Financial Management of Parliament Bill: deliberations; Election of Chairperson

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Finance Standing Committee

12 September 2005
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Meeting report

FINANCE PORTFOLIO AND SELECT COMMITTEE: JOINT MEETING
13 September 2005
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: DELIBERATIONS; ELECTION OF CHAIRPERSON

Chairperson

: Mr M Nene (ANC); Mr Ralane (ANC, NCOP)

Documents handed out:
 

Financial Management of Parliament Bill 2005: Draft Revised 7 September 2005

SUMMARY

Clause 11: Preparation of Strategic Plan and Budget

Clause 26: Requisitioning of Funds by Accounting Officer

Clause 45a: Submission of Reports to Committee

Clause 56: Regulations and Instructions

Clause 61A: Functioning of Committees

 

Mr Benjamin said that the time periods could be changed if there was a shift in national practices. The Committee agreed.

Ms Hogan said that there should be a Code of Conduct that was applicable to civil servants as well as senior persons in Parliament.

Chapter 11: Miscellaneous
Mr Benjamin said that the reference to Clause 51(3) should be deleted. The Committee concurred.

The Committee agreed to Clause 63(1).

Mr Ralane said the drafting team should present the amendments to the Committee on Friday 16 September.

The meeting was adjourned.
A Bill drafting team briefed the Committee on the proposed amendments to the Financial Management of Parliament Bill. The team outlined new clauses and opened the floor to suggestions from the Committee.

Members raised issues regarding the tagging of the Bill, the necessary auditing mechanisms needed for funds appropriated from donors, the uniformity of regulations needed to monitor funds given to political parties, Supply Chain Management regulations and National Council of Provinces (NCOP) involvement.

MINUTES
Election of chairperson
The Committee appointed Mr M Nene (ANC) as the new Chairperson for the Finance Portfolio Committee and thanked Mr K Moloto for his performance as Acting Chairperson.

Financial Management of Parliament Bill

Mr T Ralane (ANC) asked the drafting team to take the Committee through the amendments to the Bill.

Chapter 3: Strategic Plan and Budget
Mr C Barberton (Cornerstone Economic Research) said that the Public Finance Management Act (PFMA) required multi-year budget proposals. He said that the tabled Bill did not take this into account and that the Committee may want to include the proposed clause as it explicitly outlined the need for these multi-year budgets. The Committee agreed to the proposal.

Mr Barberton stated that a mechanism needed to be introduced which would allow Parliament to appropriate funds from its external donors in a transparent fashion. The current framework only allowed for the appropriation of funds from the National Revenue Fund. Donor funds were a concern as they could not be accounted for in terms of unauthorised expenditure.

Mr S Asiya (ANC) stated that the drafting team should formulate a clause that dealt with the issue and that this could be discussed by the Committee. Prof Christina Murray (UCT Law Faculty) replied that the drafting team would include a relevant clause in the next Amendment.

Ms J Fubbs (ANC) stated that she could not find any reference in the Constitution about the appropriation of donor funds. Mr Barberton replied that the PFMA stated that funds that Parliament received from donors were not deposited in the National Revenue Fund.

Ms B Hogan (ANC) asked how schools dealt with similar situations given that they also received funds from different sources. Mr Barberton replied that school governing bodies prepare budgets and present these to the relevant parent/teacher body which then approves or rejects the proposal.

Mr Songoni (ANC) asked where current funds that were received from donors outside of South Africa were deposited.

Mr Y Bhamjee (ANC) asked what norms and standards the National Treasury had in place regarding accountability. He suggested these could be used as precedents.

Mr Barberton stated that the Committee had two options. The first would be to have a separate budget for Parliament which would then be approved by the Executive Authority. The second option would be for the donor funds to be included in the entire budget process for Parliament.

Mr Ralane indicated that the drafting team should prepare the two options and that the Committee would then adopt one.

Ms Fubbs said that the budget must be funded from sources within South Africa as external funds raised autonomy concerns.

Mr I Davidson (DA) replied that the source of the funding was irrelevant and that autonomy would not be threatened as long as the recipient had control over expenditure of the funds. Funds from donors and funds from the National Revenue Fund must be accounted for and budgeted separately.

Mr Asiya was uncertain about the two budget proposal.

Mr Bhamjee agreed with Ms Fubbs that autonomy could be threatened.

Ms Hogan asked about the status of grant funding. She said that grant funding was not labelled as revenue and therefore it could not be accounted for in the expenditure accounting. She suggested interaction with the National Treasury to clarify the matter.

Clause 14: Submission of Strategic Plan and Budget
Mr Barberton stated that the time period for the submission of the draft budget must be changed as it did coincide with the overall budget process.

Clause 19: Roll Over of Unspent Funds
Mr Barberton stated that there would be minor technical changes to the clause.

Chapter 4: Cash Management and Investment
Mr Barberton stated that the current system did not allow flexibility. A new clause should be included that would allow the Accounting Officer to create a revised draft cash flow statement.

Mr B Mnguni (ANC) enquired about the nature of the proposed flexibility and asked if this was a reference to time frames. Ms Murray replied that the issue would be deferred as it was problematic for the drafting team.

Ms Hogan referred the Committee to Clause 56(1)(f) and raised the issue of funding for political parties. This was related to the issue of grant funding. She asked if there were provisions that accounted for grants to political parties to ensure that it followed the prescriptions laid out in the Bill. She was uncertain about the implications of a separate set of regulations that apply to political party funding and that money transferred to parties must be subject to a uniform body of regulations.

Mr Davidson endorsed this view and said that current practice allowed for funds given to political parties from different sources to be subject to a different set of more lenient regulations. He said there must be uniformity in the regulations.

Ms Hogan asked why the Auditor-General did not directly audit the relevant funds paid to political parties. This was only currently done by private auditors. Mr Barberton replied that it was important to understand the nature of the funds paid to political parties as this would make the creation of an appropriate mechanism easier. Grant funding between government entities was conditional. Grants from the Government to the private sector were not conditional but that the onus was on government to ensure that the recipient had sufficient financial management systems in place. The Accounting Officer and the Auditor General reviewed the audits undertaken by the private auditors but did not undertake their own audits.

Ms Hogan stated that constituency funding must be subject to the same regulations as funding that occurs between Government entities. Mr Paul Benjamin (Legal Consultant) replied that the Bill currently deferred to the regulation framework in place and that maybe a more substantiative clause needed to be included which would address the issue.

Mr Songoni asked the drafting team to clarify the meanings of 56f (ii, iii). Mr Barberton replied that the sub-clauses could be removed as they created confusion.

Ms Hogan asked if the Committee knew about the status of fund transfers from the South African Parliament to the Pan-African Parliament. The question was not addressed.

Mr K Moloto referred the Committee to Clause 39(4) and asked for confirmation that the chairperson of the committee in question would not be aligned to the audited entity. Ms Murray confirmed this and said that the clause would include this provision.

Mr Moloto asked if the Bill sufficiently dealt with issues surrounding Supply Chain Management. Mr Barberton replied that the Bill could either be subject to Supply Chain Management policy created by the relevant national authority or it could include its own provisions. If the Bill included its own provisions this would be time consuming and arduous.

Ms Fubbs stated that the more recent Municipal Financial Management Act (MFMA) provided more clarity with regards to Supply Chain Management than the PFMA and that it should be used as a precedent.

Ms Hogan agreed that the MFMA was tougher than the PFMA and that it was therefore more appropriate. Mr Barberton agreed that the regulations should be tougher and that the reason that the PFMA had been used was that it pertained to the national sphere of government over which Parliament had oversight. The drafting team foresaw no difficulty in adopting MFMA guidelines though.

Mr Bhamjee stated that the MFMA was more relevant than the PFMA and that its norms and standards should be adopted.

Ms Hogan agreed and said that the Bill should rather be more detailed with regards to Supply Chain Management as opposed to running the risk of being too thin on the matter.

Mr Ralane closed the issue and asked the drafting team to proceed with the deliberations.

Ms Murray stated that the issue of tagging the Bill was still problematic. Mr Moloto replied that the Bill should be tagged as a Section 76 Bill. The Committee agreed.

Chapter 8: Reporting and Auditing
Mr Benjamin stated that the 21 day window for the submission of reports was unfeasible and that this must be altered to 5 days. The Committee agreed.

Clause 51: Tabling and Consideration of Annual Report
Mr Ralane said that the issue of whether or not to include National Council of Province (NCOP) members on the committee in question must be resolved. Mr Songoni replied that there was no need to include NCOP members on the committee. Mr Ralane replied that he took Mr Songoni to be representing the NCOP and that the matter was now closed.

Mr Ralane said that the NCOP could still raise the issue again as the Bill was now tagged as a Section 76 Bill. He suggested removing the entire clause.

Mr Bhamjee raised a concern that the associated regulations to the Bill would be created after the adoption of the Bill and that this might be problematic. He would like to examine the regulations before they were adopted so that the Committee could deliberate on them. Ms Fubbs agreed with the suggestion.

Ms Hogan commented that if all the regulations were tabled for all Bills then Parliament would be overwhelmed. She did agree that more detail was necessary in some cases though. Mr Moloto agreed.
 

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