Money Bills Amendment Procedure & Related Matters Act Workshop

Meeting report

Money Bills Amendment Procedure and Related Matters Act briefing
Advocate Frank Jenkins, Parliamentary Legal Advisor, explained that the new Money Bills Amendment Procedure and Related Matters Act (the Act) involved fairly new procedures that would be difficult to absorb at once; Canada had taken a full two years to get to grips with a similar Act. The background to the Act lay in Parliament’s attempts to fulfil its dual role in regard to legislature and oversight. One aspect of this oversight was oversight over the budget. The Act applied to the whole budget process and would provide for oversight and accountability.

The Act set out a procedure for Parliament to amend the budget.  The budget included the Division of Revenue Bill (DORB), the Appropriation Bill and Adjustments Appropriation Bill, as well as revenue Bills.  The starting point of the procedure was the annual assessment of national departments by the National Assembly committee members.  Committee members assessed their respective departments through annual budgetary review and recommendation reports (BRRR).  The Committees were responsible for deciding whether or not the department in question performed adequately, given the departmental resources. This step took place prior to the Medium Term Budget Policy Statement (MTBPS), during which a critical review of the first six months of the financial year would be conducted, with an opportunity to prepare for the budget of the next financial year.  Next in the procedure was the Division of Revenue Bill (DORB).  This process involved the financial committees establishing the appropriateness of the country’s “fiscal framework”- a term that referred to the relationship between revenue and expenditure.
 
Once the budget was introduced to the National Assembly, a certain procedural sequence was required, starting with the introduction of the fiscal framework and its adoption.  This fiscal framework was the reference point for any amendments to the DORB, the revenue bills or the Appropriation Bill. Any such amendments must be consistent with this framework.  Once the DORB had been passed, amendments to the Appropriation Bill may be considered, but such amendments must be consistent with both the fiscal framework as well as the DORB passed by Parliament.  In other words, a committee could not recommend an amendment to the Appropriation Bill that might contradict the DORB.  Adv Jenkins suggested some actions that a committee could take, such as recommend ring-fencing of allocated money, or suggest conditions for the use of designation money.  The procedure hinged on a sequencing of the fiscal framework, DORB, and the Appropriation Bill with each stage contingent on the previous one.

Section 8(5) of the Act also set out certain principles that Parliament and its committees must follow.  These were in addition to the procedural framework.  All decisions taken in terms of the Act must display reasonableness and must be taken in context.  Additionally, Parliament and its committees must ensure that the balance between revenue, expenditure and borrowing was appropriate.  Furthermore, any decision should take into account reasonable debt levels and debt interest costs, the cost of recurrent spending not being deferred to future generations, and adequate provision for spending on infrastructure, overall capital spending and maintenance.  Finally, cyclical factors that may impact on the prevailing fiscal position, and public revenue and expenditure, including extra budgetary funds and contingent liabilities, must be taken into account.

Adv Jenkins set out what must be taken into account when amending revenue bills. Section 11(3) provided that Parliament and its committees must ensure that the total amount of revenue raised was consistent with the approved fiscal framework and the Division of Revenue Bill. They must take into account the principles of equity, efficiency, certainty and ease of collection and must consider the impact of the proposed change on the composition of tax revenue, with reference to the balance between direct and indirect taxes. Regional and international tax trends, the impact on development, investment, employment and economic growth must also be taken into account.
National adjustments to the budget were considered in Section 12 of the Act.  Budgetary changes may, for example, be due to emergency expenditure by the national government.  The national adjustments budget was introduced with the MTBPS, and Parliamentary committees were allowed to table feedback to changes in the budget.  Provision was also made for consultation between committees.

Adv Jenkins noted that the support required by Parliamentary Budget Office, established in section 15 of the Act, was imperative to the implementation of the Act. This Office must provide “independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills.” The Budget Office must thus provide expert analyses of the budget. Additionally, a director must be appointed by resolution of the Houses, on recommendation of the committees on appropriations and committees on finance.  Further time, however, was needed to refine the role of the Budget Office.

Advocate Jenkins concluded by saying that the Act allowed for a budget that was owned by the people. The Parliamentary committees must therefore play their role and participate as the Constitution allowed.  Imperative to the success of the Act was the management of information in Parliament. Improved, faster channels of information flow would allow for the fulfillment of the stringent timeframes articulated in the Act.

Discussion
Mr N Du Toit (DA) said that whilst it was good to review the departmental reports, it would be more appropriate to view such reports quarterly and not yearly, as was currently the case.  The increased frequency of reviews would allow the Committee greater power to assist the department.

Mr Peter Thabethe, Acting Director General, Department of Agriculture, Forestry and Fisheries, thanked Adv Jenkins for his presentation.  He also thanked the Committee for allowing him to join the Committee in being informed about the Act.  He asked Adv Jenkins what would happen in the case of the Department of Agriculture, Forestry and Fisheries (DAFF) not being able to fulfill proposed budgetary changes submitted by the Committee due to a lack of resources.  He specifically asked whether, in such cases, the Committee could go to the Finance Committee and enforce such changes.

Adv Jenkins responded that the Committee could still recommend changes to the budget but that the Committee could not recommend changes that affected policy matters.

Ms M Mabuza (ANC) asked Adv Jenkins to explain Section 10(5) in greater detail.  She said that this section contained much technical information.

Adv Jenkins responded that Section 10(5) provided for cases in which the Committee could provide conditional appropriation recommendations.  He used the example of an oversight committee blocking an “overseas travel” budget line item, on the basis that the previous year’s trips were not productive or valuable.  The Committee would, in this case, suggest that the line item be conditional on a report detailing the benefits of travel during the financial year in question.  The Committee must always indicate what conditions must be met and must also engage the Minister of the department in question before reporting conditions to the House.

Mr Du Toit asked about the issue of how noncompliance would be dealt with.

Adv Jenkins said that the Act set out a timeframe and although noncompliance would not be considered a criminal act and have no associated sanctions, there would need to be a degree of goodwill in enacting the Committee’s recommendations.  Overall, though, compliance would definitely be an issue and the punctual issue of reports would be imperative to ensure compliance.

The Chairperson asked when implementation of the Act was envisaged.

Adv Jenkins responded that there was no set timeframe but that it was suggested the Committee look at Section 5 and try come up with an assessment that would be submitted to the House by mid October.

The Chairperson asked whether or not the Parliamentary Budget Office was in place.

Adv Jenkins responded that the Office was not in place at this stage.

Ms Mabuza asked what ‘reasonable’ meant in Section 8.

Adv Jenkins responded that the term ‘reasonableness’ was not explained in the Act.  He suggested that Parliament give meaning to the word, specifically through looking at the context of the fiscal framework in juxtaposition with the Constitution.

Mr S Abram (ANC) said that the Committee must be supplied with factual information, delivered with speed, from the DAFF, and that there should be integrity in the information. He said that the DAFF must closely monitor expenditure to allow for a consistent flow of spending.

Mr S Abram went on to say that he was happy that such an oversight mechanism was now in place. He reiterated Mr Du Toit’s point about more regular reviews, but said that bi-monthly, rather than yearly or quarterly reports would be necessary for good oversight.  He mentioned that the Act should be in force before the current financial year, and asked why no Parliamentary Budget Office had been established.

Adv Jenkins responded that the Parliamentary Budget Office would be a powerful tool, but it would be expensive, and would be fraught with political opinions and intentions.  He said that Parliament would need to have an institution-wide consensus on the nature of the Office.  He said that some time would be needed to finalise issues around who would appoint the Director of the Office, and what the responsibilities of the Office were to be, and it was necessary to have a proper vision before this Office could be created.  He warned against the hasty implementation of a Parliamentary Budget Office.

Mr Abram asked about the wording in the Act that said that the Parliamentary Budget Office would assist in research “subject to capabilities,” and asked whether this was a loophole in the Act.

Adv Jenkins responded that Parliamentary committees should support the Office when the Office capacity was low.  The Committees should also accept, in good faith, that the Office would assist Committees to the maximum of its capabilities, in accordance with the Office Director’s duty as a public officer in line with the Constitution.

Mr Abrams made reference to Section 15(4) of the Act and said that another loophole could exist. He said that allowing the procurement of expert research on a contract basis could be abused or misused.

The Chairperson said that the contrary could also be the case.  He said that expert consultants could be the best source of budget expertise.  He said that the Committee should keep an open mind to the ideas articulated in the Act.

Ms M Pilusa-Mosoane (ANC) said that of particular worry was the fact that in the past, the department had never implemented recommendations from the Committee.  She said that budget would need to be debated before it was introduced, not afterwards.

The Chairperson concluded by saying that the Committee was now engaged in a process, and not an event.  He said such a process was ongoing, highly technical, and at the end of it, a law was expected to be implemented.  He thanked Adv Jenkins for his informative presentation and excused him from the meeting.

Engagement with the Department
The Committee then took the opportunity to engage with the Acting Director General of the Department of Agriculture, Forestry and Fisheries on certain issues.

Ms Mabuza asked how it was possible for the DAFF to supply tractors to people who could not use them.

Mr Thabethe responded that the mechanisation programme was being conducted in all provinces in which former homelands were located.  He said that it went together with an irrigation programme, and that the provinces were being brought on board.  He said that a full report on the programme would be delivered to the Committee at a later date.

Ms Mabuza asked about the state of Rift Valley Fever.  She specifically asked why the DAFF was not working together with the Department of Health.

Mr Thabethe responded that the DAFF had begun issuing joint statements with the Department of Health.  He said that the disease was now slowing down, as winter meant that the disease-carrying mosquitoes were not active.  Once again, he said that reports on all issues raised would be delivered to the Committee at a later date.

The meeting was adjourned.