Money Bills Amendment Procedure Act review: joint workshop

This premium content has been made freely available

Finance Standing Committee

08 February 2017
Chairperson: Mr Y Carrim (ANC) and Mr C De Beer (ANC, Northern Cape)
Share this page:

Meeting Summary

Parliament’s Constitutional and Legal Services Office (CLSO) presented at the joint workshop to the Finance and Appropriations Standing and Select Committees. It noted that the National Assembly had passed a resolution in May 2016 that the Finance Standing Committee should review the Money Bills Act with a view to introduce amending legislation if necessary. The Finance Standing Committee had to confer with the Appropriations Standing Committee in this process. The aim of the review was to make the Act more suitable to oversight of the Budget. The Act provided time frames and the sequencing of the budget process. The sequence followed was from the Fiscal Framework to the Division of Revenue Bill (DORB) to the Appropriations Bill. The Act provided for the establishment of the Parliamentary Budget Office (PBO), and set out its functions. The four Chairpersons of the Finance and Appropriations Committees and the relevant House Chairpersons had to act as an advisory board to consult about the PBO structure and conditions of service. The way forward for the review was to develop and consider a draft Amendment Bill; hold public hearings on it, and thereafter to report a final draft which would be introduced as a Committee Bill.

The Parliamentary Budget Office explained that it was established as a juristic person to operate in the Parliament administration. It was headed by a Director, and provided independent, objective and professional advice on matters related to the Budget and other Money Bills. It had to give advice on proposed amendments to the Fiscal Framework, the DORB and Money Bills, and policy proposals with budgetary implications. Its challenges were mainly administrative, and not due to lack of support or political will. The PBO was an independent entity with its own legislation. The PBO operated in the parliamentary administration without a clearly defined funding model. It had been constrained by lack of funding for four years and had to deliver under difficult circumstances. A three-year rolling budget and accountability for the PBO had to be formalised, as well as the legislative powers of the Director.

In the workshop the matters that received most attention were the need for flexibility in the fiscal framework, and the strengthening of the Parliamentary Budget Office as well as the constrained time frames. Fiscal policy had to be flexible and had to be able to accommodate unforeseen events like the student protests. Members were united in their concern about the independence and powers of the PBO. Due powers had to be given to the PBO as an independent juristic person within the parliamentary administration. The powers of the Director were not to be limited. The PBO budget had to be of such a nature that it was not reduced to a line item of Parliament. The PBO had to have teeth to review difficult policy. It was not to be part of Parliament, even if it was funded through Parliament. PBO capacity had to be improved. The DA and the ANC differed about the PBO advisory board. The DA felt that as the Chairpersons of the Finance and Appropriations Committees were from the ruling party, there could be implications for transparency, as the opposition could not provide inputs. The ANC countered that the advisory board played purely an administrative role. There were remarks about the NA/NCOP parallel process, the independence of the two Houses, and the role of the NCOP. The Finance Standing Committee Chairperson concluded that expectations had been exceeded by the day’s session, as important decisions were reached. The PBO Director endorsed that by saying that it was the most important meeting for the PBO in four years.

Adv Jenkins said that there were shortcomings in the Act, as it currently stood, to achieve substantive compliance. The PBO could have an independent approach to fiscal policy. The question was how to give it authority. If budget oversight was to be a priority for the PBO, its resources had to show that. On the cramped timeframes for the annual budget cycle, it was not possible to create more time. It was possible to specify exactly what had to be done from Monday to Friday. The question was how to break the annual cycle up into segments as the sequence demanded that one phase had to be completed before the next one could be proceeded to.
 

Meeting report

Introduction by Chairperson
Mr C De Beer (ANC, Northern Cape, Finance Select Committee Chairperson) remarked that the workshop on the review of the Money Bills Act was long overdue as part of parliamentary process. Adv Frank Jenkins had prepared a background document. Documents had been already circulated since June 2015. There had been inputs by Adv Jenkins, the PBO and National Treasury. He noted that there were four committee chairpersons present. He would chair the briefing session by Adv Jenkins.

Review of Money Bills Amendment Procedure and Related Matters Act: CLSO briefing
Adv Frank Jenkins, Senior Parliamentary Legal Adviser, told the committees that the National Assembly had passed a resolution in May 2016 that the Finance Standing Committee should review the Money Bills Act with a view to introduce amending legislation if necessary. The Finance Standing Committee had to confer with the Appropriations Standing Committee in this process. The aim of the review was to make the Act more suitable to oversight of the Budget. Law had to be adapted to practice to make compliance possible. The Act provided for time frames and sequencing of the budget process. The sequence followed was from the Fiscal Framework to the Division of Revenue Bill (DORB) to the Appropriations Bill. The Act provided for the establishment of the Parliamentary Budget Office (PBO), and set out its functions. The PBO Director had to be responsible for fiduciary duties, and financial and human resource management. For alignment to the Financial Management of Parliament and the Provincial Legislatures Act (FMPPLA), there had to be clarity on whether the PBO was an entity that received a transfer of funds. The four Chairpersons of the Finance and Appropriations Committees and the relevant House Chairpersons had to act an advisory board to consult about the PBO structure and conditions of service. Section 120(3) of the Constitution provided that provincial legislatures had to pass provincial legislation to set out a procedure to amend provincial money bills. The way forward was to develop and consider a draft Amendment Bill; to have public hearings on it, and thereafter to report a final draft which would be introduced as a Committee Bill.

The Chairperson remarked that all four committee were working as a collective. He asked for his mind to be refreshed if the documents handed out in August 2015 were similar to the current documents.

Adv Jenkins replied that there were new issues, but essentially they were the same.

Parliamentary Budget Office (PBO) briefing on its role and structure
Prof Mohammed Jahed, PBO Director, explained that the PBO was established as a juristic person operating within the administration of Parliament, headed by a Director, to provide independent, objective and professional advice to Parliament on matters relating to the budget and other money Bills. It had to provide advice on proposed amendments to the fiscal framework, the DORB and money Bills and on policy proposals with budgetary implications. The PBO concept was part of an international process. Its challenges were mainly administrative, and not due to lack of support or political will. The PBO was an independent entity with its own legislation. It operated within the administration of Parliament without a clearly defined funding model. The PBO was constrained by limited funding, and had to deliver under difficult circumstances for four years. A service level agreement (SLA) with Parliament addressed guiding principles and regulations in terms of the Act. There was a lack of capacity to carry out work. Approval of the PBO was of critical importance. The three year rolling budget and accountability had to be formalised, as well as the legislative powers of the Director. It had been a tough four years of having to deliver under constraint. The workshop of the day was the most important meeting for the PBO in four years.

Discussion
Mr C De Beer (ANC, Northern Cape) thanked the PBO for its work. It was prospering in spite of challenges. It was important that the Committees go through the documentation.

Mr F Essack (DA, Mpumalanga) referred to the bullet point on alignment to the FMPPLA, where the Chairpersons of Finance and Appropriations and relevant House Chairpersons act as an advisory board to consult about the structure and conditions of service of the PBO. He asked what the motivation behind that was, and whether transparency was possible if only those Chairpersons were on the advisory board. He asked about the stipulation of timelines. Municipal managers sometimes acted independently.

Mr A Lees (DA) remarked that he had been party to the debates about the form the PBO should take. The advisory board concept was contentious even then. He was disappointed by the PBO lack of capacity. It was a most important institution which had to be taken seriously. It had to be capacitated and independent. There had been frustration regarding the capacity of the PBO to render services to MPs. Capacity had to be put in place. It would not do to work through Committee Chairpersons. The PBO had to get more resources. Nevertheless, the PBO had produced a great team and was doing good work.

Ms T Tobias (ANC) remarked that a whole day was needed to workshop. Issues could not be glossed over. The Committees had to implement decisions. On the briefing by Adv Jenkins, the issue was how fiscal policy and the division of revenue was translated into appropriations. Fiscal policy had to direct the process, and therefore had to be flexible. Allowance had to be made for increased demands, as for example by the universities. Dealing with fiscal policy created space to engage. Legislators had to take their cue from national fiscal policy. It had to be implemented through the National Council of Provinces (NCOP). The NCOP had to see that implementation occurred. The question was whether it was possible to follow the time schedules set by the Act.

Ms Tobias referred to the PBO as a juristic person. Due powers had to be granted to it. The Act gave the PBO the power to assume responsibility for delivery and implementation, and accountability. The power of the Director was not to be limited. Among a board of directors in a corporate environment, the director became the CEO, who would be in charge of line items and the budget. The PBO had to be able to say what it needed, and what services it could provide. In interaction with the Finance Minister, it had to be able to say that the budget received reduced the PBO to a line function of government. The question on the service level agreement was who it was between. The PBO service could not be reduced to a line item. It was not to be part of the government organogram, but had to stand alone. A review of the PBO had to start with how it was structured. She referred to policy formulation, saying the PBO had to have the teeth to review difficult policy. It had to be independent. The PBO had to be able to answer questions as empowered individuals. It had to read the economic outlook of the country and indicate in what direction the country was moving. When the PBO was asked for documents about policy decisions, it was difficult for them to obtain. The Committees had to understand their role as Parliament. The PBO Director had to be granted powers based on constitutional directives. The PBO had to be removed from the organogram. Accountability had to be formalised so that the PBO could be asked how it would account to Parliament, within the context of powers granted to it. Parliament could then give its approval. Legislation had to be in place to deal with eventualities like what to do if the Western Cape had its own fiscal policy approach that departed from that of national government. It had to be known how the relationship between appropriations and the fiscal framework was to be structured, and how it related to the NCOP and the Rules Committee.

Mr Lees told Adv Jenkins that he was concerned about the parallel process with the NCOP. Adv Jenkins had noted that it was embedded in the Rules. There were two Houses for definite reasons. It was undesirable to have a situation where the two Houses both did the same thing. He asked how NCOP participation fitted in with the Constitution. The Constitution directed that in the Budget Review and Recommendations Report (BRRR) process, the national process dealt with national departments. The NCOP had to deal with provincial and local impact. It already tried to do too much; it could expand the BRRR process and waste time.

Mr O Terblanche (DA, Western Cape) remarked that guidance was needed about the independence of the NA and the NCOP. There were definite reasons for having two Houses. If too many joint statements were issued, it could jeopardise the roles of the two Houses. He remarked on the importance of the PBO. It still did not have enough capacity to render service to the House and to MPs as it wished to, and in line with what was expected from it. It caused frustration. There was general consensus about that. The whole setup had to be reviewed. One had to guard against the PBO not becoming a huge department. Issues could be addressed through SLAs and the budgeting process. He referred to the Chairpersons of Finance and Appropriations acting on the advisory board for the PBO. The country was run democratically, and he was not taking a political angle, but the Chairpersons would all be from the ruling party. There would be no debate nor input from the opposition.

Mr A McLaughlin (DA) noted that there had been controversy in 2016 in the Appropriations Standing Committee because of time frames. There was not enough time to do things. Adv Jenkins had mentioned that there were difficulties of implementation. The law had to be practical. The time frame was too cramped for proper oversight of the budget. Adv Jenkins had made sound suggestions. Parliament could not achieve what it wanted to within a problematic and limited framework. He agreed that making the PBO a juristic person established it as a separate entity and a separate person in law, with its own identity. It would not be part of Parliament, even if funded through the Parliament budget. The PBO had to perform its function within the law.

Dr B Khoza (ANC) reminded Members that political agendas could not be accommodated. If there was no delivery, the ruling party had to account so it was in order for Chairpersons to be on the advisory board. If the DA came to power, it would not accommodate the ANC. The ANC wanted the budget to lean more towards the poor, and the DA wanted it to lean towards the rich. There had to be oversight of the PBO.

Mr Y Carrim (ANC, Finance Standing Committee Chairperson) took over as Chairperson. He jested that Dr Khoza was not speaking for the ANC when she told the DA that it could come into power.

Mr Perran Hahndiek, NA Procedural Officer, remarked that parliamentary committees did not work on their own but according to parliamentary rules. The kind of rules adopted had to be looked at. The NA Rules were looked at before a Committee adopted an Amendment Bill. The Act prescribed engagement between the Committees. How the PBO worked had to be developed in the Rules of Parliament. Parliamentary Legal Services and the PBO could make proposals.

The Chairperson noted that there was a member of the public present who took an active interest in the work of the Finance Standing Committee. To him she represented the mass of South Africans. He asked her to comment.

Dr Roselind Nyamane remarked that the way forward was for entities to make their own policy. It suggested that there could be a move away from government policy.The PBO was supposed to be independent of Parliament, objective and professional. It had to give advice on matters related to Parliament and money Bills. The Director was obliged to report to Parliament about any inappropriate political or executive interference to prevent the PBO from providing independent advice. If it had the ability to create its own policies, the question was how it would confront Parliament, when it had a problem with the Budget.

Ms S Shope-Sithole (ANC) remarked that the PBO had to be aligned to the FMPPLA. She referred to the Chairpersons on the PBO advisory board, saying it was important that Chairpersons were from the ruling party. The budget was an instrument that expressed the policy of the ruling party.

Mr S Mohai (ANC, Free State) commented that there had to be more strategic engagement on the budget vote. There had to be adequate time to discuss the budget. The provincial legislature had an interest in the national sphere of government. He referred to Adv Jenkins’s statement on the role of the NCOP. It was not suggested that the NCOP had to have similar structures to the NA. The NCOP had a complex structure. Section 65 of the Constitution stated that oversight was the mandate of the NA. The BRRR was more of a prioritisation of the budget.

Mr De Beer said that section 5 of the Money Bills Act did not allow the NCOP to go beyond the time frame. The NCOP worked in six week cycles. The provinces were saying that processes were being rushed t. More space was needed. The question was why Parliament could not continue until 15 December. It was necessary to work longer to accommodate these challenges. The PBO and Ms Tobias had referred to the administrative aspect. There had to be urgent discussions with the Speaker, in terms of the Money Bills Act and the FMPPLA.

Mr Y Carrim (ANC) remarked that capacity for budget oversight had to be strengthened within the context of 0.4 percent economic growth. It could be made more efffective. He advised that Members not be party political about the Money Bills Act. It caused polarisation. Interparty issues had best be diluted. These issues were administrative, not legislative, and related to the programme and Rules of Parliament. It was linked to issues around the advisory board and effective oversight of the PBO. If the NCOP had more time, the question was what would be done with it. The question was if the NCOP had the capacity to use more time. The NCOP could not be a match for officials such as Mr Ismail Momoniat of National Treasury, who were high powered professionals. They were officials who had been in Treasury for 20 years and had been around the world. He did not always agree with them, but they were world-class in terms of technical ability. He had asked Mr Nene, the former Finance Minister, about the reason for the time constraints. Mr Nene came up with very good reasons. The National Treasury had strong views on time extension as it would cause difficulties for the completion of the budget cycle. Dates would have to be changed for Parliament and the FMPPLA.

Mr Carrim said the Finance Committees had ten additional bills to deal with. The Insurance Bill was tabled in 2015, and the public hearings only took place the day before. Time extensions caused difficulty for Appropriations and other committees. The BRRR and Medium Term Budget Policy Statement (MTBPS) could not change. No Chairperson would really want to serve on the PBO advisory board, as far as he was concerned. He himself was too busy. It was a boring and pedestrian administrative role. He told Mr Essack that he would gladly swop places with him on the advisory board. It was bound to be drudgery. Dr Khoza was wrong in suggesting that the DA could ever come into power, but if it did, Mr Essack and Mr Terblanche would be able to see for themselves how excruciatingly boring it would be to serve on the advisory board. He told Mr Terblanche and Mr Essack that the vast majority of voters were ANC, therefore the majority of civil servants were bound to be ANC. Ms Tobias was right in saying that it would not do to just tinker with the Money Bills Act.

Mr Carrim said the fiscal framework had to be looked at to see if it was too rigid. Mr Michael Sass, the Accountant-General, had come up with the idea earlier in the year that the fiscal framework had to be more flexible. It was a novel and innovative point. The fiscal framework in the US allowed for unforeseen events. Eventualities such as the student uprising had to be raised with Treasury. The PBO had a most important role. He agreed with the decisions that Ms Tobias had come to. The establishment of the PBO was not a party-political matter. There were political choices to be made, which were ANC choices. That was how democracy worked. Any advice received would ultimately issue from ruling party ranks. Yet it was not a party-political matter. If he was to be a good advisory board member, he would insist on a meeting with the Speaker. Currently the advisory board chairperson was the House Chairperson, Mr Frolick, on behalf of the Speaker’s Office. There had to be a commitment to a strong PBO on the part of the administration, but for a variety of reasons, it did not happen. It was not lack of political will or commitment to the law. There were a million little things related to money or the power base of the administration. It was the same as with any normal parliament anywhere. There was no conspiracy. The PBO had used resources effectively. It had worked hard with limited resources and had done reasonably well. It could do better if Parliament decided about its structure and its role. If that meant tackling the administration, it would have to be so. The meeting had gone beyond being just a workshop as decisions had been taken. He supported the decisions taken by Ms Tobias. Things had gone further than anticipated.

Adv Jenkins replied to Mr Essack about the transparency of the PBO advisory board. It was an administrative function and would not influence the advice that the PBO gave. The Director would work in consultation with the Committees. Administrative and managerial functions would be attended to. He agreed with the PBO about structure. Powers had to be granted to someone. MPs had to have some authority to provide a 50 percent input. MPs had to be able to say what they wanted to know, if the PBO wanted to set up a structure that did not serve the needs of the committee. Amendments were hard to make because four parliamentary committees were affected. All had to be in agreement about managerial functions. The idea of a board reflected the current situation, with Chairpersons and the House Chairperson. It could be hard for four committees to agree with the Director. Chairpersons had to meet with the Director to consider options. It could be hard for four Committees to agree with the Director. The budget of the PBO, like that of Parliament, was an open issue. The PBO was not a government department. Government department issues of a similar nature could not be discussed with the media present. The question was what was desired from the board. There were checks and balances. The issue was National Assembly oversight over the executive authority. The NCOP could bring provincial interests to the national debate. The NCOP role had to be defined and it had to comply with the Constitution. There were resource issues related to the capacity of the two Houses. Within the parallel budget process, both Houses looked at the fiscal framework at the same time, and adopted it on the same day. It was the only process that ran parallel. Until both Houses agreed, it could not be referred to the DORB and the Appropriations Bill. Changes to legislation had to engage the public.

With regards to a flexible fiscal framework, Adv Jenkins noted that Parliament could change the fiscal framework, as it had oversight over it. The schedules of provincial legislatures were linked to the fact that they could not change their own budgets, as they did not have revenue raising powers of their own. There had to be compliance to the Constitution, guidelines could be put in place. Provincial legislatures had to adhere to section 16 norms and standards. The norms and standards set out what committees there had to be, and what they had to do. Constitutional boundaries were not to be overstepped. He agreed with Mr McLaughlin that if boxes were created, it would lead to a tickbox approach. It would be ticked off whether there had been public hearings, and if the Minister had had an opportunity to respond, and so forth. There were shortcomings in the Act as it currently stood, to achieve substantive compliance. The PBO as a juristic person was in the same position as the Prudential Authority within the Reserve Bank. The Prudential Authority was also a juristic person.

Adv Jenkins answered Ms Nyamane that the PBO could have an independent approach to fiscal policy. The question was how to give it authority. If budget oversight was to be a priority for the PBO, their resources had to show that. There was to be no interference from the executive authority.

Adv Jenkins replied to Mr Mohai about timeframes for the annual budget cycle. It was not possible to create more time. It was possible to specify exactly what had to be done from Monday to Friday. The question was how to break the annual cycle up into segments. The National Treasury and Parliament together had to prescribe how it had to be done. Treasury wanted Parliament to pass the DORB, and Parliament wanted Treasury to submit documents by the required dates. The question was whether more legislation had to be added. The sequence demanded that one phase had to be completed before the next one could be proceeded to. The risk of inconsequential amendments had to be considered.

Prof Jahed said that it was time to act, after four years of the PBO having to make do with limited resources. He agreed with recommendations made during the workshop. The workshop presented an opportunity to start taking action.

Mr Carrim told Prof Jahed that he could not lie to Parliament. He had to answer whether the Communist party had instructed him to use the PBO to attain certain of its goals. [The question caused great amusement]. It was not advisable in money Bills matters to get too ambitious, nor too rigid. It had to be said that in difficult circumstances more time might be needed. Instead of stipulating 25 days, for example, it could say that it would be after matters had been attended to by the committees in consultation with Treasury. Flexibility was needed. It would not do to go back to square one. The new dispensation had to be honoured. He advised that Adv Jenkins compile a first draft and send it to the Parliamentary researchers. The PBO could then comment. A small technical subcommittee could be set up under Adv Jenkins. Chairpersons would be busy with the budget. The subcommittee had to meet with Treasury and produce a report, which would make it unnecessary to ask the same questions asked in today’s workshop. It was stated the previous year that the review of the Money Bills Act was a primary bill for the Finance Committee. The MTBPS of the current year would be dealt with in terms of the new amended Money Bills Act. More attention had to be given to the specific concerns of the Appropriations Committee. Appropriations could look at the report before the Bill came back to the Finance Committee, so that its concerns could be addressed. The Money Bills Act was highly important, and a primary concern for the Finance Committee. The Act would be discussed again on 15 February. He suggested a target of 1 June, so that the draft Bill could be passed by both houses by the end of August. It was ambitious, but everyone could try their best. Within two years there would be different Chairpersons who could make up for the current mess, just as the current Chairpersons had to make up for the mess of a certain Minister of Finance. The Apartheid leader BJ Vorster used to say that the next generation would have to solve the problems of Apartheid. He asked his co-Chairperson, Mr De Beer, to conclude.

Mr De Beer concluded that the summary given by Mr Carrim was an excellent one. He thanked everyone and adjourned the meeting.

Share this page: