Key areas for inclusion in framework document

Ad Hoc Committee on the Funding of Political Parties

18 August 2017
Chairperson: Mr V Smith (ANC)
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Meeting Summary

The research team presented a list of key items that needed to be included in the committee framework document that would be discussed on 22 August.  After the presentation, a productive discussion followed that suggested additions and fleshing out of these key areas.

It was suggested that before discussing the 90/10 formula, there needed to be a legal interpretation of the concepts of proportionality and equity as intended in Section 236 of the Constitution, how to ensure multi-party democracy. The Committee suggested against recommending an amendment to the Constitution, although it might be necessary at a later stage to deal with political party funding at local government level. It was agreed that there would be comment on local government funding in their report to the House although it was not in the mandate of the Committee. All parties agreed that there needed to be extensive amendment to the Regulations but the degree to which the Act would need amendments was yet to be determined.

Key issues around which agreement would have to be found included the funding formula, provincial allocations, enhanced funding, private funding, funding to individual candidates within a party, and investment arms of political parties. The involvement of the National Council of Provinces (NCOP) in its approval of the Regulations would have to be considered and whether the IEC was the appropriate body to manage the funding.

Meeting report

Opening remarks
The Chairperson indicated that the Committee content advisor and research team would provide an overview of the public submissions. The presentation had no status per se but was intended to support the work and the thinking of the Committee Members. After the presentation, there would be a discussion addressing the political underpinnings of political party funding.

Content Advisor and research team presentation
The team included Mr Xolisile Mgxaji, Content Advisor, Michael Price, legal advisor for Parliament and Prof Halton Cheadle of UCT.

Mr Xolisile Mgxaji suggested there was no need to replace the current Act but there might be a need to make amendments. In some sections, policy decisions had to be taken. For example, the current Act allowed private and public funding but there had been a suggestion of an independent fund. A decision was required on whether there was a need for a change as the current fund allowed for private donations. There was a need to determine if the specific uses of the fund needed to be included in the Act or if the Committee was comfortable with the current explanation that the fund was intended to support multiparty democracy. The importance of being specific about the uses of the fund was that the Committee would be able to cost the functioning of political party funding and be able to make a case if there were gaps and additional funds were required.

Mr J Selfe (DA) pointed out that the presentation was not intended to go into detail nor should specific recommendations be made.

The Chairperson agreed and suggested that Mr Mgxaji address the list he had made on issues that needed consideration. It would be the task of the Committee to evaluate and decide on the direction to take on each issue. Mr Selfe had raised an existential point that the presentation was giving a choice between two funds but it was quite possible that the Committee might not want a fund. There had been submissions that recommended there ought to be one fund and others that said there ought to be two funds.

Mr Mgxaji apologised for going overboard with his explanations.

Prof N Khubisa (NFP) agreed that the presentation should simply list the main issues that required the attention of the Committee.

The Chairperson reminded the Committee that the purpose of the presentation was to enable the research team to obtain clarity on issues that needed to be incorporated in the draft document and which Committee Members would debate at the next meeting.

Mr T Godi (APC) suggested that the presenters go ahead and present the document, following which the Committee would engage in discussion. Committee Members could decide for themselves what they want to take from the documents and what they did not.

Mr B Bongo (ANC) agreed with Mr Godi and noted that it was a good document that would assist the Committee but the presenters should not motivate positions because that was precisely what the Committee would be discussing. It was a helpful document because it contained all the issues that had to be addressed.

Mr Mgxaji continued, saying the next issue was the formula, the weight and allocation of the funds. With private funding, there was the question of capping, disclosure of private funding, the prohibition of certain sources of donations and finding incentives to encourage private donations. There were two proposals for the monitoring and enforcement of funding regulations: whether to establish a new entity or to create a new unit within the IEC. On sanctions, it had to be decided whether those would be political sanctions, financial sanctions, administrative fines or other forms. The last point was whether local government is included in the funding framework. If local government is included, it would be necessary to amend the Act.

The points were:
• Capping
• Disclosure
• Use of resources
• Tax incentives
• New unit in IEC or new organisation
• Inclusion of local government

The Chairperson obtained consensus from the Committee for the items on the list and asked for additions to the list.

Dr C Mulder (FF+) asked that the question of the multiparty democracy fund be added.

Mr D Gumede (ANC) mentioned the proposal for an increase in public funding, when affordable.

Prof Khubisa asked if foreign donor funding was included.

Mr Godi suggested that the key points be listed and then fleshed out so that the Committee could discuss all issues methodically.

Mr N Singh (IFP) agreed with Mr Godi that broad headings were needed, followed by the detail, for example: Funding formula
Investment companies
Deposits for participation in elections
Oversight body
Provincial allocation

The Chairperson added:
Multi-party funding
Increased funding for political parties

Mr M Dlamini (EFF) added barriers to entry / registration.

Ms L Maseko (ANC) asked that funding of individuals be included.

The Chairperson asked if funding of individuals should be included under regulations or whether it was a topic on its own as suggested by Mr Selfe.

Prof Khubisa suggested there was a need to factor in individual candidates. It should be a stand-alone item so that a comparative analysis could be made.

Mr Dlamini had two interpretations of funding of individuals: funding of a candidate standing as an independent, and funding an individual within a party. He suggested it be placed as a stand-alone item.

Ms Maseko suggested the point belonged under both private funding and regulations.

The Chairperson agreed that it should be put under two categories and once Members had debated the item they could determine where it belonged. Alternatively, it would be a matter for legal services.

Mr Selfe supported Mr Dlamini’s point about determining which were significant parties and how to support them.

Dr Mulder asked that public funding include administrative support and the constituency allowance.

After asking if any other areas were needed to create the framework document for discussion on 22 August, the Chairperson said the discussion was concluded.

The Chairperson reminded the Committee that the original mandate handed to the Committee was to enquire into and make recommendations on funding of political parties represented in the national and provincial legislatures in South Africa with the view of introducing or amending legislation if necessary and, in so doing, consider:
• If it was necessary to amend?
• If so, what was the appropriate model applicable to public and private funding for political parties?
• The need for and possible needs of regulating private funding in all its forms as well as investment entities.

That was the mandate of the Committee and subsequently the Committee had taken the decision to have a political debate on that mandate. It was no longer about what others wanted but about what the Committee wanted to achieve, bearing in mind that 30 November was the deadline. The Committee had a programme. It was necessary to establish whether that programme would allow Members to achieve what they needed achieve. He was opening up the political discussion for inputs and comments. He used funding models as an example. Was it necessary or not necessary? If it was necessary, was the Committee going to look at both models, both private and public funding and all those items listed above.

Dr Mulder thought that it was not the time to go into nitty gritties. The Committee could do that the following week when they had the framework document before them, but the broader principles should be addressed. The first one was whether it was necessary to amend the Constitution. The current funding model was based on three pillars: the Constitution, the Act, the Regulations. His view was that it was not necessary to amend Section 236 of the Constitution. While he appreciated all the input made today, if the Committee had to address all the points raised, the Committee would go well beyond its mandate. He had a serious problem with some of the Regulations and he had a problem with certain aspects of the Act itself. In sum, it might be necessary to amend the Act and it was certainly necessary to amend the Regulations. The Committee would also need to look at the funding model and might need to amend it. That would have implications in terms of what would follow in the new model.

Prof Khubisa shared Dr Mulder’s sentiments. He believed that, with the items that had been elicited and flagged, the Committee had a roadmap for its work. The issues raised were salient matters that the Committee needed to work on. At the end of the day, it was possible to come up with a model without the necessity of amending the Constitution. The Committee would need to deal with the Act and what it entailed, working within the mandate of the Committee.

Mr Selfe agreed with Dr Mulder. There was no need to change the Constitution. The Public Funding of Represented Political Parties Act was fine, although it might need to be added to. The real sensitive part lay in the Regulations. Mr Selfe had been a member of the Committee when the Regulations were put together. There was a political deal between a member of the then National Party and a member of the ANC because it served both their interests. They made it a 90/10 split, favouring the bigger parties over the smaller parties. He recalled speaking to the member of the National Party and warning him that there would come a time when the National Party would be a small party and others would be big parties; then he would wish that he had never made the deal. The guiding principle in terms of the allocation was that it had to be fair both to big parties and to small parties. It was deeply iniquitous as it stood. He suggested that other matters that needed to be amended could be discussed at the following meeting.

The Chairperson explained that at the next meeting, they would talk to each of the points in the framework document that the research team would prepare. The intention was not to debate at the current meeting but to allow Members to indicate the broad principles that should change or not change and the motivation for that. He recapped the input of Mr Selfe, noting that the Regulations needed looking at.

Mr A Lees (DA) noted that considerable discussion had taken place about independent political representatives at local government level but the mandate of the Committee did not include that and it might be a mandate overreach if the Committee were to consider that.

The Chairperson noted that the Committee would not address local government issues.

Mr Godi thought that local government fell outside of the mandate but it would be correct to discuss the matter because when the legislation went to Parliament, the Committee could report on the need at local government level. If a comprehensive funding model for all levels of government was going to be developed, there would need to be a change in the Constitution. As far as the Regulations were concerned, they were unconstitutional. As Mr Selfe had indicated, it had just been a political deal. The Constitution indicated that funding was to be both proportional and equitable. However, in the current Regulations, proportional applied to both national and provincial legislatures but equity applied only to provinces. At the centre was the issue of transparency, promoting multi-party democracy and accountability. He would prefer to talk of enhanced funding. There were three elements to the funding: monies that parties needed for the day-to-day administration overheads of the party; education of their members and members of the public; campaigning at election time. With the current formula, one needed friends with deep pockets. So it was necessary to look into enhanced funding. The Regulations were important. Members needed to go and consult so that they had substance for proposals.

Mr Dlamini asked if it was necessary to continue the discussion. The Committee needed to get into the actual issues and debate whether they were wrong or right. He understood the purpose of the current meeting was to plan for the next meeting. It was then that Members could have a political discussion on all the elements highlighted.

Mr Bongo agreed that the Committee would have to go further to deal with certain issues at a very close range. The Constitution talked not only about national and provincial but also it spoke about “multi-party. What did that mean? Did the Constitution envisage a situation where parties would play a major role in the contestation of political power? For that reason, local government had to be looked at and consideration given to what other model could be introduced. That needed to be parked as the Constitution would have to be looked at. The Regulations needed to regulate private funding which was the main concern from his point of view. At the centre the mandate that the committee had been given, was to enhance transparency, to promote democracy and to ensure accountability. As the Committee did those things there would have to be some compromises in relation to the fiscus. The Committee would get into the nitty-gritty is at the next meeting but in the meantime, Members should go back and consult about exactly what they wanted. Members should be able to raise superior arguments to defend their positions.

Mr Singh believed that before going into the 90/10 formula, there needed to be a legal interpretation of proportional and equitable. That would be the point of departure. He agreed that local government was not within their mandate but Mr Godi was correct in saying that the Committee needed to consider funding of local government. It was the first time in 20 years they had an opportunity to discuss funding of local government. The Committee could at least make a statement about it and take the matter to the House. What about the involvement of the National Council of Provinces (NCOP)? When he looked at the Regulations, No117 of 1998, it contained the words “acting on the joint decision of the National Assembly and NCOP”. He thought it would be helpful to get a copy of the minutes of the proceedings leading to the Regulations to check whether the Minister had captured correctly the discussions and decisions of the meeting. He reminded the secretary that the Committee was awaiting the correct allocation of funding in the provinces, but he assumed that the information had not yet arrived.

Mr Gumede agreed with Mr Bongo and those who had spoken before and with Mr Singh’s proposal. He proposed that they accept the researchers’ document and go away to study and get mandates from their political parties and return with substantiated reasons.

Prof Khubisa wanted to ensure that the additions proposed during the debate would be added to the document.

Dr Mulder said that the current document could not be adopted as it was not the working framework, which they would receive at the next meeting. He asked that, when consulting their political parties, Members of the Committee bear in mind that the discussion about the formula as that was going to be a contentious discussion. It was not just about the percentages; it was also about how the formula was implemented. For example, one interpretation was that equitable meant all parties, both in the National Assembly and the provincial legislatures but a second interpretation was that equitable included representivity and proportionality. He was sure that Members of the Committee could find each other around the formula.

The Chairperson summed up as he did not want the Committee to go over the same ground again at the next meeting. Regulations needed panel beating, especially in the section on the 90/10 formula. In terms of the Act, as it currently stood, everyone would argue where there were gaps and how those would be closed. Everyone would work through the Regulations and motivate amendments where appropriate. They would include funding of individual candidates within a party; barriers to entry and the filtering of “fax machine” parties; enhancing political party funding and how the funds would be used. The involvement of the NCOP required clarification. Also included in the document would be investment arms; multi-party democracy; provincial funds and whether the current funding was constitutional. A decision would need to be taken on whether the funds were determined at national level or whether they took the Division of Revenue Act (DORA) approach which ringfenced funds. Other matters included the need to look at funding local government level; the use of the IEC to do everything or a separate multi-party fund; enforcement and sanctions and the capacity was necessary. He requested that the research team included all those items in the framework document but reminded them that decisions would be a political matter.

Minutes for the 15, 16 and 17 August would state who attended and the transcripts would serve as minutes.

Dr Mulder agreed with summary. He requested that Members be given details of the current funding status in the provinces. The Chairperson agreed that it would be done before next meeting.

Mr Godi agreed with the need for information about the funding situation in the provinces but he was not sure whether it was in the mandate of the Committee to determine whether that funding was constitutional or not. The information about the provinces would also assist in the determination of the formula and how it was implemented.

Ms L Mathys (EFF) added that municipalities made funding available to parties and that needed to be taken into consideration. The Chairperson said they could look at it for purposes of the formula but local government was not part of the mandate.

Mr Bongo noted that the constitutionality of provincial funding had been raised frequently during submissions. He asked that legal advice be obtained.

The Chairperson agreed that they would get a parliamentary view of the constitutionality of provincial funding. The following documents were required: framework, information from the IEC, funding at provincial level; legal opinion. A letter from Treasury was provided to Committee Members.

The Minutes of the Committee meeting of 3 August 2017 were adopted. In response to a matter arising, the Chairperson indicated that he had approached all institutions for research support following the offer by the University of Cape Town to assist with research and a legal opinion had been requested from the legal team.

Meeting was adjourned.

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