Financial and Fiscal Commission Amendment Bill: further deliberations

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Finance Standing Committee

04 February 2015
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Committee met for further deliberations on the Financial and Fiscal Commission (FFC) Amendment Bill and began by going through a presentation by National Treasury from the previous meeting on the said Bill. After discussion, Members felt Treasury should look at how many members would be full time and the options around this perhaps by way of submission.

The Committee then went through the Bill page by page. It was urged that all cross-references be checked. Members then discussed the proposed additional, inserted and deleted terms. One particular term discussed was the legality and legal implications of “advise” vs. “recommend” in terms of the functions of the FFC. After discussion, it was agreed the term “advise” be dropped and “recommend” be retained.

The Committee also engaged on the idea of “reasonable period of time” in relation to the filling of vacancies. Members particularly questioned why the stipulated timeframe was no longer 90 days or six months. The concern from Members was that the proposed “reasonable period of time” was not a legally binding principle and people would find ways of getting around it. There were also differences in how people defined “reasonable period of time”. The legislation needed to be empowered by policy with a stipulated timeframe – without this the legislation would not be binding.  A Member suggested guidance was sought from the Department of Public Service and Administration (DPSA) for alignment of practices. The Committee also thought that the proposal for change must have come from experience with non-adherence to the 90-day rule. The Committee agreed on a six month timeframe. 

Meeting report

Financial and Fiscal Commission Amendment Bill Briefing by National Treasury
The Chairperson asked who was present from the legal side because that person would have to monitor all the changes the Committee made and ensure the Department did everything it was supposed to be when making the changes.

The Committee then went through the presentation by National Treasury on the Financial and Fiscal Commission Amendment Bill delivered to the Committee the previous day.

The Chairperson asked that the Department look tentatively at slide nine for the Minister to decide how many members should be full-time. The point was not to impose anything but to keep the matter open and make the Financial and Fiscal Commission (FFC) more comfortable – this was the tentative view of the Committee but it would be discussed in more detail during the study group next week. The obligation was on government to provide a reasonable argument.

Adv Empie van Schoor, National Treasury Chief Director: Legislation, thought the flexibility was concerning because of the shift of CFO and accounting officer functions to administrative positions – this was the main reason for suggesting there should not be a full-time chairperson. The option the Chairperson outlined was considered in the earlier process.

The Chairperson asked why the option was turned down.

Adv van Schoor, noting this put her in an awkward position, said it was considered during the earlier process but the new Minister took a position which was turned down by Cabinet for the reason she indicated earlier but the flexibility option was not put to Cabinet. 

Prof. Nico Steytler, FFC Commissioner, said the FFC will make a submission to how, with numbers, what the duties of a chair would be. Having a full-time chair would put the FFC in alignment with many other constitutional, chapter nine, bodies where there was such a provision. 

Financial and Fiscal Commission Amendment Bill: deliberations

The Committee then proceeded to go through the Bill page by page.

The Chairperson asked that the cross-referencing be checked. He asked what was meant by the deletion of the definition of “state department” in clause one.

Adv. Van Schoor explained this term was no longer used on legislation – the term now used was “department”. There was also a proposal in the Bill to replace the power of the Minister to make regulations with the power of the Commission to make rules. Section one of the Act still made reference to regulations so she asked if this could be amended. It was discussed with the FFC and they agreed that this amendment was necessary. 

Ms T Tobias (ANC) asked that the Committee get more clarity on the legal jargon, for example, what “advise” meant as compared to “recommend” because advice could be taken or not while recommendation implied a more constitutional obligation to look at the recommendations – what did advise mean in this context? She did not have a problem, however, if both “advise” and “recommend” were proposed. Did “advise” carry any weight?

The Chairperson said yesterday, the Committee welcomed the strengthening of the FFC – this was also in the Constitution and if people were unhappy with it they should change the Constitution and not try to subvert the Constitution this very democratic Parliament passed. There had been discussion on ambivalence around how certain powerful forces in the majority party saw the FFC but this was not acceptable. The point was that if people were unhappy, they should change the Constitution – legislation reflected powers contained in the Constitution. He felt that recommendation should be the case in majority of instances but there might be a minority of instances where one might one to advise. He asked if the Member was proposing that “advise” be removed or that both “recommend” and “advise” be retained. He understood that people were not obliged to consider proposals or it could be considered and then simply dismissed but what was the legal meaning behind recommending in regard to the FFC, this Act and the Constitution? The issue was that there should be due consideration to the recommendation but it could still be rejected and might even be obliged to provide a reason for the rejection. This was compared to advise which was more loose, tenuous and softer. What was the legal meaning of recommendation?

Adv. Van Schoor agreed with the interpretation of the Chairperson – the recommendation must be considered but it could be rejected and did not have to be accepted. On the use of the term “advise”, the Constitution specifically said the FFC made recommendations and did not use the term “advise” and this was why it was proposed to be removed from Section 3 of the Act. In her reading of the chapter on the FFC in the Constitution, the nature of the work of the FFC was to make recommendations which were stronger than advice as the Chairperson explained.

The Chairperson said his question was a policy one- were there no circumstances in which the FFC would not be required to recommend but merely advise? He understood the need to be consistent with the Constitution but leaving advise in the Act would not make it unconstitutional – to only have advise and not recommend would in fact weaken the powers of the FFC. Having both advise and recommend allowed for more latitude.

Ms Tobias supported the inclusion of advise in the Act but she wanted to understand the legal implication of the word. The Constitution could not be interpreted in a rigid way because Acts of Parliament could allow for inclusions to strengthen the Constitution itself. Having advise and recommend did not negate the function of making recommendations and actually strengthened the work of the FFC. She did not want a situation where words were juxtaposed and where recommendations made by the FFC were interpreted as advice and were therefore not implemented. Making use of the word advise should strengthen recommendation powers and so that it was not limited to advice. Cases could be cited where recommendations made by Chapter Nine institutions were interpreted as advice and not as recommendations to be considered. She believed it strengthened the Act and the FFC to allow for an advisory role in cases which were not major as it enhanced the function of being a check and balance. It would be nice to have both words there without them being used interchangeably. This was why she wanted to know what legal weight the word advise carried.

Prof Steytler replied that it was difficult to maintain if it had strictly separate meanings – it was already highlighted that recommendation, as used in the context of the Constitution and the Act here, simply meant giving due consideration. Consequences of giving due consideration were spelt out in other legislation for example,  the Fiscal Relations Act which said Treasury must give reasons why they do not follow the recommendation. It was correct to say the aim was not to restrict the powers of the FFC but he understood recommendation to be broad enough and inclusive enough to include advice. He could not see real legal points turning on the concepts.

A parliamentary legal adviser added the principle Act spoke to both recommendation and advice – as the concept of recommendation currently stood, the adjective to provide power to take decisions only on the recommendation of the FFC was lacking. Currently the recommendation and advice was merely providing a sense of direction.

Ms Tobias thought the spirit and letter of the Constitution was to uphold the responsibility of acting in accordance with decisions taken in terms of implementation. An example was a department receiving a qualified opinion from the Auditor-General – the AG would make a set of recommendations to the department to mitigate challenges identified in the audit. She thought the aim was implementing the recommendations to address the problem. If the power of FFC recommendations did not hold water in terms of accountability, she did not see what was trying to be achieved. She was made to believe legislation should be discouraged from making use of words such as “must” because they were rigid and were limiting. She also thought recommendations were a powerful tool institutions of government could make use of – a stronger word should then be used. She was confused about what was trying to be achieved and needed clarity.

The Chairperson understood that the Constitution made use of the word recommendation so the legislation would have to stick by this. The consequence was for the party to whom the recommendation was made to give due consideration – the party was not obliged to implement the recommendations. Recommendation however was stronger than advice although it included the aspect of advice as had been highlighted. Although he did not know if he was correct, he understood the recommendations of the AG to be different to those of the FFC or another institution. The use of recommendation, for its practical meaning, would relate to the role of the structure – two institutions recommending might not have the same power to implement their proposals because of differing roles and legislation that defined their functioning. While the recommendations of the AG had greater substance and had to be taken more seriously and were more likely to be implemented, the recommendations of the FFC, given its role, were less likely to be implemented. He asked if this was reasonable to say.

Adv Van Schoor, while agreeing the interpretation, noted the Constitution, in reference to the FFC, said recommendations must be considered but were not binding. One would have to look at the Constitution and other legislation to get an idea of recommendations but essence it involved giving consideration and in some cases, giving reasons as to why some recommendations would not be implemented. Some legislation said “on the recommendation of” which meant the person making the final decision could reject the recommendation but then new recommendations would be developed so there was no acting independently. 

Prof Steytler said the consequence of recommendation depended on the context in which it was used in the Constitution – an example was the appointment of judges. The Constitution said the President must appoint judges from all other courts on the advice of the Judicial Service Commission (JSC). In this case it was clear the advice of the JSC was binding. Wording itself must be examined in the context in which it was used.

The parliamentary legal adviser added another definition of recommendation which she found was a suggestion or proposal as to the best course of action especially one put forward by an authoritative body.

The Chairperson, given what he had heard, thought it reasonable to drop the word advice and to retain recommendation according to the above definition. It was an area which did not have to be finalised today so he would flag it for the Committee to return to it. Moving on he wanted to know why the word “requested” was included in section 2 (c).

Adv van Schoor said it emphasised what was already outlined that there must be proactive seeking of recommendation from the FFC.

Ms Tobias did not understand what clause 2 (c) (c) meant. 

The Chairperson explained that, for example, if provinces wanted to give the function of libraries to metros, that function, strictly speaking, would have to request the transfer of function to be looked into by the FFC to look at financial implications etc.

On clause 4, the Chairperson asked why the amendment was proposed for “within a reasonable period” and not 90 days.

Adv Van Schoor replied that there was another provision in the current Act which said the vacancy must be filled as soon as practical. There were times when vacancies took longer than 90 days to fill and this was part of the reason to be not that specific. There were also not particular consequences attached to vacancies which were not filled within 90 days. 

Mr Bongani Khumalo, Acting Chair and Chief Executive of the FFC, added that the challenge had been that the 90 days did not seem to be respected for quite some time – in some instances there were vacancies in the Commission for up to four years. This implied consequences for those in acting positions. To say a reasonable time put responsibility on the Commission itself to provide notice of vacancies. 

Prof Steytler said the practice of reasonable time was really not reasonable – there should be some marker of time to prevent the process from being open-ended.

Ms Tobias felt that if there were no clearly binding legal principles, there would be mischief and people would find easy ways of not doing things in a particular timeline. There could also be differences in how people measured a reasonable period. The legislation should be empowered by policy to provide an exact timeframe and which also provide a legal basis for taking people to task if something was not done in the stipulated timeframe. Without this, the legislation would not be binding.

Mr D Van Rooyen (ANC) thought the matter at hand was not something new – perhaps the Department of Public Service and Administration (PSA) could provide guidance on what an acceptable period of time was – this would also allow for alignment of practices.

The Chairperson asked what the problem with six months was because he thought it was reasonable. If the FFC was supposed to play the role envisioned in the Constitution, and given challenges, six months was a reasonable time.  He asked for an argument for why six months would not be appropriate.

Adv van Schoor did not have an objection to six months – where she worked previously and having interacted with the Public Service Commission, there would be a list of when vacancies would occur so that it was known in advance when the process of replacement would have to begin. She thought the same should occur with the FFC.

Mr Van Rooyen fully agreed with this approach but there were instances where posts were vacated without notification so the insertion should also cater for these occurrences. This was why he suggested standard practice from the PSA be used as the insertion.

The Chairperson said it could be used as a guide but as this was an appointment to a Commission, it could not be a rigid framework.

Ms Tobias asked if there tool to use to look at the pattern of filling vacancies generally and from there to assess whether the 90 day rule was adhered. There should be a reason why it was proposed the 90 day rule be changed to a reasonable time – it must have been based on experience with non-adherence to the 90 day rule. If there was such experience it could inform Members when making decisions because now decisions were being based on assumptions.

The Chairperson added that there had always been a reasonable but specified timeframe – the simple thing to do now was to decide on a timeframe. He asked how long it took to replace other vacancies on average.

Adv Van Schoor did not have those details.

Mr Khumalo responded that it took on average two, three or so years to fill a vacancy.

The Chairperson said that could not be accepted – a decision needed to be taken on how many months would be stipulated as the timeframe to fill these vacancies.

There was agreement on a six month timeframe.

The Chairperson reminded the Committee that the Bill would not be voted on today so if Members picked up on other areas which they wished to discuss, this could be done.

The Chairperson did not quite understand clause 7 (4) – he thought the date of commence should occur not more than one year after date of publication of the notice instead of before one year as the Bill outlined.

Adv Van Schoor explained that it covered notices which were backdated. This was the same provision for all Chapter Nine institutions.

On clause 9, conduct of members, Adv Van Schoor said there was a provision in the Act which already regulated recusal from a meeting so the proposal was that 14 (4) be repealed.

The Chairperson urged that the parliamentary legal adviser check that there were no inconsistencies with amendments being made now on the Bill and the original Act. 

Ms Tobias asked if clause 10 (a) should make reference to “other staff members” and not just “other staff”.

Adv Van Schoor responded that it was consistent with the current language in the Act – other legislation also used the term “employees”. In fact in a subsequent section of the Bill, the term “employees” was also used. If the Committee, wished where “staff” was used in the Bill, it could be changed to “employees”.

The Committee would next meet at 10h00 on Tuesday.

The meeting was adjourned.

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