltd. (2012). 34 The average of g CO2/km (Galarraga, I. et al. (2014), The price of energy efficiency in the Spanish car market.) and g CO2/km (United States Environmental Protection Agency. (2014). Greenhouse Gas Emissions from a Typical Passenger Vehicle.) 35 (g CO2/km/passenger of average motor car - g CO2/km/passenger of Gautrain) divided by g CO2/km/passenger of average motor car = g CO2/km/passenger saved (%) 111

121 8.3.2 Gautrain resulting in fewer cars on the road In June 2014, Catalyst Research and Strategy conducted a Gautrain reputation Audit. This study revealed that 57% of respondents use private transport when not using the Gautrain, as can be seen in the following graph. Graph 21: Gautrain users alternative transport mode Transport mode used most often Public - Taxi 28% Public - Rail 2% Private 56% Public - Bus 14% Private Public - Bus Public - Rail Public - Taxi Source: Gautrain Reputation Audit, 2014 Between 1 April 2013 and 31 March 2014, an average of passengers utilised the General Passenger Service route between Pretoria and Johannesburg on business days (excluding the airport link). 36 As a result, the Gautrain effectively removed would-be motorists from the Pretoria Johannesburg corridor every business day over this period. 37 Therefore, based on the assumption that approximately cars use the Pretoria Johannesburg corridor every business day 38, the Gautrain reduced the traffic congestion on this stretch of highway by 7.5% during the week over this period Gautrain Management Agency Patronage data 2013/14 37 Average number of Gautrain commuters per business day multiplied by the percentage of respondents who use private transport when not using the Gautrain = The number of cars effectively removed from the Pretoria Johannesburg corridor per business day by the Gautrain 38 City of Johannesburg. (2014). Engineeringnews.com. (2003). Newton Heritage Trail. (2010). IOL Property. (2010). All of these listed webpages and web-based articles have indicated this figure, without stating its direct source. 39 The number of cars effectively removed from the Pretoria Johannesburg corridor per day by the Gautrain, divided by the number of vehicles using the Pretoria Johannesburg corridor per business day = the proportion of vehicles removed from the Pretoria Johannesburg corridor. 112

122 8.3.3 The Gautrain reduces fatal accidents and resultant fatalities 40 According to the Road Traffic Management Corporation, the number of registered vehicles in Gauteng grew by 3.95% from the previous year to reach by March 2011, representing 38.86% of the national total. 41 The table below presents some key indicators from 2010: Table 3: Key road traffic indicators 1 April 2010 to 31 March April 2010 to 31 March 2011 Gauteng National Proportion Registered vehicles % Learner licenses issued % Code B driver's licences issued % Fatal accidents % Fatalities % Fatal accidents per registered vehicles N/A Fatalities per registered vehicles N/A Fatal accidents per day N/A Fatalities per day N/A Source: Road Traffic Management Corporation, 2011 While Gauteng has the lowest ratios in terms of fatal crashes and resultant fatalities per registered vehicles of all Provinces, the sheer volume of vehicles on its roads resulted in 2008 fatal accidents and fatalities during from 1 April 2010 to 31 March This comes to a daily average of 5.5 and 6.4 respectively over this particular period. Between 1 April 2013 and 31 March 2014, a daily average of passengers utilised the General Passenger Service route between Pretoria and Johannesburg on business days (excluding the airport link). This means that approximately would-be motorists were effectively removed from Gauteng s roads by the Gautrain per day throughout this 12 month period. 40 Please refer to the report appendix for detailed calculations for the reduction in fatal accidents and resulting fatalities. 41 Road Traffic Management Corporation. (2011). Road Traffic Report, 31 March Average number of GPS Gautrain commuters per day multiplied by the percentage of respondents who use private transport to work/final destination = The number of cars effectively removed from the Pretoria Johannesburg corridor per day by the Gautrain 113

123 We assume that the most recent statistics relating to fatal accidents and fatalities per day, listed above, still hold true for the period 1 April 2013 to 31 March Based on the ratio of total number of vehicles using the Pretoria Johannesburg corridor to the total number of registered vehicles on Gauteng s roads, we assume that the same ratio of accidents and fatalities occurs on that corridor, relative to the total number in Gauteng. Therefore it stands to reason that the Gautrain could avoid about 13 fatal accidents 43 and 14 resultant fatalities per year. However with the Pretoria Johannesburg corridor being one of the busiest corridors in Gauteng, it is safe to say that we cannot expect that only 8% of total accidents would occur on the stretch of road. For that reason a scenario analysis was conducted to estimate the number of fatal accidents that could be avoided based on the share of accidents we expect could potentially occur on the corridor. For this analysis we considered that between 8% and 50% of accidents could potentially occur on that stretch of road. Both figures below show the estimated number of fatal accidents and fatalities, as the share of accidents occurring on the specified corridor rises. Based on these results we expect that the Gautrain averts between 13 and 81 fatal accidents and 14 and 91 fatalities per year. 43 Please refer to the report appendix for detailed calculations for the reduction in fatal accidents and resulting fatalities. 114

124 Figure 7: Number of fatal accidents per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor Number of fatal accidents Gautrain avoids between 13 and 81 fatal accidents per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor % 10% 20% 30% 40% 50% 60% Percentage of total accidents that occures on the Pta-Jhb corridor Figure 8: Number of fatalities per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor Gautrain avoids between 14 and 93 fatalities per year based on the assumption of percentage of accidents that occur on the Pta-Jhb corridor Number of fatalities % 10% 20% 30% 40% 50% 60% Percentage of total accidents that occures on the Pta-Jhb corridor 115

125 This in turn reduced the direct cost of the actual accident and also the indirect cost of the resultant traffic delays. In fact, the average human casualty cost resulting from a road accident was estimated to be at least R1.1 million in 2013, while the average unit vehicle damage and incident cost was approximately R in Therefore, the Gautrain reduced the total cost 45 resulting from fatal accidents by at least R17 million over the period 1 April 2013 to 31 March When including the number of non-fatal accidents avoided, this number will of course be much higher Reduced travel time The Gautrain s ability to move a large number of people through the busiest metropolis in Africa at a rapid speed is unequivocally its greatest advantage. The following table provides a comparison of the average travel time on the two main routes by car and Gautrain: Table 4: Average travelling time: Hatfield station - Park station Hatfield station to Park station Gautrain Car - No traffic Car - Heavy traffic Average travel time (minutes) 00:41:53 00:49:00 02:35:00 Average speed (km/h) Distance in one direction (km) Sources: Gautrain Management Agency, Google Maps, Graphic24, KPMG calculations While the minimum travelling times between Hatfield and Park station are relatively closely aligned for the two transport modes, road congestion occurs very often and inhibit one s ability to travel the distance in under an hour. With heavy traffic, the time spent between these two stations can increase three fold. 44 The National Department of Transport. (2002). The estimation of unit costs of road traffic accidents in South Africa. These numbers were increased with annual inflation to reflect 2013 values. 45 The costs to society as a whole is measured as costs to the individual and its family, the community, government departments, the private sector, and the economy through loss of potential production plus average damage to vehicle 116

126 Table 5: Average travelling time: OR Tambo - Sandton OR Tambo to Sandton station Gautrain Car - No traffic Car - Heavy traffic Average travel time 00:14:28 00:32:00 02:05:00 Average speed (km/h) Distance in one direction (km) Source: Gautrain Management Agency, Goole Maps, Graphic24, KPMG calculations The Gautrain utilises a direct route between OR Tambo and Sandton station, thereby reducing the total road distance travelled by almost 40%. The reduction in distance travelled allows this trip to be completed in less than half the time a motorist would require with no traffic and up to 8 times faster with heavy road congestion. The table below contains key indicators from TomTom s South African Congestion Index 2013: Table 6: Key traffic congestion and income indicators - Gauteng Key indicators Johannesburg East Rand North Pretoria East Rand South Congestion level on highways 18% 15% 11% 12% Congestion level on non-highways 37% 37% 32% 32% Delay per hour driven in peak period 43 min 38 min 32 min 30 min Delay per year with a 30 min commute 96 h 89 h 80 h 76 h Source: TomTom Congestion Index 2013 According to results from TomTom s 2013 Congestion Index, a one-way commute of 30 minutes (similar to the average Gautrain commute of minutes) driven during peak periods on business days leads to between 76 and 96 hours of lost productivity per person per annum. 46 Taking into account the varying distances travelled by commuters in Gauteng, this is equivalent to an average of between 10 and The methodology that is used in this report compares travel times* during non-congested periods (free flow**) with travel times* in peak hours***. The difference is expressed as a percentage increase in travel time*. We take into account local roads, arterials and highways. All data is based on actual GPS based measurements and for each city**** the sample size is expressed in total number of measured miles for the period. *TomTom s historic traffic database contains over six trillion anonymous speed measurements. Theses speed measurements are used to calculate the travel times on individual road segments and entire networks. **A journey made without any delay caused by traffic congestion. This most typically occurs during the night. ***Based on real traffic measurements, the busiest one-hour-long period in the morning and in the evening period were determined for every evaluated city. ****TomTom evaluated capital cities as well as cities with a population of over Next to the cities that meet these criteria, additional key cities are chosen and added in some countries. 117

127 working days per year. 47 Therefore, utilisation of the Gautrain substantially increases its users productivity by shortening the time spent on their daily commutes. 47 Based on an 8 hour working day. 118

128 8.4 Connecting you to the world The Gautrain airport service has been operational for four years and within the first six months of the airport service s operation, it carried just over 1 million passengers. By the 2012 / 2013 financial year, the demand for the service grew two fold, with it carrying just under two million people. The increase in demand for the service can be attributed to excellent customer service provided to commuters in the form of convenience, efficiency, reliability and safety of the service. Diagram 2: Snapshot of commuters using the Gautrain to ORTIA, 2012 Source: Urban Studies, Gautrain commuter survey, 2012 Considering the general profile of a commuter using this service (see figure above), it is safe to say that the Gautrain airport services plays an important role in the economy in that it: 119

129 Connects local business travelers to Gauteng, the business hub of the country. This is shown by the fact that more than 60% of commuters both originate from the rest of South Africa and use the service business trips. Supports Gauteng s access to international markets, by providing a safe and convenient mode of transport for international visitors This is shown by the fact that 12% of commuters travelling from abroad use the Gautrain airport service. Connects employees of the ORTIA precinct to their place of work. This is shown by the fact that 11% of commuters use the Gautrain as a meand to get to work Changes the overall perception of the public transport system by providing a safe and convenient service that delivers an enjoyable and stress free transition between air and rail travel. This is shown by the fact that 74% of commuters have been using the Gautrain for a year or more we can conclude that it has become a preferred mode of transport for this group. The Gautrain has also become a popular means of transport to ORTIA for its time convenience, as it takes only 15 minutes to travel from Sandton to the ORTIA Station. This is approximately three times faster than the average time it takes to travel from Sandton to ORTIA by car. According to a recent publication 48 on global air and rail market trends, the Gautrain airport services are also relatively cheaper, if compared to the price of using a taxi to get to the same destination. This survey estimated that the Gautrain services are three time cheaper than the cost of a taxi service to ORTIA. The economic value-add derived from the Gautrain airport service stems from the cost savings and value for money of the service, as well as the average time saving and reliability of the service. This has aided in increasing the popularity of the service. 48 Please note that this report has not as yet been made available to the public, but is expected to be published in

130 Diagram 3: Economic value-add derived from the ORTIA link, 2014 Source: Recent publication on global air and rail market trends, 2014 In conclusion, the airport allows commuters to connect with the world via the ORTIA link in a convenient, affordable, safe and reliable fashion. The increasing demand, shown in rising ridership numbers over time, clearly indicates that commuters are keen to adopt this mode of transport and appreciate the value it adds to their lives The Aerotropolis effect In modern cities, airports have become major drivers of urban form, economic activity and city competitiveness. The Aerotropolis aims to take advantage of these changes and optimises the positive effects the airport can have on the economy and on communities. To achieve these positive changes, the Aerotropolis seeks to serve as an economic development strategy designed to increase competitiveness in global markets, leveraging the degree of access to air travel and air freight. The concerted development of an Aerotropolis is about taking advantage of all the economic opportunities an airport offers, reflected at times by new physical infrastructure, but also by alternative retail, entertainment, employment and commercial land use, sometimes in areas far outside the airport boundary. 121

131 Aerotropolis development also embraces urban and regional planning, but with a strong focus on how these can be used to enable strategic economic development. The ultimate goal is to maximise the economic competitiveness, attractiveness and growth of the city and its surrounding region through the identification of the optimal mix of land uses and infrastructure investments. The nature of these investments, how they are financed, where they are made, their timing, how they relate to the broader economy and their alignment with economic and social sustainability, are all key outcomes of the planning process. An Aerotropolis development plan therefore requires an integrated breadth of input across urban and transport planners, economists, financial and logistics experts, environmental managers, market researchers and strategists. In other words, there is a substantial interrelationship between transport, land-use and economic development. These considerations drove the decision-making in Ekurhuleni Metropolitan Municipality, one of three Metropolitan Municipalities in Gauteng, around changing policy perspective to the development of an OR Tambo International Airport centred Aerotropolis Ekurhuleni s aim to create an Aerotropolis-centred development An Aurecon-led consortium has recently won the contract to develop the Ekurhuleni OR Tambo Aerotropolis. The Aerotropolis concept is now becoming more central in planning, and can bring substantial economic and social benefits to airport owners, as well as local businesses and communities. The Ekurhuleni Aerotropolis offers a unique opportunity to apply the lessons learnt at other airports to the South African case. Air travel serves not only passenger travel, but a growing need for the just-intime provision of goods and services. Through a seamless connection to other transportation modes, for example the link to the Gautrain, Ekurhuleni and Gauteng can leverage their comparative advantage in the transport sector. The envisioned outcome is a dramatic increase in the scale of ORTIA centred developments in the Province, with their growth serving as sources of employment for its people. 122

132 8.4.3 Current Aerotropolis-related interventions in Ekurhuleni and Gauteng As outlined in the Ekurhuleni Metropolitan Municipality Annual Report 2013/14, the municipality s flagship projects now include the development and coordination of the: Aerotropolis (including the 30 year Aerotropolis Master Plan to be completed December 2014); and Integrated Rapid Public Transport Network (EMM has made progress in the design of Phase 1A and B of the IRPTN project, i.e. Tembisa to OR Tambo International Airport. The commencement of the physical construction of routes is planned for mid-2014). Additionally, national government has also rolled out mandated projects that help to fast-track infrastructure development and unlocking of investment opportunities. Accorded by the New Growth Path, the Presidential Infrastructure Coordinating Committee (PICC) is coordinating the Strategic Infrastructure Projects (SIPs), which are catalytic projects for growth and development. Gauteng is focused on development in line with these projects, to unlock value along the supply chain, and to meet national requirements for investment. Overall, the potential Gautrain expansion, the Aerotropolis, and the IRPTN projects are all supportive of the provincial imperatives outlined in the Gauteng Industrial Policy Framework (GIPF), which emphasises expansion of work opportunities, development and expansion of medium technology and labour intensive manufacturing, strengthened sectoral linkages with supply chain development and clustering, and the creation of an integrated and diversified industrial base. Gauteng is an 123

133 important manufacturing base in the country, and as such support for the transport, manufacturing, engineering, and related services sector is considered to be a comparative advantage. With the Aerotropolis development gaining momentum and receiving support from a wide range of national, provincial and municipal policy documents and strategic objectives, it is important to emphasise the enormous potential for synergy between the Gautrain and the OR Tambo International Airport. The implications are as follows: 8.5 Fulfilling the Gautrain system s strategic objectives Linking to the strategic objectives set out in the original Feasibility Study of the Gautrain: Gautrain s strategic objectives It must improve accessibility and mobility in this development corridor. How the Gautrain contributes to achieving these objectives Gautrain commuters now have better access to economic and industrial hubs in Gauteng than before. 124

134 It must promote the use of public transport. It must assist in improving the image of public transport. It must utilise the concept of value capture in developing the station precincts. It must promote tourism. Surveys and ridership data indicate a clear shift in perception, with the public, Gautrain users and non-users indicating high approval and even admiration for the Gautrain. The high quality, safety, speed, reliability and convenience of the Gautrain system has given the public a new view of public transport in South Africa Value is added to commuters lives, as the Gautrain allows them to save time, reduce stress, guaranteeing that they will travel fast, safely and will arrive on time. In addition, through carbon emissions savings, the Gautrain promotes a greener, sustainable Gauteng. Quick and easy access to ORTIA for Gautrain commuters promotes affordable travel and supports the tourism sector. This also links Gauteng to the rest of South Africa, Africa and the world. 125

135 There is no power for change greater than a community discovering what it cares about Margaret J. Wheatley 126

136 Adding value to Gauteng Powering the future 127

137 9 Adding value to Gauteng Powering the future 9.1 Developing our communities Due to increased connectivity provided by the Gautrain in combination with high rates of economic growth in Gauteng in the past few years, the areas surrounding the Gautrain stations have developed and are continuing to develop into high density mixed-use areas, changing the urban landscape considerably. Property values continue to rise in areas surrounding Gautrain stations and several new developments have been rolled out in their vicinity, including, high rise office towers, hotel developments, residential apartment blocks and various other forms of retail and commercial properties. The development of high-density city areas enables Gautrain riders to conveniently live, work and shop along the Gautrain route. As density levels increase at nodal points along the Gautrain route, we expect that Gautrain patronage will increase by association, providing a strong backbone for public transport in Gauteng. This concept is typically referred to as Transit-Orientated Development (TOD), based on the following principles: Mix of land uses; Availability of reliable public transport systems Walkability; and High-density compact development 49 Higher-density city nodes form part of a deliberate land use strategy by Local Authorities and the Gauteng Province to combat urban sprawl, thereby making service delivery more efficient and cost effective. Additionally, development is increasingly centred around a greener mode of transport than road traffic, therefore 49 R Mushongahande; C E Cloete; C J Venter. (2014). Impact of the Gautrain on property development around station precincts 128

138 preserving the sustainability of Gauteng and contributing to policy objectives of driving a greener development path for the Province. The Gautrain route passes through the heart of Gauteng, where communities integrate into all social and economic activity. Since 2005, increased activity along the Gautrain route has changed the landscape considerably. Figure 9: Aerial view of total Gautrain route (2014) Source: Google Earth, AfriGIS To illustrate this changing landscape, the areal map from 2014 (above) indicates 21 major developments since 2005 within a 5km band along the Gautrain route. Some of these developments were certainly ushered in with the construction of the Gautrain, others would have certainly gained from the additional connectivity 129

139 which links them to industrial and economic hubs. Some examples of these new developments are: Letter Description A. Hatfield Station B. Jean Avenue Shopping Centre C. Office Park D. Eris Office Park E. Office Block Echo Park F. N1 Business Park G. Investec Development opposite Midrand Station H. Midrand Station I. New Warehouse for Dischem Pharmaceuticals J. Warehouse Development for Companies like Builders Warehouse K. Waterfall City Mall L. Waterfall City Residential Area M. Gautrain Depot N. OR Tambo O. Modderfontein City Planned Future Development P. Light Industrial Development on Scarce Property Q. Marlboro Station R. Renault, HILTI and SUPA Quick Commercial site S. Area Upgrade Around Sandton Station T. Discovery Health new Head Office U. Park Station Source: KPMG research While the various stations are a necessity for the train system to function, they have also attracted new developments looking to utilise its proximity for increased connectivity and ease of access. This has paved the way for residential areas and new shopping centres to follow, leading to densification by making better use of available land area in close proximity to the different stations. By comparing aerial maps of 2005 and 2014, the change in landscape towards more developed areas surrounding the Gautrain route can be clearly seen. Notice, for instance, the imposing new Echo Park Office Block (E) and the new N1 Office block (F) on the 2014 map, after these areas were a much smaller building and open field respectively in

140 Figure 10: Aerial map - central section (2005) Source: Google Earth A number of new projects can be distinguished a decade later below: Figure 11: Aerial map - central section (2014) Source: Google Earth Please see Appendix for the full set of the aerial maps. 131

141 9.2 Empowering business activity The construction of the Gautrain ushered in a new period for business activity in the surrounding areas. It is important to note that a number of exogenous driving forces would have had a bearing on the dynamics of the property market in Gauteng, including for example, international developments like the global financial crisis of 2008/9, or domestic drivers like the implementation of local development plans. Keeping this caveat in mind, it is nonetheless possible to connect new developments to the emergence of better connectivity in the area by assessing their geographical proximity to Gautrain stations and routes. Indeed, a number of businesses moved their premises closer to Gautrain stations to take advantage of better connectivity, decreased travel time and the subsequent higher productivity. For example, Ernst & Young and Alexander Forbes moved closer to the Sandton station and Standard Bank moved closer to the Rosebank station. A number of new developments are following, like Discovery Health s new headquarters to be constructed close to Sandton station and Fluxmans Attorneys near Rosebank station. Sandton Rosebank 132

142 A recent study 50 conducted with property developers in station precincts within the 400 meters perimeter, indicated that the presence of the Gautrain to be a major factor influencing their decision to develop in these areas. It was found that the Gautrain is especially important in the less developed, less attractive nodes of Midrand and Pretoria. The establishment of Park station and the Pretoria CBD station provides opportunities to revitalise inner city centres by enhancing the immediate area s property value as a result of its proximity to these new transport facilities. Centurion, Midrand, Rhodesfield and Marlboro stations were all constructed in nodes not yet well established and will benefit from current and future planned developments that will make these stations all the more viable as densification increases. Rosebank and Sandton stations will capitalise further as both nodes were already well established with a diverse range of primarily retail and office uses, including a strong tourism component. 51 In addition, the City of Johannesburg's densification policy encourages the development of a more compact city, calling for developers to go as high as 40 storeys on key routes in Sandton and up to 20 storeys in Rosebank. 52 As such, each Gautrain station has witnessed an increase in the gross lettable area (GLA) in its immediate surrounds in terms of office or industrial developments. The areas such as Rosebank and Midrand has managed to adequately meet the increased demand for letting space, as can be seen from the graph below: 50 R Mushongahande; C E Cloete; C J Venter. (2014). Impact of the Gautrain on property development around station precincts 51 R Mushongahande; C E Cloete; C J Venter. (2014). Impact of the Gautrain on property development around station precincts

143 Graph 22: Rosebank GLA and vacancy rates Developers in Rosebank have adequately aligned demand with supply of available letting area Percentage 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 16.2% 12.9% 7.2% 4.2% % 3.9% % 9.3% % 4.9% Square meters Sum Development GLA Vacancy rates Source: IPD, 2014 This is confirmed when looking at the corresponding increases in rental rates in the area: Graph 23: Rosebank rental rates (deflated) Rental rates in Rosebank have increased by more than 100% over the last decade R/m² Source: Rode, 2014 However, with the global financial crisis inhibiting business and industrial/manufacturing expansion, a number of these developments have been 134

144 struggling to maintain full occupation. The increased vacancy rates within office blocks and industrial parks have affected areas such as Sandton (indicated below), Johannesburg CBD, Centurion CBD and Hatfield/Hillcrest. Graph 24: Sandton area GLA and vacancy rates Developers in Sandton have managed to find the demand for continued investment into office space Percentage 18% 16% 14% 12% 10% 8% 6% 4% 2% 13.6% [] % 7.3% 4.1% 4.7% % 9.8% 8.0% 9.8% Square metres Sum Development GLA Vacancy rates Source: IPD, 2014 Despite this, rental rates in the Sandton area have continued to climb over the last 11 years, owing to it being a cornerstone of the South African economy and financial market. The vacancy rates should therefore dissipate with demand catching up to the increased supply. 135

145 Graph 25: Sandton area rental rates (deflated) Despite a sizable vacancy rate, rental rates in Sandton continue to climb R/m² Source: Rode, 2014 Similarly, the impact of the financial crisis and the subsequent effect it had on demand for rentable industrial space is evident when looking at Rhodesfield s industrial rental rates. Graph 26: Rhodesfield area industrial rental rates (deflated) Rhodesfield's industrial rental rates of 500m² areas and larger have grown considerably, especially over the period R/m² Source: Rode, 2014 However, it does seem that appetite for industrial letting space is improving as can be seen from the graph below: 136

146 Graph 27: Marlboro South (Alexandria): Real industrial rental rates (deflated) Industrial rental rates have increased markedly over the last two years in the Marlboro South (Alexandra) area R/m² Source: Rode, 2014 New developments and upgrades to retail centres have increased in order to take advantage of the improved connectivity that the Gautrain brought consumers. The table below indicates investment into retail shopping malls within a 0km - 10km distance from a Gautrain station. Developments that took place within a 0km -2km radius from a Gautrain station can be considered to be directly due to their proximity to a station. Developments that took place outside of the 0km- 2km radius can be considered an induced developmental impact of the Gautrain system. Induced, in this context, means that the development was drawn in by the connectivity offered by the DFDS in conjunction with the Gautrain stations and the rail system. Therefore, the table below shows the development impact of the Gautrain system, where this includes the routes covered by the Gautrain bus services. Table 7: Retail shopping centres within a 0km -10km distance from a Gautrain station Name Location Proximity to Gautrain station Value of upgrade (R millions) Mall of Africa Midrand 5-10km R Sandton City Sandton 750m R Sandton City Office towers Sandton 750m R 450 Timeframe Oct Jun 2016 Started Jan 2009 Approved Nov

147 Nicolway Bryanston shopping centre Sandton 10km R 500 Finished 2012 Menlyn mall Lynnwood 7km R Rosebank mall Rosebank 300m R Brooklyn Mall Brooklyn 3.5km R Source: IOL, Property 24, SA Commercial Prop News, Engineering News, Business Day It is clear that the Gautrain s arrival led to increased investment and densification translating to improved connectivity and production, which in turn led to positive economic spin-offs. Retail R10 billion invested in new developments and upgrades to retail centres between 2009 and 2014 An increase in GLA has led to additional investment of R986 million in office space. The additional investment in the retail industry added R28 billion to the Gauteng economy s GDP during 2013, representation of 3% of the provincial GDP 53, emphasizing the importance of the multiplier effect which the retail industry has on the Gauteng economy. The increased investment in office rentals had a total impact on the provincial GDP of R920 million. Even though its impact was not as significant as the retail industry, it still made a contribution of about 0.1% to the provincial GDP in The retail industry s operations sustained about jobs in Gauteng in 2013, representing about 4% of the total employment 54 in the Province jobs were sustained in Gauteng due to the additional office space available in during Source: IPD, Rode, IOL, Property 24, SA Commercial Prop News, Engineering News, Business, KPMG analysis 53 Total GDP of Gauteng for 2013 = R million (Source: StatsSA Statistical release P0441, Gross Domestic Product, Quarter 3, 2013) 54 Total number of jobs in Gauteng for 2013 was (Source: StatsSA Statistical release P0211, Quarterly Labour Force Survey (QLFS), Quarter 4, 2013) 138

148 9.3 Home is where the Gautrain is The analysis of the residential property value surrounding the Gautrain station allows us to gain a better understanding of the impact the Gautrain development has on the attractiveness of surrounding areas, relative to further outlying property. By showing the impact of additional demand on property prices surrounding the Gautrain, it is possible to see the value that residents attach to being close to high quality public transport that connects them to industrial and economic business hubs. Specifically, the analysis takes account of the effect of Gautrain stations on residential properties within a 0km - 2km radius of all the stations in terms of their value inflation since The results below show, per title deed type (i.e. freehold and sectional title), the ranking in terms of growth in property values by related Gautrain station. The analysis includes properties within 0km - 2km of the station, pre- and post the completion of the first Gautrain link. Prior to the completion of the first Gautrain link in 2010, there was already a strong indication that in residential areas surrounding Park, Rosebank and Rhodesfield stations, the demand for freehold property was on the rise at a rate higher than that of further outlying properties. Specifically, property values were inflated by an additional 1% - 3% for areas surrounding these stations. 139

149 Graph 28: Freehold residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2008/09 Top response in property values from Park, Rosebank and Rhodesfield 2.5% 2.3% 300 Average Inflation Increase 2.0% 1.5% 1.0% 0.5% 0.0% 1.1% 0.9% 0.4% 0.3% 0.3% 0.2% 0.1% 0.0% Number of Property Sales Average Inflation Increase Due to Location Number of Property Sales Source: Lightstone properties The stations that have most positively affected freehold residential growth over the period 2011 to 2013 were Park, Rosebank, Marlboro and Midrand stations. During that period, the properties very close to these stations increased in value by 0.7% to 2.6% more than further outlying properties. In the case of residential property surrounding the Midrand and Marlboro stations, property values rose relatively faster in comparison to residential areas further from the station. The increase ranged from an additional 0% to about 0.8% between and For the Marlboro link, property prices seem to have responded with a slight lag, given that there was no increase during the period but a more noticeable increase during the period. Furthermore the changing dynamics are reflected in sales volumes that virtually doubled for the post construction period under consideration. 140

150 Graph 29: Freehold residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2011/13 Average inflation Increase Property value in Marlboro and Midrand respond only after the stations were commissioned 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2.6% 2.3% 0.1% 0.8% 0.1% 0.1% 0.7% Number of Property Sales Average Inflation Increase Due to Location Number of Property Sales Source: Lightstone properties Sectional title properties close to the Gautrain stations show the most significant growth increases owing to their convenient location close to the stations compared with freehold residential properties. The sectional title properties close to the Rosebank station show an increase of their inflation figures of just over 2.5% compared with properties further away. This makes the Rosebank station the most influential station on property price growth figures, followed by Rhodesfield and Johannesburg Park stations. 141

151 Graph 30: Sectional title residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2008/09 Average inflation Increase Top response in property values from Sandton, Rosebank and Park stations 1.40% 1.32% 1.20% 1.00% 0.80% 0.76% 0.76% 0.60% 0.40% 0.15% 0.20% 0.04% 0.03% 0.00% 0.00% 0.00% 0.00% Number of Property Sales Average Inflation Increase Due to Location Number of Property Sales Source: Lightstone properties In the case of residential property surrounding the Hatfield, Rhodesfield, Pretoria and Midrand stations, property values rose relatively faster in comparison to residential areas further from the station. The increase ranged from an additional 0% to about 1.63% respectively between and

152 Graph 31: Sectional title residential property inflation and property sales by Gautrain station within a 0km 2km radius, 2011/13 Property value in Marlboro, Hatfield, Midrand Pretoria and Rhodesfield respond only after the stations were commissioned Average inflation Increase 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 1.21% 2.65% 1.51% 0.00% 0.00% 1.43% 0.89% 1.63% 1.58% Number of Property Sales Average Inflation Increase Due to Location Number of Property Sales Source: Lightstone properties For all the above mentioned stations, property prices seem to have responded with a slight lag, given that there was no increase during the period but a more noticeable increase during the period. Furthermore, the changing dynamics are reflected in increased sales volumes for the post construction period under consideration. 143

153 It is clear that the Gautrain s arrival led to increased property prices and development, translating into increased property values, which in turn led to positive economic spin-offs. Increase in property value of R12.9 billion. The increased property values added an additional R18 billion to the provincial GDP, representation of 1.5% of the provincial GDP 55, emphasizing the importance of the multiplier effect which the property has on the Gauteng economy. The increased development of residential properties sustained about jobs in Gauteng in 2013, representing about 2% of the total employment 56 in the Province during Source: Lightstone, KPMG analysis 55 Total GDP of Gauteng for 2013 = R million (Source: StatsSA Statistical release P0441, Gross Domestic Product, Quarter 3, 2013) 56 Total number of jobs in Gauteng for 2013 was (Source: StatsSA Statistical release P0211, Quarterly Labour Force Survey (QLFS), Quarter 4, 2013) 144

154 9.4 Fulfilling the Gautrain system s strategic objectives Linking to the strategic objectives set out in the original Feasibility Study of the Gautrain: Gautrain s strategic objectives It must integrate land-use and transportation planning in the corridor. How the Gautrain contributes to achieving these objectives Greater development in areas surrounding Gautrain stations is reflected by higher property sales values and volumes. These developments promote greater opportunity for the emergence of additional transport modes. It must utilise the concept of value capture in developing the station precincts. It must promote the use of public transport. Rising property values in areas surrounding Gautrain stations indicate value capture, as residents indicate their appreciation for better quality transport options. The positioning of the Gautrain stations in strategic economic and industrial hubs leads to a large demand for transport services, promoting the use of public transport. Additionally, the crowding in of additional development leads to larger uptake of transport services in the areas surrounding Gautrain stations. 145

155 The secret of change is to focus all of your energy, not on fighting the old, but on building the new Socrates 146

156 Platform to a better tomorrow 147

157 10 Platform to a better tomorrow 10.1 Gautrain on the move to a better tomorrow Our journey thus far has taken us through the structure and challenges in the Gauteng province before the introduction of the Gautrain, the construction of the Gautrain and the inception of the operations of the Gautrain and its ancillary services and the positive impacts that the project has had on the economy and the lives of the people of Gauteng. However, the journey of the Gautrain and the good news associated with the Gautrain do not stop here. The project will continue to contribute to the future of the country and the Province, and through the role in can play to give impetus to national policy initiatives such as the National Development Plan and the Integrated Transport Master Plan. Source: National Development Plan 148

158 The National Development Plan: Our future Make it work During 2012, the process of developing the National Development Plan (NDP) was completed. It was time for the roll-out thereof to commence in order to change the South Africa our children will live in by 2030 to a country where unemployment, poverty and inequality would no longer be challenges. The National Planning Commission identified the following enabling milestones to give effect to South Africa s vision for 2013: Increase employment from 13 million in 2010 to 24 million in Raise per capita income from R in 2010 to R by Increase the share of national income of the bottom 40 percent from 6 percent to 10 percent. Establish a competitive base of infrastructure, human resources and regulatory frameworks. Ensure that skilled, technical, professional and managerial posts better reflect the country's racial, gender and disability makeup. Broaden ownership of assets to historically disadvantaged groups. Increase the quality of education so that all children have at least two years of preschool education and all children in grade 3 can read and write. Provide affordable access to quality health care while promoting health and wellbeing. Establish effective, safe and affordable public transport. Produce sufficient energy to support industry at competitive prices, ensuring access for poor households, while reducing carbon emissions per unit of power by about one-third. Ensure that all South Africans have access to clean running water in their homes. Make high-speed broadband internet universally available at competitive prices. Realise a food trade surplus, with one-third produced by small-scale farmers or households. Ensure household food and nutrition security. Entrench a social security system covering all working people, with social protection for the poor and other groups in need, such as children and people with disabilities. Realise a developmental, capable and ethical state that treats citizens with dignity. Ensure that all people live safely, with an independent and fair criminal justice system. Broaden social cohesion and unity while redressing the inequities of the past. Play a leading role in continental development, economic integration and human rights. Since its adoption by Parliament, the NDP has been the main driver of policy development, planning and investment decision making by the South African Government and it will remain so for the foreseeable future. 149

159 The Gautrain has already contributed to some of the NDP milestones and will continue to be a major player in shaping the economy of Gauteng, more so if its network expands beyond the current capacity. NDP milestones to achieve South Africa s vision for 2030 Increasing employment Increase per capita income, specifically for lower income households Competitive base of infrastructure and human resources How the Gautrain can contribute to achieving these milestones With operations of the Gautrain already supporting in excess of jobs, future growth in passanger numbers and the extention of the Gautrian, as well as localisation of rolling stock maintenance and building of rolling stock, can increase this number dramatically: For every R1m invested in future expansion, an extra 5 jobs can be created. Over and above the 23% of income flowing to lower income households, expanding the public transport network will create further opportunities for the unemployed to be able to access work opportunities. Improving the quality of infrastructure, in particular the quality of public transport, could only improve South Africa s competitiveness position. Currently, the country is ranked in 66 th position. 150

160 Ensure that the job market better reflect the racial, gender and disability make-up of the country Establish safe, affordable public transport Access to quality education and healthcare A comprehensive monitoring and evaluation process of the Gautrain s socioeconomic development contribution has been in place since the inception of the project and it still continuing. This monitoring process has certain targets in place for the employment of Historically Disadvantaged Individuals and the procurement processes to benefit Small and Medium Enterprises. Reports tracking progress is published on a monthly basis. Before construction of the Gautrain, potential users had concerns about the safety of the system and 44% stated that it would keep them from using the Gautrain. However, in 2014, safety is one of the central elements highlighted by commuters as being a reason that attracts them to using the Gautrain. If the current usage by Gautrain users are considered, it is clear that the system already is an important way for students and scholars to reach educational institutions: 11% of users at Park station are on their way to an educational institution. 151

161 Reduction in carbon emissions Continental development and economic development Commuters opting to use the Gautrain instead of their motor vehicles, reduce their carbon footprint by 52% per trip. The economic importance of the ORTIA link is supported by large proportion (77% of the total) of users of this link travelling for work purposes. This link connects Gauteng to South Africa and South Africa to the world, with 61% of commuters being from the rest of South Africa and 19% from the rest of the world. As international trade contiues to grow in future, the importance of this link will only be emphasised further. As part of these milestones in the NDP, there is an underlying understanding that the way our economy is structured spatially needs to develop around achieving these outcomes, i.e. the way in which we live today, will need to transform: According to the NDP, by 2030, people in South Africa should: Should benefit from a strong and efficient spatial planning system, well integrated across the spheres of government. Live in upgrade informal settlements on suitable, well located land. Live closer to their place of work. Have access to better quality public transport. Be employed in jobs in or close to dense, urban townships. 152

162 Following the implementation of the NDP, the Gauteng province published the 25- Year Integrated Transport Master Plan (ITMP25). The key differentiation of the ITMP25 is the approach towards integrated spatial and transport planning, further giving effect to the NDP milestones of safe and affordable public transport, economic development and economic integration. The ITMP25 provides insight into the 10 key integrated transport interventions identified for the province related to: Land use development; A strategic public transport network; Freight transport; and Road transport. The ITMP25 integrated transport interventions: Land Use Development Subsidised housing provision within urban core areas Facilitating local economic development outside the urban core Land use densification in support of public transport Strategic Public Transport Network Reinforcing passenger rail network as the backbone of the system Extending the integrated rapid and road-based public transport networks Capacity building in the transport industry Freight Transport Strengthening intermodal freight hubs Road Transport Travel demand management Mainstreaming non-motorised transport Continued provincial wide mobility 153

163 ITMP25 interventions Facilitating local economic development outside of the urban core Land use densification in support of public transport How the Gautrain can contribute to achieving these milestones By connecting industrial areas to its workers and the city, the value proposition for functioning industrial zones outside of the urban core has increased significantly. This can be seen in the Rhodesfield, Marlboro South and Modderfontein areas surrounding the respective stations. The Gautrain and its feeder systems have increased connectivity which has led to Reinforcing the passenger rail network as the backbone of the system residential, business and industrial densification, thereby integrating the metropolis. New residential and retail developments closer to the Gautrain are following and attest to this. More than 30% of commuters travel the entire distance of the link between Pretoria CBD and Park station (Johannesburg CBD). A further 22% travels between Pretoria CBD and Sandton. From there commuters would make use of other means to get to their final destinations. This supports the view that a rail network is well suited to cover longer distance connections and integrates easily with other modes of transport. 154

164 Extending the integrated rapid and road-based public transport networks The integrated nature of the Gautrian system in other transport systems is supported by the large portion (30% - 40%) of commuters that make use of the bus system to get to their point of final destination. The Gautrain provides the link to major points and from there, the distribution and feeder system relies on other types of transport. This trend will become more pronounced in future. Capacity building in the transport industry First project of this nature in the country and largest PPP project in Africa. Travel demand management The N1 corridor between Johannesburg and Pretoria is one of the most congested roads in South Africa. The large majority of commuters who make use of the Gautrain, use it to get to and from the office. As more than 50% of Gautrain users make use of private vehicles to get to and from the station, it is a good indication that these vehicles would have been on the road, probability during peak times. The Gautrain therefore makes an important contribution to reduce congestion during peak hours. 155

165 The Gauteng Premier, David Makura and his administration team, have adopted a ten-pillar programme of radical transformation, modernisation and reindustrialisation for the province over the next five to fifteen years. This programme is set to make Gauteng an integrated city-region characterised by social cohesion and economic inclusion; the leading economy in the continent underpinned by smart and green industrial and socioeconomic development. Gauteng s Ten Pillars of Radical Transformation The Gauteng Provincial Government (GPG) has adopted a multi pillar programme of radical transformation, modernisation and reindustrialisation of Gauteng. The Ten pillar programme will run over the next five to fifteen years and will consist of the following pillars: 1. Radical economic transformation 2. Decisive spatial transformation 3. Accelerated social transformation 4. Transformation of the state and governance 5. Modernisation of the public service 6. Modernisation of the economy 7. Modernisation of human settlements and urban development 8. Modernisation of public transport infrastructure 9. Re-industrialisation of Gauteng province and 10. Taking the lead in Africa s new industrial revolution 156

166 Ten pillar programme Decisive spatial transformation through public transport infrastructure development and the creation of integrated and sustainable human settlements that are connected to hubs of economic opportunity Accelerated social transformation by raising the living standard of and quality of life of all people of Gauteng Modernisation of public transport infrastructure How the Gautrain can contribute to achieving these milestones If the current usage by Gautrain users is considered, it is clear that the system is already an important way for employees to reach their place of work: more than 50% of commuters use the Gautrain to get to work. Over and above the 23% of income flowing to lower income households, expanding the public transport network will create further opportunities for the unemployed to be able to access work opportunities and thus aid in raising the quality of life of public transport commuters. The Gautrain promotes the emergence of hubs of economic activity and increased spatial development surrounding the stations and bus routes. We expect that in areas where Gautrain stations will be located the surrounding areas will benefit through increased connectivity and economic activity. 157

167 Re Industrialisation of the Gauteng economy With the construction of the Gautrain already supporting in excess of direct jobs and contributing R20bn to provincial GDP, future expansion to the Gautrain link, as well as localisation of rolling stock maintenance and building of rolling stock, can increase this number dramatically: For every R1m invested in future, at least R is estimated to be added to GDP and 5 additional jobs are expected to be created. Improving the quality of infrastructure, in particular the quality of public transport, could also improve South Africa s competitiveness position. Currently, the country is ranked in 66 th position. Furthermore, in order to give impetus to the pursuit of national infrastructure development targets, as well as drive infrastructure development in the Gauteng province, the proposal of a Gauteng City Region (GCR) Game Changer Programme was put forward by the Premier s Gauteng Planning Division in The Game Changer Programme is envisioned as a collection of well-planned and co-ordinated interventions that cumulatively achieve a major upward shift in the growth trajectory of the Gauteng City Region and empower the realisation of the Ten Pillar Programme outlined above. The rationale behind the Game Changers is that radical transformation will not occur by itself, nor will it occur through continuing with existing practices and policies. Conversely, with all layers of government pursuing a developmental role, decisively leading in the planning and regulation of socioeconomic advancement, it will be possible to drive development in the country and 158

168 in the Province, enabling the achievement of broad-based socio-economic outcomes. The GCR Game Changers, which will be outlined in more detail below, were identified within a broader context constituting previous catalytic infrastructure projects, as well as current national and provincial socio-economic development policies. Previous catalytic infrastructure programmes included the Reconstruction and Development Programme (RDP) adopted by the national government in 1994, the Blue IQ programme established in 2001, as well as the Flagship Programme adopted in Additionally, the GCR Game Changers are coordinated with the priorities expressed in the National Development Plan 2030 (NDP), the ANC Manifesto , as well as the Imperatives of the Fifth Administration (also known as the Ten Pillar Programme). From this context, a number of catalytic infrastructure projects were identified, with particular potential to achieve the following objectives: Promote development in consolidating and developing the GCR; Be catalytic: take the GCR to a higher trajectory of growth and development; Have a major infrastructure component in the project content; Support radical spatial, social and economic transformation in the GCR; Be based on multi-year inter-governmental and inter-departmental collaboration and cooperation; Promote and support the crowding in of public and private investment; Promote and support economic development and job creation; and Lead to improved service delivery, entrenching of good governance, deepening of democracy and strengthening partnerships. Below, we highlight projects under the economic cluster component of the GCR Game Changers programme, which either constitute the Gautrain extension itself (as one of the identified Game Changers), or are directly and indirectly supported by the expansion of the Gautrain system. Furthermore, we outline the Pillars, within the Ten Pillar Programme, which are directly linked to the roll out of these infrastructure projects. 159

169 GCR Game Changers: Economic Cluster Pillar #1: Radical economic transformation Pillar #2: Decisive spatial transformation Pillar #5: Modernisation of the economy Pillar #8: Modernisation of public transport infrastructure Pillar #9: Re-industrialise Gauteng Pillar #10: Lead in Africa s new industrial revolution Game Changer Description Role of the Gautrain and future extension in supporting these Game Changer projects Gautrain extensions Revitalisation of township economies Green Economy Metropolitan BRT Systems Metrorail upgrade Aerotropolis Gauteng as Africa s financial and services hub Gauteng Energy Strategy To increase accessibility and improve mobility by extending the current footprint across the Province. Transform townships into vibrant economic centres of opportunity and job creation To skill up for & manufacture sustainable green energy solutions in support of the Gauteng Energy Strategy To increase accessibility by completing BRT systems in 3 metros with potential extension Implementation of the 25 year ITMP with regards to moving passenger transport from road to rail Leveraging the potential of ORTIA as an economic engine for sustainable economic growth and job creation Implement and build on National Treasury Strategy in this regard Cement GCR as the primary provider of goods, services, and skills to a growing Africa To ensure energy security To reduce the reliance on carbon-based fuels Depending on where future Gautrain stations and routes will be located, surrounding areas are expected to experience transit-oriented development, driven by improved connectivity and access. With more commuters opting to use the Gautrain instead of their motor vehicles, there will be a substantial reduction in their carbon footprint, promoting a greener Gauteng economy. The Gautrain extension, particularly if it is coordinated with other transport modes and future transport system expansions, will substantially support efforts to create a more integrated transport system in Gauteng, as described in the ITMP25. Through a seamless connection to other transportation modes, for example from ORTIA to the Gautrain and vice versa, Ekurhuleni and Gauteng can leverage their comparative advantage in the transport sector. An extension of the Gautrain can make a major further contribution to facilitating growth in the financial and services hubs of Gauteng, thereby helping to cement the GCR as the primary provider of goods, services, and skills to the continent. With commuters being increasingly diverted from road-based traffic, the Gautrain and its extension can make a substantial contribution to reducing the Province s reliance on carbon-based fuels. 160

170 As proposed in the GCR Game Changer programme, the Gautrain extensions would entail an expansion of the Gautrain system s footprint through the construction of the following links: East-West Links (Ekurhuleni Metropolitan Municipality and City of Johannesburg) Sandton-Randburg-Lanseria Rhodesfield-Boksburg North-South links (City of Tshwane and City of Johannesburg) Park Station-Westgate (CBD) Naledi-Mamelodi As a result of the proposed extensions, the Gautrain would not only be an important part of the economic cluster within the GCR Game Changer programme, but would also support other clusters, particularly the social cluster. This cluster entails, for example, Building new post-apartheid cities to facilitate and enable the development of new nodes that will significantly influence the spatial form of the Province. Through the construction of the proposed Gautrain links, a number of cities envisioned under this part of the social cluster of the Programme, would benefit from a boost of connectivity and access, spurring on their development into successful new cities within the larger GCR. In summary, the envisioned Gautrain extension is fully in line with the infrastructure investment thrust of both national and provincial economic policy plans, fulfilling the criteria of a catalytic and transformative infrastructure project that would lift socioeconomic development in the Gauteng region onto a higher, and more sustainable growth trajectory. Additionally, the Gautrain extension can support radical spatial, social and economic transformation in the GCR, thereby promoting a more equal society through better access to economic opportunities to benefit Gauteng s residents. 161

171 10.2 Building on our track record Along with the excitement of the 2010 FIFA Soccer World Cup, South Africans experienced the opening of the first high-speed rail link in South Africa: the Gautrain. The Gautrain has exceeded the expectations in terms of the ridership, its contribution to the Gauteng economy, how it has transformed the way in which people live, work, get to school, to places of business, to the airport and conduct their leisure activities. All of these positive spin-offs already experienced, tell the story of how potential extensions to the Gautrain system could connect more people, more businesses, more parts of the Gauteng province not currently being serviced. Feasibility studies for network expansions are currently being undertaken. Usage trends and uptake, as well as the broader impacts of the current network only continue to support the view that network expansions will multiply the current benefits Trends and dynamics shaping the future The Gautrain user of the future will be influenced by key changes and driving forces in the economic and social environment that will shape the world in which they live. The Gautrain system has been developed with this in mind and future expansion plans are also developed with the impacts that these trends would have on the needs of the South Africa and Gauteng of the future. Key dynamics that will impact the future shape of the Gauteng economy include: Key developments and trends Demographic changes Implications thereof Higher life expectancy and failing birth rates are increasing the proportion of elderly people across the world, challenging the solvency of social welfare systems, including pension and healthcare. Some regions are also facing the challenge of integrating large youth population into saturated labour market. 162

172 Rise of the individual Enabling technology Economic interconnectedness Public debt Economic power shift Climate change Advances in technology and greater educational attainment combined with a rising middle class in many developing economies are empowering individuals, leading to greater scrutiny of governments, demand for transparency, and higher expectations for participation in decision-making. Technology not only empowers individuals, but will have significant implications on employment, business and economies, leading to different opportunities and skill demands. Information and communication technology (ICT) has transformed society over the last 30 years. A new wave of technology advances is now to creating novel opportunities, while testing governments ability to harness their benefits and provide prudent oversight. The interconnected global economy will see a continued increase in the levels of international trade and capital flows, but unless international conventions can be strengthened, progress and optimum economic benefits may not be realised. Public debt in the developed countries has ballooned over the past half-decade. It is expected to operate as a significant constraint on fiscal and policy options through to 2030 and beyond. This implies reduced flexibility to deal with unforeseen economic crises, and could have negative implications for the world economy in view of increasing global economic interconnectedness. Emerging economies are lifting millions out of poverty while also exerting more influence in the global economy. For developed countries, this means adjusting to a post-power shift world, whereas many emerging countries will face tensions caused by growing inequality. Rising greenhouse gas emissions are causing climate change and driving complex mix of unpredictable changes to the environment while further taxing the resilience of natural and built systems. 163

173 Resource stress Urbanization Rising income disparities Source: KPMG Future State 2030 The combined pressures of population growth, economic growth and climate change will place increased stress on essential natural resources (including water, food, arable land and energy). These issues will place sustainable resource management at the centre of government agendas. Urbanisation is creating significant opportunities for social and economic development and more sustainable living but it is also exerting pressure on infrastructure and resources, particularly energy. Labour markets will increasingly value complex and highly-specialised skills toward 2030, subjecting lowskilled workers to increased competition for jobs and widening the income opportunity gap. 164

174 10.4 Arriving home: the future of the Gautrain 57 M HATFIELD M MAMELODI M PRETORIA TSHWANE EAST CENTURION IRENE SAMRAND BLUE HILLS SUNNINGHILL MIDRAND M FOURWAYS RHODESFIELD OR TAMBO INTERNATIONAL COSMO MARLBORO HONEYDEW SANDTON EAST RAND MALL RANDBURG RUIMSIG ROSEBANK M BOKSBURG M ROODEPOORT PARK M NALEDI WESTGATE 57 Please note that the new stations and Gautrain routes displayed may change during the feasibility study phase of the expansion. 165

175 The existing Gautrain system has already exceeded expectations and forecasts and capacity on the network has been increased a number of times with interventions including: The introduction of 8-car train sets on the North South service during peak hours to replace the 4-car train sets that have been used in the past; Increasing the frequency of trains on the ORTIA link on Sunday afternoons; Increasing the frequency and capacity of the ORTIA link on Monday mornings. Over and above capacity interventions such as the above, the coverage of the current network and appetite for further expansion is also in the spotlight: The Gautrain is viewed as an inter-city transport system, linking the three main metropolitan areas of the Gauteng province. The current system serves only part of the key developmental nodes that have been identified in the Province and areas such as the eastern part of Ekurhuleni and areas further to the south, such as Soweto, as well as the western parts of the Province towards Honeydew and Ruimsig, as well as the further eastern parts of Tshwane are not currently being serviced. The potential new developments are therefore considered within these areas. Important characteristics of the types of links that these expansions will facilitate include: Proximity to lower income housing areas and informal developments that are part of the provincial government s economic growth and development plans; Proximity to new residential developments, often high density developments; Proximity to industrial areas and business areas that are going through rapid development; Proximity to educational institutions; and Proximity to retail and shopping areas. The Gautrain users of 2030 will require a transport system that is safe, secure, reliable flexible and easy to use. They would like to plan their journeys in the morning before they leave home, taking into account information about delays, connections with 166

176 other forms of transport and alternatives available to them. They would require their journey to work to be integrated with the places where they would want to shop and the places of education that they sent their children to, be it day care or university. They would be sensitive and cognisant of the impact that their travel decisions would have on the environment. They would require a transport system that allow them to connect with the technology they are using in their daily lives. The Gautrain users of the future will undertake the majority of their long distance travel in the Province via rail, but they would require a hub where it would be easy and quick for them to transfer to other modes of public transport. We, the people of South Africa, have journeyed far since the long lines of our first democratic election on 27 April 1994, when we elected a government for us all. We began to tell a new story then. We have lived and renewed that story along the way. Now in 2030 we live in a country which we have remade. Excerpt from the Vision of the National Development Plan 167

177 10.5 Recommendations The emphasis of this study has been to gain an understanding of the macro-economic impact the Gautrain has had on Gauteng and the South African economy as a whole. As a result, there is significant scope to investigate the impact the Gautrain has had on Gauteng and the South Africa from a micro-economic point of view. Further studies could potentially analyse the following topics: Determine and verify the micro-economic impact of the Gautrain on supply chain and market structures from an industry point of view; The proposed study could focus on the Gautrain s impact on SMME businesses, start-up activity and viability over the years due to the construction and operation of the Gautrain. In addition, the proposed study could also investigate the impact the Gautrain has had on promoting more competitive markets in South Africa. This could potentially have occurred through the promotion of competitive and fair bidding, as well as support for small businesses due to improved connectivity in Gauteng, Investigation of the impact on South Africa s transformational goals as a result of the construction and operation of the Gautrain, as well as verification of whether BBBEE businesses that were positively impacted by the construction of the Gautrain are still operating and the financial viability of those businesses. This study can provide a strong foundation for the microeconomic studies suggested above. By adding a microeconomic stance, the reader will be able to gain an even more holistic understanding of the impact the Gautrain has had on Gauteng and South Africa. 168

178 You can't understand a city without using its public transportation system Erol Ozan 169

179 Current impacts pave the way to the future 170

180 The following current and anticipated impacts of the Gautrain system are centred around the GMA s Key Performance Indicators (KPIs) namely, inter alia, economic development, public transport as a mode of choice and spatial development. 171

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182 173