Discussion of the Public Finance Management Amendment Bill [B 27-99]

Meeting report

FINANCE SELECT COMMITTEE
8 March 1999
DISCUSSION OF THE PUBLIC FINANCE MANAGEMENT AMENDMENT BILL [B 27-99]

Documents handed out
Public Finance Management Amendment Bill
Public Finance Management Act consolidated with the Public Finance Management Amendment Bill
A representative from the Finance Department briefed the committee on the Public Finance Management Amendment Bill [B 27-99].

MINUTES
Chairperson Fenyane of the ANC called the meeting to order and explained how the Public Finance Management Amendment Bill [B 27-99] deals with the Provinces and extends this legislation to the provinces. He expressed his wish that workshops be held in the Provinces because it is very important for the Minister of Finance to educate the public of the impact of this bill.

Mr Dean Botha from the Department of Finance started his briefing by informing the committee that the Public Finance Management Bill [B 119B-98] had been passed last week and signed by the President as Act 1-99. This amendment bill, B 27-99, was drafted because due to technical reasons related to the Constitution, the Public Finance Management Bill had to be split into two separate section 75 and section 76 bills for its passage through Parliament. Therefore, the amendment bill provides for legislation for both the provincial treasuries and the national treasury.

Mr Botha outlined the significant changes made within this amendment bill. He started by noting that the definitions have been brought in line to include the Provinces. The chapter on the budget basically says the same as Act 1-99 except for minor changes to the title and where the bills are tabled in the future. On page 20 of the amendment bill, in clause 17, a section on unfunded mandates has been included. References to the Provincial legislatures are inserted where appropriate throughout the bill.

Mr Botha pointed out a slight error in the amendment bill on page 36. Where the Gauteng International Airport is mentioned in number 13 of the list of Provincial public entities in the Northern Province, the name needs to be changed to the Gateway International Airport. Mr Botha said that this oversight will be corrected within the bill.

Mr van Niekerk of the NNP noted that the success of this bill relies on the cooperation from the Provinces. Mr Botha replied that the Ministry has assigned consultants to each of the Provinces to help with its capacity building in regards to public finance management.

Another MP asked if a joint task force will be organised to ensure the implimentation of this bill. Mr Botha responded that a task force has already been established and that by the end of June, educational workshops should be scheduled, which will also ensure appropriate implementation of this bill. Mr Van Niekerk said that he wants this committee to ensure that the overseeing body is in place by the time this bill comes into force as an act. Mr Bhengu of the IFP expressed his concern for the constitutionality of this process of establishing a task force. He does not think that such a task force should be able to nullify the precise Constitutional provision for the NCOP. Mr Botha replied that this task force which is comprised of members from both Houses is not a Constitutional institution. This task force was actually formed last year to provide advice and recommendations and there never has been any concern about its constitutionality. The Constitutional Review Committee has also looked at the task force and approved of its functions.

An MP asked which groups would be briefed during the upcoming visits to the Provinces. Would it just be the Finance Department or all departments? Chairperson Fenyane replied that all departments would be briefed because it is not only the Finance Department but all department heads that will be accounting agents.

Another MP remarked that when looking at all the clauses in this bill, the amendments totally transform how Provincial governments will operate finances. She further asked for a point of clarification. Clause 20 of the bill, "Delegations by provincial treasuries" , is this clause in alignment with the Public Service Act? Was this issue investigated particularly because different Provinces support different structures? Mr Botha explained that clause 20 only deals with the heads of the finance departments in the Provinces.

Mr Lebona of the ANC mentioned the problems that the Provinces have experienced in the past regarding unfunded mandates. Mr Botha explained that the Provinces will be given a chance to respond to all legislation that indicates a financial burden on the Provinces. The NCOP will also have a chance to review legislation as well.

Chairperson Fenyane explained that on 15 March 1999, this committee will adopt the bill unless any Province comes forward with amendments. In that case, the National Assembly will have to delay adoption. The plan at this time is that this bill will go before the NCOP on 16 March 1999 and the National Assembly on 26 March 1999.

An MP asked for further clarification regarding the section on unfunded mandates. The clause refers to draft legislation but not legislation that is already in place. Mr Botha replied that that this observation is correct and that only draft legislation will be affected. He said, "What has been done, has been done and we can’t do anything now about it."

Mr Lebona asked if unauthorised expenditures will replace unfunded mandates. Chairperson Fenyane replied that clauses addressing unauthorised expenditures will not replace the clause on unfunded mandates.

Another MP asked if the "foreign currency" mentioned in clause 38 of the bill takes into account offshore deals not considered a foreign market. She explained that businessmen are very creative and can conduct the deal itself not in a foreign currency but then later change it during the transaction into foreign currency. Mr Botha replied that he is not sure what happens in cases of offshore deals but will make a note of this question and follow up on it with this committee.

Chairperson Fenyane asked the committee if there were any further questions. Since there were none, he adjoined the meeting until 15 March 1999 when this committee will meet again.