Constitutional Matters Amendment Bill: deliberations

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE AND SECURITY AND CONSTITUTIONAL AFFAIRS SELECT COMMITTEE: JOINT MEETING
10 August 2005
CONSTITUTIONAL MATTERS AMENDMENT BILL: DELIBERATIONS

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

Documents handed out:
Constitutional Matters Amendment Bill [B22 - 2005]
Working Draft 2: Amendments to Constitutional Matters Amendment Bill
Working Draft 2: Amendment regulations
Public Funding of Represented Political Parties Act No. 103 of 1997
Provisions Relating to Delegates in a Provincial Delegation
Letter from IEC (see Appendix)

SUMMARY
The Committees continued their deliberations on amendments to the Constitutional Matters Amendment Bill, and regulations of the Public Funding of Represented Political Parties Act 103 of 1997. The focal point was Section 10 of the Public Funding of Represented Political Parties Act, in regard to re-allocation of funds by the Independent Electoral Commission (IEC) to existing parties as well as new parties during the floor-crossing and election periods.

The amendments to the Bill were aimed at providing funding to political parties after floor-crossing, and dealt with the consequences of unspent monies from the coffers of political parties.

MINUTES
Ms Chohan-Kota said that the central issue that the Committees were grappling with was what would happen upon floor crossing and the consequences thereof in so far as they related to the Public Funding of Represented Political Parties Act (Funding Act). There were three instances whereby the unspent balances of political parties had to be repaid to the Independent Electoral Commission (IEC): where a party had lost an election; where Parliament or legislature was dissolved, and when parties had failed to qualify for funding after the floor crossing period. The first two instances were already in the Act and the Bill was providing for the third one. Different consequences followed from all these circumstances. In one instance parties had to repay unspent balances within 21 days and where parliament had dissolved the IEC had determine what was the unspent balance. She suggested that all issues relating to unspent moneys and the implications of floor crossing should be dealt with in one section (section 6A).

Dr Delport (DA) supported the suggestion by the Chairperson. In principle, one should calculate the allocations as if an election had taken place. There should be clear guidelines on the whole issue of unspent balances.

The Chairperson said that her suggestion would facilitate a great deal of what Dr Delport had said. Some of the issues were dealt with in the draft Bill that had been prepared. The IEC would have the opportunity to determine the unspent balances bearing in mind that parties had certain financial commitments such as rental and salaries that went beyond September.

Mr M Mzizi (IFP) (Gauteng) said that he had not yet an opportunity to discuss some of the issues around the Bill with his colleagues from the National assembly (NA). He was aware that the committees were not dealing with the actual act of crossing the floor but the issue of funding of parties. The IFP was against floor crossing.

Mr S Swart (ACDP) said that he was also in a similar position to the IFP. He was in agreement with the proposal that all issues relating to unspent moneys and the implications of floor crossing should be dealt with in one section.

The Chairperson said that at the point that a party had ceased to qualify for funding after the crossing period, the accounting officer of the party should submit financial statements to the Commission. The Commission would then interrogate the statements. It should have the power to appoint its own auditors to determine if the documentation was truthful. It should also determine the unspent balances bearing in mind committed funds that the parties would legally be obliged to pay. The Commission would then demand that any unspent amount should be repaid to it within a specific period. The money would go into the pool to be used in the next financial year. The problem was that there were two other regimes that dealt with unspent moneys. The complication was that they dealt with the issue differently. When it came to losing an election parties had 21 days within which to repay the money. There was no provision relating to who should determine the unspent balances. With regard to the dissolution of the legislature, parties should repay the unspent moneys and the IEC would determine the unspent balances.

Mr Labuschagne said that there were two scenarios. Nobody determined the unspent balances upon dissolution of parliament and every provincial legislature. The situation was different upon the dissolution of parliament or any provincial legislature. In this case the Commission determined the unspent balance.

The Chairperson said that the committees had tried to say that unspent moneys should be treated the same way regardless of whether a party had lost an election or parliament or provincial legislatures had dissolved. The problem with this was that there might be unforeseen consequences. Because of the tight deadline in terms of which the Committees were working, the Chairperson had suggested to Mr Labuschagne that the committees should deal with the other regimes (dissolution of parliament and losing an election) in a resolution. The Department should be offered an opportunity of looking at unifying the regimes governing the issue of unspent balances. Consultation should happen more widely than it had taken place.

In relation to floor crossing, Dr Delport said that if the principle that new calculations would have to be made, one should also accept that the new calculations would take effect as from 1 November of the year in which fllor crossing had occured. A member who had crossed over to another party had a constituency to serve and certain things had to be phased out. One should note that there were certain expenditures that had to be paid. Parties should be allowed one and a half months to phase out their obligations and the Commission should not come into the picture. This principle could also apply in cases where parliament had dissolved.

The Chairperson said that the proposal was sensible but there was also a problem. An issue had been raised as to who should determine the unspent balances. There could be some problems if it was left to political parties to determine their unspent balances. The financial statements of the parties had to end on the 30^th of September. The Commission would have to consider ongoing commitments that parties had even if they stretched beyond September. It was up to the parties to disclose the ongoing commitments.

Mr B Magwanishe (ANC) asked if only the accounting processes would be used in determining unspent balances. One could find a situation wherein the books were so bad that the auditors could only issue a disclaimer. In such a situation it would be difficult to determine the unspent balances. He wondered if some other mechanism to determine the unspent balances would be developed.

The Chairperson replied that parties had to submit audited financial statements. The auditors would have to express an opinion on whether the money was spent in accordance with the Act. The parties would then have to prove their ongoing financial obligations to the Commission. The Commission would decide the unspent balances taking into account the financial statements and the proof of ongoing commitments. It could appoint its own auditors if it was unhappy with the financial statements.

Department briefing
Mr Labuschagne said that he had already drafted a provision dealing with the issue of unspent moneys. He took the committee through the amendments.

Clause 2: Amendment of section 5 of Act 103 of 1997
It was agreed that option 1 should remain intact in the Bill.
Options 2, 3 and 4 should deleted from the Bill.

He said that he had inserted a new option that would give effect to the committees’ decision that unspent balances in cases where a party had ceased to qualify for allocations because it had lost an election should be dealt with at a later stage. No amendments to the existing subsection (4) were therefore necessary.

Mr Labuschagne said options 1, 2 and option 3 under clause 2(c) should be deleted. Clause 2 set out the different scenarios that could take place during floor crossing. Section 6A would deal with some of the issue addressed in clause 2. Option 4 should consequently be deleted.

Amendment of section 9 of the Funding Act
Mr Labuschagne said that option 2 should be deleted.

Clause 3: Insertion of section 6A in Act 103 of 1997
Mr Labuschagne said that options 1, 2 and 3 should be deleted. A member noted that option 2 had not yet been drafted. The options were to be deleted on account of the resolution to be adopted by the Committee.

He said that should the Committee adopt the proposal that no party should repay the unspent balances, section 6A would not be applicable. The whole clause was drafted on the assumption that the Committee had agreed that unspent balances should be repaid to the Commission.

The Chairperson said that even Mr van der Merwe had at some point accepted that the proposal would raise some problems. Parties would seldom have unspent balances but nevertheless a provision to deal with unspent balances should be included in the Bill.

Mr Labuschagne said that a party had to repay its unspent balances when it had ceased to qualify for allocations. The Committees should decide, in the case of crossing and the party had not ceased to qualify for funding, whether a party would not have to repay its unspent balances. They would also have to decide how to regulate cases wherein a party had subdivided and one of the subdivisions continued to represent the original party.

The Chairperson asked what was the difference between the two scenarios outlined.

Mr Labuschagne said that the first dealt with members walking from one party to another. The second was an actual subdivision. Section 6A(1) and (2) should remain if these instances were to be regulated.

The Chairperson said that in cases wherein members had crossed the floor and the party continued in the legislature, the party would not have to repay unspent balances. The principle was that parties had to repay unspent balances when they ceased to qualify for funding.

Mr Labuschagne said that there was no confusion on whether a party should repay or not. What was important was to provide for legal certainty. This would prevent a member who had crossed to another party to attach a monetary value on his or her seat and demand that the money be paid over to his or her new party.

The Chairperson said that such a possibility did not exist because all unspent moneys would go to the Commission.

Mr Labuschagne replied that such a possibility existed in cases wherein the original party had continued to qualify for allocations and therefore did not have to repay anything to the Commission.

The Chairperson did not think that such a scenario would present a problem because at no stage would the party be called upon to declare unspent balances.

Mr L Landers (ANC) said that the Bill provided for a situation wherein the Commission would do a reassessment after the crossing period had closed. It would then determine how much each party would get. It was not a case of saying "I am taking my seat and my funding with me". It was a case of what would the finding of the commission be when it had done its reassessment. The Bill was not as clear as it was supposed to be.

Mr Labuschagne pointed that section 6A(3) provided that a party had to repay its unspent balances should it cease to qualify for funding after floor crossing.

Mr Landers said that Mr Labuschagne was referring to a scenario where two members had left a party and the party had continued to exist. Such members might argue with the Commission and say that they had taken their seats to another party and funds must follow the seats.

Kgoshi Mokoena said that after the crossing the Commission would recalculate seats for each party and fund them accordingly.

The Chairperson asked if there should not be a general clause that would provide that a party would not have to repay any unspent balances if it continued to qualify for funding after the floor crossing period. One could even include "notwithstanding the fact that it might have changed its name".

Mr Labuschagne replied that this would still not cover the scenario he was referring to. He was happy not to include his suggestion if members were convinced that there would be no problems.

The Chairperson could not see how problems would arise.

Mr Landers understood Mr Labuschagne to be saying that there should be a clause providing that no member would have a claim to any portion of any unspent moneys left in the party from which he or she had crossed.

The Chairperson asked where such a person would get the right to claim a portion of the unspent balances because moneys were allocated to the party and not individuals.

Dr Delport also emphasised that it was parties, and not the individuals who had crossed the floor, which were entitled to repayment of unspent moneys. The unspent balances would be channelled into the IEC pool and he didn’t foresee any problem arising from this. A party to which a member had crossed should not be entitled to any unspent balance to which such a member might lay claim.

The Chairperson said unspent balances went back to the pool. No individual was entitled to any money paid to political parties.

Mr Mzizi (IFP) opposed the idea that a Member who had crossed the floor to another party would have any claim against his/her old party.

Ms Chohan-Kota asked what would happen should a party’s only member cross to another party. What if it was a three men party and all members crossed to different parties. The party would cease to exist but this was not provided for in section 6A(3). She wondered if section 6A(3)(a), (b) and (c) should not be collapsed into one general provision that would apply to different situations.

Mr Swart said that perhaps it would be better if section 6A(3)(a) referred to "member or members". This would cover a situation wherein one was dealing with a one-member party or a party with more than one member. The Constitution referred to one or more members.

The Chairperson asked if it was necessary to deal with mergers and subdivision.

Mr Labuschagne replied that section 6A(3)(c) referred to subdivision in a manner contemplated in item 3(1)(b) of Schedule 6A to the Constitution.

Mr Swart (ACDP) wanted to know if a party that had ceased to exist at a provincial level would still qualify for public funding at a national level.

Ms Chohan-Kota explained that the formula for funding of political parties was set out in the Funding Act. The Funding Act set out separate formulae for the provincial as well national levels. The formulae would still apply.

Mr Labuschagne said that proportional allocation took into account the number of seats awarded to each party.

Mr Labuschagne proposed that the word "commitments" in section 6A(4)(c) should be replaced by "obligations". He could not find the expression "financial commitments" in the statutes books.

Ms Chohan-Kota asked if it would not be better to refer to "legal financial obligations" as opposed to "fixed financial obligations".

Mr Labuschagne suggested perhaps it should just say ‘financial obligations’ and leave it to the Commission to decide if such obligations were legal or not.

Ms Chohan-Kota said that it should still refer to "legal" commitments. The Commission would still decide if the commitments were legal or illegal. In some rental agreements one could give one-month’s notice before terminating it. In such a case there would be no reason for continuing with the lease.

Mr Labuschagne said that the intention was to cover existing legal obligations. The Chairperson said that the provision should clearly refer to all existing legal obligations.

The Chairperson asked if there was any reason why parties were given a two months period for the preparation of financial statements under section 6A(4).

Mr Labuschagne replied that two months would give parties sufficient time to close their books and to prepare financial reports. The two months period was consistent with the existing section. The existing section provided that the statements had to be provided within two months after the end of a financial year. A longer period of time could cause some unnecessary delays to the Commission’s work.

The Chairperson said that parties should be able to deal with their financial statements quickly because they were meant to keep books of accounts in terms of the Act. All they had to do was to close off the balances and submit the statements to be audited immediately thereafter. Once this had been done the report could be submitted to the IEC. All of this could be done within two months. It seemed like parties were being given two months to close their books, get the statement audited and thereafter submit the report to the IEC. Parties should be given a period of two months within which they should close their books, have their financial statements audited and then submit the report to the Commission. Additional commitments like rental and salaries were easily determinable and could be forwarded to the Commission sooner. There was no need for extra time for this.

Mr Labuschagne said that the issue was dealt with in section 6A(6). It provided that the auditor’s report should be submitted within three months after the date on which the books were closed. He suggested that the period in subsection (4) should be reduced to one month. This meant that parties would have to prepare the financial statements within a month and the auditor would edit them in the second month. The statement would then be submitted to the Commission at the end of the second month. The period of time referred to in subsection (6) should be reduced to two months.

Ms Chohan-Kota asked which financial year was referred to subsection (4)(c). She asked if it should not refer to the financial commitments until the end of December. The financial year would end in March.

Mr Labuschagne responded that it was referring to the financial year in which the crossing of the floor had taken place.

Ms Chohan-Kota asked if the term "financial year" was defined in the Bill. Mr Labuschagne pointed out that it was defined in the Funding Act.


Ms Chohan-Kota said that "obligations" was too vague. She proposed that it be qualified to read "legal obligations" as it encompassed all financial obligations of the party. Mr Labuschagne thought that the wording of this provision should be left to the IEC to consider.

Ms Chohan-Kota asked what were Public Accountants and Auditors. Were they different officials?

Mr Labuschagne did not know if they were different. There was also an Act called Public Accountants and Auditors Act, 1991. He did not know if the Act provided for the appointment of auditors and accountants. The words "public accountant and auditor" were also contained in section 6 of the Funding Act.

Mr Labuschagne said that subsection (5) stipulated that an Auditor should express an audit opinion on whether the moneys were used for purposes authorised by the Act and on the correctness of documents submitted in terms of subsection (4)(b) and (c). In terms of subsection (6), the auditor’s report and the audited statements as well as all statements for the financial year in question of the banking account of the party concerned should be submitted to the Commission.

Ms S Camerer (DA) said that subsection (5) should require the auditor to express an opinion as to whether "or not" the allocations were used for purposes authorised by the Act.

The Chairperson asked if the subsection should not also included records of existing financial legal obligations. These would include things like copies of lease and employment contract.

Mr Labuschagne felt that "records of account" covered supporting documents.

Mr Swart that the Commission could ask for additional documentation in terms of subsection (8)(a).

The Chairperson said that the point was that some moneys might not have been spent in terms of the financial statements. If the Commission was going to determine what the unspent balances were, it should have the documents upfront. She suggested that supporting documents should be included in subsection (6).

Mr Labuschagne said that subsection (7) stipulated what the Commission should do after receiving the auditor’s report and the audited statement.

The Chairperson asked why the subsection referred to ‘percentage’ of the unspent balance and not an amount.

Mr Labuschagne replied that the Act also referred to ‘percentage’. He also preferred the use of ‘amount’. The Chairperson said that the subsection should refer to an amount. It should also refer to all supporting documents and not just the auditor’s report and audited financial statements.

Mr Mzizi said that subsection (8)(a) would become unnecessary if supporting documents were included in subsection (7).

The Chairperson said that subsection (8)(a) was a ‘safety net’ provision in terms of which the Commission could ask for more documents. In terms of the Act the Commission was able to refer to the Auditor General’s office as opposed to auditors. She wondered if such a possibility should not be included in the Bill.

Mr Labuschagne replied that section 6(6) of the act provided that the Auditor General might at any time audit any political party’s books.

The Chairperson said that the benefit of having the Auditor General auditing the books was that he or she would table the report in Parliament. She supposed that the Commission could also be asked to table the report in Parliament.

Mr Labuschagne replied that the Commission was expected to submit a report to Parliament once a year. He recommended that the report should include unspent balances that it had received.

Mr Labuschagne said that in terms of subsection (8) the Commission could appoint an auditor to verify the auditor’s report and audited statements or audit the party’s statements.

The Chairperson said that auditors appointed by the Commission should also be empowered to express an opinion on the correctness of the documents referred to in subsection (4)(c).

Mr Labuschagne said that subsection (9) dealt with the repayment of unspent balances.

Mr Swart asked why subsection (9) referred to the leader of the part and not the accounting officer. Was it because one could be dealing with a party to be formed? The principle in the Act was that the accounting officer was personally liable. The provision seemed to be a slight deviation from the general principle.

The Chairperson said anything could happen during the three months period. The accounting officer could die and the Commission would have not recourse against anybody. The next best person to go to would be the Chairperson as opposed to just any other official of the party.

The Chairperson asked if subsection (11) should not be qualified by saying "any circumstances relating to unspent moneys".

Mr Labuschagne replied that such a qualification would limit the powers of the Commission.

Clause 4: Amendment of section 8 of Funding Act 103 of 1997
Mr Labuschagne said that this amendment would enable the Commission to report on unspent balances.

Amendment of section 9 of the Funding Act 103 of 1997
Mr Labuschagne said that section 4(2) of the Act gave an impression that the moneys in the Fund could be used for other purposes and not only allocating it to parties. He suggested that the unspent balances should be used in the prescribed manner.

The Chairperson said that one was not talking about huge sums of money. She cautioned against getting into the realm of earmarking funds for specific purposes. What was important was the principle that the funds should go back to the Commission.

The committee agreed that paragraph (a) in option should be deleted. Mr Labuschagne said that paragraph (b) was similar to clause three and dealt the definition of ‘Constitution’. The whole of option 1 was no longer necessary if paragraph (a) was going to be deleted. Option 2 had already been deleted.

Clause 6: Insertion of section 9A in Act 103 of 1997
This was a penalty clause and was necessary because it was non-existent in the Act. Reference to section 6A(1), (3) or (6) in section 9A(a) and section 6A(5)(a) in paragraph (b) should be deleted.

Mr Labuschagne said it was up to the committee to decide if the six months imprisonment period was sufficient.

The Chairperson said that the clause should refer to a period not exceeding two years. The court would have the discretion on what would be a suitable punishment.

Mr Mzizi asked what was the amount of the fine. Would this be left to the discretion of the court?

Mr Labuschagne replied that one-year imprisonment was equal to a fine of R20 000. It was important not to mention the amount because it could always change.

Mr Labuschagne also proposed two options amending the preamble to the Act as a result of the new process of repaying the unspent balances to the Commission. The first option dealt with the allocation of moneys after floor crossing. The second option dealt with the repayment of unspent balances.

The Chairperson asked if one was not concerned with ‘re-allocation’ as opposed to ‘allocation’. The Commission would have to reallocate moneys after floor crossing had taken place.

Mr Labuschagne said that the long title of the Bill would also have to be amended to that effect.

Dr Delport said the Bill did not specifically provide that allocations would be reallocated after the crossing of the floor as if an election had taken place.

Mr Labuschagne said that the issue was dealt with in the existing regulations. Amendments to existing regulations would regulate the issue of re-allocation and distribution after a crossing period. Section 10 of the Act provided that the President could make regulations in regard to the manner in which and the procedure according to which payments from the Fund were to be made.

Ms Chohan-Kota expressed concern section 10 did not deal with "reallocation under different circumstances".

Ms Camerer said it appeared as though the recalculation of unspent moneys could up to six months to be completed. Ms Chohan-Kota explained that the parties were given two months and the IEC had two months to determine the unspent balances.

Mr Labuschagne was unsure if the recalculation meant after elections or after the floor-crossing window period.

Ms Chohan-Kota stated that she would support the idea of inserting the phrase, "after election and floor-crossing period." She insisted that it was necessary to provide clearly in the regulations that unspent moneys were to be transferred into the pool for the next financial year.

Mr Labuschagne responded that section 3(10) of the amendment Bill provided that any unspent moneys should be transferred into the Fund.

Ms Chohan-Kota wanted to establish if there was any provision outside the regulations for unspent balances to be repaid into the coffers of the Public Fund in the next financial year.

Mr Labuschagne explained further that unspent moneys should be earmarked for distribution to the parties in the next financial year and could not be used to cover the expenditure incurred by the Fund itself.

Ms Camerer was of the view that such unspent moneys should be rolled over the next financial year and be distributed equally amongst the parties. Therefore the unspent moneys should not be used to pay the expenditure incurred by the Fund.

Ms Chohan-Kota argued that the expenditure incidental to the administration of the Fund should be paid out of the remnants of unspent balances. She maintained this position notwithstanding the principle that unspent moneys were specifically meant for allocations to the parties during the next financial year.

Regulation 5(1)
Mr Labuschagne indicated that regulation 5(1) provided that moneys allocated to parties should be paid in four equal instalments. The first instalment was payable within four weeks of the beginning of the financial year. He noted that after the floor-crossing period the instalments payable to various parties might change. The amendment regulation was meant to provide for the change that resulted from the floor-crossing exercise.

In terms of subregulation 3(a)1, the Commission should recalculate the allocations of each party within 10 days after the publication of the list by the Speaker. The Speaker of Parliament should publish the list of all parties that qualified for the allocation of moneys from the Fund in terms section 5(1) of the Funding Act.

The Chairperson suggested that the Commission should give parties three weeks before the end of a financial year in order to allow them time to repay their unspent balances. Subregulation 3(1)(a) gave parties 4 weeks within which they could repay their unspent balances to the Commission.

Mr Labuschagne said that the IEC had to distribute 50% of the total amount of the 3^rd and 4^th instalments paid by the parties after 22 September. This scenario was carefully provided for in the new regulation 5(4)(a) and (b). The first and 2^nd instalments had to be paid prior to the floor-crossing period. A new determination had to be made in respect of calculations for the allocation of funds to parties by the Electoral Commission. The distribution of funds to the parties would be made in accordance with formula prescribed in Regulations 3 and 4 of the Funding Act. The reallocation would be done proportionally and equitably amongst parties. The existing regulations would continue to be applicable in the next financial year. Every year the IEC should make a new determination of what the reallocation to parties would be.

The Chairperson asked if the IEC was happy with payment of allocations to parties within 15 days after the Speaker had published the list of all represented parties in October.

Mr Labuschagne expressed concern that IEC might be unable to recalculate the instalments payable to parties within 15 days and this could create problems. The IEC was keen to repay the parties within the first 15 days of October after floor crossing.

The Chairperson asked if all parties were happy with the 15 days in which the IEC had to repay allocations.
Mr Labuschagne said that it would be problematic if the IEC would be unable to comply with the 15 day period. He pointed out that although the IEC had not objected to the 15 day period it could still cause problems for them.

Dr Delport contended that 15 days was sufficient time within which the IEC had to recalculate the instalments payable to the parties. He was convinced that the IEC had a computer programme to allow smooth calculation. He argued that parties already had existing balances kept in their financial records. The Chairperson agreed with the contention that the 15 day period was sufficient for the IEC to distribute moneys to parties entitled thereto.

Regulation 8(1)
Mr Labuschagne explained that this specific regulation took into account the details of individuals who had crossed the floor. The details of the individuals had to be submitted to the IEC together with the financial statements and records of the party. In terms of regulation 8(2) the submission of the records of the party and details of the floor crossing individuals had to be done within 3 months.

Mr Labuschagne proposed that the period for submission be reduced to 2 months. The financial statements prepared in relation to the Fund should be submitted within 3 months after the end of the financial year. The Leader of Party or Accounting Officer should within two months after party had ceased to exist, submit the financial statements together with the information to the IEC.

Dr Delport argued that the period should remain three months after the party had ceased to exist and not after the party had closed its financial books. He warned the parties could use the closing of books as a defence. A party could refuse to close its books if it was involved in court case. He submitted that three months were insufficient as the party could be engaged in lawsuit that could go far beyond the three months period.

The Chairperson interjected and pointed out that the Funding Act clearly stipulated that the parties had to close their books as at 31 September during the financial year.

Dr Delport suggested that the records be submitted after the party had ceased to qualify for funding as prescribed in the Act.

The Chairperson said that the requirement for closing of books and financial records was provided for in the Funding Act and was therefore not necessary to insert in regulations.

Mr Labuschagne suggested that new section 6A(10) should include a proviso to the effect that all moneys left in the Fund should be carried forward to the next financial year.

The Chairperson urged the Committee not to forget that the Bill and Regulations should provide for penalties in the event of failure by the parties to pay unspent balances into the coffers of the Public Fund. She stressed that penalties would ensure significant compliance by the parties. The absence of penal provisions could lead to non-compliance and render the proposed regulations inapplicable.

Mr Labuschagne stated that such penalties were provided in terms of section 9(A) of the draft Bill and regulations thereto. He said that the critical question was whether six months imprisonment or fine would be viewed as serious by the courts. The provision currently left the courts with discretion to determine the appropriate penalty.

Mr Mzizi asked if the Committee wanted the courts to determine what the appropriate sentence should be in case of failure to comply with time periods.

Mr Labuschagne replied that the presiding officers of our courts were given an unfettered discretion in imposing the appropriate sentence and fine in cases of failure by the parties.

The Chairperson asked for an explanation around the amount of fine as opposed to the six months term of imprisonment imposed for failure to meet the deadline. She asked if there was an already existing formula to quantify the six months in payment of the fine.

Mr Labuschagne replied that there was a formula set out in the Funding Act. In terms of this formula a one year sentence would be equal to R20 000 fine at the moment.

The Chairperson reminded Members that they had to deal with the situation where there was crossing in the legislature and completely new party was formed. A formula or mechanism should be devised for the determination of delegates. The Department had suggested that the legislatures be allowed to decide which of those parties would have to lose their seats. An election could be held at the legislature in accordance with this mechanism. An advantage resided with fact that the NCOP was a forum at which legislatures and not parties were represented. The second advantage was that the need to resort to ballots would be rendered unnecessary and this would save costs. The votes should follow MPs as they cross the floor. The electoral legislation already provided that if parties merged then the total number of votes for both parties would be taken into account.

The question which arose was whether votes should follow Members who had crossed the floor. Therefore it could be argued that a member of a single member party should be allowed to carry his/her votes to the new party when crossing the floor. If this scenario was allowed to occur, then anomalies could arise. The question would be whether that was a merger or crossing of the floor. If some Members could cross over with their votes then everybody should be entitled to do so. She doubted whether, in accordance with the new amendment regulation, this specific scenario would be interpreted as merger or not. Another problem could arise when a party had lost all but one member remaining behind. That party would retain all of the votes cast at the ballot for the purposes of this mechanism. Nevertheless, the new parties that had never contested elections would get nil fractions based on the formula. The newly formed party that never contested elections would then had to receive zero-rated value in allocation by the IEC.

The second option presented Parliament with possibility that votes would then follow Members as they cross the floor to another party. The Chairperson indicated that in instances were one or more parties merged the Electoral Commission would recalculate the total number of votes.

Dr Delport cautioned that such a situation only happened on a limited scale and should not derail the main purpose of amendments to the Funding Act. The scenario in question only played itself out in the Free State provincial legislature. In this instance, the Freedom Front and ACDP each had one representative and both parties suffered after floor crossing as they received only a fraction of their allocations from the Electoral Commission. He asserted that democracy required that votes should and had to remain with the party and not the individual who had crossed the floor to other party. Furthermore, the Democratic Alliance would be happy if newly formed parties would receive a nil fraction after floor crossing had occurred. He stressed the fact that the support of an individual who had crossed the floor had not been tested.

The Chairperson held the view that in cases where there was a tie emerging between parties after floor crossing or an election, the legislature should be afforded the privilege of determining the value of the allocations to parties. She pointed out the above proposition would serve as deadlock breaking mechanism in the cases of a tie.

Mr Mzizi said that individuals who crossed the floor did it for pure political manipulation of their party positions and self-interest. He indicated his party had problems with floor crossing. The constitutionality of certain matters could be tested in the Constitutional Court. He asked what would happen to individuals left without a party in the legislature.

The Chairperson explained that these were challenges that faced the Committee in grappling with the amendments to legislation about floor crossing. Where there were no remnants left behind for the party a dispute could arise whether that was a merger or subdivision. She proposed that the principle that votes of both parties had to be collapsed and such parties would cease to exist in the legislature. A party that had not contested election should not be afforded the opportunity to abuse the democratic principles enunciated in the enabling legislation and the Constitution.

She said that the formation of new parties after/ during the floor-crossing episode was a rare occurrence in our democracy. This rare occurrence needed to be captured in legislation to ensure that the electorate was protected from unscrupulous public representatives. People normally voted for parties and not individuals and this had to be respected. She wanted to know why a new party should be accorded the benefits of an elected party when it did not stand for elections. She urged Members to make efforts to find deadlock breaking mechanism in the amendment regulations.

Imam Solomon pointed out that some legislatures used the drawing of lots and secret ballots to break deadlocks. The Chairperson submitted that another route would be to give a newly formed party a zero rated fraction during allocations. She indicated that allocation would only apply to situation when there had been consolidation of parties during or after floor crossing.

Mr Labuschagne appealed to Members to uphold the constitutional principles enunciated in relation to the floor-crossing. The Constitution required that floor crossing legislation should be consistent with democracy and good governance. Floor crossing was also firmly embedded in section 61(2) (b) of the constitution.

Dr Delport argued that it was quite natural that legislatures would be more elaborate on the constitutional principles in enabling legislation that they enact. He warned that the DA had agreed to the formula of allocating a fraction to a new party only if there was a tie.

Mr Labuschagne stated that the legislature should determine the fraction to be allocated in such cases and it should express its decision through amendments to the Funding Act.

Dr Delport suggested that preference should be given to already established parties and not newly formed parties when allocations were made.

The Chairperson cautioned that section 5 pertaining to the formula should not be interpreted to exclude newly formed parties. She admitted that she did not understand the mechanism of calculation as set out in section 5(1). However, she pointed out that it did not oust the new party from the allocations.

The meeting was adjourned.

Appendix:
CONSTITUTIONAL MATTERS AMENDMENT BILL [B22-2005]
27 July 2005

Thank you for your letter of 19 July 2005.

Clauses 1 to 4 of the Bill contain necessary technical amendments to the Public Funding of Represented Political Parties Act, 1997, to accommodate the outcome (if any) of the September 2005, and subsequent crossing of the floor window periods. The underlying principles of the Act are not affected. We support the proposed amendments, but feel uncomfortable with the discretionary powers assigned to the Commission in the new subsection (8) of section 5 - clause 2(c) of the Bill. It is suggested that all aspects are adequately covered by the rest of the amendments and that there is no need for the proposed subsection (8).

The proposed amendments to the Regulations are also technical and aimed at providing for the possible outcome of crossing of the floor window periods. We agree with the proposed amendments.

We do not have any comment to offer on clause 5 of the Bill.

Yours sincerely
Dr N B Bam
Chairperson: Independent Election Commission