Money Amendment Procedure and Related Matters Draft Bill [B75-2008]: briefing

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Finance Standing Committee

29 July 2008
Chairperson: Mr N Nene (ANC)
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Meeting Summary

The Legal and Constitutional Office of Parliament presented the initial briefing on the Draft Money Amendment Procedure Bill. The Bill was a product of discussions conducted by the Budget Focus Group and arose from the Oversight and Accountability Report of 2002. The focus group wanted to develop legislation that involved Parliament to a greater extent in the budgetary process. The thinking behind the Bill focused on developing procedures that would take account of the whole budget cycle. The parliamentary drafter reviewed each of the clauses of the Bill. The Chairperson assured the Committees that the 15 August deadline for reporting on this Draft Bill was not to finalise the Bill but merely to provide a progress report.

The discussion by these two Committees was wide-ranging. The definition of “fiscal framework” was questioned several times. Also they asked if there would be a conflict resolution mechanism in place if Parliament did not agree with the fiscal framework as decided by the executive. The issue of referral to other parliamentary committees received attention as the Finance Portfolio Committee felt that this would present challenges to committees less experienced in financial matters. There was much focus on the 4 month deadline for passing any proposed amendments to Money Bills. The drafter was reminded that this deadline might be insufficient as parliamentary constituency periods had to be factored in. The matter of capacity was of most concern to committee members, specifically the Budget Office. Clause 7(13) gave the House the power to amend the proposed amendments without referring back to the committees. The Committee asked if it would be possible for one individual to achieve this from the floor. The fear was expressed that this Bill might become a mechanism for departments to increase their budgets. The view was also expressed that this amounted to a lot more than oversight and could have huge implications. Other question included: what the impact on the South African Reserve Bank would be, whether they would be reporting to the National Assembly or the whole Parliament and what the communication with local and provincial government would be. The Portfolio Committee requested an opportunity to meet with the task team so that they might discuss the process in more detail

Meeting report

Adv Frank Jenkins, Legal Adviser: Parliament, delivered a briefing on the first draft of the proposed Bill. The impetus for the Bill came from the Oversight and Accountability Report of. The draft Bill was the product of the discussions of Parliament’s Budget Focus Group. They were mandated to consider a procedure for amending money bills and come up with a draft Bill. There was also a Committee Focus Group and a Project Focus Group. The task team felt it wanted something more involved than what was currently in legislation. Many ideas were considered such as setting ceilings on amending Money Bills.

The thinking behind this Bill was that procedures needed to be established to account for the whole budget cycle. The preamble of the Bill outlines that it will co-operate with government provisions. The Minister of Finance had a very specific function, as only the Minister would be able to introduce a Money Bill and Parliament may amend a Money Bill only if it had this legislation in place. A need for fiscal discipline was highlighted.

He gave an overview of the Bill, beginning with the definitions. Here, a special note was made of the definition of “fiscal framework”. This was noted as a very interesting point of reference throughout the Bill.

Clause 2 concerned the interpretation of the Act and here it was highlighted that the context the Bill would operate in, would be as an oversight exercise.

Clause 3 referred to the application of this Act.

Clause 4 proposed the mechanism of having a committee in each House, similar to a budget committee, that engaged with the national macro-economic and fiscal policy and considered all amendments to Money Bills. The clause set out the functions which must be taken up by this committee. The rules of each House could go further and set up further functions. The main task of this Clause 4 committee would be to consider all Money Bills as well as Division of Revenue Bills and to analyse Section 28 and 32 PFMA reports and the annual budget projection, tabled by the Minister of Finance.

Clause 5 required the Minister of Finance to submit various statements to Parliament and to set out the draft budget allocations of each programme within a vote. These would be additional to the requirements of Section 28 of the PFMA on the Minister.

Clause 6 concerned national government's fiscal policy framework and macro economic policy.

Clause 7 laid out the mechanism for how a Money Bill would be considered by the Clause 4 committee for possible amendment. They could then refer it to other parliamentary committees for consideration. Once considered, the amendment could then be submitted to the House. The Bill also provided for the Minister to have input. The views of the Minister must be solicited and he would have 30 days to comment and a response would be required. Once the committee submitted the proposed amendments to the House, the House would decide. The timeline for amendments to be passed was 4 months from the time the Bill was introduced.

Another important aspect would be that Parliament would have to establish capacity to deal with this and the draft provided for the establishment of a budget office for this purpose. It would be there to assist the committees in consideration of any amendments. This provision was contained in Clause 8.

Overall the focus group felt that the Bill was necessary for effective oversight. It would be impossible for Parliament to influence fiscal policy without it.

Discussion
The Chairperson opened the floor to questions and comments to be tabled with the Committee. He stated clearly that a response was not required from Mr Jenkins as he was not in a position to respond at that time.

Mr K Moloto (ANC) stated that the Bill raised challenging and complex issues. He referred to the section that stated that Parliament must adopt the fiscal framework. What would happen if Parliament did not agree with this framework. How would that be addressed?

Mr Moloto commented on the Portfolio Committee's experience in dealing with issues of taxation law and asked if this aspect would not present challenges to other parliamentary committees who were not as experienced.

Mr Moloto queried the proposed Budget Office. He said Parliament needed its own implementation plan and needed to give thought and resources to building capacity for the realisation of the Bill. He also asked if there was a conflict resolution mechanism. If this was not well defined, it could present major problems.

Mr S Asiya (ANC) said that the deadline of the 15 August to report on this Bill was insufficient. There were a number of issues to be looked at. On the issue of capacity, he feared that it would become a budgetary instrument for departments to request increases in funding directly from Parliament.

Mr S Marais (DA) agreed with Mr Moloto's sentiments. He said they had lived without such a Bill for 14 years and that South Africa had a good financial and economic reputation internationally. He thought this amounted to a lot more than oversight and had huge implications if Parliament was able to amend Money Bills. He asked what the fundamental problem was with how things were currently done. The issue of the capacity of the proposed Budget Office had huge implications as the persons must have special qualifications in order to be able to interpret and propose amendments. More specifically, he wanted to know what the prescribed qualification would be.

Adv Jenkins responded that many discussions in the drafting of the Bill had been about capacity and this lead directly to the proposal of the Budget Office in Clause 8. He felt this was really a policy issue.

The Chairperson requested that Members desist from asking questions as Adv Jenkins would not be answering questions in this session. They were simply raising issues to be tabled with the Committee, and these would be responded to in future sessions on the Bill.

Mr Marais referred to Clause 7(13) and asked if, after the Bill had gone through all the relevant committees, the House could amend the amendments without referring it back to the committees.

Adv Jenkins responded that Clause 7(13) made it clear that the House could adopt an amendment from the floor.

Mr Marais asked if the 4 month time frame was a kind of sunset clause.

Adv Jenkins replied that this was found in Clause 7(14). He said that it had to be read in conjunction with Clause 7(8). The Money Bill was introduced by the Minister, then referred to the relevant Committee. The House must pass the Bill as introduced if it failed to pass the proposed amendments within 4 months.

Ms J Fubbs (ANC) asked if the money Bill could refer to sub-budgets and also noted that the time issue had to be taken into account. She asked about the capacity of the two committees (Finance and Joint Budget) in referring bills to other committees. She said operational constraints were a possibility. It was very difficult, currently, to get a clear understanding of the amounts in budget presentations. A clearer picture from departments would be required. The revenue side was very specialised and needed closer attention. She pointed out that the constituency periods of Parliament would have to be considered, concerning the 4 month deadline.

Mr N Singh (IFP) stated that he subscribed to the principle of oversight and that this was a necessary Bill, but the implementation of it was a concern. He queried the bureaucratic process, regarding macroeconomic and fiscal policy and its impact on the South African Reserve Bank (SARB) and the Governor of the SARB. Mr Singh asked if there would be a minimum or maximum amount on the adjustments made. He remarked that the point of departure should be the relevant Portfolio Committee and that the recommendation should then come to the Portfolio Committee on Finance. Mr Singh asked what the impact would be on provinces and wondered what informed the drafting of the Bill in terms of procedure.

The Chair referred to the time frame of the 15 August, he agreed with member and stated that this was only the date by which they would have to report, not finalise the Bill. He added that it had been published in the Government Gazette for public comment.

Mr D Gumede wondered how they could avoid the mechanism of Parliament being both the referee and the player and how they could create a measure of certainty for stakeholders. On the Budget Office, he said he accepted its establishment but said that it should be well capacitated.

Ms L Mabe (ANC) made a plea to the Portfolio Committee and the Joint Budget Committee to consider this as their Bill as Members of Parliament. She said this Bill belonged to Parliament and that this should be considered when deciding what to include and what to exclude. It was achievable and Parliament could provide capacity to ensure that they achieved this. She said that it would probably be a struggle to get into a better position to take up the challenges and that it would not be achieved in one day.

Mr B Mnguni (ANC) remarked that it would not be an appropriate procedure to go through the Bill clause by clause. The Committees would have to study the reference material and hear submissions at the public hearings.

The Chairperson pointed out that “fiscal framework” was not adequately defined.

Mr Asiya requested an opportunity to meet with the task team in order to take the Committee through the process.

Dr D George (DA) noted that the definition of “fiscal framework” was not clear to him. He wondered what the elements were that should be mentioned. There was much more to it than fiscal policy as it dovetailed with monetary policy. He added that the issue of taxation was much broader than the budget and that an appropriate caveat might be needed. The framework of the Portfolio Committee on Finance must be considered where fiscal policy and monetary policy were considered together and that clarity on that would be useful.

A Committee Member felt that this was a drastic departure from normal procedure. After 15 August, more work would need to be done in terms of conscientising provinces. He said there would have to be specific communication with provinces as a caution of what was to come.

The Chairperson reiterated that it would only be a report that would be due on the 15 August.

Mr Moloto sought clarity on whether they would be reporting to the National Assembly or the whole of Parliament.

Ms Fubbs referred to Clauses 7(2) and 7(12) and asked for clarification on the references to “other committee”.

Adv Jenkins responded that this pointed to  the specific instance of a Money Bill being referred to other  committees by  a Clause 4 committee. Amendments could then be proposed  by those committees. In these cases they must report back to the Clause 4 Committee. The other committee could be a Portfolio Committee  or a Select Committee. The views of the Clause 4  Committee must still be obtained, as they should have specialised capacity to consider the proposed amendments.

Ms Fubbs asked if this was the central committee.

The Chairperson responded that it was the committee established in Clause 4.

Mr Singh queried Clause 7(13) and asked if one person would be able to amend an amendment from the floor.

The Chairperson replied that the Portfolio Committee would decide if that door would need to be closed.

Adv Jenkins responded that the focus group felt that they could not take away the authority of the House. He said there might be a need to plug that gap as it might have radical consequences, but it was still democracy. He added that there were past instances where the House had limited its own power and it may do so again.

The Chairperson said that this was not the final document and members would engage with these issues to refine the document.

A Committee member expressed the opinion that he had a problem with Clause 4. He said he did not see the need to start a new committee.

The Chairperson said that members would have to apply their minds to that.

The meeting was adjourned.

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