Parliamentary Budget Office 2022/23 Annual Report

Meeting report

Opening remarks

The Chairperson said that this was the Committee’s first meeting with the Parliamentary Budget Office (PBO).

Ms Cindy Balie, Committee Secretary noted the apologies from Ms Dlakude (ANC) and Ms Gwarube (DA) who were both on sick leave.

The Chairperson said that the Co-Chairperson Ms B Mabe (ANC) was also not feeling well, but she has joined the meeting and will interject when necessary.

Briefing on the PBO’s 2022/23 Annual Report

Dr Dumisani Jantjies, Director, PBO, took the Committee through a detailed presentation, which focused on the core functions of the PBO and highlighted some of the successes and challenges that the PBO had experienced since its establishment in 2013. He said that a lot has been done by the PBO, but some of the challenges are still persistent.

The PBO was established in terms of section 15(1) of the Money Bills Amendment Procedure and Related Matters Act. Its main objective is to provide independent, objective, and professional advice and analysis to Parliament on matters related to the budget and other money Bills.

Performance and financial information

• The PBO annual performance information depicts positive performance information comprising 36 actual annual performance outputs produced against 28 performance targets. The PBO performance information is influenced by cyclical variations in demand-driven requests, this resulted in a performance variance of 08 performance outputs.

The 36 performance outputs enabled the PBO to discharge its legislative mandate in support of the public finance oversight mandate of Parliament over the Executive.

• A gross annual budget amounting to R18 403 330 across the three main expenditure categories was allocated to the PBO for the 2022/23 financial year. The budget comprised of compensation of employees (R17 118 330) and goods & services (R1 285 000) and no allocation for capital expenditure

An annual eighty-eight (88%) percent aggregate spending rate across the three main expenditure categories materialised.

The Office experienced delays in the procurement and human resources processes, and was unable to complete planned procurement, e.g. economic modelling and recruitment and performance reviews, tools of trade, maintenance of the Office etc.

Key challenges impacting the PBO from fulfilling its mandate

• Lack of budget and other resources means the PBO remains disempowered to give full effect to section 15 of the Money Bills Act.

• Non-compliance with the Money Bills Amendment Procedure and Related Matters Act.

The PBO must annually receive a transfer of funds from Parliament's budget in accordance with section 35 of the Financial Management of Parliament Amendment Act (FMPPLA) to carry out its duties and functions. Over the years, the Executive Authority has requested that the PBO be provided with the required budget.

• Lack of sufficient budget and human capacity to fulfill its mandate, governance, and reporting responsibility of the Office.

• The current recruitment process and its lack of efficiency disables the Office from recruiting required talent.

(See Presentation)

Inputs by National Assembly House Chairperson

Mr C Frolick, House Chairperson, said that he did not receive a direct invitation to attend this meeting, but given that he is the Co-Chairperson of the PBO Advisory Board he had taken the liberty to attend.

The PBO Advisory Board is scheduled to meet next week and will discuss a lot of the issues that Dr Jantjies has raised. The Money Bills Amendment Procedure and Related Matters Act is very clear on how things ought to be done, but it is very difficult to achieve in practical terms. For instance, the financial situation in the country is of such a nature that what is being requested cannot be funded to the maximum.

The PBO Advisory Board has noted the issues and will have further discussions in next week's PBO Advisory Board meeting.

Discussion

Mr B Radebe (ANC) welcomed the PBO’s 2022/23 annual report. He agreed with Mr Frolick, that the country’s financial situation was facing headwinds. He added that it is very important that resources are used effectively. Resources must be directed to areas that will have an impact on transforming the country.

He believed that the PBO’s research capacity was essential because the most successful countries are driven by cutting-edge research. The PBO should be handy in assisting Parliament to maximise the expenditure of taxpayers' money. Whatever is done, must be done in such a way that it addresses South Africa’s structural problems, such as unemployment, inequality, and poverty.

He was worried that it seemed as if the PBO only provided support to the finance and appropriations committees. He suggested that the PBO should also support other committees that oversee departments that have an economic impact, especially the committees that oversee trade and industry, mineral resources and energy, and agriculture. He asked if the PBO would also have the capacity to support committees that oversee health because the vast majority of people depend on the public health care system, but the quality of public health care is declining.

He said that there is a longstanding problem of Parliament being treated like a department. He appreciated the comparison made in the presentation, that the United States (US) Congress has the capacity to amend or reject the executive’s budget proposal and to formulate a budget of its own. If the PBO remained “so small”, he questioned whether Parliament would ever reach a level where it would have the capacity to influence and amend the budget of the state, especially based on the priorities.

He asked how many meetings took place between the PBO and the PBO Advisory Board during the 2022/23 financial year. He asked about the outcomes of those meetings because it did not make sense that the PBO was established ten years ago, but it still does not have a full complement of staff. He said that the PBO needed greater capacity so that it could support Parliament in its oversight over the Executive.

Mr N Singh (IFP) said that he had been privileged to be part of the establishment of the PBO. He was pleased to see that the PBO went from being a stepchild of Parliament to having a meaningful representation and budget. He agreed with Mr Radebe that the PBO was established with the intention to provide support to the finance and appropriations committees, as well as other committees and Members of Parliament. He asked that the Committee be informed of the role and mandate of the PBO Advisory Board.

He asked if the PBO would be conducting a study across all departments to determine the impact of the recent budget cuts on service delivery.

He noted Mr Radebe’s remarks about the US Congress’s authority to amend budgets. He said that the Parliament of South Africa also has this legislated authority, but it has not done so because it is not empowered with research and information to make such suggestions to the Executive. Instead, the Members incessantly complain about the low budget allocated to some of the departments. He asked if the PBO had any recommendations to facilitate meaningful interactions between the committees and the Executive Authorities, particularly to propose amendments to budgets.

Mr M Rayi (ANC, Eastern Cape) suggested that the Committee’s Co-Chairpersons and Researcher should meet with the PBO and the PBO Advisory Board to clarify the issues that had been raised regarding the stumbling blocks of implementing the Money Bills Amendment Procedure and Related Matters Act in terms of the governance, role, and functions of the PBO. He asked whether the PBO was an independent organ of state or if it was an entity of Parliament. He asked if the PBO was audited separately, and if it has its own audit committee.

He noted that there was a service level agreement between the then Acting Secretary to Parliament and the Director of PBO in terms of the financial management of the PBO. He asked if the service level agreement intended to address the provisions of the Money Bills Amendment Procedure and Related Matters Act that have not yet been implemented.

He further suggested that the Committee receive clarity on the PBO’s role in supporting other committees beyond the finance and appropriations committees. He asked if the PBO had ever made suggestions to amend budgets. He asked whether the National Treasury had the power to instruct departments to cut budgets if the budget had been approved by Parliament.

Mr X Qayiso (ANC) appreciated the PBO’s 2022/23 Annual Report, which was quite elaborate. He suggested that the presentations should be shorter in the future. The presentations should not be more than 15 slides, as the Members could read the reports on their own for further details.

He concurred with Mr Rabede and Mr Rayi’s remarks. He noted that one of the common issues affecting PBOs or similar entities is the lack of specific legislation to protect them from undue influence. He asked whether the PBO had identified any gaps in the legislation that resulted in the PBO being confronted by undue influence.

He said that the PBO has made some positive strides with the 36 actual annual performance outputs produced against 28 performance targets. However, the PBO must expand its support beyond the finance and appropriations committees, based on its analysis of the achievement of National Development Plan (NDP) targets.

He believed that the PBO required greater capacity to enhance its role. There should also be frequent reviews of legislation to ensure that it has the desired impact.

Ms N Mahlo (ANC) said that most of the points that she wanted to raise have been covered by her colleagues. She informed the Chairperson that she might experience internet connection issues, although she will try to reconnect, as the Committee required a quorum.

The Chairperson thanked the Members for raising their questions. She sought clarity on the independence of the PBO. She said that it was a good presentation, but the Committee anticipated a presentation that focused on the research and recommendations to the Committee. The Committee also looked forward to observing the impact of the PBO’s work.

She reiterated Mr Rayi’s question on how the PBO was audited. She said that the Committee would have further engagements with the PBO to seek clarity on the issues raised.

She noted that several Members have left the meeting, due to other commitments. She invited the Secretary to Parliament to make a few remarks.

Mr Xolili George, Secretary to Parliament, said that Mr Rayi’s suggestion was worth pursuing to ensure that Parliament’s governance interfaces so that the matters are clearly spelled out. Perhaps at the time of conceptualisation in the Money Bills Amendment Procedure and Related Matters Act, some matters were not set out very clearly to support the PBO in ensuring that it is properly capacitated and given clear lines of accountability. The engagements with the Director of PBO and the PBO Advisory Board must ensure that there are firm proposals that are legally sound and respond to corporate governance.

Dr Jantjies said that this was an important meeting for the PBO, as it was its first meeting before the Committee. As the Director, it was an opportunity for him to understand the requirements of the Committee and to receive clear guidance on the information required.

He agreed that some of the issues are longstanding and the proposed meeting with Parliament’s management would be useful. He believed that the Money Bills Amendment Procedure and Related Matters Act did contain clear governance and reporting frameworks, but there are also a lot of perspectives and views around it.

The PBO does conduct sectoral analysis across education, health, economic development, and education et cetera, but this is done at the appropriations committee level. The analysis considers whether the outcomes have been realised and identifies the issues in those sectors. Moving forward, the PBO wishes to do more substantive analysis and engagements with the different sectoral committees beyond finance, especially on the impact on service delivery. Many committees have invited inputs from the PBO, but at times the PBO is not able to respond immediately due to its very limited capacity.

He believed that the bulk of the challenges that the PBO is confronted with is due to the lack of implementing the Money Bills Amendment Procedure and Related Matters Act. It was premature to assume that there was a problem with the Act because it had not been fully implemented.

He explained that PBO is an entity of Parliament, it is not independent from the Parliament ecosystem. The PBO was established by an Act of Parliament to support Parliament. It has a very specific role and purpose that is linked to the Money Bills Amendment Procedure and Related Matters Act.

The lack of budget disables the PBO from fulfilling its mandate. He was worried that so much was expected of the PBO, but it can only do so much with the capacity that it has.

He said that the presentation did provide some insight into the work that the PBO does, especially on the slides relating to the service delivery overview. The PBO looked at the recent budget cuts and expressed concerns about the socioeconomic implications.

The service level agreement was a form of recognition that the PBO has been established but it had not been given the capacity, yet it is expected to deliver on its mandate. The service level agreement had ideally been set up to enable the PBO to co-share some functions with Parliament’s administration while maintaining the accountability mechanisms. It was a transition to allow the PBO to build capacity, but this has not taken place. The service level agreement was seen as a way to keep the PBO functioning as a division of Parliament, but it remained ineffective because it lacked considered effort to ensure that there were resources to bring it to effect. The PBO has largely been compromised by the lack of capacity.

It is important for the PBO to have regular engagements with different committees, especially to address the key thematic areas of concern. Any committee was welcome to write to the PBO to request analysis and advice.

He noted that one of his concerns about the delays in giving effect to the capacity of the PBO is the moral impact that it had on its staff. It was difficult for the team to truly be motivated if they had raised the same issues over time, but it has not been dealt with. He hoped that the proposed meeting would resolve some of the issues that have persisted for ten years. He thanked the Committee for the opportunity to present.

The Chairperson thanked Dr Jantjies and the PBO delegation. She said that it was a good start, considering that it was the Committee’s first meeting with the PBO. This is one of the milestones that will be reflected in the Committee’s legacy report as it hands over to the Seventh Parliament.

Minutes

The Chairperson asked the Committee Secretary if there was a quorum for the Committee to adopt its minutes and a report.

Ms Balie replied that the Committee needed eight Members to quorate, which must include five Members from the National Assembly and three from the National Council of Provinces (NCOP). There were only two Members from the NCOP in attendance and five Members from the National Assembly. She suggested that the Committee schedule a short meeting to adopt the minutes and report.

The Chairperson noted that there was no quorum. The Committee would have to consider another meeting to adopt the minutes and report.

Mr Rayi suggested that the Committee schedule a brief meeting before the National Assembly’s plenary session on Tuesday, 14 November 2023.

Mr Radebe said that the plenary session would start at 2pm. He suggested that the Committee schedule the meeting after the plenary session, at about 7pm.

The Chairperson said that she will consult with the Co-Chairperson, Committee Whip, and the Committee Secretary to check the availability of Members. The consideration and adoption of the minutes and report were postponed.

The meeting was adjourned.