Budget Process in Parliament: Meeting with Rules Committee Focus Group

Meeting report

JOINT BUDGET COMMITTEE
4 April 2005
BUDGET PROCESS IN PARLIAMENT: MEETING WITH RULES COMMITTEE FOCUS GROUP

Chairperson: Mr N Nene (ANC) [NA]

Relevant documents
Document bundle compiled by Research Unit of Parliament consisting of:
- Concept Paper: Joint Budget Committee [Draft 6 June 2003, drafted by A Fölscher]
- COSATU submission on the Money Bills amendment Procedure Bill -22 October 1997
- Report on the amendment of money bills: UCT public law - report offers a brief comparative overview of Germany, Sweden and Canada.
- Information sheet on Budget reform in Asia.
- The Money Bill Amendment Procedure Bill of 1997
- The South African budget cycle.
- The role of the Legislature in the budget process - Report from Hon. B Hogan.
- Budget Reforms, comments and ideas: Jason Olson - Document for Hon. B Hogan.
- Amending Budget Bills.
- Designing money bills amendment powers for Parliament.
- Legislature Budget Oversight: best practices - London School of Economics.
- Legislatures and the budget process - National Democratic Institute for International Affairs
- Legislation to amend money bills - Response by Parliamentary Law Advisor
- Information on the German system.
- Information on the Swedish system.
- Comparative budgetary processes in UK, France and Brazil
- Redefining the Contribution of Legislatures to the Budget Cycle - Report from Joachim Wehner

[Email [email protected] for specific documents]

Terms of Reference in previous Parliament

SUMMARY
The new terms of reference for the Joint Budget Committee were currently being finalised by Parliament’s Research Unit, and would be considered by the Committee at a later meeting. The Committee identified the following four matters that required consideration by the Committee before its terms of reference could be decided upon:
- the opportunities for the Joint Budget Committee to influence the Budget process;
- the precise nature of the procedure that Parliament would practically have to establish, as envisaged in Section 77(3) of the Constitution;
- the structures that currently existed within Parliament that would be used to give expression to Parliament’s Section 77(3) mandate; and
- Parliament’s oversight role in the Budget process.

MINUTES
The Chair informed Members that the document provided by the Parliamentary Researcher would form the basis of the discussion, which dealt with Parliament’s ability to amend money Bills.

Dr S Cwele (ANC) [NA] requested the Parliamentary Researcher to provide a brief synopsis of the large document as Members were seeing the document for the first time.

Mr A Ganief, Parliament Researcher, replied that the document was really a compilation of various documents on the matter that were discussed by Parliament since 1994. He proposed that Ms Hogan instead provide a brief overview, as she was more familiar with the issues.

Ms Hogan informed Members that Parliament’s Rules Committee had established an Ad Hoc Committee on Oversight and Accountability during the previous term of Parliament to consider Parliament’s oversight and accountability functions in terms of the Budget. That Committee submitted its Final Report by Ad Hoc Committee on Oversight and Accountability to Parliament during the last term. Parliament’s Joint Rules Committee had adopted the Report, and was now setting into action the recommendations contained in that Report. The mandate of the Focus Group was to consider the process to be followed by Parliament in amending money Bills generally in order to give effect to Section 77(3) of the Constitution, whereas the Joint Budget Committee’s specific interest would be whether Parliament could amend the Budget. Yet the Joint Budget Committee would only be able to engage that matter once the role of Parliament in amending money Bills generally was clarified. She proposed that the Focus Group and Joint Budget Committee in fact sit jointly to consider the matter, so that the process could be expedited.

The Chair stated by way of background information that the Budget was only one of the money Bills that Parliament dealt with, in terms of Section 77 of the Constitution. Any amendments effected by Parliament to money Bills must also be accompanied by rigorous scrutiny and meaningful involvement by Parliament in influencing the Budget, especially the Budget process. The Committee did request precise dates on the latest budget cycle because it needed to identify the points at which Parliament could intervene and effect amendments to the Budget.

Dr G Woods (IFP) [NA] asked whether the Chair was implying that Parliament could become involved in the Budget process and influence allocations even before the final version was tabled in Parliament. He questioned whether this would not offend the separation of powers doctrine.

The Chair answered that he did not mean before it was tabled.

Mr S Asiya (ANC) [NA] stated that Parliament must be allowed to amend the Budget, but National Treasury must agree to this and the process to be followed. He questioned how this could be done before the final Budget was tabled.

The Chair informed Members that Clause 3 of the old Terms of Reference of the Committee stipulated that it must give effect to Section 77(3) of the Constitution by establishing a procedure for Parliament to amend money Bills. This was precisely the mandate of the Focus Group.

Ms Hogan suggested that there were three basic conceptual issues that needed to be decided on. Firstly, the opportunities for the Joint Budget Committee to influence the Budget process, because Parliament could not technically amend the Budget. This would essentially mean that Parliament would be able to influence the Medium Term Expenditure Framework (MTEF), yet the current difficulty was that the information provided over the MTEF was very limited and lacked the degree of detail needed for Parliament to properly exercise its oversight function. Parliament would then be able to effectively influence the Budget of the following financial year by exercising its rugged oversight powers over the MTEF period.

Secondly, the precise nature of the procedure that Parliament would practically have to establish, as envisaged in Section 77(3) of the Constitution. The approach followed by other governments would be valuable in reaching a decision on this matter.

Thirdly, the structures that currently existed within Parliament that would be used to give expression to Parliament’s Section 77(3) mandate. This would detail the roles of the Joint Budget Committee and the Focus Group in the process, as well as those of the NCOP and the Finance Portfolio Committee. The process to be used must be agreed to by all these relevant role players.

Mr M Stephen (UDM) [NA] contended that the Joint Budget Committee did not strictly have the power to amend the Budget, and it was thus merely able to influence the Budget.

Mr Y Bhamjee (ANC) [NA] stated that Parliament’s role was to scrutenise the Budget and assess whether its allocations were in line with government’s spending priorities. Parliament was however not able to influence the specific priorities.

Mr T Ralane (ANC) [Free State] urged the Committee not to rush the process. The Committee should instead to allow the Parliament researcher to finalise his work, and must also discuss the three conceptual items identified by Ms Hogan.

Ms Alta Folscher, a consultant on governance, public expenditure and civil service management systems, proposed a fourth conceptual item: the precise nature of Parliament’s oversight function in amending money Bills.

Ms Hogan agreed. She proposed that this fourth item be entitled "Parliament’s oversight role in the Budget process".

The Chair agreed and requested the researchers to expedite his work.

Ms Hogan proposed that the Committee first reach conceptual clarity on the four issues raised before it engaged in discussions on the new terms of reference of the Committee.

The Chair agreed and noted that one of the four items would be focused on at the next meeting.

Ms Hogan requested that the researcher provide the Committee with the following important information before the next meeting: the precise dates of the Budget cycle, the Financial and Fiscal Commission’s reporting timelines, the nature of the South African Local Government Association (SALGA) interaction with Parliament on the Budget, information on the people’s Budget and the requirements of the Public Finance Management Act (PFMA) with regard to the Budget.

The Chair agreed, and adjourned the meeting.