Money Bills Amendment Procedure and Related Matters Amendment Bill: public hearings

This premium content has been made freely available

Finance Standing Committee

02 August 2017
Chairperson: Mr N Gcwabaza (ANC) (Acting)
Share this page:

Meeting Summary

The committees heard public submissions on the Money Bills Amendment Procedure and Related Matters Bill.

Dr Sean Muller, Senior Lecturer: School of Economics & Public and Environmental Research Centre, University of Johannesburg, in submitting, queried the timing of the oversight process stipulated by the Act. The Money Bills Act was supposed to strengthen oversight, but some timelines mean the oversight process risked remaining a rubber-stamping exercise. He believed committees needed time to apply their minds; the Parliamentary Budget Office (PBO) and other advisory bodies, time to do substantive analysis; and the public, time to absorb details and make representations.

Dr Muller identified the need for clarifying and strengthening the structure of the PBO. Administrative independence was paramount and therefore, amendments clearly affirming PBO independence as juristic person, with Director as accounting officer, were welcome. An explicit provision for the PBO to access information was a significant omission from Act. Thus, proposed amendments were welcome. He suggested strengthening the provision as follows:  Any information which the Parliamentary Budget Office requires…must on request, be supplied timeously, free of charge and in the format requested…” He commented on appointments of the Advisory Board and Acting Director. The proposed replacement of committees with Advisory Board was not desirable as it contradicts principles of non-partisanship and transparency. The process for the appointment of Acting Director should be open and transparent. He suggested that the Act state more explicitly that requirements for Director apply to Acting Director as well.

In conclusion, Dr Muller noted that the current oversight process contains an oddity as finance committees had to report on revenue proposals (fiscal framework) in 16 days, but actual legislation only appears and is subject to oversight many months later. He asked if the reporting requirement was meaningless. Does the superficial analysis possible in 16 days constrain subsequent decisions on detailed legislative provisions? It seemed logical that the ultimate objective should be to table proposed legislation with the Budget documents in February. He suggested that this be reflected in the current amendments.

Ms Ntombizonke Nyamane submitted that in as much as the National Assembly, through its committees, assesses the performance of National Departments, the envisaged PBO Advisory Board needed observers who would evaluate the degree and quality of its work as well.

Members agreed that some of the proposed amendments were simple and useful. They suggested resolving the not so contentious amendments as soon as possible. Mr Maynier emphasised that if the independence of the PBO was not guaranteed, he would do everything in his power to have it shut down. The Acting Chairperson felt it was not prudent for Members to take the stance suggested by Mr Maynier. The PBO serves Parliament through committees, not political parties; and that had to be made clear. All Members have a right to make inputs through their respective committees. It was not true that the PBO serves the interests of the governing party. 

Meeting report

University of Johannesburg submission
Dr Sean Muller, Senior Lecturer: School of Economics & Public and Environmental Research Centre, University of Johannesburg, queried the timing of the oversight process stipulated by the Act. The Money Bills Act was supposed to strengthen oversight, but some timelines mean the oversight process risked remaining a rubber-stamping exercise. He believed committees needed time to apply their minds; the Parliamentary Budget Office (PBO) and other advisory bodies needed time to do substantive analysis; and the public needed time to absorb details and make representations. Consequently, any substantive amendment process would require more time.

Dr Muller identified the need for clarifying and strengthening the structure of the PBO. Administrative independence was paramount and therefore, amendments clearly affirming PBO independence as juristic person, with Director as accounting officer, were welcome. Such independence was clearly the intent of the original Act. However, questions remain as to why provisions of the current Act had not been implemented.

On integrity and accountability of the PBO, the Act only addresses technical and managerial qualifications required to manage the Office, but not integrity. It was appropriate to require that Director of the PBO be a “fit and proper person”. Also, functional independence was arguably more important than administrative independence, but the Act remains unclear on to whom, and how the PBO would report interference. Also, questions remained as to the accountability of the Director and how performance of same would be assessed. 

An explicit provision for the PBO to access information was a significant omission from Act. Thus, proposed amendments were welcome. He suggested strengthening the provision as follows:  Any information which the Parliamentary Budget Office requires…must on request, be supplied timeously, free of charge and in the format requested…”

Adequate resourcing of the PBO is critical for success. He cited the case of the European Union’s minimum standards for International Financial Institutions (IFIs) which states that; to ensure sufficient and stable financial resources (at constant prices), the budget of IFIs should not be subject to discretionary cuts’. “Legal provisions should guarantee immunity from the discretion of policy makers”. “The IFI should be provided a multiyear budgetary appropriation that supersedes the government’s electoral cycle. Provisions related to the stability and sufficiency of financial resources should also be reflected in law, in order to be taken into account when the budget”. However, the current Act and amendments fail to clarify budget tabling, negotiation and approval process –and certainly do not provide protections. A possible approach would be to take current structure as baseline and agree that this should be adjusted for inflation, and when need be.  

He commented on appointments of the Advisory Board and Acting Director. The proposed replacement of committees with Advisory Board was not desirable as it contradicts principles of non-partisanship and transparency. The process for the appointment of Acting Director should be open and transparent. He suggested that the Act state more explicitly that requirements for Director apply to Acting Director as well.

In conclusion, Dr Muller noted that the current oversight process contains an oddity as finance committees had to report on revenue proposals (fiscal framework) in 16 days, but actual legislation only appears and is subject to oversight many months later. He asked if the reporting requirement was meaningless. Does the superficial analysis possible in 16 days constrain subsequent decisions on detailed legislative provisions? It seemed logical that the ultimate objective should be to table proposed legislation with the Budget documents in February. He suggested that this be reflected in the current amendments.

Ms Ntombizonke Nyamane submission
Ms Ntombizonke Nyamane submitted that in as much as the National Assembly, through its committees, assesses the performance of National Departments, the envisaged PBO Advisory Board needed observers who will evaluate the degree and quality of its work as well. (See submission)

Discussion
Mr D Maynier (DA) asked for Dr Muller’s view on how timing of oversight process and attendant uncertainty could cause budget risks and possibly impact on the country’s sovereign rating. He emphasised that the PBO is not independent. Dr Muller’s presentation supported that view in respect of the appointment of its Director. Also, the governing party would decide on the work of the PBO. Therefore, in practise, the PBO would not be accessible to opposition parties; opposition parties could only approach the PBO through the committees. In practise, the African National Congress would decide whether the opposition’s requests were approved or not. If this was not remedied, the opposition would have to work on shutting the PBO down. He asked Dr Muller how the situation could be remedied.

Dr Muller replied that uncertainty, in itself, was a bad thing in economics; and that needs to be recognised. The timing of oversight process and uncertainty could have a negative impact depending on the broader context, and what the issues holding approval were.  He suggested the stipulation of a timeframe. It would be best to have an institution that can review and make recommendations.

Mr M Hlengwa (IFP) felt that confining the reporting of inappropriate interference to the Office of the Public Protector was overburdening same. He suggested such be directed to law enforcement agents or other bodies as well. The committees should explore other avenues.

Dr Muller, in response, pointed out the need for an independent institution, which could be the Office of the Public Protector, Public Service Commission to make the referral, in the event that a relevant body of Parliament does not take action.
 
Mr A Mclaughlin (DA) agreed with Dr Muller that the timelines meant oversight process risks remaining a rubber-stamping exercise. The committees would have a compressed system that puts them under pressure. He asked Dr Muller’s view as to whether extending timelines would strengthen oversight and how that can be done. 

Dr Muller replied that certainly the timelines presented risks, and it was not an indictment to Members but had everything to do with the fiscal framework. Increasing the timeframes would help but might not be enough.

Mr Mclaughlin asked Ms Nyamane if she had considered the implications of her proposals. How would such proposals work in practise?

Mr Maynier emphasised that if PBO independence was not guaranteed, he would do everything in his power to have it shut down.

The Acting Chairperson felt it was not prudent for Members to take the stance suggested by Mr Maynier. The PBO serves Parliament through committees, not political parties; and that had to be made clear. All committee Members have a right to make inputs through their respective committees. It was not true that the PBO serves the interests of the governing party.

Ms S Shope –Sithole (ANC) said the Appropriations Committee in particular, found the PBO very useful. Therefore, at no point would the Committee want it to shut down; it had to be strengthened instead.

Mr D Hanekom (ANC) said the committees ought to consider the amendments in a calm way; some of the proposed amendments were simple and useful. He suggested resolving the not so contentious amendments as soon as possible. He agreed that a 16 day timeframe puts a huge strain, and Dr Muller’s input in that regard was useful. Also, provision for adequate resourcing of the PBO was clearly essential as pointed out by the submissions.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, commented that when approving proposals, Members had to note that committees were not binding themselves. Parliament, by its nature, cannot bind itself. The issue of stipulating a timeframe was well understood. But from a legal standpoint, what would happen if such stipulated timeframes are not met? Members had to be aware of such risks before making decisions on the timeframe.

The PBO spoke about its current resourcing model and structure. The composition of the PBO Board should be decided at Committee level. It emphasised the need to guard its independence and non-partisanship. Adequate resourcing of the PBO, for it to play a more significant role, was important.

Mr Maynier asked about the PBO budget for the 2016/17 financial year.

The PBO replied its budget was between R15-16 million, including salaries for a staff complement of 12.

The meeting was adjourned.

 

Share this page: