Financial Management of Parliament Bill: deliberations

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Finance Standing Committee

06 September 2005
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Meeting report

FINANCE PORTFOLIO AND SELECT COMMITTEES: JOINT MEETING
7 September 2005
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: DELIBERATIONS

Chairpersons

: Mr K Moloto (ANC) [NA]; Mr T Ralane (ANC) [Free State]

Documents handed out:
 

Draft Financial Management of Parliament Bill as revised after 30 August 2005 meeting

SUMMARY
The legal drafters outlined the amendments effected to the Bill as proposed by the Committee at the previous meeting. The amendment to Clause 14 was aimed at ensuring that Members from both Houses be represented on the Committee at which Parliament’s strategic plan and budget would be scrutinised. The Committee expressed concern at the inclusion of the executive authority of Parliament or the Deputy Speaker of the National Assembly or Deputy Chairperson of the National Council of Provinces (NCOP) on the committee, but agreed that this would remain provisionally. Two different drafting options were provided for Clause 51, and the Committee engaged in lengthy debate as to whether Parliament’s Standing Committee on Public Accounts should be the only Committee to deal with these documents and whether Members of the NCOP should be included in that SCOPA sitting.

The ANC questioned whether Parliament was able to approve regulations made by the Executive Authority, in Clause 56. Two drafting options had been provided for Clause 61A, but the Committee agreed that neither option be adopted but that the current Clause 61A be retained.

 

The tagging of the Bill was discussed, and the legal drafters along with Parliament's Legal Advisors agreed that the Bill should be tagged a Section 76 Bill, because it contained provisions that related to the provinces. The NCOP Members present recognised the importance of allowing the NCOP to have a voice in the management of Parliament, but it was recognised that it was a battle to get provincial comment on the Bill. The Chair ruled that the matter be flagged for further discussion after the NCOP delegates had consulted the relevant provincial authorities.

MINUTES
Introduction by Acting Chairperson
Mr Moloto, Acting Chair of the Finance Portfolio Committee, requested the legal drafters to take the Committee through the amended Bill. It was hoped that most of the outstanding issues would be resolved during this meeting.

Mr Ralane proposed that the Bill be a piece of national legislation that would cover both Houses of Parliament. .

Financial Management of Parliament Bill
Mr Paul Benjamin, Legal consultant, took the Committee through the more substantial amendments:

Chapter 1: interpretation and Objects
Clause 2: Objects of this Act

Mr Benjamin stated that the amendment to 2(1)(b)(i) tightened up the loose language that had concerned the Committee.

Chapter 4: Strategic Plan and BudgetClause 11: Preparation of strategic plan and budget
The new 11(2) was an existing provision that was merely moved to make the sequence of the provisions read more easily, and to emphasise that it was something that need not be done every year.

Clause 14: Submission of strategic plan and budget
Mr Benjamin stated that the amendment to 14(2)(a) was aimed at ensuring that Members from both Houses be represented on this committee at which these documents would be scrutinised. Thus Parliament was left free, through the Joint Rules, to determine precisely which committee that would be. The changing of that committee could then be effected by amending the Joint Rules and did not require a legislative amendment.

The new 14(3) reflected the proposal made by the Finance Portfolio Committee in May that the executive authority of Parliament or the Deputy Speaker of the National Assembly or Deputy Chairperson of the NCOP be allowed membership of the Section 14(2) committee. The footnote explained the governance model currently employed. The new provision did conflict with the current governance model of Parliament, and the issue would be whether it was appropriate to regulate in such detail in the legislation. There were however several examples where this was the case. The Broad Based Black Economic Empowerment Forum was in fact chaired by the President and advised the President, even though he was himself a member of that body. Thus the fact that the Executive Authority was putting up the draft strategic plan and budget did not in any way prevent them from participating in the proceedings.

Mr Moloto stated that this matter must be discussed further, because the role of the Executive Authority in the process was potentially problematic.

Mr S Asiya (ANC) [NA] was of the opinion that it would not be proper for the Bill to include such details, and proposed that the governance model be left out of the legislation.

Mr B Mnguni (ANC) [NA] and Mr E Sogoni (ANC) [Gauteng] agreed with Mr Moloto.

Mr I Davidson (DA) [NA] stated that he was happy to go along with the decision taken by the Committee, but he was also conscious of the fact that this was not the end of the process. Once the Committee had completed this stage of deliberations on the Bill, it would go out for public comment, and interested parties including the institution of Parliament would then comment on this provision. He proposed thus that Mr Moloto’s approach be followed, as it could always be amended at a later stage.

Mr Moloto proposed that the proposed 14(3) remain, as the position could always be changed after the public hearings.

Mr Benjamin stated that the phrase "may not be members" would have to be clarified, because the extent of its meaning was not clear. It was not certain whether it meant that the officials could not attend the meetings of that committee. The Committee may wish to rephrase the provision positively so as to clearly specify the relationship between the members and the committee referred to in 2(a). Perhaps the provision should stipulate that while the executive authority of Parliament, the Deputy Speaker of the National Assembly or Deputy Chairperson of the NCOP would not have voting rights at the 2(a) Committee, they would however be able to attend the meeting.

Mr M Johnson (ANC) [NA] stated that the analogy was drawn between a Minister who devised policy, but was not himself part of the Parliamentary Committee which exercised oversight over his Department’s budget and strategic plan. In this case the Executive Authority would be the Minister and the Secretary to Parliament was akin to the Director-General of a government department and, as such, the Director-General would bear the responsibility of presenting the budget and strategic plan to the 2(a) Committee. This was the situation as he understood it.

Mr Asiya suggested that the 2(a) Committee be allowed to invite the members to attend the meeting and explain certain issues, as was currently the case in Parliament in which a Parliamentary Committee could invite a Cabinet Minister to attend and answer questions relating to the strategic plan and budget of the Department.

Mr Y Bhamjee (ANC) [NA] stated that if the Executive Authority was allowed membership on the 2(a) Committee it would contradict the principle of accountability. The principle of the separation of powers must be maintained.

Mr Davidson stated that he agreed with the view expressed, and thus believed that the wording of the provision in the document was correct.

Mr Moloto noted that that was the general consensus of the Committee.

Chapter 7: Audit Committee and Internal Audit UnitClause 39: Establishment of audit committee
Mr Benjamin stated that the amendments effected to this clause were as a result of proposals made by the Committee during the last meeting. The amendment in 3(a) prevented employees of the State from being members of the audit committee. The new 3(b) was aimed at avoiding any conflict of interest of those independent members of the audit Committee who were not Members of Parliament. Secondly, the new Clause 39(6) applied to all members of the audit committee, whether from within the ranks of Parliament or the civil service or those independent of Parliament. It was a very standard clause in many Acts passed by this Parliament.

No objections were raised to the proposed amendments.

Clause 42: Internal audit unit
Mr Benjamin stated that the amendment clarified that the unit would be independent of the activities within Parliament that were being audited. The wording mirrored the National Treasury regulations on the topic.

Mr Moloto noted that no objections were raised to the proposed amendment.

Chapter 8: Reporting and Auditing
Clause 45A: Submission of reports to committee

Mr Benjamin noted that the renumbering of the provisions would be reworked once this draft was agreed to by the Committee. The amendment now required the monthly, quarterly and mid-year reports to be tabled within 21 days of the end of the reporting period. This was consistent with the Public Finance Management Act (PFMA).

Mr Sogoni noted that no reference was made to annual reports.

Mr Benjamin responded that annual reports were dealt with in Clause 50 and, because it was a different document it had a longer time period within which to be tabled. This procedure was consistent with the broader practice.

Mr Sogoni stated that he would raise the matter during the clause-by-clause discussions.

Professor Christina Murray, UCT Law Faculty, replied that the process stipulated in the PFMA was followed exactly with regard to the treatment of annual reports by government departments.

Mr Moloto noted that no objections were raised to the proposed amendment.

Clause 51: Tabling and consideration of annual report
Mr Benjamin pointed out that three different options had been provided here. The first was the split option which provided that the audited financial statements and audit report go to a committee consisting of Members of Parliament with experience in public accounts and would not include members of the Executive Authority, the Deputy Speaker of the National Assembly and Deputy Chairperson of the NCOP. The second option was that the reports be submitted to the 14(2)(a) committee, and there would thus be no splitting of the process. The third option would be to leave the issue open and merely state that the reports must be referred to one or more joint committees of Parliament for consideration. Thus the issue of splitting would be dealt with in the Rules of Parliament and not in the Bill itself.

Mr Asiya proposed that the options be removed and instead the Bill should stipulate that the reports be submitted to Parliament’s Standing Committee on Public Accounts, so that unnecessary duplication was avoided.

Mr Sogoni disagreed with Mr Asiya and stated that he preferred Option 2.

Mr Mnguni disagreed that Option 2 was preferred, as it cut out the Standing Committee on Public Accounts (SCOPA). He proposed instead that Option 3 be retained because it accommodated SCOPA.

The Chair disagreed with Mr Mnguni as convention stipulated that all Auditor-General’s reports were referred to SCOPA, and this would thus be covered by Option 2.

Mr Davidson disagreed with the recommendations made by the ANC. He preferred Option 1 because it included both Houses, so that Parliament’s oversight function could be properly exercised. Option 1 was the only logical choice by including both Houses.

Mr N Van Dyk (DA) [NA] asked whether Members of the NCOP could be required to sit on SCOPA for that one meeting a year at which the financial statements and audit report of Parliament were discussed. This would give full expression to the joint committee requirement.

Mr Moloto stated that this suggestion must be discussed further as it was a very useful proposal that would solve the problem.

Mr Ralane replied that the only snag was that the NCOP was "a complex animal" because its Members were very often in the provinces during the Provincial Weeks, which were obligatory. Thus if Mr Van Dyk’s proposal were followed it would mean that NCOP Members would not be able to report back to their provinces as they would have to be on the SCOPA Committee. This would be a problem even if SCOPA met for just one day in a year. The complement of NCOP Members was much smaller than the National Assembly complement, and the NCOP teams would be weakened if its Members were to be required to attend the SCOPA meeting. It was a very useful proposal but would unfortunately not be feasible at a practical level. He proposed that the matter be flagged for later discussion.

Further, he agreed with Mr Asiya that SCOPA be the preferred option.

Mr Mnguni agreed with Mr Davidson that Option 1 be adopted as 3(a) would accommodate SCOPA as well.

Mr Bhamjee agreed that Option 2 be retained, as the other options usurped the powers of SCOPA by introducing other committees to perform a function that properly vested in SCOPA alone, and should remain as such.

Mr Davidson reiterated that Option 1 was the preferred option. He proposed the deletion of the word "joint" in 3(a), so that the Rules of Parliament could decide whether the "appropriate committee of Parliament" would be SCOPA or a Committee with NCOP Members as well.

Mr T Vezi (IFP) [NA] stated that he did not understand the problem at hand.

Mr Moloto informed Mr Vezi that the problem was that SCOPA did not have any NCOP Members, and the concern was that the committee which exercised oversight over the financial statements and audited report of Parliament must consist of Members both from the National Assembly and the NCOP.

Mr M Robertson (ANC) [Eastern Cape] proposed that, if the NCOP felt left out, it should deploy two of its Members to SCOPA.

Mr Moloto urged Members to seriously consider Mr Robertson and Mr van Dyk’s proposals that NCOP Members be invited specifically to sit on SCOPA for that one meeting in which it considered the financial statements and audit report of Parliament.

Mr Benjamin stated that he and Prof Murray had drafted a revised version of Clause 51 which could solve the Committee’s problems: "The audited financial statements of Parliament and the audit report must be referred to the Standing Committee on Public Accounts. The Joint Rules must provide for appropriate representation from the NCOP on the Committee when it considered the financial statements and audited report in terms of subsection 1".

Mr Van Dyk proposed the adoption of Mr Benjamin’s proposal.

Mr Moloto asked what the harm would be in adopting the proposal.

Mr Davidson stated that the Committee was making a mountain out of a molehill in not accepting the proposal. The Bill would still have to go for comment by the public who could then raise concerns if there were any.

Mr Moloto agreed. He stated that he saw no harm in including the NCOP in SCOPA deliberations on the financial statements and audit report of Parliament only.

Mr Ralane stated that the big problem was practical implementation, and thus motivated for the non-inclusion of the NCOP.

Mr Davidson maintained that the NCOP would surely be able to meet with the SCOPA for just the one day on which it considered the financial statements and audit report of Parliament.

Mr Moloto ruled that Mr Benjamin’s proposal would be adopted.

Chapter 9: Regulations and Instructions
Clause 56: Regulations and instructions

Mr Benjamin informed Members that 56(3) was inserted following the Committee’s decision that regulations would have to be approved by Parliament.

Mr Moloto agreed that this was decided upon by the Committee at a previous meeting.

Mr Sogoni questioned whether Parliament was able to approve regulations made by the Executive Authority.

Mr Moloto responded that 56(1)(f) made it clear that political parties in Parliament would want to decide on the matter of the regulations, and that was allowed by 56(1)(f). Furthermore, the document called L19 was adopted by Parliament, which related to 56(1)(f)(ii), and dealt with the travel facilities of Parliament. It was approved by the House. He stated that he did not thus find any contradiction because L19 itself could only be amended by the House.

Chapter 11: Miscellaneous
Clause 61A: Functioning of committees

Mr Benjamin informed Members that the reference in the Constitution to the NCOP was now included in the provision. Two options have been included regarding the representation on such committees. Option 1 stipulated that the representation would be dealt with in the Joint Rules. Option 2 reflected a Constitutional provision which stipulated that minority parties are entitled to representation in a manner consistent with democracy, and provincial representation must be in accordance with the Joint Rules of Parliament. The first option thus looked towards the Joint Rules for both, whereas the second looked towards the Constitution for the National Assembly and the Joint Rules for the NCOP.

Mr Sogoni stated that he did not see the need for this clause because all political parties were allowed to sit on any Committee in Parliament. They would prioritise the Committees they wanted to sit on. He proposed that the reference to "Joint Rules" be replaced with an express reference to a "Joint Committee".

Mr Mnguni stated that the Committee’s understanding was that the Committee would function just as any other Committee of Parliament, and as such its representation would be covered by the Joint Rules of Parliament. Thus Option 1 was the preferred option.

Mr Ralane proposed that 61A(1) as it stood in the draft was sufficient, and any formulation of 61A(2) was not needed because it was not necessary to prescribe representation..

Mr Davidson sought clarity on the meaning of the word "appropriate" in Section 56 of the Constitution.

Ms D Robinson (DA) [Western Cape] agreed with Mr Davidson.

Mr Moloto sought clarity as to how exactly Joint Committees were constituted in Parliament.

Prof Murray responded that this was done via Joint Rule 19.

Mr Moloto read through the Joint Rule and stated that it solved the current problem. He proposed that Mr Ralane’s suggestion that the provision end at 61A(1) be adopted.

Tagging as a Section 76 or 75 Bill?
Prof Murray explained that the drafting team had discussed this matter with Parliament's Legal Advisors and they agreed that the Bill should be tagged a Section 76 Bill. This was because it fell under Section 216 of the Constitution which dealt with norms and standards for financial management, and Section 76 stated that a Bill which contained any provision that related to a province and that fell under Chapter 13 of the Constitution, were Section 76 Bills. The problem was that the Constitution did not provide an absolute direct answer to this matter probably because one had not envisaged this kind of legislation when it was drafted.

Mr Mnguni stated that the Committee had removed any references to provinces as such in order to deal with this matter, so that the Bill could be tagged Section 75. Further, he proposed the deletion of the last Schedule in the Bill that dealt with norms and standards for provincial legislatures.

Mr Ralane stated that the Powers and Privileges Act was a Section 75 Bill and it dealt with all issues relating to Parliament and provincial legislatures. He proposed that this Bill follow suit. If this were to be tagged a Section 76 Bill it would have to go through the whole provincial cycle, which included negotiating and final mandate. He was not sure whether that was the desirable approach. He supported Mr Mnguni’s proposal that the Schedule be deleted.

Prof Murray confirmed that if all references to provinces were removed from the Bill it would become a Section 75 Bill. On the other hand, the Section 76 route would give full expression to the role of the provinces in the Bill. She expressed political rather than legal concerns for sending the Bill the Section 75 route, because it concerned the NCOP. It was inappropriate to deal with the management of Parliament that provided the NCOP with no real say. She was well aware of the battle of engaging all the provinces in the NCOP process, but she believed the correct overall outcome would be for the Bill to follow the Section 76 route.

Mr Ralane stated that the NCOP would not be cut out of the process if the Bill were tagged Section 75, because his Committee had been part of the process all along, and had received the briefing on the Bill and was part of the meetings at which the Bill was discussed.

Mr B Mkhaliphi (ANC) [NCOP; Mpumalanga] stated that he would have preferred the inclusion of the NCOP in this Bill but, as Mr Ralane had indicated, the provinces have not been helpful in this regard. When they were given the opportunity to provide input on the Bill they had not commented. It was unfortunate, but under the circumstances the provinces would have to be excluded and the Section 75 route followed. Members of the NCOP did however bear the responsibility of going back to the provinces for one more round to inform them of the Bill and allow them to provide input.

Mr Moloto asked the drafters to explain the legal consequences of removing all references to the provinces.

Prof Murray responded that they would still be covered by the PFMA, and thus the only material difference would be that the NCOP would have less influence in the adoption of the Bill.

Mr Asiya asked whether the deletion of the schedule would be possible.

Mr Ralane proposed that this matter be discussed thoroughly.

Mr Mnguni proposed that the Bill be tagged a Section 76 Bill so that the provinces could have a voice, even if the process would take longer.

Mr Moloto proposed that this matter be flagged for fuller discussion after the NCOP delegates had consulted the relevant provincial authorities. He noted that the Committee agreed. He added that a clause-by-clause reading of the Bill could not be conducted because the meeting was not quorate. The Committee agreed and the meeting was adjourned.


 

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