Money Bills Amendment Procedure & Related Matters Amendment Bill: briefing & written submissions

NCOP Finance

09 October 2018
Chairperson: Mr C De Beer (ANC, Northern Cape)
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Meeting Summary

The meeting was attended by chairpersons and members of finance committees in the provincial legislatures who took part in discussions. A Senior Parliamentary Legal Adviser provided a clause by clause briefing on the Bill, during which he responded to questions by Members. He also attended to matters raised in written submissions on the Bill, in particular the proposed reduction of time allocated for oversight of the Medium Term Budget Policy Statement, as well as the Parliamentary Budget Office advisory committee. Other matters discussed were the independence of the Parliamentary Budget Office, the oversight role and functions of the NCOP, and the time allocated to the NCOP to deal with the fiscal framework. On interaction between Portfolio and Select Committees and provinces during budget hearings, it was noted that Portfolio and Select Committees could sit jointly and report separately. The basic principle was that Parliament had to facilitate public involvement in all its processes. The Chairperson noted that there was currently more engagement with the provinces than in the Fourth Parliament.

Meeting report

Introduction by the Chairperson
The Chairperson welcomed chairpersons and members of finance committees in the provincial legislatures, and allowed them to introduce themselves. He also welcomed Dr Dumisani Jantjies from the Parliamentary Budget Office (PBO). The morning session would be devoted to a clause by clause briefing on the Bill, and then there would be public hearings if the persons who made written submissions turned up. There were advertisements to invite submissions in the media. The two written submissions received were 90 percent similar.

Money Bills Amendment Procedure and Related Matters Amendment Bill
Adv Frank Jenkins, Senior Parliamentary Legal Adviser, presented a clause by clause briefing on the Money Bills Amendment Procedure and Related Matters Amendment Bill. He commented on the written submissions received and responded to questions by Members.

Clause 1
The clause sought to amend various definitions as well as insert a few new definitions.

Clause 2
The clause sought to confirm that in addition to all money Bills, the Act further applied to all division of revenue Bills, the medium term budget policy statement (MTBPS), the fiscal framework and amendments to any of these instruments.

Clause 3
The proposed amendments to section 4 of the Act sought to clarify the powers of the committees on finance and appropriations.

Clause 4
The clause sought to clarify what the committees of the National Assembly (NA) had to consider when assessing the performance of departments.

Mr O Terblanche (DA, Western Cape) commented that it appeared that the NCOP could make budgetary review and recommendation submissions, but that it was not necessary. He asked for clarification.

Adv Jenkins replied that the mandate of the NCOP was set out in the NCOP Rules. It could make reports to the House, and that power was not to be curtailed. The NA had to make an annual assessment of each government department. The question was whether that had to be extended to the NCOP. It was decided that the NCOP was not to be under obligation to assess departments. The NCOP worked in clusters, and did not do BRRR reports. But in terms of the Rules, the NCOP could report on the performance of a government department, as it had a different focus. Select Committees could engage with the Annual Reports of departments, in terms of section 65 of the Constitution. But it was deemed not advisable to create additional obligations for the NCOP, as it could create a situation where a budget could not be passed because there was no BRRR from the Select Committee.

Mr T Motlashuping (ANC, North West) asked about the oversight role of the NCOP.

Adv Jenkins replied that, hypothetically speaking, if there were performance issues in the DoH, it could state in the Portfolio Committee that it was only transferring budgets to the provinces, hence the health crisis was not its problem. But the NCOP was in a position to look at intergovernmental issues, it could look at the responsibilities of the transferring agency, and at which provinces were not performing. When Parliament amended budgets, ideally it had to look at reports from the Select Committees to the Portfolio Committees. The NCOP performed oversight visits, and would therefore be aware of problems around efficient spending of money, and could ask if the national AO was informed about that. If that was not the case, it could be asked how money could be shifted. The amendment was saying that the NCOP was not obliged to submit a BRRR, but it was not saying that the NCOP could not do so. His personal position was that it was good to have an intergovernmental perspective. If people were not getting health services in Mpumalanga, for instance, it had to be possible for the public to report on that. There had to be proper oversight of the national department as transferring agent.

The Chairperson referred to section 69 of the Constitution, which stated that the NCOP could require anyone to report to it.

Mr Terblanche asked why the Bill was quiet about functions that could be performed by the NCOP.

Adv Jenkins replied that authority was already granted to Select Committees, but it was not peremptory. The Bill did not seek to create additional obligations for the NCOP. The question was what would happen if obligations were not adhered, it could result in a budget being passed illegally because there was no BRRR report from a Select Committee. It was only a matter of not saying that the NCOP was under obligation, but nothing was taken away from the NCOP.

The Chairperson noted that the BRRR process had started in the NA that morning, and that it was a packed programme.

Clause 5
The clause sought to amend timeframes related to the submission of the MTBPS, when the finance committees had to report to the respective houses, when the appropriations committees had to report to the respective houses, and when the report had to be submitted to the Minister of Finance.

Mr Motlashuping found the change from “local government” to “municipality” to be problematic.

Adv Jenkins replied that with the passing of the Local Government Systems Act, the definition moved towards “municipality” as a sphere of government.

Mr Motlashuping insisted that the three spheres of government were national, provincial and local.

Adv Jenkins replied that provincial government was a sphere, but there were individual provinces within that sphere. By the same token, there were individual municipalities within the sphere of local government.

Mr Madoda Sambatha, member of the North West finance committee, said that municipalities accounted individually within the sphere of local government. Accountability was according to individual municipalities.

Adv Jenkins referred to the two written submissions from Dr Sean Muller and from the Public Service Accountability Monitor (PSAM) that stated reduction of the time allocated to oversight of the fiscal frameworks in the MTBPS from 30 to 15 days, would reduce time for oversight and public participation. It was also argued that the proviso “or as soon as reasonably possible thereafter”, could cause uncertainty. The proposal had come from the Finance Standing Committee. He explained that if the parliamentary committees could deal with the MTBPS in 15 days, it could freeze up space. If the fiscal framework was problematic, the time period could be extended. The reduction of time from 30 to 15 days, was to grant space for Parliament to loosen up, in order to allow for eventualities that could impact on the parliamentary programme, like the Soccer World Cup. The proviso of “as soon as reasonable possible thereafter” was said to cause uncertainty, but it was not arbitrary. If someone challenged the budget and the reasons were arbitrary, it could be challenged. What was reasonable in terms of time depended on the context, but Parliament had to be able to answer if taken to court.

The Chairperson noted that 15 days amounted to three weeks, in terms of working days. There would be a briefing in week one, public hearings in week two, and a conclusion in week three. After that the Division of Revenue Bill (DOR) kicked in, and then the process of appropriation. The fiscal framework was the first phase of the MTBPS. The Standing and Select Finance Committees had to work jointly to deal with the proposed fiscal framework in 15 days. If the time granted was 30 days, it would go on until 24 December. In the history of Parliament that had never happened. The second phase was the DOR and the DOR Amendment Bill, which was governed by section 76 legislation, as it affected the provinces. The NCOP wanted more time to allow provinces to engage, not only in the provincial legislatures, but also through public participation. It had to be within a four week cycle. There had to be briefing, public participation, and the negotiating and final mandates. More space had to be granted. Currently the NCOP had only nine days.

Adv Jenkins replied that amendment to money Bills proceeded through stages. The report of the Finance Standing Committee was the first stage. Provinces had to understand their role in the proposed fiscal framework, when, for instance, Parliament wanted a change in the budget for the following year, it had to be recognised that some provinces were lagging behind with infrastructure development. The question was how to engage with provinces when the proposed fiscal framework was looked at.

The Chairperson said that during briefing on the fiscal framework and public hearings, provinces had to be invited to engage with the fiscal framework. When the DOR was dealt with in the provinces, the first phase to deal with was the fiscal framework, as the DOR was based on the fiscal framework.

Mr Motlashuping remarked that there had to more interaction between Portfolio and Select Committees. The provinces had to be brought in.

The Chairperson commented that there was currently more engagement with the provinces than in 2009.

Clause 6
This amends the heading of section 7 of the Act; the simultaneous tabling of the DOR with the National Budget and Appropriation, and the time period for the financial year in question.

Clause 7
This amends the time period by when the finance committees had to report to their respective houses.

Clause 8
This amends the time period within which Parliament had to pass the Division of Revenue Bill.

Mr Motlashuping asked about interaction between Portfolio and Select Committees during public hearings.

Adv Jenkins replied that Portfolio and Select Committees could sit jointly and report separately. The basic principle was that Parliament had to facilitate public involvement in all its processes.

The Chairperson remarked that according to NCOP rules the NCOP had to have four weeks to deal with the fiscal framework. It could be possible if the Appropriations Standing Committee did its work more speedily. The Standing Committee on Appropriations could not take the DOR to the provinces, the Select Committee had to do so. Something had to be added, for the NCOP to be covered more adequately.

Adv Jenkins replied that when the sequence to adopt the fiscal framework was set in motion, the clock started ticking. The DOR was referred to the Select Appropriations Committee by the Standing Appropriations Committee, and then was taken to the provinces. There had to be public participation before there could be a negotiating mandate and voting mandate. It all had to happen within 35 days. The question was how to codify the procedure in the NA, if necessary through a time limit for the NA to deal with the DOR, thereby ensuring enough time for the NCOP to deal with matters.

The Chairperson said that the NCOP and the provinces needed four weeks to deal with the DOR and the DOR Amendment Bill. He asked that it be minuted.

Adv Jenkins replied that it could be achieved through proper programming. There were six weeks, ideally there had to be 10 days for the fiscal framework to be finalised and adopted, which would leave four weeks for the DOR Amendment Bill. The NCOP still had to pass the adjusted budget and needed a number of days for that. Programming had to be carefully done, as there were overlaps.

The Chairperson noted that it had been a challenge over the preceding nine years.

Mr Namane Masemolo, Limpopo Finance Committee Chairperson, supported the proposal to increase the 30 days to 40 days, as it would grant time to the provinces.

The Chairperson remarked that 30 days as from 24 October, would end up early in December. Another week could be added. It would be fine if it could be done within a shorter space of time, but additional space had to be created. The following year was election year. The State of the Nation Address, the National budget, including the fiscal framework, and the DOR, would take until the end of March. The Sixth Parliament would have to deal with the Appropriations Bill.

Mr Mbongani Radebe, Chairperson of SCOPA in Gauteng, commented that he supported the proposed 40 days.

The Chairperson remarked that the procedures of the NCOP and the legislatures dealing with section 76 legislation had to be protected, which was why he was proposing the 40 days.

Adv Jenkins replied that the catch-all clause of “as soon as reasonably possible thereafter” made provision for extra time. It had to be ascertained that the 40 days did not impact on the parliamentary programme. An input from National Treasury on this was needed. However, 40 days would be noted as a proposal.

The Chairperson remarked that the same Members served on the Finance and Appropriations Select Committees in the NCOP, but in the NA it was two distinct committees. The pressure was on the NCOP, and the work of the NCOP had to be protected.

Mr Terblanche remarked that the catch-all clause would serve the same purpose. If maneuverability through 40 days were granted, people would work according to that.

Clause 9
This clause proposed textual amendments to section 10 of the Act.

Clause 10
This clause amends the heading and effected certain textual amendments to section 11 of the Act.

Clause 11
This clause proposed
- a shift from a mandatory to a discretionary tabling of a national adjustments budget;
- a correction of the anomaly that the DOR Amendment Bill was to be referred to a joint sitting of the appropriations committees;
- the removal of the time period by which the appropriations committees had to report to their respective houses on the DOR Amendment Bill, and
- the sequential reporting of the Adjustments Appropriation Bill and the DOR Amendment Bill.

Clause 12
Proposed an amendment to the heading to section 13 and certain textual amendments of that section.

Clause 13
This clause proposed that the Parliamentary Budget Office (PBO) had to be a juristic person; that the Director had to be employed on a performance-based, renewable five-year contract. Transfer of funds had to be in accordance with the Financial Management of Parliament and Provincial Legislatures Act (FMPPLA). The Director was to be the accounting officer of the PBO. An advisory committee would take over the function of nominating a replacement if the Director’s position became vacant. The PBO would be granted powers to obtain information.

Adv Jenkins explained that the question had been whether the PBO was to be a separate juristic person, so that it could be independent of Parliament. It had been envisaged since 2009, as a policy position, that the PBO was to be a separate juristic person. It was consistent with international conferences on budget offices. The direction taken was that the PBO accounting officer had to be separate from the parliamentary administrative accounting officer. The PBO accounting officer had to be a “fit and proper person”, so that he/she could be removed if not deemed fit and proper. It was standard practice pertaining to people who dealt with financial matters.

Mr M Monakedi (ANC, Free State) asked why the matter was not covered under the FMPPLA.

Adv Jenkins replied that it was in the Money Bills Amendment Procedure and Related Matters Act to create distance between the parliamentary administration accounting officer and the PBO accounting officer. Questions that had to be addressed, were for instance who had to be responsible for the appointment of PBO officials, and the transfer of funds to the PBO. Currently authority lay with the Secretary of Parliament. The Finance Standing Committee had decided that there had to be stand-alone provision for the PBO. The responsibilities of the Director were borrowed from the Financial Sector Regulation Act. The advisory board consisted of the Chairpersons of the Standing and Select Finance and Appropriations Committees, and the House Chairperson. The Chairperson of the Finance Standing Committee argued that it had to be restricted to Chairpersons, as it was difficult for four committees to sit together.

Adv Jenkins said that Dr Sean Muller and Mr Jay Kruuse of PSAM objected in their submissions to the fact that all members of the advisory board were of the same political party, as they were in favour of more transparency and pluralism. PSAM wanted a separate mechanism. While it was currently the case, it could change. It had not always been like that, and it could change in future. Transparency was a constitutional imperative, but it was not feasible to have public hearings on matters like compulsory leave and other PBO conditions of service. The public could not make submissions on that, as it was covered by labour legislation.

Mr Namane Masemolo, Chairperson of the Limpopo Finance Committee, commented that the submissions focused on persons, rather than on a system.

Adv Jenkins replied that there was nothing wrong with the legislation. To have Chairpersons from the ruling party was in accord with democratic principles. There was the option of arguing that two out of five members had to be from the opposition, as was done with the Pan African Parliament. But the objective to be served was that the management of the PBO had to be subject to political oversight. The parliamentary administration could not do that. In the interests of accountability and transparency it could rightly be asked if decisions affected the broader public. The conditions of service of the Director and PBO officials did not affect the broader public. It could be argued that for the sake of accountability the Standing and Select Finance and Appropriations Committees had to be involved, but it was difficult to work as committees. Accountability within the context of the advisory board would mean, for instance, that the advisory board would have to explain why an acting Director would be appointed, and to consider if other options were possible. The amendment was aimed at promoting functionality. Transparency was not the apex purpose of the provision.

Mr Radebe commented that that the advisory board had to work in line with standards pertaining to how boards had to operate.

Mr Sambatha remarked that the insistence on plurality was not used as a basis to contest electoral outcomes. Those who raised the objection could very well proceed to claim that the composition of Cabinet did not reflect plurality. There was the danger of Parliament being told how it had to rule.

Mr Motlashuping commented that democratic decision-making could not be harmed, as the advisory board dealt with purely administrative matters, such as the appointment of the Director. He asked about the position of the four committees in the process, and whether the appointment of the Director would be finalised before it was brought to the committees.

Adv Jenkins replied that the advisory board would look at administrative matters such as conditions of service. The Committee Chairpersons then had to account to the committees. The Chairpersons could not ignore committee demands. Committees could complain if it was felt that the PBO was not rendering good service. The PBO Director had to account to both Houses.

Clause 14
This clause reflected the proposed amendments to the Schedule in the Act.

Clause 15
This clause conferred the power to make regulations on the Executive Authority.

Clause 16
This clause amended the short title of the Act.

Clause 17
This clause amended the Schedule to the Act.

Adv Jenkins noted that (e) and (f) was removed from norms and standards for provincial legislatures, as it was telling a committee of the provincial legislature how it had to report. That was a function of the provincial legislature, not of Parliament.

Clause 18
The clause sought to amend the long title of the Act.

Clause 19
The clause contained the short title of the Amendment Act.

The Chairperson concluded that the briefing had been a necessary exercise. If no one turned up for the afternoon session, the meeting would be adjourned. The Committee programme had been circulated. It would mainly be devoted to the MTBPS, but the Committee would also deal with the Taxation Laws Amendment Bill, the Monetary Rates and Amounts Amendment Bill, and the Taxation Laws Administration Amendment Bill. The Finance Standing Committee would have its last meeting on legislation on 13 November. It would be voted on in Committee, then go to the NA plenary, and then proceed to the NCOP. Provisional dates were submitted in the Whips meeting. It was to be hoped that legislation would be speedily referred to the Select Committee. The Bills process could be concluded by 30 November.

Consideration of submissions
The Chairperson noted that three submissions were received, namely from Dr Sean Muller, PSAM and Mr George Buthelezi. The latter submission in fact dealt with the land issue. As Dr Muller and Mr Jay Kruuse from PSAM were not present at the meeting, and seeing that Adv Jenkins had referred to their submissions during the clause by clause briefing, the meeting had come to an end. The following week would be devoted to oversight, and then there would be engagement on the MTBPS. He thanked delegates from the provincial legislature as well as Adv Jenkins and Dr Dumisani Jantjies from the PBO, for their attendance.

Meeting adjourned.

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