Public Finance Management Amendment Bills: public hearings

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Finance Standing Committee

07 June 2022
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

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The Committee held public hearings on two Private Members’ Bills (Public Finance Management Amendment Bill [B41-2018] and [B13-2020]) seeking to amend the Public Finance Management Act.

Only one oral submission from Lebut Solutions JW was made. The company’s submission proposed additional clauses to both Bills and did not speak directly to the clauses contained in either. The company proposed an additional clause, which states that a that has opened an account for a department, a public entity listed in Schedule 3 or a constitutional institution, or any other institution that holds money for the aforementioned institutions, must promptly, in the case of any bank withdrawal of above R250 million, request in writing, National Treasury approved reasons for withdrawal.

National Treasury reported that it is currently conducting a comprehensive review of the Public Finance Management Act. As part of this process, it will consider some of the issues identified by the two bills and thereafter table a Bill in Parliament either in 2023 or 2024.

Members were not pleased that National Treasury had not submitted detailed comments on both bills, especially because they were in the pipeline for some time and National Treasury was aware of this. Some Members questioned why the proposed Amendment Bill could not be used as an interim measure to combat the widespread malfeasance across all sectors, whilst NT concludes its process.

The Chairperson explained that in terms of the law a PMB is treated in the same manner as Bill tabled by a Minister. The Committee, he felt, could not put the Bill on hold, while for National Treasury to conclude its comprehensive review, particularly as it would give the impression that the Parliament is being told what to do by the Executive.

The Committee advised National Treasury to prepare precise and detailed feedback on the Bills for the planned meeting next Tuesday, 14 June. On the following day, the Committee would debate the motion of desirability on the bills.

Meeting report

The Chairperson said the Committee would hear submissions from interested parties on the two PFMA Bills.

Lebut Solutions JW Submission

Mr Lebogang Mothophi, Executive Director, Lebut Solutions JW, briefed the Committee on the company’s submission on the two Public Finance Management Act (PFMA) Amendment Bills.

He indicated that the company’s submission proposed additional clauses to both Bills and did not speak directly to the clauses contained in either. Some of the company’s proposals include:

  1. Section 7: Banking, Cash Management and Investment Framework

For this section he proposed an additional clause, which states that a that has opened an account for a department, a public entity listed in Schedule 3 or a constitutional institution, or any other institution that holds money for the aforementioned institutions, must promptly, in the case of any bank withdrawal of above R250 million, request in writing, NT approved reasons for withdrawal.

  1. Section 25: Use of funds in emergency situations

For this section, he proposed that in the cause of use of emergency funds, a request must be submitted to either provincial or national risk committees, to conduct a risk assessment that will consider the effects of uncertainty on financial objectives.

(See Presentation for full details)

National Treasury Input

Adv Empie van Schoor, Chief Director: Legislation, National Treasury, said the Committee was sent a letter written by the Director-General (DG), Mr Dondo Mogejane, which highlighted that the department is currently conducting a comprehensive review of the PFMA, and the Municipal Finance Management Act (MFMA). To date, NT has received inputs from national and provincial departments; public agencies; and constituency institutions listed on the PFMA schedules. Once it has compiled all the input received, Treasury will engage further with the relevant stakeholders, following which, a draft bill will be published for public comment. As part of this process, Treasury is also reviewing its own regulations.

She added that National Treasury may also include and consider some of the issues identified by the two bills, in its reviewal process. Following Cabinet approval of the draft regulations, the PFMA Amendment Bill will be tabled in Parliament for consideration. National Treasury anticipates tabling the Bill in Parliament either in 2023 or 2024.

Discussion

The Chairperson opened the floor for discussion.

Mr G Cachalia (DA) was left confused by the remarks made by National Treasury, as he believed that both Bills can be incorporated into the review process. Nonetheless, as it stands, the PFMA Act does not provide for additional measures in instances where reports are not tabled. For instance, a department or entity is not required by the Act to table any reports within a specified time, following the submission of an explanation as to why it had failed to do so. Whereas he felt that the PMB he tabled proposes that the annual financial statements and their audit reports be tabled 60 days after the explanation is tabled by the department or entity. This, he was convinced, would be uncontroversial and non-partisan.

Thereafter, he asked how long the reviewal process would take before the Bill is tabled in Parliament. Further, he asked if his PMB would function as an interim measure until NT concludes its process and if the department did not believe that the PMB would assist in combating the widespread malfeasance across all sectors.

Mr R Lees (DA) recommended that the department looks into the points made by Lebut Solutions in its submission, as they were useful.

Referring to National Treasury’s comments that the Bills be considered in its reviewal process, he indicated that the DG’s letter states that Rule 286 (4)(e) of Parliament provides a department in the national sphere of government sufficient opportunity to make submissions on the objects and particulars of a Bill. However, he noted that National Treasury had not done so. As such, he asked if it was satisfied with the Bills, or if it took issue with certain aspects of them. Additionally, if National Treasury was not satisfied with the Bills, he asked if it could provide reasons why they should not be enacted and vice versa. He called on National Treasury to support the enactment of the Bills, given that the review process would possibly take more than three years.

Mr D George (DA) said that the Committee should take it that National Treasury supported the proposed Bills, as it had not submitted any objections to them. He felt that the review process would unfold similar to the one for Pension Reform (which has been ongoing for the last 20 years) and called for the Bill to be adopted in the interim. This, he added, would assist National Treasury in remedying some of the issues responsible for the collapse of municipalities across the country.

Adv van Schoor admitted that National Treasury was unsure of how long the review process would take to unfold. Though National Treasury aims to complete it as soon as possible.

Regarding National Treasury’s submission on the amendments, she mentioned that the department does have some concerns regarding their wording. Further, the department believes that some of the amendments should be captured in NT regulations and not in the PFMA. She informed Members that NT officials would require a mandate prior to submitting comments on specific amendments. Once received, a letter, listing NT’s comments on the Bills, would be submitted.

Mr Lees was not pleased by Treasury’s reason why it had not commented on the amendments, particularly as the letter sent by the DG indicated that submissions must be made on the contents of the Bill. He urged National Treasury to table its submissions to the Committee, so that it can consider them.

Ms P Abraham (ANC) indicated that the department was not ready to provide responses to the questions posed. She requested that Members be given time to deliberate with their respective political parties on the Bills and urged that National Treasury adequately prepare its comments during that time. This, she added, would allow for the Committee and the department to have fruitful discussions on the Bills.

Mr George said that it was unacceptable that National Treasury had not provided feedback on the PMBs. Usually, when a Member tables a PMB to Parliament, the department is expected to give comments on its reservations, regarding the clauses, or where it agrees. He requested that National Treasury submit its input on the Bill, as it is a sensible one, which looks to protect the public’s money.

The Chairperson explained that in terms of the law a PMB is treated in the same manner as Bill tabled by a Minister. The Committee, he felt, could not put the Bill on hold, while for NT to conclude its comprehensive review, particularly as it would give the impression that the Parliament is being told what to do by the Executive. As such, he indicated that since the Committee had received submissions from relevant stakeholders, it would then move on to the motion of desirability. He asked Parliamentary Legal Services what steps the Committee should take to move forward in processing the Bill.

Adv Charmaine van der Merwe, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, noted that Treasury is embarking on a reviewal process, however it was not a reason for the Committee to reject or halt its motion of desirability on the two Bills. In a different matter, the Portfolio Committee on Trade, Industry and Competition decided to postpone its motion of desirability on the Bill, until the Department of Trade, Industry and Competition completed its review of the policy implications involved in passing it. However, in this case, Treasury had only provided sufficient justifications for the Committee to do the same. Thus, she recommended that Treasury first make detailed submissions on the two Bills, before the Committee makes a final decision on its next course of action.

Further, she advised that the Committee also consider the importance of Treasury’s reviewal process, as it will cover all aspects of the legislation.

She highlighted that Lebut Solution’s submission proposed additional clauses to the Bills and did not speak directly to the clauses contained in either. She proposed that the Committee only attends to these once it has adopted a motion of desirability on either Bill. She further explained that if the Committee decides to include the proposed additional clauses, it will then have to approach the House of Assembly, to extend the scope of both or either Bills.

The Chairperson highlighted that the Bills have been in the pipeline for some time and that National Treasury was aware of this. He proposed that the Committee moves to process the Bills.

The Committee Secretary indicated that the Committee had scheduled two meetings on the Bills for the following week. The meeting on Tuesday, 14 June, would focus on the Committee’s response to the submissions made.  Thereafter, the following day it would consider motions of desirability for both Bills. 

Mr Lees recommended that the Committee compile and clarify all the submissions made, in preparation of the meetings scheduled for the following week.

Ms Abraham agreed with the recommendation. She also suggested that National Treasury prepare precise and detailed feedback on the Bills, for the Tuesday meeting.

The Chairperson agreed with both proposals.

The meeting was adjourned.

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