Constitutional Matters Amendment Bill: Department briefing

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE; SECURITY AND CONSTITUTIONAL AFFAIRS SELECT COMMITTEE: JOINT MEETING

5 August 2005
CONSTITUTIONAL MATTERS AMENDMENT BILL: DEPARTMENT BRIEFING

Co-Chairpersons: Ms F Chohan-Kota (ANC) and Kgoshi L Mokoena

Documents handed out:
Constitutional Matters Amendment Bill [B22 - 2005]
Working Draft 1: Amendments to Constitutional Matters Amendment Bill [B22A - 2005]
Working Draft 1: Amendment regulations

SUMMARY
The Department outlined the amendments that had been effected to the Bill arising from suggestions made by the Committee at previous meetings.

The proposed amendments dealt with Clause 2 of the Bill and the regulations. The most important matter to clarify was whether a political party that had ceased to exist should repay its unspent balances to the Independent Electoral Commission (IEC). Two options were presented on this:
- a party should repay to the Commission the unspent balances of all monies that had been allocated to it should it cease to qualify for the allocation of monies from the Fund or
- no unspent balances should be repaid to the IEC.
Also proposed was the insertion of a new Section 6A that would regulate the procedure of the repayment of unspent balances.

There was a concern whether the IEC would take into account all outstanding debts and rent for premises of the party before determining the percentage of the unspent balance that had to be repaid to it. All political parties knew that there were two floor crossing periods in each five-year term and it would not be advisable for them to sign long term leases on property and equipment.

The suggestion was made that a penalty for failure to comply with the provisions of the Bill, once passed into an Act, should be increased because it was too lenient.

MINUTES

Briefing on Proposed Amendments to Bill
Mr J Labuschagne (Department of Justice legal drafter) briefed the Committee on the proposed amendments that he had effected to the tabled Bill. Such amendments were shaded in grey. Words that had been deleted had a line running through them. New insertions were doubly underlined. This was necessary because there were already deletions indicated by bold brackets and insertions underlined by a single line.

Clause 2: Amendment of Section 5 of Act 103 of 1997
Mr Labuschagne explained the amendment options in this clause. Option 1 was to cater for the proposal that had been made by Mr van der Merwe (IFP) that unspent balances should not be repaid to the Independent Electoral Commission (IEC). The proposal necessitated the amendment of the proposed Section 5(4) in the Bill. A political party that had, prior to the period of floor crossing, qualified for the allocation of monies, would not have to repay the unspent balances to the IEC should it cease to qualify for the allocation as a result of its:
- only member becoming a member of another political party;
- merger with another political party; or its subdivision.

He said that Option 2 was that a party should repay to the Commission the unspent balances of all monies that had been allocated to it should it cease to qualify for the allocation of monies from the Fund. He referred to this as the Committee’s option. This option referred to repayment "in accordance to Section 6A" because he had inserted a new clause dealing with procedures in terms of which unspent balances should be repaid to the Commission. In essence this clause set out the general principle and the proposed Section 6A contained the mechanism.

Mr Labuschagne said that Option 3 provided that allocation of monies would cease should a party cease to qualify for such allocation. Such a party would be required to pay its unspent balances to the Commission. The difference between this option and Option 2 was that Option 3 regulated the procedure and mechanism for the repayment of the money that had ceased to exist after the election or during the course of the year.

Ms Chohan-Kota said that it was important to get a clear understanding of the options. Option 2 retained the three circumstances in which a party would cease to qualify for allocation. These were when a party had lost an election, or Parliament or legislatures had dissolved or upon crossing of the floor. Option 3 provided that there was only one provision that pertained to ceasing to qualify for allocation.

Mr Labuschagne said that he preferred Option 4. The heading of Section 5 was "allocation of monies". The whole section dealt with the manner in which monies had to be allocated and purposes for which such monies could be used. It dealt with unspent balances towards its end. He submitted that the whole part that dealt with unspent balances should be deleted. The issue of unspent balances would be addressed in a new Section 6A.

Ms Chohan-Kota said that Option 4 was not really an option in terms of the broader principles but just a matter of moving provisions around so that they stood together.

Mr M Mzizi (IFP) (Gauteng) noted that unspent balances had to be paid back to the IEC. He asked if the Bill would take into account any outstanding debts that a party might have to settle before making repayments to the Commission.

Ms Chohan-Kota said that such a scenario would be taken care of in terms of Option 3. A political party ceased to qualify for funding upon losing an election, dissolution of Parliament or provincial legislature or when all members cross the floor and the party was no longer represented in Parliament or a provincial legislature. The first two were already in the Bill even before any amendments were made to it. The Bill basically provided that unspent balances had to be repaid within 21 days and did not regulate the procedure. The IEC determined what the unspent balance was upon dissolution of Parliament. This was not the case when a party had lost an election. The Bill was trying to establish a single principle. There were different options in terms of what that principle should be. One of them was the suggestion, by Mr van der Merwe, that parties did not have to return the unspent balances. In principle this was a bit messy because putting together politicians and public moneys was a recipe for disaster. There should be an opportunity for political parties to pay for expenses that they had already incurred before making payment to the Commission. Practically, there would be little or no money to repay to the Commission because parties had expenses on an ongoing basis.

Mr Mzizi asked if audited financial statements would come from the parties themselves and if there would be any investigation to authenticate them.

Ms Chohan-Kota replied that such issues would be addressed somewhere in the Bill.

[Kgoshi Mokoena took over as the Chairperson as Ms Chohan-Kota had to leave the meeting.]

Mr Labuschagne said that the Bill proposed to insert new subsections 5, 6, 7 and 8 in Section 5 of the Act. One could retain the provision that when a member crossed from one party to another, the nominating party did not have to repay any unspent balances. This is provided for in the proposed subsection (5). If this was not properly regulated, a member who had crossed to another party might attach a certain value of money to his or her seat and demand that such an amount be paid to his or her new party. This principle was already in the Bill and should be retained. The proposed subsection (5) could be deleted if it was already clear to members that a party did not have to repay unspent balances should its member cross to another party provided that the party did not cease to qualify for funding.

An alternative could be to delete the proposed subsections (5) to (7). The proposed subsection (8) would then become subsection (5). The proposed subsection (8) would empower the Commission to deal with any matter that was not provided for in the Act. The Commission had raised an objection against this provision.

Another alternative was to delete all of the proposed subsections.

Mr Labuschagne proposed the insertion of a new Section 6A to regulate the procedure regarding the repayment of unspent balances. He would draft two more options to this proposal to cover situations where a party had ceased to qualify for allocations because it had lost an election or upon dissolution of Parliament. The proposed section dealt with repayment of unspent balances upon crossing of the floor. It terms of the proposed section, the last person to hold the office of the accounting officer of a political party should, within two months after the last day of September of the financial year in question, prepare a statement showing:
– all amounts the party had received from the Fund and the purpose for which such monies were used
– the unspent balances of the party as at the last day of September
– all the fixed financial commitments of the party until the end of the financial year in question.
The statement should be audited by an auditor who should express an opinion as to whether the monies had been used for purposes not authorised by the Act and on the correctness of the information. The Commission would determine the percentage of the unspent balances that must be repaid to it and the date on which such monies should be repaid. The unspent balances repaid to the Commission would be credited to the Fund. The Commission could appoint a public accountant to verify the report and audited statement submitted to it. It could also audit the statement.

Mr Labuschagne also proposed an amendment to Section 8(1)(b)(i) of Act 103 of 1997. The section would also deal with amounts of unspent balances of money repaid to the Commission during a financial year.

Mr Labuschagne said that it terms of Section 9(2) of the Funding Act all monies that stood to be credited to the Fund at the end of a financial year were to be carried forward to the next financial year. He proposed that a proviso that "provided that any unspent balances of monies repaid to the Commission in terms of Section 6A(6), must be used in the prescribed manner". The regulations provided that the unspent balances would be distributed to all parties that qualified for funding. The wording of Section 4 of the Act gave an impression that the monies could be utilised for other purposes other than funding political parties. It was important to clearly state that the monies should be allocated to political parties in the next financial year.

He also proposed the insertion of a Section 9A to provide for offences and penalties. In terms of the proposal any person who had contravened or failed to comply with any provision of the Act would be guilty of an offence and liable on conviction to a fine or imprisonment for a period not exceeding six months. This was necessary to ensure that an accounting officer of a party that had ceased to exist would still prepare the statements as required by the Act.

Mr Labuschagne said that Clause 4 of the Bill would be deleted if the proposal that a party should not be required to repay unbalances under any circumstances was accepted.

Briefing on the Proposed Amendments to Regulations
Substitution of Regulation 2 of the Regulations
Mr Labuschagne proposed the insertion of subparagraph (b) to provide that any unspent balances repaid to the Commission should be included in the total amount of funding for the next financial year.

Amendment of Regulation 5 of the Regulations
Mr Labuschagne said that he had changed reference to subregulation 4 in regulation 5(1) to reference to subregulation (3). He said that the existing subregulation (3) that regulated the payment of money from the party to the Commission was no longer necessary. The amendment contained two options on the period within which allocations to which political parties were entitled to in terms of paragraph (a), had to be paid.

Amendment of Regulation 8 of the Regulations
Mr Labuschagne said that he would draft an amendment to this regulation.

Discussion
Mr S Swart (ACDP) asked if the Bill covered the situation of floor crossing where a party might not cease to have representation in Parliament or provincial legislature but had fewer representatives and therefore a smaller amount of funding from the Commission.

Mr Labuschagne replied that the matter was cover by the proposed Section 5(5). One of the options in the proposed amendments was to have a specific clause to the effect that a party did not have to repay its unspent balances should its member of a legislature cross to another political party.

Ms C Johnson (NNP) asked if the date on which a party would cease to exist was the date on which the Speaker would publish the new list. The New National Party would soon cease to exist and one did not want a situation where people would say that because they had crossed on 1 September, the party had also ceased to exist on that date rather than on the date that the Speaker would publish the list. She wondered if there was any ambiguity in the Bill.

Mr Labuschagne replied that the party would cease to exist on the date on which the Speaker had published the new list and this would not be later than 22 September. Whether the Commission would interpret the issue in this manner was another matter. The Commission was the body which would have to decide when a party should repay the unspent balance. The Bill did not regulate the issue of when a party would cease to exist. He wondered if this was the correct legislation to regulate the issue even though it was the only one that dealt with the issue of when a party would cease to qualify for funding.

Ms Johnson said that the answer to her question had a huge impact. Obviously people had to pay for rental for offices and equipment for the month of September.

Mr Labuschagne replied that the Bill did not refer to instances where a party had ceased to exist. It referred to the moment a party had ceased to qualify for allocations from the Fund. A party ceased to qualify for allocations if it was no longer represented in Parliament or provincial legislature. The unspent balances should be determined as at the last day of September. It did not mean that if the NNP had ceased to qualify on 22 September it would be expected to repay the remaining eight days’ money. He said that he would again apply his mind to the question because it was important.

Ms Johnson said that it was important to know the date on which the party had ceased particularly given that there was a provision that provided that a party should repay the unspent balances within 21 days after it had ceased to qualify for allocations.

Mr Mzizi said that the IFP was in principle against floor crossing. Floor crossing was like an illegitimate child. If the child was born at home and one was not the father, he could not kill that child. He would have to provide clothing, food and everything for the child as if the child was his. The IFP was not against funding. The problem was that when a party came into existence, it leased premises for five years. He asked if the repayment would not badly affect the party that had ceased to qualify for funding. Would the landlord not sue the party for rental or breach of contract? He asked if the lease would be taken into account as outstanding debt that still had to be paid.

Mr Labuschagne replied that all parties knew that there were two floor-crossing periods during a five-year term. The question would be why take a five-year lease while knowing about the floor crossing periods. A party that had ceased to exist during the first two years would in any event cease to qualify for funding. The repayment of unspent balances did not play such a big role because the party would no longer exist after the floor crossing period. It would have to find some other means to pay for the rental. At the same time this was one of the issues covered under the proposed Section 6A. The Commission would have a discretion to decide how much of the unspent balances should be repaid. There was no way that unspent balances would be sufficient to cover the rental amount for a five-year period.

Mr L Joubert (IFP) asked if it would not be better for the proposed Section 6A(4) to refer to an "amount" and not "percentage" of unspent balances.

Mr Labuschagne replied that the Act itself referred to ‘percentage’ and he had used the word so as to be consistent with the Act. He also preferred the word "amount".

Mr B Magwanishe (ANC) asked if the six months imprisonment penalty was in line with Treasury regulations and the Public Finance Management Act. He wondered if this was not too lenient. These were public funds and people had to be accountable for them. One could have a situation where the books were too bad in such a way that the auditor could only issue a disclaimer. In such cases the Commission would not be able to determine what percentage should be repaid to it.

Mr Labuschagne replied that perhaps he was in a lenient mood when he drafted the provision.

Mr C Burgess (ID) asked what was the Commission’s attitude to the amount of time within which it had to respond if the Bill and regulations were passed. He wondered if it had the required capacity to do what was required. He also asked if it was possible to have the regulations and the Bill in the same Act. The offence clause should preferably refer to specific sections of the Act.

Mr Labuschagne replied that the IEC had been involved in the drafting process. He would send the documents discussed in the meeting to the IEC and also specifically ask if they would be able to comply with the requirements of the Act. The principles of the Act had changed from what the IEC had previously agreed to and more obligations had been placed on them. Regulations normally regulated matters in greater detail than an Act. It was not desirable to have regulations in an Act. He agreed that the offence clause should refer to the specific section of the Act. He would refer to sections towards the finalisation of the Bill.

Kgoshi Mokoena asked if the principal Act did not have an offence and penalties clause. Mr Labuschagne replied that it did not and that was the reason for including this clause in the Bill.

Mr B Ntuli (ANC) asked how the Committee could deal with parties that where saying that people who had crossed over to other parties would have to pay them a certain amount of money.

Mr Labuschagne said that he did not think that the Bill was the correct legislation to deal with the matter.

Mr Mzizi said it was important to note that the party had allocated the seat to the person. The person was not elected to occupy such a seat but chosen by the party to represent the people. He asked if it was not better to give back what belonged to Caesar.

Members agreed that the regulations were clear and had no questions to ask.

The meeting was adjourned.