Money Bills and Related Matters Act: Parliamentary legal services & Parliamentary Budget Office briefings

NCOP Finance

08 October 2019
Chairperson: Mr Y Carrim (ANC; KZN)
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Meeting Summary

Money Bills Amendment Procedure And Related Matters Amendment Act

The Committee received two briefings on the Money Bills and Related Matters Act and how it relates to its work.

A Parliamentary Legal Advisor explained that the Money Bills and Related Matters Act of 2009 gives effect to section 77(3) of the Constitution requiring national legislation to provide a procedure to amend money Bills before Parliament. The Act came into operation on 16 April 2009. The review process started in May 2012. The Money Bills Amendment Procedure and Related Matters Amendment Bill [B 28 – 2018] – Act No 13 of 2018 – assented to and signed by President on 16 January 2019
 
The Act requires that there be a procedure for the amendment of money bills. Money bills may be introduced only by the Minister of Finance and in order to amend them in Parliament, that procedure is needed in legislation. The review process was meant to view problems that had been discovered when the Act had been implemented in 2010/2011. The fundamental changes that emerged were more on the governance of the Parliamentary Budget Office (PBO), as well as time frames.

The Act ensured that there were certain mechanisms within the Finance and Appropriations Committees that ensure that they were separate so that there was no overlapping. The Finance Committees – both select and standing – look at the national macro-economic and fiscal policy. Included in this were the fiscal framework, the revised fiscal framework, and the proposed fiscal framework. The Appropriations Committees deal with the spending priorities of national government, including the proposed division of revenue and the proposed substantial adjustments.

The Parliamentary Budget Office (PBO) highlighted that the Act gives Parliament powers to amend the budget and other money bills before it. Each House has a Committee on Finance to consider and report on specific mandate. Each House has a Committee on Appropriations to consider and report on specific mandate. Standing rules and House resolutions also provide additional functions to committees further to those stipulated in the Money Bills and Related Matters Act; including consultation between two Houses finance committees.

Members asked what the specific roles of the NCOP was in the budget process. They expressed frustration and the strict timelines to process money bills and the strict criteria that needed to be met in order to make amendments. Further, they asked what the relationship between the BRRR and the MTBPS was, and how the BRRR was meant to affect the MTBPS. They requested that the date for submission of the annual reports be brought to the end of August instead of the end of September so that there was more time for public consultation and scrutiny.

Meeting report

Mandate of the Committee: Briefing
Advocate Frank Jenkins, Senior Parliamentary Legal Adviser, explained that the Money Bills and Related Matters Act of 2009 gives effect to section 77(3) of the Constitution requiring national legislation to provide a procedure to amend money Bills before Parliament. The Act came into operation on 16 April 2009. The review process started in May 2012. The Money Bills Amendment Procedure and Related Matters Amendment Bill [B 28 – 2018] – Act No 13 of 2018 – assented to and signed by President on 16 January 2019
 
 The Act requires that there be a procedure for the amendment of money bills. Money bills may be introduced only by the Minister of Finance and in order to amend them in Parliament, that procedure is needed in legislation. The review process was meant to view problems that had been discovered when the Act had been implemented in 2010/2011. The fundamental changes that emerged were more on the governance of the Parliamentary Budget Office (PBO), as well as time frames.
He explained that essentially, the Act did three things for committees:
·         Creates certain institutions and requires the creation of rules as well as a system for the amendments;
·         Creates procedures which deal with time frames, and who the various legislative instruments must be referred to;
·         Sets up the mandates of various committees, and how they are to be dealt with
The Act establishes various mechanisms which ensure that there are Finance and Appropriations Committees in the two Houses, and that they have specific mandates which keep them separate. This ensures that the overlapping of their functions is avoided. The Finance Committees – both select and standing – look at the national macro-economic and fiscal policy. Included in this are the fiscal framework, revised fiscal framework, and the proposed fiscal framework. The Appropriations Committee deals with the spending priorities of national government, including the proposed division of revenue and the proposed substantial adjustments. Essentially, the Appropriations Committees compile a review of the actual spending by each national department, and each national government.
Regarding the Special Appropriation Bill, a common question asked by the Standing Committee on Appropriations is whether this bill affects the fiscal framework and if the Appropriation Bill has been taken into account. When looking at the following year’s proposed fiscal framework, the immediate funds going into Eskom should be in the revised fiscal framework which comes with the adjustments budget.

At the end of the month, Parliament will be receiving the medium term budget policy statement (MTBPS). According to the Act, the revised fiscal framework for the financial year and the proposed fiscal framework for the next three years should come to the finance committees.

The NCOP Finance and Appropriation Committee had their own specific role, in the same way that the NA Finance and Appropriation Committee did. The whole purpose was to ensure that there was a separation of duties between the two committees as each had a certain focus that was different to the other.

Section 8(5) states:  When amending the fiscal framework, a money Bill or taking any decision in terms of this Act, Parliament and its committees must—
(a)   ensure that there is an appropriate balance between revenue, expenditure and borrowing;
(b)   ensure that debt levels and debt servicing charges are reasonable;
(c)   ensure that the cost of recurrent spending is not deferred to future generations;
(d)   ensure that there is adequate provision for spending on infrastructure development, overall capital spending and maintenance;
(e)   consider the short, medium and long term implications of the fiscal framework, division of revenue and national budget on the long-term growth potential of the economy and the development of the country;
(f)    take into account cyclical factors that may impact on the prevailing fiscal position; and
(g)   take into account all public revenue and expenditure, including extra-budgetary funds, and contingent liabilities.

Briefing by the Parliamentary Budget Office (PBO)
Mr Dumisani Jantjies, Director: Finance, PBO, said the PBO was established in terms of Section 15 of the Money Bills and Related Matters Act. It was established to support the implementation of the Money Bills and Related Matters Act, particularly in support of the Finance and Appropriations Committees in both Houses.

The PBO offers independent and objective advice and analysis to the Finance and Appropriations committees in both Houses of Parliament on money bills and other bills presented by the Executive; and any other documentation or reports with fiscal implications.
 
The Act came into effect in April 2009. It gives Parliament powers to amend the budget and other money bills before it. Each House has a Committee on Finance to consider and report on specific mandate. Each House has a Committee on Appropriations to consider and report on specific mandate. Standing rules and House resolutions also provide additional functions to committees further to those stipulated in the Money Bills and Related Matters Act; including consultation between two Houses finance committees. The Committee has previously invited various provinces to provide an overview of their fiscal situation.
 
He listed and provided a description of the PBO outputs, which included:

Pre-Budget and Pre-MTBPS briefs: Provide analysis to Parliament about the status of the economy and public finance and government performance before the presentation of the National Budget (February) and Medium Term Budget Policy Statement (October)
 
Policy Analysis on National Development Plan
Several analysis on the implementation of the National Development Plan, vision2030(NDP) in terms of content, context and progress made with the implementation.
 
Quarterly Economic and Fiscal Briefs: Quarterly Economic Brief, the PBO provide parliament with an analysis of the economic outlook as the economic performance affects public finances outlook. Fiscal Brief appraise MPs on the status of the of government’s performance in relation to the budget allocated, and these updates are given within six months(pre-MTBPS) of the financial year and just after the end of a financial year.
 
 
In-year revenue forecastand Forecast Audits: In-year revenue forecast, within the first six months of the financial year, PBO provide an estimate of whether government revenue targets for that year will be realised. The PBO estimates are based on historic trends and including first five months of the year’s outcomes being forecasted. Forecast Audits, annually provide an analysis of the government growth estimates. This analysis gives indications of the likelihood of realising forecasted growth given historic performance of the forecasts.
 
 
Discussion
Mr D Ryder (DA, Gauteng) asked if he was being overly simplistic in his analysis of the roles of finance and appropriations. In his understanding, the roles of finance and appropriations were quite closely related and there appeared to have been many overlaps between the two departments.

Mr Z Mkiva (ANC, Eastern Cape) observed that all these presentations did not talk about transformation. He questioned whether or not it had been deliberate to talk about finance and appropriation, but not to include transformation. He emphasised that these presentations were silent, and acting as though the country did not have the background that it has. He believed that this was problematic and it was about time that the officials addressed this matter. He would like to know why officials were so silent on the matter.

The Chairperson responded by asking why officials were quiet and emphasised that this was a question that he should be asking himself. He noted that this was not an executive Bill, but rather that of the officials.

Mr Mkiva explained that at another level they had already communicated what they wanted to see happen in the country, and Advocate Jenkins’ statement regarding the executive bringing in legislation was rather problematic.

The Chairperson emphasised that the point that he was making was that this was one of the two Acts that they as officials had passed -- not the Executive. He added that the point made by Mr Mkiva was in fact a valid one, but one that should rather be not be posed to officials but to the Executive. It was a political question, not a technical one.

Ms D Mahlangu (ANC; Mpumalanga) said that the issues raised by Advocate Jenkins and Mr Janjties were very important. There were in fact very thin lines in the rules between the finance and appropriations committees. At some stage, there was overlapping between the two entities regarding expenditure which should be handled by Appropriations. She believed that while it may make no difference, as they were the same people, it was important to understand who should do what. It was a process that they were learning, and they were appreciative of the fact that they finally knew what they should be doing.

The Chairperson thanked both presenters, and commented that they could now see what they had not seen before. They understood that there were two committees that were mutually dependent on each other and therefore needed to cooperate. An advantage was that it was the same members. He said that in the National Assembly there were two chairpersons who had to work with each other, but it was the committees that did not work very closely together. Even in their reports, they had emphasised that the two committees needed to work with each other, but that had never happened.

The Chairperson requested that Advocate Jenkins and Mr Janjties give them a pager on what the specific roles of the NCOP and the NA were. Essentially, they were doing the same thing – but what were the specific roles of the NCOP when it came to Money Bills?

He continued to enquire why there were Section 75 Bills. Firstly, he wanted to know if that meant that their role on the budget was a limited one. Secondly, was it correct to say that they first examined the division of revenue so that they would know how much money to allocate to the different spheres? And once they knew how money they gave, would they know what would happen and which department got what?

The Chairperson expressed his appreciation for what Advocate Jenkins had said about the executive having to also adhere to the same criteria that were set out in the Money Bills to make amendments, yet they often got away with it. He asked whether it would be correct, in theory, to assume that they were the ultimate arbiters. Even if they had not done it, the NCOP should still check all these things. The executive should also be asked to meet those criteria.
He expressed his frustration that they were required to meet the strict criteria of eight rules when making amendments to the Money Bills. They had complained before that it was a ploy by the Executive to ensure that they never made changes, given that it was so hard to do as the balance of power was uneven, and they did not have the capacity.
The first thing they should ask was for both Appropriations Committees to produce a pager on how they had done all these things, and to explain to the committees why they do Budget Review and Recommendations Reports (BRRRs). He asked what the relationship between the BRRR and the MTBPS was, and how the BRRR was meant to affect the MTBPS.
He had requested that the date for submission of the annual reports be brought to the end of August instead of the end of September so that they had more time to process things so they could deliver the BRRR at least three weeks before.
On the issue of public consultation, he explained that more time was needed for consultation with the public. When it came to sequencing, the problem was that the Committee received the annual reports at the end of September, and if the time for the MTBPS reports was extended, it meant they would run until the middle of December. Furthermore, when it came to the quarterly meetings done by PBO, he requested that the two chairpersons shuld speak to the other two chairpersons and have joint briefings.

Advocate Jenkins responded by first explaining the specific role of the NCOP in the budget process. When dealing with the fiscal framework that comes with the budget, the revised budget that comes with the adjustments budget or the MTBPS proposed fiscal framework, the Act requires that the committees act together – they should have joint briefings, joint public hearings and then report within specific time frames. The difference was that the Constitution states that the NCOP is required to represent the provincial interests at the national level. It was critical that provincial issues were brought up. The Minister had to respond to that because when the fiscal framework was fixed, even before the budget had been presented, it was very difficult for the provinces to have any impact at that stage of the fiscal framework. This was critical, as that fiscal framework affected the money that the provinces received -- it would affect the division of revenues, it would affect how much money they got and how they could meet their policy priorities and their provincial budget.
He further explained that the role of the Select Committees was to really look at what was happening at the provincial level, and actually facilitate that process. Although the budget was a national and central process, it did affect provinces and municipalities. He believed that the focus needed to shift and should not be unnecessarily repetitive. The focus should be on the on the provincial issues that needed to be taken into consideration when looking at the proposed fiscal framework.
When looking at what the role of the NCOP was, and then the Select Committee on Appropriations and Finance, it was critical that provincial issues came through. Provinces may have different needs that may not be reflected on paper, and therefore there was a need for the provincial legislatures to speak up on what was needed.

He then responded to Mr Mkiva’s question on transformation, explaining that as advisors, it was not their job to support or not support certain party positions. They were to remain independent, neutral and impartial. However, the Constitution did clearly state in section 195 that the public service must be developmental-oriented. So while they did have a role to play, it was not a primary role. He further explained that it was one thing to look at what the policies of government were and to debate them, but one should never lose sight that a lot of the budget priorities were set in the Bill of Rights, which states that provision should be made for various socio-economic rights and that there must be further reconciliation for those rights. The inclusion of justiciable socio-economic rights – rights that can be enforced in the court of law – was to say that government could not deliver housing and education for everyone at the same time.

He explained that the difference between section 75 and 76 bills was the level of participation. The level of participation of the NCOP did not have to be as intense as that of the NA. When looking at section 120, subsection 3 of the Constitution stipulates that provinces must also have provincial legislation to set the procedure to amend their provincial Money Bills.
He commented that the NCOP and the Select Committee on Finance and Appropriation were not required to produce BRRR reports. Furthermore, there had always been a problem with the timeframe when the Minister reviews the budget in February, and needed to respond on both reports to explain certain recommendations.

Mr Jantjies responded on the issue of transformation by raising the point that the budget was an expression of the aspirations of the country. When looking at the Act, it empowered the legislature to hold government accountable in terms of whether or not the budget expresses the aspirations of the country. In his opinion, the Act allowed Parliament to assess whether or not that was the case – whether or not policies or societal needs were reflected in the budget.

Ms Nelia Orlandi, Policy Analyst, PBO, explained that they also presented to the Appropriation Committee that of the 45% that goes to the national departments, actually 70% of that money was transferred to the provinces. That indicated the importance of the NCOP committees, because it was such a huge amount. She added that besides that transfer, provinces also had their own revenue. The Committee had never analysed the budgets and compared different provinces with each other. In terms of the BRRR reports, she was of the opinion that BRRR reports should be the vehicle of all the finance committees in order to make recommendations to amend the budget. Because of the timeline of the reports, the committees miss those outcomes.

Mr Seeraj Mohamed, Deputy Director: PBO commented on the specific role of the NCOP and the issue of transformation. In the first one, he made a comparison of nature of South Africa in relation to that of the Indian government. The fiscal commissions had become a hugely influential and political entity. On the transformation side, he emphasised Advocate Jenkins’s stance that as advisors it was important that they stay non-partisan in the discussion document.

Since joining PBO in 2016, it had been very difficult for him to know how far to push within the PBO -- how far he wanted to disagree with National Treasury and the Financial and Fiscal Commission in terms of what was good for the country’s stability and growth, as well as what he may see was missing from their views. These were considerations like taking into account that South Africa ws now hugely integrated into the global financial system, and that the financial sector was the largest contributor to gross domestic product (GDP) -- but also the largest contributor to instability.

The Chairperson responded to Mr Mohamed by explaining that the PBO was independent. How they managed their internal differences was something that the advisory board could look at. He made the suggestion that all of the delegates should come to an advisory board meeting at some stage.

Responding to Mr Mkiva, the way he saw it was that there were tools to make transformation possible. This was not the content, but rather the means to achieve a goal. Secondly, in their reports to Parliament, the Committee did talk about transformation -- in fact, they talk too much about transformation, but do not deliver on it. Every report was about transformation; the problem was that neither the MPs, nor the Executives, nor the civil servants did the job. Thirdly, even if one were to get a very progressive government, it would still have to observe these things. One would just have to take into consideration inflation. Finally, there was a whole lot legislation and policy that had been passed in Parliament from 1994 to effect transformation, and had failed dismally to do it. His view was that the issue was not legislation, or words on a piece of paper -- the issue was implementation and delivery. This included the ANC, mainly because they were the majority party.

Mr E Njandu (ANC; Western Cape) commented on the point made by Advocate Jenkins about the NCOP representing the interests of provinces on the budget and MTBPS. He suggested in order to do things differently, it would important for committees to know how provinces were spending their budgets, it as it would assist the Committee to influence the process of representing the interests of the provinces.

The Chairperson commented that it was the Appropriations Committee that had to do that. It was something that was in the Bill, but was not done.

Mr F du Toit (FF+; North West) said he strongly believed that the focus should be put on corruption being eradicated, rather than transformation. The country had been transforming for the past 25 years and everything was in place according what people wanted it to be.

The meeting was adjourned.      
 

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