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FINANCE PORTFOLIO COMMITTEE
30 August 2005
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: DELIBERATIONS
FINANCE PORTFOLIO COMMITTEE
: Mr K Moloto (ANC) Clause 39(3) stated that more than half of the members of the Audit Committee should be individuals who are neither in the employment of Parliament nor members of Parliament, a provincial legislature or a municipal council.
Documents handed out:
Draft Financial Management of Parliament Bill – as of 18 May 2005
Draft Financial Management of Parliament Bill
Mr E Songoni (ANC) said he was not clear about what the Constitution stated regarding the independence of Parliament as an institution and he sought clarity to this end. The Constitution did not explicitly state the nature of the relationship between Parliament and the National Treasury. Ms Murray replied that the Constitution was an enabling document that did not explicitly lay out every possibility. If the Constitution was silent on a matter then this left a gap for suitable legislation to be passed as long as it did not undermine the spirit of the Constitution.
Mr S Asiya (ANC) asked if the Bill would be based on the Public Finance Management Act (PFMA). Ms Murray replied that the Bill was not based on the PFMA as Parliament should have its own legislation to deal with its financial management. This management should be consistent with other budgetary processes. The Bill did track provisions from the PFMA in some cases.
Mr T Ralane (ANC) asked if the Bill was not stating the obvious as the relationships laid out in Clause 2(1b) were already in place. He asked if the clause was necessary. Mr Benjamin agreed that on some levels the relationship was obvious but that legislation should identify worst case scenarios as the relationship laid out may change in the future. The Bill was procedural as it set out key phases and supplemented those with legislation. He said that the Committee should comment if they thought the Bill was too prescriptive in its guidelines.
Mr Y Bhamjee (ANC) asked for clarity on how the Bill would be subordinate to the PFMA.
Mr K Moloto (ANC) referred Mr Bhamjee to Section 63 of the draft Bill that addressed the issue. Mr Benjamin replied that Section 63 of the Bill allowed for a repeal provision that would remove the effects of the PFMA on Parliament. He said that parliament was currently covered by the PFMA but that the point of the new Bill was to regulate Parliament separately.
Mr D Botha (ANC) asked if the provinces had been consulted about the Bill. Ms Murray replied that a decision was taken not to consult the provinces for two reasons. Firstly Parliament did not have the authority to legislate for provinces and secondly it was decided that provinces should tackle their own financial affairs.
Mr Ralane asked why the Bill had not been tagged. He said that raising the issue of norms and standards meant the Bill was effectively a Section 76 Bill. He also queried the change in the name of the Bill. Ms Murray replied that the decision not to include the provinces in the formulation process resulted in the name change. She also said that the name change raised the issue of tagging the Bill. She suggested removing the section of the clause that related to the provinces and pass a separate Act that would deal with provincial norms and standards. Mr Botha agreed and stated that Clause 2(1)(e) should be removed.
Ms Murray said the issue of tagging the Bill needed further deliberation and apologised to the Members for not foreseeing the problem.
Mr Ralane said that permanent delegates from the NCOP had a mandate and that the issue of tagging was vital as it affected these mandates. He suggested a piecemeal reform for Parliament and provincial legislatures. Mr Benjamin replied that once the Bill was in place, Parliament would not be regulated by the PFMA but that the provinces would still be covered by it until they took steps to enact their own legislation. He said that the PFMA might need to be amended so that once provinces adopted their own legislation the effects of the PFMA would lapse.
Ms Murray said Clause 4(2) states that the Accounting Officer is accountable to the Executive Authority for the financial management of Parliament. Mr Benjamin added that the clause reasserts the accountability of the Executive Authority to Parliament.
Mr Ralane asked why the Accounting Officers were not both the Secretaries of the National Assembly (NA) and the NCOP acting jointly. Ms Murray understood that there was a Secretary of Parliament who had two sub-secretaries, one for the NA and one for the NCOP. The Secretary of Parliament would then report to the Executive Authority. Mr Ralane noted that he still wanted clarification on this matter.
Mr I Davidson (DA) asked what mechanisms were in place to break the deadlock if the two parties that constituted the Executive Authority, disagreed with each other. Were there any international precedents to follow? Ms Murray replied that South Africa was a unique case in that it had fused the Executive Authority. International precedents were absent as most countries separated the Executive Authority. Mr Benjamin commented that the consultative process would have to result in an agreement.
Ms Murray said that this clause stated that the Accounting Officer should submit the draft strategic plan and draft budget to the Executive Authority for approval at least ten months prior to the start of the financial year or by a prescribed date. Clause 14(2)(a) stated that the Executive Authority should in consultation with the Minister of Finance, determine a process for submitting Parliament's annual budget to the National Treasury. Clause 14(2)(b) stated that the Executive Authority should submit the draft strategic plan and draft budget to an appropriate joint committee established in terms of the Joint Rules of Parliament. Clause 14(3) stated that members of the Executive Authority, the Deputy Speaker of the National Assembly and the permanent Deputy Chairperson of the NCOP may not be members of the joint committee given above.
Mr N Van Dyk (DA) asked if the process given in Clause 14(2)(a) was fixed or if it would be amended annually. Mr Benjamin replied that the process would not be amended annually unless it was necessary.
Mr Ralane asked if the budgetary processes for the whole country would need to be adjusted given Parliament's independence. Ms J Fubbs (ANC) said that the purpose of the Bill was not to delay the budgetary process. She suggested an amendment to prevent deliberations on the budget for Parliament delaying the entire budget process. She also said that timeframes for the budgets would need to be tightened.
Mr Bhamjee said that the Committee needed to decide on a prescribed date to decide on the process.
Mr Ralane said that interaction with the National Treasury was needed with regards to the budget process. Parliamentary independence had to be dynamic and that Parliament could not ‘become an island’.
Mr Asiya said that use of the word ‘may’ in Clause 14(3) was vague. He also suggested a minor technical amendment to 14(2)(b). Ms Fubbs suggested the use of the term ‘shall' was more appropriate. Ms Murray replied that the drafting team had applied the convention used in the creation of the Constitution. The term ‘shall’ was not clear cut in law and that ‘must' was a better term. The clause should be consistent with other legislation. Mr Bhamjee said the clause should use words that were commonly understood and unambiguous and should be user friendly. Mr Moloto stated that the issue was unresolved and should be flagged.
Mr Davidson asked for clarification as to why parties mentioned in 14(3) could not be part of the committee. Mr Moloto replied that the Executive Authority could not be accountable only to itself, but rather needed accountability to another source.
Ms Murray said that the clause stated that no Member of Parliament might be a member of a committee evaluating or approving tenders, quotations, contracts or other bids for Parliament.
The Committee accepted the clause in its entirety.
Ms Murray suggested that the exclusion of committee members should perhapsextend to employees of the state.
Ms Nguni (IFP) suggested that family members and close relatives of Parliament employees should also be excluded.
Ms Fubbs said that the Members of Parliament should declare any interests regarding relationships with those appointees to the Audit Committee.
Mr Mnguni said that the Audit Committee would need the expertise of state employees in some cases and opposed the exclusion of state employees from the Audit Committee.
Mr Davidson said the Audit Committee should rather consist of individuals from the private sector.
Mr Moloto agreed that state employees would be able to offer insights into the affairs of Parliament.
Mr Benjamin suggested that a conflict of interest clause be included.
This stated that the Executive Authority should table monthly, quarterly and mid year reports in Parliament for referral to the committee referred to in Clause 14(2)(b).
In reply to Mr Asiya asking to what committee the clause was referring, Mr Ralane said that it was the Joint Rules Committee.
Ms Murray stated that the Bill was not specific about the committee but that this would be decided at a later date.
Mr Bhamjee asked if the tabling of reports would go to Parliament or the committee referred to above. Mr Ralane replied that the Joint Rules Committee was sufficient and Mr L Gabela (ANC) agreed
Mr Gabela said that the submission of monthly reports might be difficult for the committee due to time constraints. Mr Moloto replied that if the convention was for monthly reports, then this should be adhered to by the committee. Mr Ralane agreed and said that timeframes should not be open-ended as this had implications for the auditing committee.
Prof Murray said that Clause 51(3) and (4) stated that the audited financial statements of Parliament and the audit report should be referred for consideration to an appropriate joint committee of Parliament established in terms of the Joint Rules of Parliament consisting of members with experience in public accounts. Members of the Executive Authority, the Deputy Speaker of the National Assembly and the permanent Deputy Chairperson of the NCOP should not be members of the committee in question.
Mr Asiya stated that audited reports should go to the Standing Committee on Public Accounts (SCOPA). He asked if the Joint Rules would be amended.
Mr Ralane said that the NCOP did not participate in SCOPA proceedings. He raised the issue of having one joint committee to perform the SCOPA role but for both the National Assembly and the NCOP.
Mr Gabela stated that he opposed the inclusion of Clause 51. He said that members of the NCOP were not part of SCOPA proceedings for a reason and that he saw no reason why NCOP members should look at audited reports for Parliament and not other public institutions.
Mr Moloto asked if the proposal for a budget committee and a SCOPA Committee was acceptable. Ms Fubbs replied that the NCOP needed to be included somehow and agreed that two committees were acceptable.
Clause 57stated that regulations or policies issued by the Executive Authority were binding only if they had been approved by Parliament. If either the National Assembly or the NCOP did not reach a decision within 30 days of its first sitting after the regulations or policies had been referred to it for approval, those regulations or policies should be considered to have been approved by the National Assembly or NCOP.
Mr Mnguni stated that too much power was given to the Executive Authority. Backlogs in Parliament were foreseeable.
Mr Davidson suggested that if the National Assembly or NCOP did not reach a decision about the regulations or policy then they should not be approved rather than be automatically adopted.
Mr Fubbs said that the clause was too general and asked what other precedents were available.
Mr Davidson said that some sort of timeframe for decision-making was necessary but that it should be appropriate.
Mr Moloto asked if there was a consensus that the 30-day period clause should be cancelled and that a review would be initiated. The Committee concurred.
This stated that the joint parliamentary committee referred to in Clause 14(2) had the powers that the committee of the National Assembly had under Section 56 of the Constitution. The Joint Rules of Parliament should provide for appropriate representation of minority parties represented in the National Assembly and the NCOP on the joint parliamentary committee.
Mr Davidson asked if there were rules of Parliament for calculating appropriate representation and if they were applicable.
Ms Fubbs suggested that the clause include Section 56 and 69 of the Constitution in the wording as this would cover the NCOP as well. Ms Murray replied that this was a good suggestion and that the draft team would look into it.
Before adjourning the meeting, Mr Moloto noted that the next meeting on the Bill would be 7 September 2005.
Clause 39(3) stated that more than half of the members of the Audit Committee should be individuals who are neither in the employment of Parliament nor members of Parliament, a provincial legislature or a municipal council.
A Department legal drafting team briefed the Committee on the proposed amendments to the Financial Management of Parliament Bill. The team outlined new clauses and asked for suggestions from the Committee. The new clauses included 2(1), 14(1)(2)(3), 37(a)(b)(c), 39(3), 45A, 51(3)(4), 57(1)(2) and 61(a). The new clauses outlined the relationship between Parliament and the National Treasury, addressed the issue of a separate budget process and cycle for Parliament, outlined the requirements for submissions of financial reports by Parliament, addressed the auditing process for Parliament and outlined the powers of the Executive Authority.
Members raised issues regarding the process of tagging the Bill, National Council of Province’s (NCOP) involvement, the influence of the Public Finance Management Act, whether the Standing Committee on Public Accounts (SCOPA) - that covered both the National Assembly and NCOP - would be appropriate, and the composition of the auditing committee.
Prof Christina Murray (UCT Law Faculty) said that the drafting team would go through the recent additions and changes to the Bill and that the Committee was welcome to offer suggestions at any stage.
Ms Murray stated that the first addition to the Bill was Clause 2(1)(b) and (c). The clause stated that the objective of the Act was to ensure that a consultative relationship between Parliament and the National Treasury should be conducted at a high level and be based on respect for the independence of Parliament; the constitutional requirements for the tabling of money bills, the budget processes, generally recognised accounting practices, uniform expenditure classifications and Treasury norms and standards established in terms of the PFMA and the fiscal policy of the national government. The clause also allowed the National Treasury to have an opportunity to comment on proposed annual budgets and adjustments to Parliament's budget, to acquire information on proposed annual budgets and adjustments to Parliament and for regular information on expenditure by Parliament.
Mr Paul Benjamin (legal consultant) said that the clause had been included as there was a concern that the relationship it laid out was not properly articulated. Explanation of the consultative relationship between Parliament and the National Treasury was needed. The budget processes for Parliament should adopt uniform norms and standards and should be consistent with National Treasury directives.
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