Workshop: Money Bills Amendment Procedure and Related Matters Act, 2009

NCOP Finance

03 August 2009
Chairperson: Mr E M Sogoni (ANC)
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Meeting Summary

The two Committees held a workshop process on the Money Bills Amendment Procedure and Related Matters Act (the Act), to discuss and get clarity on this new legislation. It was noted that there was no provision in the Act giving a specific timeframe for phasing in, and this would be up to the members to decide. The House Chairperson gave an outline of what was expected of the Committees, and the purpose of the Act. The Parliamentary Legal Advisors briefed the Committees on the constitutional requirements and other legal obligations that they faced now that the Act had been promulgated. The Section Manager of Committees gave a presentation on the implications of this legislation for the Committees’ work. The Deputy Secretary of Parliament described the necessary processes that needed to be started to set-up the Parliamentary Budget Office as required by the Act.

Members asked questions about the legal ramifications Parliament would face if the Act was not implemented quickly. Concerns were raised about the strict timeframes the Act necessitated, what would happen if the Minister did not table responses, and how the Director of the Budget Office would be selected. Further questions related to amendments made to the Appropriation Bill were also asked, along with a scrutiny of particular sections in the Act. It was noted that a further workshop would be held at a later date.

Meeting report

Money Bills Amendment Procedure and Related Matters Act No 9 of 2009 (the Act): Parliamentary Legal Advisor’s introductory briefing
Advocate Frank Jenkins, Parliamentary Legal Advisor, addressed Members on the Money Bills Amendment Procedure and Related Matters Act (the Act). He presented the background of the Act, highlighting the Constitutional background and discussing Sections 73 (2), 77 (3), 75, 77 (1) and 214 with reference to the Act.

Adv Jenkins then described the parliamentary background to the Act, covering the Joint Rules Committee’s establishment of a task team to develop an oversight model for Parliament, which in turn led to the Act being signed, and promulgated in April 2009.

The principles of the Act were then discussed. Adv Jenkins highlighted the co-operative government, maintaining oversight of executive action, and ensuring that interpretation was in line with oversight and the adopted fiscal framework.

The budget and oversight cycle was then discussed. There would be annual assessment recommendations on forward usage of resources. The Act required that, by February 2010, the Minister of Finance should table responses to these recommendations. The Act also required Parliament to adopt the fiscal framework. The Division of Revenue Bill and the Appropriation Bill were also briefly discussed as requirements of the Act. Mr Jenkins said that the procedure tried to establish a predictable area for Parliament to function effectively.

Other matters discussed were the amendments to the Appropriation Bill proposed by the Minister, and the National Council of Provinces (NCOP) suggestion for norms and standards for provinces which had been accepted. 

Implications of the Money Bills Amendment Procedure and Related Matters Act: Section Manager of Committees’ briefing
Ms Zanele Mene, Section Manager of Committees, Parliament, addressed members of the Committees on the implications that the Acts presented to the Committees, and what was required of them in respect of the Act. She discussed the impact that the Act had on Committees, and noted that the rules of Parliament would need to be addressed in some areas. There were also financial implications in the establishment of new Committees and of the Parliamentary Budget Office (BPO).

She discussed the ability of Parliament to provide time for Committees to review the performance of the departments over whom they exercised oversight, before the adoption of the medium term budget policy statement (MTBPS) in October. She noted that the Committees would have two weeks to do this, but it was unclear where their reports would be referred. She said that mechanisms would need to be put into place.

Ms Mene stated that the Act gave Committees 30 working days (excluding the constituency period) to report after the MTBPS, which meant that the process would move over to February 2010. This would give the Minister only one week to consider the recommendations made by Parliament on the budget, and she was unsure if this was a sufficient amount of time. The timeframe given for the fiscal framework was also discussed, and it was noted that the Act required participation on the part of the Finance Committee, which was not the previous practice.

Ms Mene then moved on to discuss the Division of Revenue Bill, in terms of which the National Council of Provinces (NCOP) had 35 days for consideration. She noted that this was too long a timeframe as usually this consideration took one week. If the full six weeks were allowed for the NCOP, only five days would remain for the National Assembly (NA) to comment.

Ms Mene discussed the timeframes involved in the adoption of the Appropriation Bill. This needed to be passed by the end of July 2010. This meant that Committees should be ready by 10 May, in order to give the Minister enough time to consider budget votes. The National Adjustments Budget was also discussed, and the timeframe that it needed was addressed (see attached presentation for full details).

Ms Mene said that in principle the legislation could be implemented if the Parliamentary Programme was reviewed to accommodate the deadlines, if Committees reviewed the manner in which they functioned, and if a healthy relationship between Parliament and the Executive existed. She noted that the Budgetary Review and Recommendation Reports (BRRR) could be implemented immediately, but without review, but this would leave Committees with little time to do anything else. 

Address by House Chairperson
Mr Kopeng Bapela (ANC), House Chairperson, addressed the Committees, noting that this legislation would attract some comment from society, and that Parliament would be judged on its performance in this area. He said that the Constitution required that an Act of Parliament must provide for an amendment procedure, and clauses outlining such a procedure were initially drafted by the National Treasury (NT). However, due to concerns regarding the extent to which Parliament was empowered to amend money bills, the legislation was never tabled. Subsequently Parliament established a task team to deal with oversight and accountability. Within this, a focus group was established to look at the principles of the National Treasury’s proposal. These were formulated into a draft Bill, which was considered, according to standard procedure, by the then-Portfolio Committee on Finance. At present there was a Standing Committee on Finance, and a Standing Committee on Appropriations, but the Portfolio Committee on Finance was dissolved because of inaction of this legislation. He had, in the previous week, met with the Standing Committee on Public Accounts (SCOPA), and had expressed the view that the Standing Committee on Finance, the Standing Committee on Appropriations and SCOPA must all have detailed knowledge of this piece of legislation. Other portfolio committees also needed to have some understanding of it, as they would be required to approach the Standing Committee on Appropriations to propose amendments to budgets. These proposed amendments would have to be scrutinised thoroughly and a decision made by the Appropriation Committee.

The report by the panel of experts, which was due to be tabled in Parliament by the Joint Rules Committee, pointed to a number of concerns regarding the Parliament’s powers and abilities, which must be addressed by the Committee. These included, for example, the balancing of revenue, the disruption of budget cycles, and the inadequate resources within Parliament to analyse the full implications of the budgetary matter on adjustments. He added that although the panel did agree that Parliament should have the ability to amend money bills, it would be extremely complex, requiring thorough procedures and a significant expansion of Parliament itself.

Mr Bapela said that the task team responsible for reviewing the Money Amendment Bill, which would be making a presentation to the Committees, was comprised of representatives from the NA, NCOP, Legal Services, and others. The task team would identify what could be implemented immediately. He said that this had already begun with the setting up of the Appropriation Committee and the continued existence of the Standing Committee on Finance. Parliament was thus already doing what it was legally obliged to do. He said that this workshop should enable Members to empower themselves, and enter the buy-in process of the implementation phases. The rules of Parliament would have to change because general mandates of other portfolio committees would not be applicable to the Appropriation Committee. Other inputs, when given, would also offer clarity on what other parliamentary rules ought to be processed. Once the necessary rules had been identified, they would be submitted to the Parliamentary Joint Rules Review, and then they could stand for adoption by the Joint Rules Committee.

Mr Bapela noted that a further challenge existed around the issue of the “independence” of parliament. The expectation of civil society and the media was that Parliament be independent from the Executive. The Constitution said that distinct mandates existed for different sectors of the State, but all were inter-related, and the challenge would arise in balancing independence and inter-relations. He said that an independent Parliament would exist, but only within the confines of the Constitution itself. He assured Members that the legislation would prove to be a powerful tool in exercising oversight over the Executive policy priorities.

He cited another challenge as the timeframes that in some instances only gave Ministers a few days to give their inputs, and said that here too Parliamentary rules might have to change and realign with timeframes.

The Chairperson said that no one Act could stand in isolation and all were meant to strengthen others. Therefore, it was necessary to consider other Acts when dealing with this legislation. Both Houses had dealt with budgets before this Act came into place, and essentially it was now providing regulation for the timeframes, and relationships between committees. This legislation was to strengthen practices that existed already, and assist committees. He encouraged members to engage with the question of how to implement this Act.

Mr C Mashile (ANC) was concerned that the Act assumed that the Minister of Finance would table a budget, but no measures were in place if this did not occur. It also seemed to take for granted that comments and inputs would be forthcoming from other ministers and did not foresee the possibility that this may not happen. He asked how this problem would be addressed, as nowhere in the Act was there any recourse for such a situation.

The Chairperson reminded Members that this was a workshop, and no decisions needed to be taken today. He noted that Section 27 of the Public Finance Management Act (PFMA) required the Minister to table the annual budget for a financial year in the National Assembly before the start of that financial year, or, should exceptional circumstances arise, as soon as possible in that financial year. If the Minister were to fall ill, or was unable to fulfil this task, the relevant Deputy Minister would undertake it.

Mr Jenkins added that there was nothing in the Act to force the Minister to give a response, although such co-operation would be greatly welcomed. He added that if no response was forthcoming, this should be included in the report to the House, but not much more could be done.

Mr T Harris (DA) asked what was the distinction between the Fiscal Framework and the Fiscal Policy.

Mr Jenkins said that the main difference between the Fiscal Framework and the Fiscal Policy was that Parliament was only allowed to amend the Fiscal Framework. The Act set out all the estimates that underpinned such Fiscal Framework. He noted that the Maastricht Treaty, which had set up the European Economic Community, allowed for a negative 3% deficit. By contrast, this piece of legislation was not limited in the same way, and Section 8(5) highlighted how this would be done. The assumptions underpinning the estimates could only be amended if they did not affect the balance between revenue and expenditure. He conceded that sometimes the distinction between Framework and Policy was not completely clear.

Mr Z Luyenge (ANC) queried the value of the Act in assisting Parliament with its oversight function, stating that a dichotomy existed between parliament and the executive, and there should not be the case where one politician was pitted against another. He added that it was only the establishment of new departments that this Bill spoke to.

Mr Jenkins said that the oversight role of Parliament over the Executive was laid out in the Constitution, and was necessary, whether the members liked it or not.

He said that the reason for having national legislation that set out the procedure for amending the budget to allow for predictability, through using a fixed process. The public would be able to see in the legislation what Parliament could or could not do. The Act essentially set out the authority of Parliament, and Parliament must then adhere to the process.

Mr Bapela thought that the issue related perhaps more to timeframes. He assured Members that Parliament would remain robust and would fulfil its oversight function. The relationship between Parliament and the Executive as dealt with in this legislation related to Ministers responding within the given timeframes. Any budget proposal could be rejected, but the ramifications of such an action should be considered seriously.

Mr N Koornhof (COPE) asked if there was an obligation to implement the legislation immediately, or if could be delayed. He also asked who comprised the task team that was referred to.

Mr Jenkins said that the immediacy of implementing the Act was both affirmative and negative. It should be implemented immediately because there was an expectation by the public that Parliament should do so. However, leaving public opinion aside for the sake of argument, it would only be necessary to implement it if the budget was amended. He added that it would be strange if Parliament did not wish to amend the budget, and so effectively implementation would have to occur. He said a piecemeal approach would be beneficial in some respects, but while this process was under way the budget could not be amended.

Mr Bapela added that the process had already started, with the setting up of the Appropriations Committee. This workshop was intended to familiarise Members with the issues, expand their knowledge base, and engage on the issues to ensure their readiness, and was another step in the implementation process.

Mr Bapela added that the task team was made up of officials looking at operational issues, which included the Committee section of the NA, the Secretary of Parliament, the NA Table and the NCOP. There was a combined task team of the two Houses. The mandate of this task team was to look at operational issues, and the timeframes in the phasing in of the legislation. Once this was decided it would be taken to the House Chairperson, who would then submit it to the Joint Rules Committee for approval.

Mr C De Beer (ANC) asked if the present year-plan of parliament was set, and if it was possible to start working earlier and finish later in the year. He said that committees were expected to perform oversight periods in terms of the Act, and specific times and dates were needed so that this could be carried out. He also asked what tracking mechanisms were in place to follow resolutions adopted by the House.

Mr Bapela assured Members that tracking mechanisms would be developed, and once these were ready Members would be informed. He also urged that committees that they produced reports that were capable of being adopted by the House.

Ms Z Dubazana (ANC) asked if it were possible to set some tentative starting dates at this workshop. She said that this was a critical point. She asked how the Act would affect eh functioning of the committees, given the strict timeframes. She asked for a more in-depth discussion of the principles mentioned by Mr Jenkins. She said that inter-dependence and inter-relations of Parliament and the Executive needed to be addressed further.

Mr Jenkins said the most fundamental principle underlying the Act was that Parliament needed to maintain oversight when amending the budget. He noted that there had been some parliaments in the past that amended the budget for their own purposes, and that would not be allowed in terms of this Act. Other principles were co-operative governance, and the issue of public participation, which would be included in the reports to the House.

Mr S Montshitsi (ANC) noted that little time was given to the committees, and that this could cause severe problems. He agreed with Ms Mene that the programme needed to be adjusted in order to achieve the objectives outlined.

Mr Bapela stated that the issues identified dealt with capacity and ability, which would be addressed in the second session of the workshop. There were already discussions under way on programming, but there was much contestation between those wanting more plenary sessions, those wanting more oversight sessions, and those wanting more constituency sessions. Furthermore, the issue of budgets to enable committees to fulfil their mandates around public hearings and similar issues also could not be ignored. He said that one or two legislative aspects still needed to be addressed, but noted that the law itself was not being reviewed, but rather the practicality of implementation being discussed. He noted that the legislation could not be changed to amend the timeframes set for the NCOP and NA. The NA Committees (Finance Committee, Appropriations Committee and SCOPA) each had three days per week for meetings, which would increase the workload and demand dedication from members.

Mr Mashile expressed the view that Parliament was not ready to implement the provisions as yet. He expressed concern that should any part of the legislation fail to be implemented or amended, Parliament could suffer adverse legal ramifications and could be sued by civil society. He would like to avoid this.

Mr Jenkins said that it was difficult to avoid the possibility of being sued; however the question was rather whether an attempt to sue would be successful. There was an obligation on Parliament to facilitate public involvement, and on this point civil society might say that they were not involved in the processes. Although Parliament had a constitutional obligation to respond, a minority group could not demand that an Act be changed.

Mr Luyenge asked what form the budget would take, specifically in regard to the new departments, and whether it would be zero-budgeting, programme-based budgeting, or be given in incremental instalments over time. He noted that the National Treasury had stated that it was important to ensure that service delivery did not suffer, even if this meant borrowing money, and asked if this was reflected in the legislation. He also asked how monitoring would be effectively carried out if the Auditor-General’s report only came out at the end of the year. He wanted to have assurance that there was sufficient capacity for monitoring and evaluation.

Ms Zarina Adhikari, Director:National Treasury (NT), said that no decision had been made to shift from the current type of budgeting. Where new departments had established their structures, their proposed budgets would be tabled with the adjustments budget in October. Those departments that would not be ready would be allocated budgets in the following year. She said that this all depended on the readiness of the new departments to establish their structures.

Mr Bapela said that the Budget Office would be the monitoring tool within parliament. He said that this would be addressed fully in the afternoon session. The Executive would perform its own self-assessment, but Parliament would oversee this.

He added that legislation that was phased in would generally have regulations in place. The task team was charged with putting systems in place to start implementation, and show the public what was being done, and that it should all be in place by the next financial year.

The Chairperson noted that the question of implementation kept recurring. The purpose of this workshop was to address this issue. He expressed the need to move quickly, as it would be desirable to have clarity on how implementation should carried out by the time of presentation of the Medium Term Budget Policy Statement (MTBPS). He again said that there was no pressure on Members to reach final conclusions today.

Mr B Mnguni (ANC) asked how much time would be saved if the NA and NCOP Committees conferred.

Ms Mene said that it may save the NCOP a lot of time.

The Chairperson noted that the Act made it compulsory for these Committees to confer.

Mr R Lees (DA) stated that if the Act allowed six weeks to the NCOP, then it should have this time. However, he wondered if there was any move to amend this should it be found that this amount of time was not needed. He also asked if the new department structures had been changed according to the Act, as he had understood that changes were not permitted.

Mr Jenkins clarified that only technical corrections were made according to Section 14 of the Act.

The Chairperson noted that the Constitution required that if Parliament wanted to amend money Bills, there must be legislation to do so. This Act could not be amended, as it was already in place. The purpose of the workshop was to get an idea of how to proceed.

Ms Mene said that even though six weeks were given to the NCOP to consider matters, this cycle period was never followed. She added that the Mandating Procedure legislation had implications for all Section 76 legislation. The revised Division of Revenue Act would not work for the NCOP.

Establishment of the Budget Office: Deputy Secretary of Parliament
Mr Michael Coetzee, Deputy Secretary of Parliament, addressed Members on the establishment of the Parliamentary Budget Office (the Office) in accordance with Section 18 of the Act.

Mr Coetzee said the core function of this Office would be to support the implementation of the Act through research and analysis. The Office would also have a number of sub-functions, such as the annual review of relevant documentation, monitoring and synthesis of matters and relevant reports tabled in the House, and undertaking research on request by the Houses.

The Office would be headed by a high level Director. At this stage it was unclear to whom the Director should report. He suggested the line of reporting should perhaps be to the Speaker of the NA, and Chairperson of the NCOP. The responsibilities of the Director included the setting-up of the Office and the appointment of staff and other resources.

Mr Coetzee discussed the setting-up of the Office in more detail, drawing attention to the timeframe, as expectations for its set-up were immediate, and the issue of funding. He also set out in further detail how the Director would be chosen, noting that Committees could nominate candidates. (See attached presentation for further details).

Mr Mashile asked what the differences were between the main objectives and core functions in the Act. He asked whether the core functions were functions of the Budget Office solely, or whether they were undertaken by the various portfolio committees.

Mr Coetzee said the main objective was to provide independent, objective and professional advice and analysis on the budget. He said that Section 15(9) obliged the Director to report any interference to Parliament. In short, the Director would account to the committees, but the Office could issue its findings independent of the committees. He added that the relationship between the various committees, the Appropriation Committee and the Budget Office still needed to be worked out in finer detail.

He then explained that the core functions were the various outputs that the Office should achieve, in the form of fact sheets, pamphlets, reports or presentations. He said that all these functions must lead to an outcome, which was embodied in the main objective.

Mr Harris noted that the functions as set out in Section 15(2)(a) to (f) were all functions of the Research Unit or Committee Section.

Mr Coetzee agreed that the Research Unit did currently provide reports and advice on a number of matters to the portfolio committees, but not to the extent which this Act required. He added that the full structure would still need to be set up by the Director, and so it was imperative to fill that position as soon as possible.

Mr Harris said that he understood the point, but this still seemed like a duplication of duties.

The Chairperson said that it might be the intention to ensure that unforeseen loopholes were closed.

Ms Dubazana said that the Secretary did well in developing broad divisions that filtered down to the sub divisions.

The Chairperson said he believed that both views presented had merit.

Mr Luyenge asked if it was possible to appoint a person in an Acting capacity, so that the Act  could be implemented quickly.

Mr Mashile said that the Act stated that if the Director was removed, then the committees could nominate a replacement. He noted that the Act did not indicate that an Acting Director was employed for a limited period of time. He added that clarity was also needed on numerous points of the process, and the finer flaws needed to be addressed.

The Chairperson said that some of the questions that were raised could be considered in the process currently being performed by the panel of experts, as indicated by the Chairperson of the House.

Mr Coetzee said that he was unsure of the appropriate course of action for selecting an Acting Director, but he drew attention to Section 15(5)(a), which gave some indication of how to start the process. He stressed that it was the decision of the Committee on how to proceed.

Mr M Swart (DA) asked if there was anyone assisting with the drafting of a job description for the post of Director, or how this was going to be addressed.

Mr Coetzee said that the Human Resources and Organisational Development Section of Parliament was responsible for the design of job descriptions and the placing of advertisements, and this would be implemented if they were instructed to do so.

Mr De Beer suggested that examples from other countries could be used to give an idea of how the Budget Office could be set up. He added that the Office needed to be created now, and that once it was running, any further problems that arose could then be addressed. He noted that in this case “practice makes perfect”, and it would be an ongoing process.

The Chairperson agreed with this sentiment.

Dr P Rabie (DA) asked if the implications of this Bill had been costed, and if so, what was this amount.

Mr Coetzee said that he was unaware of any costing performed, but this would be done when the Budget Office design was available, as the bulk of the costs would be centred on personnel.

Mr E Mthethwa (ANC) said that Section 15 clearly set out the need to focus on finding a suitable permanent candidate, and he suggested that that a systematic approach be undertaken.

The Chairperson said that this suggestion could be raised again at a later meeting, when the issue of how to implement this process would be discussed. He assured the Committee that there would be continual engagement with issues, and reports from parallel processes would be obtained.

Mr De Beer, thanking the presenters and Members, noted that this Act assisted in oversight of both quarterly reports and annual reports. He said that it would be a challenge to put it into practice. He extended an invitation to the Chairpersons of the Committees and provincial legislatures to attend the further workshop on the issue that would be hosted by the NCOP.

The meeting was adjourned.

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