The Select Committees on Finance and on Appropriations met for a joint virtual strategic planning workshop. The amended Strategic Plan and 2021/22 Annual Performance Plan (APP) of each of the Committees was presented with the focus areas. Some of the strategic objectives of the Committees include: enhancing Parliament’s oversight and accountability over the Executive; enhancing public involvement in parliamentary processes; oversight of South African Revenue Service (SARS) and monitoring revenue collection; and oversight of National Treasury and its subordinate entities.
The proposed focus areas for 2021/22 include following up on recommendations to the Minister of Finance; monitoring risks to the fiscal framework - including the impact of a COVID-19 third wave on the economy; a briefing from Treasury on the implications of Zero Based Budgeting (ZBB); monitoring SARS progress in addressing revenue collection challenges; SARS customs and excise oversight visits to the Mozambique and Limpopo border posts; and processing all bills and international agreements.
The proposed strategic improvements include supplementing expenditure information with other performance information for more effective in-year monitoring. Additionally, prioritise conducting oversight visits, especially on the outcomes of the spending provincial grants and local government conditional grants. When engaging Treasury on the Financial and Fiscal Commission (FFC) recommendations, the Committee should invite the departments affected by the recommendations. The Committee needs to improve its follow-ups and its collaborative work with sector Committees. It needs to look beyond inviting the accounting officer during in-year monitoring, and consider inviting the internal audit head and audit committee chairperson as well. It was urged that the Committee start using the Department of Planning, Monitoring and Evaluation (DPME) reports.
Members supported the joint briefing meetings between the National Assembly and National Council of Provinces sister committees but raised concern about the limited time this gave for engagement by both NA and NCOP MPs. It was suggested that these joint sittings be extended by 30 minutes to facilitate more engagement. It was proposed that the Committees instead use the time set aside for report presentations and minutes for discussion with the stakeholders present. The senior parliamentary legal advisor reassured the Committees that there is nothing inconsistent with the rules, when it comes to jointly receiving briefings and hearings. Both NA and NCOP Rules state that the Committees are in charge of how they proceed with doing work and allow for conferring jointly. But Bills must be considered and decided on separately.
The Committee agreed that the Plan needs to speak to the strategy on how meetings are conducted, such as maintaining virtual meetings and saving on transport costs. It agreed that its oversight activities needed to be more effective and that the strategic plan and programme needed to consider capacity. Moving forward the Committees should monitor what changes it wants from the bodies it conducts oversight over. It was agreed that a discussion on cryptocurrency and its impact on the economy and finance industry, would be added to the programme.
Select Committees on Finance & Appropriations 2021/22 Annual Performance Plan
Ms Esther Mohube, Committee Content Advisor, presented the APPs for both Committees. She noted the mandates of the Select Committees, in accordance with the Money Bills Act, and the strategic objectives of the Committees. Some of the strategic objectives include: enhancing Parliament’s oversight and accountability over the Executive; enhancing public involvement in parliamentary processes; oversight of SARS and monitoring revenue collection; and oversight of National Treasury and its subordinate entities.
The updated situational analysis highlights the 2021 State of the Nation Address (SONA) priorities of defeating the coronavirus pandemic, accelerating economic recovery, implementing economic reform for sustainable job creation and inclusive growth, and fighting corruption.
Ms Mohube elaborated on government’s plans in response to the economy such as the budget reprioritisations and the social and economic relief package worth R500 billion. She pointed to the progress made with the Economic Relief and Recovery Plan (ERRP). The economic sector analysis highlights the steady deterioration of South Africa’s economy as a result of continued policy uncertainty, structural challenges and the impact of the COVID-19 pandemic. The deterioration of the economy has translated into lower revenue collection and the highest unemployment record since 2008. Some of the challenges for spending include unevenness in state capacity to deliver services.
A final table outlined each Committee's strategic objectives in alignment with parliamentary strategic goals, key performance indicators, anticipated outcomes and quarterly targets.
Select Committee on Fiance 2020/21 performance
Ms Mohube spoke of the progress made on each of the Finance Committee 2019/20 strategic planning resolutions. Some of the achievements include receiving clarity on roles and mandates from legal experts and appointing the Parliamentary Budget Office (PBO) Director. Some of the oversight activities could not be conducted due the COVID-19 outbreak, such as the oversight on special economic zones (SEZs). The proposed focus areas for 2021/22 include following up on recommendations to the Minister of Finance; monitoring risks to the fiscal framework - including the impact of a third wave of COVID-19 on the economy; a briefing from Treasury on the implications of Zero Based Budgeting (ZBB); monitoring SARS progress in addressing revenue collection challenges; SARS customs and excise oversight visits to the Mozambique and Limpopo border posts; and processing all bills and international agreements before the Committee. She highlighted continued plans to enhance public participation and cooperative governance and capacity building in 2021/22. She pointed out the bills it has passed between 2012 and 2017, including the Financial Markets Bill in 2012 and Sugar Tax Bill in 2017.
Mr Y Carrim (ANC, KZN) Chairperson: Finance Select Committee, proposed having a single strategic plan for the two Committees that forks out into sections for Appropriations and Finance matters. It seems redundant for the Committees to meet for three hours on two separate days to adopt the strategic plans, considering that the two Committees have the same NCOP Members and the same budget, but just different arms. Both Committee Chairpersons and the Chief Whip agreed that it is redundant. He suggested looking into this for next year.
Mr S Du Toit (FF+, North West) said he fully supports the joint meetings between the National Assembly and National Council of Provinces sister committees mentioned on page 15. However, he expressed concerned with the limited engagement time as a result of joint meetings. He proposed looking into extending the meeting time by 30 minutes to ensure both NA and NCOP Members have enough time to engage with presenters.
Ms D Mahlangu (ANC, Mpumalanga), Chairperson: Select Committee on Appropriations, agreed with the proposal for extended time.
Mr D Ryder (DA, Gauteng) said that the circulation of the strategic plan document the day before is not fair. He agreed with Mr Du Toit that more time for interrogation is needed. He added that the inputs in the APP make the Committee very reactive instead of proactive. For instance, the Committee can make time to start investigating regulations on cryptocurrency. One of the biggest cryptocurrency scams in the world has been housed through South Africa. There is a general lack of understanding of cryptocurrency, and it is an area that can bring about significant economic change.
Ms D Mahlangu (ANC, Mpumalanga), Chairperson asked Members if the Committee is still maintaining the visit to the Mozambique and Zimbabwe border posts.
Chairperson Carrim said the Strategic Plan was sent out on the 19 March afternoon. It is incorrect to say that the document was sent out yesterday. The final version was circulated yesterday, however, the main document was circulated before that.
He requested that the Committee take a decision on whether the Money Bills Act is to be amended. Adv Jenkins can clarify to Members if there is any rule barring joint briefings between the NA and NCOP and if there is nothing wrong for there to be an NA hearing with the presence of NCOP Members. He agreed on the time extension for joint meetings. However, the Committees first need to resolve when it is appropriate to have joint meetings. He proposed writing a letter to the NA Committee Chairperson listing five areas where the NCOP thinks there should be joint meetings.
Chairperson Carrim out that the role of NCOP is to focus on local and provincial issues, and so the Committee should avoid being another NA and make this clear in its fiscal framework contribution. He also raised a concern about Committee discussions translating into action. The Strategic Plan does not take into account the Committee’s capacity. It is not strategic and instead uses a ‘tick box’ approach. It needs to delve deeper into what new things will be interrogated when engaging with stakeholders. It also needs to speak to the strategy on how meetings are conducted, such as maintaining virtual meetings and saving on transport costs.
Chairperson Carrim said that the Committee has had an initial discussion on cryptocurrency, which is captured on its exit report. He agreed with Mr Ryder that further discussions on this are needed.
Adv Frank Jenkins said that the legal opinion on the NA and NCOP Rules can be re-circulated to Members. The NA and NCOP Rules state that both Committees are allowed to confer jointly but consider the Bills separately. Deliberations and decision making on legislation must be done separately. There is nothing inconsistent with the Constitution or the Rules when it comes to jointly conferring and receiving briefings from departments. They state that the Committees are in charge of how they proceed in doing work. In planning the programme, the team considers the most efficient options and budget cuts. Sometimes joint meetings do work better, however, the time problem is noted. The legal opinion does not speak to section 75 legislation. Section 45 of the Constitution states that joint rules are required for joint sittings on section 75 matters. The Money Bill Act requires joint sittings in some instances.
Chairperson Mahlangu noted that Members do not have an issue with the joint meetings; they have an issue with the time for deliberations at the joint meetings.
Mr Ryder asked for clarity on what Mr Carrim feels Members are disagreeing with him on. Some of the joint meetings are beneficial and justified and some are not. He pointed to the example he raised last year where there was no urgency and so a joint meeting was not justified. He agreed that joint briefings from the PBO, FFC and the Minister of Finance are useful. The limited time to process some bills necessitates joint meetings.
Chairperson Carrim said it is unfair for an individual to say joint sittings are useful for some areas and are not for others. The Committees need to abide to the rules and the majority need to agree. Individuals cannot pick and choose which engagements are to be joint and which ones should not be. He would not waste his time further on the matter and the Committees can continue with the current approach.
Select Committee on Appropriations 2020/21 performance
Mr Phelelani Dlomo, Committee Content Advisor, said the perspective of the researchers is that the Committee’s strategic plan and amendment should be treated as a discussion and reflection on the five-year plan. It will take into account the Parliamentary five-year plan, NDP objectives, Committee Legacy Report, SONA policy priorities and the NCOP strategic plan.
Mr Dlomo gave a performance assessment for the Appropriations Select Committee on the 2020/21 APP. The Committee achieved the processing of bills and in year monitoring on expenditure and matters with budget implications. He pointed out that 2020 was an unprecedented year, that saw more bills being processed than usual, due to the impact of the pandemic. He highlighted the Committee’s achievement of enhancing public participation, shown by the Committee’s recommendation for an extension of the social relief grant – a process that emanated from public submissions and hearings.
Mr Dlomo shared proposed improvements to strengthen the Committee’s work going forward. He stated that it is difficult to conduct a performance analysis that is only based on expenditure information. The in-year monitoring of conditional grant expenditure should also be supplemented with other financial information for more effective monitoring. For instance, delays in infrastructure or public works programmes have a ripple effect, resulting in slow spending.
In recent years, the focus of the Committees has been passing bills with little time given to oversight. It is understandable that not many oversight visits were conducted due to COVID-19. However, going forward it is important to conduct oversight visits, especially looking into the outcomes of the spending of provincial grants and local government conditional grants.
When engaging Treasury on the FFC recommendations, the Committee should invite the departments affected by the recommendations. The Committee needs to improve its follow-ups and its collaborative work with sector Committees.
The Committee must improve on follow-up. It must track issues that it has asked the Minister for feedback and follow up on these.
The Committee needs to look beyond inviting the accounting officer of a department during in-year monitoring, and consider inviting the internal audit head and audit committee chairperson as well. They have a red flag system that gives early warning signs and they share this information with the accounting office to follow up on these. By having them in the same meeting, you are forcing the accounting officer to take seriously these matters such as irregular expenditure. This is because there is a tendency in departments and municipalities for these two units not to be taken seriously by the head of department. They do not take these internal bodies seriously, only the Auditor General. When the Auditor General comes for the annual audit, then the accounting officers run around like headless chickens. By inviting them to these meetings, you are forcing them to work together as a team throughout the year. As for M&E, the Committee should start using the Department of Planning, Monitoring and Evaluation (DPME) reports, especially the Management Performance Assessment Tool (MPAT) reports.
Mr Dlomo said that the reporting period for Committee activities and the NCOP strategic planning session should be aligned to the financial year, and not clash with budget processes. Sector committees should be more collaborative and avoid duplication of oversight activities, and instead share information to follow up on specific issues.
He noted the concerns about insufficient time for deliberations in joint meetings with the NA. The practice of Parliament even before the time of Zoom virtual meetings was a three-hour time limit. This was due to the shortage of venues to accommodate all the committee meetings. He is not sure if the era of Zoom allows for more flexibility. He noted that in follow up meetings after such briefings when the Committee is considering its report, stakeholders such as the FFC and South African Local Government Association (SALGA) and Treasury are always present in meetings in which the outcomes or decisions have implications for its institutions and Members can raise their questions and concerns then with the stakeholders present. To use time more effectively, the Committee should monitor both provincial and municipal conditional grants to ensure value for money.
Mr Du Toit said the presentation was straightforward.
Mr Ryder said the tone of the meeting was noted earlier and the Committee can proceed.
Mr Z Mkiva (ANC, Eastern Cape) said he was fully covered by the presentation, which mainstreams the aspirations of rural communities.
Chairperson Carrim said both Committees are not dealing with its oversight mandate effectively. The Appropriations presentation demands the Committee to be more effective in performing oversight, which is correct. The Committees need to consider how none of the parties find balance between party loyalty and having things in common on a provincial level. There needs to be a balance between party influence and provincial influence. The strategic plan and programme do not adequately address the pandemic’s interruption to the year and the new way of operating. He proposed bringing an independent expert to facilitate an assessment of the Committees' capacity, resources and time available and the productivity of activities done. For instance, the assessment could look at how to use digital technology more effectively to achieve their mandates. This should be factored in the strategic plan. He suggested that the Committees ask Treasury what Bills will be brought forward during the year. He noted that there are two private member bills from the DA and one from the EFF. There are only two bills on the agenda this year, apart from the normal tax bills.
Mr Ryder agreed that the Committees are not doing their oversight role any justice. He requested that the Local Government concerns raised by SALGA and Treasury on the equitable share and spending, be covered in more detail.
Chairperson Mahlangu said the briefing was on point in reminding the Committee of its weaknesses and of the Committee’s mandate and effective ways to fulfil it. The audit committee suggestion was important. The Committees need to do something about the 30 day invoice non-payment by state institutions like Eskom. The Appropriations Committee also needs to follow up on spending patterns and be able to pick up on irregular spending.
Chairperson Carrim suggested having a quarterly report on provincial and local spending for the Finance Committee and adding what Mr Ryder raised on cryptocurrency. The Committees should also include amendments on what changes it wants from the bodies it conducts oversight over.
Mr Dlomo replied that there is an updated report on the tracking mechanism that can be sent to Members. He urged the Committee to look further into the 30 day non-payment, and interrogate provincial and national Public Works programmes. Delays in Public Works programme has a ripple effect that impacts the rate of spending in provincial departments. Lastly, he highlighted the importance of going on site visits to monitor how grant funds are being sent, as recent visits to projects have shown an increasing challenge with cost escalation. A system needs to be put in place to close down on this cost escalation.
Chairperson Carrim suggested amending the programme to include discussions on cryptocurrency and a meeting with the Independent Regulatory Board for Auditors (IRBA). He proposed the adoption of the Committee programme with the amendments.
The programme with the amendments was adopted.
The minutes of 2, 9, 25 February; 2, 3, 5, 9, 16 March 2021 were adopted.
Chairperson Carrim said the Committee needs to reach a resolution on its decision in November 2020, to no longer engage with Mr Peter Meakin, on his policy recommendation to only tax land. He has made several submissions and presented on the same recommendation during public hearings for years. There is a fundamental disagreement in all political parties with his view. The Committee also decided that Treasury should respond to him to conclude the matter, however, Treasury has not responded. He proposed that the Committee write a letter of response to him and have an hour long meeting with Treasury’s Director-General on Thursday for it to explain why it does not respond to the Committee’s request and treats Parliament with disdain.
Mr Du Toit asked if it is constitutional to stop him from coming, even if his content is repetitive.
The Co-chairperson replied that the Committee is not stopping him from coming. He can continue making written submissions; however, the committee chooses how many of the stakeholder submissions can be given a slot to present during public hearings. The letter will simply communicate that there is a fundamental disagreement in all political parties with his view, and that there is no use for a continued engagement on the matter. He is still welcome to make a written submission if he wants.
Adv Jenkins agreed with the Co-chairperson that it is up to the Committee to decide whether it is effective or not to listen to the same content repeatedly in the hearings.
Mr Ryder requested that Mr Meakin's submission and the letter to him be circulated to Members before being sent.
Mr Dlomo asked how Members’ inputs on the strategic plans should be effected.
The Co-chairperson said it is not clear what Members agreed and did not agree on about strategic planning recommendations so those can be dropped for now. Towards the end of the report, just observe that some of the issues were raised and further discussion will be held until there is an agreement on it. There was consensus on the cryptocurrency matter.
The Co-chairperson, in closing, pleaded with planners to deeply consider strategies in the current context.
The meeting was adjourned.
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