Appropriation Bill 2009/10: National Treasury briefing

Meeting report

Appropriation Bill: National Treasury (NT) briefing
The Chairperson noted that according to the provisions of the Money Bills Amendment Procedure and Related Matters Act (the Act), what was previously known as the Joint Budget Committee had now become the Standing Committee on Appropriations. There should be emphasis on determining what this Committee would do and how its role would differ from that of the Standing Committee on Finance. The Act placed more responsibility on this Committee as there were certain decisions where the Standing Committee on Finance would have to defer to it. The Act had only recently been promulgated (14 April 2009) and it was clear that some of the requirements must be immediately implemented, and that other provisions would have to be phased in. The Committee planned a workshop on the Act to help members understand the provisions and also to be able to be able to report back to the leadership of Parliament on the key issues of the Act.

The repeat of the briefing on the Appropriation Bill (the Bill) was largely for the benefit of the new members of the Committee
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National Treasury had planned to brief the Committee on the expenditure figures of the 3^rd and 4^th quarter. The Chairperson was unsure if the briefing on the 3^rd quarter expenditure was still relevant.

Ms LeeAnn Ferreira, Director: National Budgets, National Treasury, briefed the Committee on history and structure of the Bill. The Bill was divided by vote and by main division within a vote/ programmes. An aim was set out for each vote and a purpose was set out for each programme. The Bill lapsed on the last day of sitting of the National Assembly and was revived by the National Assembly on 26 May 2009.

Parliament was asked to pass the Bill as soon as it was feasible so that the Act could be promulgated before the end of July. This was crucial, as the financial year had already commenced. Departments were incurring expenditure in terms of section 29 of the Public Finance Management Act (PFMA), which made provision for spending, not exceeding 4% of the 2008/09 financial year budget, before the annual budget was passed. Departmental activities might soon be severely constrained should an Appropriation Act not come into effect. The portfolios of the new ministers necessitated a re-organisation of departments, including renaming and establishment of new departments. This process, led by the Department of Public Services and Administration (DPSA), was expected to take a minimum of six months to complete. The President was expected to make a proclamation fairly soon to amend, by proclamation, the national departments listed in Schedule 1 to the Public Service Act, to accord with the new portfolios of Ministers. The Appropriation Bill tabled at the time of the Budget was based on the government structure that prevailed at that time.

In light of this, technical corrections would be proposed in terms of Section 14 of the Money Bills Amendment Procedure and Related Matters Act. This would create the new budget votes to accurately reflect the restructured and renamed departments. This was a technical correction, as no funding would be allocated to the new votes at this time. Overall funding, and funding allocated for each of the existing votes in the Bill, would not be altered. In terms of Section 33 of the PFMA, associated funds would be transferred between departments as their functions were transferred. An explanatory memorandum would be tabled depicting in broad terms how the new vote structure linked to the existing vote structure. It would be compiled from information communicated to the National Treasury by 10 June 2009, and,  together with the technical corrections would be considered by Parliament in the second reading debate on the Appropriation Bill.
 
Through the process led by the DPSA, national departments and ministries would be given funding as soon as processes were complete and approved so that planning and spending could proceed.

Where shifting of functions and establishment of departmental structures had been completely finalised, including costing, by the end of September 2009, this would be reflected in the 2009 Adjustments Budget

Structures which were finalised by November would be able to be appropriately reflected and catered to in the 2010 Budget.

The interim arrangements of the 2009 Adjustment budget process were discussed and included the treatment of transitional funding, shortfall funding and the issue of cost containment guidelines to Departments.

For the 2010 Budget process, departments had to submit their budget proposals by the end of July and where this was not possible, new departments would be able to submit their budget proposals at a later date.

The critical dates in the budget cycle were set out. National Treasury presented the provisional dates for tabling of the Adjustments Appropriations Bill and Budget in Parliament as 27 October 2009 and 17 February 2010, respectively.

Discussion
Mr N Koornhof (COPE) queried the difference in the roles of the Standing Committee on Appropriations and the Standing Committee on Finance in evaluating the Budget, and asked which Committee would take preference in that task.

The Chairperson responded that the question highlighted the need for the workshop on the Money Bills Amendment Procedure and Related Matters Act, he had mentioned earlier. He also felt that this workshop should include all members of the finance cluster, including their colleagues in the National Council of Provinces
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The Chairperson stated that the Act created certainty on this matter. This was most specifically contained in Section 4 of the Act, dealing with Parliamentary committees for consideration of Money Bills. In this regard, he referred to Sub-sections 4(1), (3), and (4).
Specific functions had been laid out for the Committee on Finance in Sub-section 4(2).
Those were the guidelines of the Act. Practically, many of the presentations would be made to both Committees and they would then have to execute their individual duties.

Mr P Rabie (DA) commented that it was his opinion that the Finance Committee was to provide the broad abstract macro-economic framework and the Appropriations Committee's role was to monitor the expenditure of the departments and whether they adhered to prescribed spending dates.

Ms R Mashego (ANC) felt that the Committee should review the 3^rd quarter expenditure figures. This was the basis of what happened last year and was important to see how the departments performed in the last financial year. This would give the Committee an indication of what to look for as they interrogated departmental expenditure reports.

The Chairperson agreed.

Ms Ferreira responded that the 4^th quarter report should be available to Parliament shortly. It needed only to be finalised by the Office of the Deputy Director-General.

Ms Mashego asked how the Committee could maintain oversight when there were so many changes to departmental structures. She sought clarity on the funding of the new votes to the new departments and how this would interplay with the continuity arrangements of the old departments. She also asked when the Committee would be informed of the transfer of functions from the old departmental structure to the new, as this would dictate the transfer of the funding allocations.

Ms Ferreira replied that National Treasury would make changes to the Adjustments Budget retrospectively for accountability purposes. There were risks attached to having two accounting officers for departments in the interim. It would be relatively easier to split transfers and funding to split departments than allocating funding to the new departments. Broadly there was the risk of cost escalation attached to the duplication of functions. National Treasury hoped to keep the Committee updated on the transfer of funds by keeping the explanatory memorandum updated. This was bound to be quite a difficult process.

The Chairperson referred to the dates mentioned in the State of the Nation Address. He added that the Executive would have to provide direction on funding in the more important areas.

Mr M Swart (DA) noted that the Land Bank's funding was still listed under the Department of Agriculture in the Appropriation Bill. As the National Treasury had taken over the management of the Land Bank, he asked if this item should not be placed as a line item under the National Treasury's budget allocation.

Ms Ferreira responded that she would provide the Committee with a response once she had consulted the programme manager for Agriculture.

The Chairperson responded that this information would be useful. In light of the challenges faced by the Land Bank, it was important for the Committee to know where to direct queries.

The Chairperson queried when the Explanatory Memorandum would be available.

Ms Ferreira responded that the Explanatory Memorandum was being finalised and should be available to members by Wednesday. This document would be tabled simultaneously with the Appropriations Bill and the Technical Corrections.

The meeting was adjourned.