Committee's role, function, programme, sector analysis, 4th Parliament Legacy Report: Committee section

NCOP Finance

08 July 2014
Chairperson: Mr C De Beer (ANC, Northern Cape)
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Meeting Summary

The Committee met to discuss its programme and to give the Committee Section staff the opportunity to orient Members with briefings on the Legacy Report from the Fourth Parliament’s Select Committee on Finance, the work of the Committee, and a Finance sector analysis, and description of the budget cycle.  This Committee decided, on the programme, to collaborate as far as possible with the Select Committee on Appropriations, to try to meet stakeholders and avoid duplications, and the Committee Secretary for each would meet with a Member to finalise these programmes. Some of the planned meetings were outlined.

The Committee Secretary presented the Legacy Report of the Select Committee on Finance of the Fourth Parliament, and highlighted the challenges cited by that Committee together with some suggested activities and solutions. That Committee had highlighted the time problems in passing of section 76 legislation, which the Committee Secretary suggested (although Members disagreed) might be solved by having the legislation finalised firstly to the NCOP before being referred to the NA. Section 100 interventions had been another challenge, as well as the lack of guidelines on how the process should run, and the Members agreed that there was a need to consider that process. Stern engagement with the provinces, on a quarterly basis, should help to avert the necessity for future interventions. However, the way that oversight visits were conducted would be reviewed. Members were in agreement on the importance of study tours, and said that further enquiries would be made about training.

The Committee Researcher presented an orientation paper, highlighted the important role of oversight done by the Committee and gave an overview of the activities of the Committee over the four quarters. Members suggested that there was more that was not detailed in that paper, although it was explained that certain examples only were cited, and said that they hoped to be present when the budget was presented each year. The Chairperson suggested that the Financial and Fiscal Commission (FFC) spend some time detailing the fiscal framework of the local government, as this had been adequately researched by the FFC recently.

The Content Advisor presented a sector analysis that explained the nature of the budget, the legal framework, the role players in the budget cycle, and the budget cycle itself. The document also detailed where the Committee found itself now, and what documents were needed for budget oversight (see attached presentation for full details). Her sector analysis examined, amongst others, economic developments globally, the situation in South Africa, the fact that growth locally was below potential and highlighted some of the internal factors contributing to this. Members asked for more detail and were directed to relevant documents, commented on the roles of Monitoring and Evaluation Committees, and asked why province-specific issues were not covered in this report.
 

Meeting report

Welcome and Committee Business
The Chairperson asked all Members to introduce themselves.

He informed Members that the Governor of the Reserve Bank had invited Members to attend a workshop on 28 and 29 July 2014, but noted that the Select Committee on Appropriations (on which many Members served) was due to consider the Appropriation Bill on 29 July, so a balance would have to be achieved.

He also noted a letter from South African Local Government Association (SALGA) confirming that it would be happy to work jointly on some issues, as the Committee had requested. This would be arranged by the Committee Secretary when fixing the programme.

Adoption of Committee Minutes
The Chairperson said the Committee would, in future, adopt minutes at the start of each meeting.

Members considered and adopted the minutes of 21 June 2014, with no amendments.

Committee Programme
The Chairperson reminded Members that this Committee had, on 8 July, met with the Select Committee on Appropriations, and had agreed that the two committees would, wherever possible, collaborate when dealing with stakeholders in the finance sector. The Committee’s draft programme should reflect this. He asked the Committee Secretary for an update.

Mr Z Rento, Committee Secretary, noted that Members of both Committees would sit jointly on 15 July and the stakeholders had been informed of this also.

Mr Rento also said that on 16 July the Committee was due to meet with the National Department of Cooperative Governance and Traditional Affairs (COGTA) and Office of Auditor-General South Africa (AGSA) but this would not involve the Standing Committee on Appropriations. The Committee had a meeting with the Parliamentary Budget office on 22 July 2014. He must still finalise the programme for 16 and 23 July.

The Chairperson asked that this be circulated in writing.

Ms T Motara (ANC; Gauteng) reminded Members that it was agreed on 8 July that the two Committee Secretaries of the two Committees would sit with her to finalise the programme, to avoid duplication and ensure availability of Members of both Committees. She suggested that the Committee leave the finalisation of the programme to her and the Secretariat, who would report back.

Members agreed.

Legacy Report of Standing Committee, Fourth Parliament
Mr Rento, Committee Secretary, tabled the Legacy Report (the Report) of the Standing Committee on Finance in the Fourth Parliament. This Report outlined the activities of that committee.

He highlighted the section of the Report dealing with the mandate of that committee, and the major stakeholders with whom this Committee would deal. He also noted the legislation finalised by that Committee. He explained the challenges in dealing with the legislation and the suggested solutions (see attached presentation for full details).

There was a specific focus, in the Report, on the legislation in terms of section 76 of the Constitution. It was suggested that one way to overcome the challenges in delaying section 76 bills was that the Minister should table such bills first before the National Council of Provinces (NCOP), for processing by that House, before sending them for processing at the National Assembly (NA).

He also pointed to the challenges faced by the Committee in carrying out oversight functions over municipalities and noted that the past committee had taken on too many municipalities at one time. He suggested, as a way forward, that a well-performing municipality should be asked to take an under-performing municipality into a “sort of partnership” for learning best practices.

He also highlighted the challenges of time faced by the Committee when considering international agreements. Another problematic area related to interventions in terms of section 100 of the Constitution.  

The appointment of Professor Mohammed Jahed as Director of the Parliamentary Budget Office (PBO) was also brought to the attention of the Committee.

The previous Committee had not, in the last term, been on any study tours.

Discussion
Mr E von Brandis (Alt) (DA;Western Cape) stated that the suggestion to send draft legislation to the NCOP before it was tabled at the National Assembly would not help in the fast-tracking of section 76 bills, and reminded Members that the provinces had to work on a specific version of the Bill and would not have time to go through draft after draft, as a result of their significant workload. While it would be interesting for the Provinces to take notice of s 76 bills coming through, the relevant committees could not start working on them because they did not have the time in their programme to do that.

Mr von Brandis said, in relation to study tours, that the Chairperson should be given a regular mandate by the Committee to engage with the researchers to identify which country, and for what purpose, the Committee would visit. This should be done urgently, starting now. He also agreed that the Committee should reduce the number of internal places it visited, so that Members would be able to keep up with the tight Parliamentary schedule.

Mr S Mohai (ANC, Free State) requested an example of international agreements considered by the Committee, apart from the agreements with the World Bank and International Monetary Fund. (IMF). He also inquired if the Committee had the power to propose a Bill to discipline public officers who did not spend public funds correctly, or even to dismiss them from their positions.

Mr E Matebus (Alt) (EFF; Western Cape) highlighted that there was a need to find a balance with section 76 legislation, to take care of challenges experienced by the Committee when there was no time to engage in detailed discussions of the legislation, and to ensure that it would have time to do so. This would help the Committee to respond to the challenges and fill the gaps in legislation adequately.

Mr Matebus also supported a visit to the Reserve Bank

Mr Matebus suggested, in relation to study tours, that it was particularly important to focus on developing countries rather than the developed ones. He also suggested that the Committee should look at the possibility of organising training for the Members because of the numerous matters they had to deal with, and the discipline that the Committee role required.

Mr T Motlashuping (ANC; North West) enquired what the role of the Committee was in ensuring that international agreements were respected. He also wanted to know what specifically the Committee could do to overcome the challenges posed by the section 100 interventions.

The Chairperson referred members to page 158 of a document dated 7 July 2014 for some idea of international agreements. He also informed Members that South Africa had international agreements with Mozambique and Swaziland on taxing at border posts. In answer to the issues raised on section 76 Bills, he emphasised that the Committee hardly ever dealt with such bills; they mainly fell to the Standing Committee on Appropriations. There would be a crucial meeting between the relevant stakeholders regarding the process of fast tracking the passing of section 76 Bills.

The Chairperson confirmed that the Committee would make enquiries at the National Treasury and Reserve Bank about the training opportunities that were available, and said that the possibility of repeating the training with the Golden Institute of Business would be considered. He gave his full support to the idea that international tours be conducted. On the issue of oversight, he also brought to the notice of Members that South Africa was involved in funding certain programmes in Tanzania, Angola and Mozambique, and there was a need for the Committee to engage in serious oversight functions over these programmes, as no one knew if the money being paid was being spent correctly

The Chairperson also alluded to the challenges that there were, at present, no guidelines to regulate the section 100 interventions and said that there was a need to have the whole process of interventions looked again by Parliament, and perhaps revised.

The Chairperson noted appreciation that the Minister of Finance had responded to the recommendations of the Select Committees of Finance and of Appropriations, as seen from the Budget review.

The Chairperson noted that there would be crucial meetings, between the four chairpersons of the Standing and Select Committees on Finance and Appropriations, on the review of the “Money Bills” Act, to speed up the review.

He agreed with the Committee Secretary that there was a need to review the way that the Committee went about its oversight functions over municipalities.

The Chairperson concluded by reminding Members that the Public Finance Management Act (PFMA) and Municipal Finance Management Act (MFMA) already had the requisite sections to enable sanctions against public officers who were not compliant with those Acts, and this was evident from the clean-up process in Limpopo.

Presentation of Orientation Paper
Mr Simo Mncwango, Committee Researcher, read through a presentation that outlined the mandate of the Committee, the role of the provinces and local government in the economy. The presentation also specified the service delivery goals, how revenue was divided, the calendar year activities, broken down by term (see attached presentation for full details). He enumerated what research support would be offered to Members of the Committee in carrying out their duty, especially the provision of detailed analyses of key government policy and other documents.

Discussion
Mr Motlashuping stated that, from his experience, the detailed activities of the Committee would be derived from two key documents, the Annual Performance Plans (APPs) of departments and their Strategic Plans. He was not sure that this was really covered in this presentation.

Mr Mncwango responded that the activities cited in the presentation were meant to be a highlight only of what was contained in the legislation. The list was certainly not exhaustive and more activities would be added, in line with the strategic plans.

Mr Brandis highlighted the difficulty that Members often had in being in Parliament when the Minister was presenting his budget, saying that during the last five-year term, he had only been able to attend one such briefing.

The Chairperson responded that this was a matter that could be sorted out with a phone call. It was a standing arrangement that the Chairperson and Members of relevant Committees would be allowed to sit in when the Minister of Finance is presenting the budget.

The Chairperson emphasised the need for engagement by the Committee with the nine provinces, in order to ascertain their fiscal position. This was aimed at preventing a recurrence of the situation that had led to the intervention in Limpopo. He also stated that the Committee should engage with the Financial and Fiscal Commission (FFC) and ask its Acting Chairperson to spend some time detailing the fiscal framework of the local government, as this had been adequately researched by the FFC recently.

Sector Analysis
Ms Esther Mohube, Content Adviser to the Committee, tabled a document that she said would explain the questions around the nature of the budget, the legal framework, the role players in the budget cycle, and the budget cycle itself. The document also detailed where the Committee found itself now, and what documents were needed for budget oversight (see attached presentation for full details).

She also presented a sector analysis. This looked at the global economic developments, developments in the South African economy, South African policy pronouncements, and suggested the implications of these. She also noted what trends were emerging and how the Committee would need to address them.  She paid particular attention to the fact that this was the first time since 2009 that the South Africa economy had contracted, and that the South African economy growth was presently below potential. This was also to be seen against the background that the growth forecasts made for the South African economy had to be constantly reviewed, given that South Africa did not have full capacity to recover from both internal and external economic shocks. She mentioned the issues of inter-country strikes, as well as the energy constraints in South Africa, and other factors, as reasons why South African growth was below potential (see attachment).

Discussion
Mr Mohai inquired about the percentage of growth in the economy before the global recession, and for more detail on the present contraction of growth of the economy. He further commented that the mismanagement of finances by the provinces and municipalities should be blamed on the Monitoring and Evaluation Committee set up by the President, which, he felt, did not engage sufficiently at the provincial and local levels. Following from that, he enquired whether the Committee had the power to scrutinise the activities of the Monitoring and Evaluation Committee more closely, to ensure better delivery.

Mr Motlashuping responded that, from his experience, the Monitoring and Evaluation Committee was not only available at the Presidential level, but there were supposed to be such committees at all spheres of government. He also stated that the emerging trends that were outlined in the presentation were not province specific but were stated in quite general terms.

The Chairperson responded that the province-specific emerging trends were reflected in the report of the previous Committee that was tabled before the NCOP, and that had been discussed and adopted. On the point of where the economy was before and where is now, he reminded Members that a detailed report was to be found in Chapters 1 to 3 of the Budget Review. He further noted that oversight functions should be placed firmly in the R847 billion allocation to infrastructures, to ensure constant accountability.

Ms Mohube further responded that before the recession, the South African economy was growing at a rate of 4% or 5%, as opposed to the 1.3% growth seen in 2013. She also stated that the Monitoring and Evaluation Committee was presently overseen by the Department of Public Service and Administration and it would be wise for the Committee to leave it at that.

Closing remarks
The Chairperson informed members of the death of the former NCOP Whip, and the Committee observed a moment of silence.

The meeting was adjourned.
 

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