Financial Management of Parliament Bill [B74-2008]: deliberations

FINANCE PORTFOLIO COMMITTEE
1 August 2006
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: DELIBERATIONS

Chairperson: Mr Nene (ANC)

Documents handed out:
Draft Financial Management of Parliament Bill as of 2^nd August 2006

SUMMARY
The drafters of the Bill took the Committee through the Bill, outlining changes made to it since their last meeting on 17 May. There were significant changes to the structure and the format of the Bill, and some additions relating to payments to Members of Parliament and the introduction of a Code of Ethics for Members as well as transitional provisions.

A parliamentary legal advisor presented an opinion on the need for a Code of Ethics for the Executive Authority in the Act. He also raised the issue of the role of the Standing Committee on Public Accounts and the Joint Committee. His concern was that the parliamentary rules were being deviated from and this was being done by legislation. Legislation was hard to change and it took a long time to do so. Even the Public Finance Management Act had not gone that far in determining internal arrangements. His question was why was Parliament regulating its internal arrangements by legislating on them rather than putting this detail into the parliamentary rules.

MINUTES
Changes and Additions to the Bill
Mr Paul Benjamin (independent legal consultant and legal drafter of the Bill) said that they had spent a long time redrafting the Bill since their last meeting with the Committee. There were significant changes to the structure and the format of the Bill, and some additions relating to payments to Members of Parliament and the introduction of a Code of Ethics for Members as well as transitional provisions.

The first major change involved the structure of the Joint Committee that would maintain oversight of the financial management of Parliament. The primary purpose of that Committee was now clearly stated and the provisions about representation on the Committee had been moved from elsewhere in the draft. With regards to administration, all of the changes had been made at an earlier stage. The powers of the Executive Authority were clarified in reference to its responsibility to Parliament with another reference to the Code of Ethics.

Other changes were in Chapter 3 that involved planning and budgeting. The provision was split up into two parts now, with the Executive Authority now having to oversee the preparation of Parliament’s strategic plan, annual performance plan, budget and adjustments budgets in accordance with this Chapter. The second part of the provision stated that the Executive Authority also had to table the strategic plan and annual performance plan in Parliament. However, the manner in which the strategic plan and the annual performance plan would operate remained the same.

Changes to section 19 were made at the request of the National Treasury with respect to expenditure before budgets were passed, in line with the Public Finance Management Act (PFMA). Treasury also had problems with some of the terminology in section 28 so changes were made accordingly.

Prof Christina Murray, legal drafter of the Bill and head of Public Law at the University of Cape Town, said that changes made to section 34 about payments to Members of Parliament and political parties was to ensure that any distribution of funds followed set guidelines and procedure for the use of them. At present no Member actually received funds directly from Parliament but did from their party. The provision was drafted in such a way that if this position changed, the Act would govern the transaction.

Mr Benjamin added that a new sub-section had been added to section 35 to make it consistent with the PFMA. It stated that this sub-section did not apply to transfers in other countries or to international institutions, and any transfer was governed by the instrument that regulated the relationship between South Africa and that entity and institution.

Another change had been made to the penalties that could be applicable. The sanction in section 70 was changed to a fine or to imprisonment for a period not exceeding five years. The Adjustment of Fines Act contained provisions that imposed fines of certain amounts depending on the length of a proposed prison sentence so the amount of any fine would not be hard to ascertain.

Prof Murray went through Schedule 4 which now contained the transitional arrangements. Sub-section 1 stated that section 14 and those parts of the Act that referred to the strategic plan came into effect on the date of the first elections for the National Assembly after the Act came into effect. Sub-section 2 said that sections 15, 20, 22, 23, 51 and 62 would all come into effect at the start of the first financial year after the Act came into effect. Also, until such a time as the two sub-sections came into effect, Parliament would still be bound by any provisions in the PFMA and its Regulations that referred expressly to it.

Discussion
Mr I Davidson (DA) wanted further clarity on the role of the Joint Committee and its functions. Did it not have any monitoring role during the course of the year? It only seemed to receive reports at the end of the year. He also wanted to know how Parliament could get back money irregularly spent by a political party under section 34(3)(j) if, for example, the party did not exist anymore.

Prof C Murray replied that the Joint Committee was given broader powers than Mr Davidson thought. Section 4(4) said that the Committee had the powers that Committees of Parliament had under sections 56 and 69 of the Constitution. This meant that it had a greater role, including an oversight function as well.

Adv F Jenkins, the Parliamentary Legal Advisor, added that whether or not the political party existed did not remove the possibility of the normal criminal sanctions on fraud being imposed on the members of the party.

Dr Van Dyk expressed concern at the composition of the Audit Committee and the skills the members should have. Section 47(1)(b) said that the Committee had to consist of at least three persons with appropriate experience. In his experience in the Standing Committee on Public Accounts (SCOPA), such Committees were hampered by a lack of adequate skills and knowledge which led to under and over-expenditure in Government Departments. He proposed that the word “knowledge” be added to the provision to impose a requirement that only those who had the necessary skills could serve on this important Committee. Why did sub-section 3 say that half of the members of the Committee be from outside Parliament. Would it not be better to have more people who knew what was going on in Parliament?

Adv Jenkins replied that it was necessary to have a lot of people from outside Parliament to ensure the independence of the Committee, given its importance. Also, the needs of the Committee and its role could change over time, with the Committee needing more of a certain skill than others depending on that need and role. It was important to have this flexibility so no set number was stated.

Other Members of the Committee agreed that the word “knowledge” should be added and Prof Murray said that she would make the change accordingly.

Need for a Code of Ethics for the Executive Authority
Adv Jenkins presented the Committee with an opinion stating the need for a Code of Ethics for the Executive Authority in the Act. The starting point was why was such a Code necessary? The Bill did not really introduce anything new in how the Executive Authority exercised its functions as the spokesperson for Parliament so something more was needed.

Another issue was that Chapter 9 of the Bill provided for the making of Regulations and the issuing of instructions by the Executive Authority. In terms of the Draft Bill, Regulations made in terms of this provision would only come into effect after approval by Parliament. This may be impractical, for example, if Parliament was in recess. On the other hand, Parliament did want to authorise the Regulations and not leave the entire matter in the hands of the Executive Authority.

Another issue was the financial management of provinces. The Bill allowed provincial legislatures to enact their own legislation to regulate their financial management in accordance with the norms and standards set out in the new Schedule 2 of the Bill. However, Parliament may not provide in national legislation for the financial management of provincial legislatures. Adv Jenkins said that it would be better not to provide for provinces in a Schedule. The Bill had to apply to provincial legislatures except insofar as provision for internal arrangements, procedures and proceedings of provincial legislatures, such as the establishment and functions of committees. It was evident that more political consultation was need on this matter. A proposal to consider in this regard in the Bill was the way the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act provided for the extent to which it applied to provincial legislatures.

He also raised the issue of the role of SCOPA and the Joint Committee. At present, the PFMA referred certain documents to Parliament. The Public Audit Act said that Parliament had to have a mechanism/committee to consider financial reports from the Office of the Auditor-General. Now the Bill was changing this position by saying that all the reports had to go to the Joint Committee and the Audit Report had to go straight to SCOPA. This was a deviation from the rules. SCOPA was a politically sensitive instrument with a specific role. The role of the Joint Committee was less clear. Was there enough capacity for it in terms of membership, support and attendance of meetings?

His concern was that the rules were being deviated from and this was being done by legislation. Legislation was hard to change and it took a long time to do so. Even the PFMA did not go this far in determining internal arrangements. Why was Parliament going so far in regulating its internal arrangements by putting them in legislation and not in the parliamentary rules?

Discussion
Mr Davidson commented that he saw no problem with codifying what the Code of Ethics was in the Act. This made the issue clear and this was alright. Regarding Adv Jenkins’ concerns about the role of SCOPA and the Joint Committee, he understood the concerns but it was the Joint Committee’s role to see that report. There was nothing wrong with this and placing notice of the fact in the Act.

The meeting was adjourned.