Draft Money Bills Amendment Procedure & Related Matters Bill [B75-2008]: deliberations

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Finance Standing Committee

16 September 2008
Chairperson: Mr N Nene (ANC)
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Meeting Summary

The legal drafters had produced a new draft of the Draft Money Bills Amendment Procedure and Related Matters Bill and some proposed amendments, which were placed before the Committee and explained. The Preamble had been changed to reflect the purpose of the Bill, and had been reorganised for better reading. In Clause 1, the amendments to the definition of fiscal framework meant that other new definitions were needed, and the three definitions to be read together now related to the fiscal framework, budgetary revenue and expenditure and extra-budgetary revenue and expenditure. A new definition of “day” was produced, to exclude Saturdays, Sundays, public holidays and days in which Parliament was in recess, although further consideration would be given to what must happen during the election period. Clause 4 had been deleted, and its contents moved to become a new sub-clause 9(5). Members discussed the meaning of “fiscal responsibility” and agreed that in this Bill it related to the basis and consequences of the fiscal framework. In terms of revisions to Clause 6(5) the budget review recommendation report would now be submitted also to any member of Cabinet responsible for the department to which the vote applied. Clause 8 now reflected that the Revenue Bills were excluded from bills to be introduced simultaneously, and sub clause 8(2) set out requirements additional to those of the Public Finance Management Act.

Clause 11 had replaced the phrase “parts on estimates of national expenditure” with more detailed wording that set out what information was wanted by Parliament. It was further suggested that Portfolio Committees did need specific performance information, and that budgets and strategic plans should be produced at a much earlier stage, to give more effective oversight. Members agreed that updated strategic plans were required and that "the narrative" should be replaced with "the proposals setting out the strategic priorities". It must be clear that a strategic plan must be tabled each year, and the drafters suggested that the Portfolio Committees should, during the 60 day period for consideration by both Houses of the Division of Revenue, deal with the strategic plans and budgets. A further sub-clause 11(5) would be inserted to bring in the amending powers of Parliament. No more than 10% of the funds appropriated could be appropriated conditionally. The committee would specify the conditions. The Minister must have two days to respond. A recommendation to the House must contain the response from the Minister, and the House must consider that recommendation within seven days after the report to the House. Members asked, under clause 11(6)(d), whether there could be a right to exclusively appropriate on a specific line item, and it was explained that this was already in the Public Finance Management Act. New wording was proposed to the effect that "Another Committee may advise a Committee on Appropriations that an amount must be appropriated specifically and appropriately for a purpose mentioned under a main division within a vote", and this was to be included after the clauses dealing with the conditional freeze. Clause 11(6)(c) was being amended to provide also for transfer payments.

The issue of unfunded mandates was also discussed, but this would be further unpacked during the detailed discussions on the Budget Office. The Committee suggested that when portfolio committees reviewed the budgets they should take note of any unfunded mandates, and the Budget Office should also report on these before the tabling of the Medium Term Budget Policy Statement. A distinction was made between unfunded mandates and failures of delivery on conditional grants. The Bill should create opportunities for any public finance problem to be reviewed by Parliament, although the drafters cautioned against specifying unfunded mandates only, which might narrow the interpretation over time.

The amendments to Clause 12(4) set out the factors to be considered when considering revenue bills. Transfer payments were being inserted into clause 13(16)(b), which spoke to recurrent and capital expenditure. A new clause was proposed to allow the Minister to propose technical corrections, from the floor, or to a Committee, without having to go through all the budget cycle and motivations.

Detailed discussion was held on the Budget Office in Clause 15. The drafters had prepared a further option to have the Budget Office completely separate from the Parliamentary administration. After extensive debate, it was agreed that a further draft would be prepared for discussion. The qualifications and experience of the Director, and then also of the staff, must be specified. The four year term of office suggested did not find general favour, as it was not necessary to link this to the Parliamentary term. Confirmation of the appointment of Director by a new Parliament, as well as removal from Office, must be by both houses, and appointments would be made after recommendations by the four Committees. The Director must submit reports on use of funds, and the budgets and Strategic Plans, as well as office structures and personnel. The functions and duties of the Budget Office must be set out, and it should be clear that its primary responsibility was to the Appropriations Committee and the Portfolio Committee on Finance, with other research tasks being allocated as time permitted. It would need to establish tax and revenue specialist capacity. It must work with the research component of Parliament. Members suggested that it would need to be proactive, and provide a substantive analysis and review of proposals presented each year, with a report back.

Meeting report

Draft Money Bills Procedure and related Matters Bill (the Bill): Deliberations
Adv Frank Jenkins, Parliamentary Legal Adviser, noted that the Bill dated 22 August 2008 was now supplemented with a further document of proposed amendments. The version of 22 August did not contain any issues that the Committee had not discussed. He said that this version and the separate document containing the changes must be read together.

Preamble
Adv Jenkins noted that the suggested changes now reflected the purpose of the Bill. However, Adv Jenkins noted that the Preamble had been a little disjointed, and he had therefore redrafted the whole preamble in a better format, and had then stated the purpose, to give effect to resolutions on oversight of the National Assembly (NA) and the National Council of Provinces (NCOP)

Mr N Singh (IFP) noted that there were a number of "Whereas" paragraphs.

The Chairperson responded that this was "legal speak".

Clause 1
Adv Jenkins noted that point 1 concerned the definitions. The amendments to "fiscal framework" meant that a definition must be given to “budgetary revenue and expenditure". It was intended to make a distinction between budgetary funds and extra-budgetary funds, and then to distinguish between revenue and expenditure within those funds. He then read out the definition of "fiscal framework". Wherever there was a reference to revenue, the Committee wanted to see what was raised within and outside it. The three definitions to be read together were therefore those for the fiscal framework, budgetary revenue and expenditure and extra-budgetary revenue and expenditure.

Ms Alta Folscher, Consultant to the Committee, noted that this was being expanded to deal also with other funds that might fall outside the annual Appropriation Act. The fiscal framework must include all types of revenue and expenditure that might come through in the year.

Adv Jenkins noted that here was also a new definition for "day". There were various references in the Bill to time periods. Some were quite short. If undefined, "day" would take the meaning of the Interpretation Act, which would exclude Sundays and public holidays. It was suggested that a specific definition be inserted in this Bill, to clarify that “day” meant any day other than a Saturday, Sunday, public holiday or day in which Parliament was in recess. The computation would exclude the first day, but include the last day. If two days were allowed from Wednesday, that would be until the end of business on Friday.

Mr Singh pointed out that even if Parliament was in recess, the Executive offices would still function and he was not sure why more days should be given.

The Chairperson noted that the purpose was to afford Parliament the opportunity to amend the Bills. It should therefore work in favour of Parliament, not the Executive.

Mr M Swart (DA) noted that this definition in fact gave the Minister more time to prepare and he agreed that there was not a problem.

Adv Jenkins added that a constituency period was not a recess. It might be necessary to consider what would happen during the election. The Executive remained competent to function until the election of a new President. He thought that perhaps the definition should be amended to say "when Parliament is sitting" rather than "not in recess". This would happen only for a few days every five years, but he suggested that perhaps he should think about it and revert to the Committee.

Clause 4 (read with the new clause 9(5))
Adv Jenkins said that there was a substantial amendment to Clause 4. The fiscal responsibility clause was central to the procedure as all amendments and decisions needed to comply with it. He proposed that this content be moved to become a new sub-clause under clause 9, which considered amending the fiscal framework, to bring the two concepts more closely aligned.

Adv Jenkins then turned to the proposed clause 9(5). Clause 9 had noted that the amendment proposed to the fiscal framework in the reports must be consistent with the Act. The new clause 9(5) would now read: "When amending the fiscal framework, a money Bill, or taking any decision in terms of this Act, Parliament and its committees must ensure that...” and then the elements of clause 4 were set out, as subparagraphs (a) to (g). He asked the Committee to confirm that it was satisfied with the move of the fiscal responsibility clause to clause 9.

The Chairperson thought it looked neater.

Ms L Mabe (ANC) wondered if this did not make clause 9 too bulky.

Dr L George (DA) said that he did not have a problem with the content being moved to clause 9. However, he pointed out that when this was contained in clause 4, the concept of fiscal responsibility was highlighted by having its own heading and it was more prominent. He wondered if the move to clause 9 would water down that emphasis.

Mr K Moloto (ANC) agreed that it did make sense to put it under clause 9, so that the issues were set out comprehensively. He did not think that the fact of removal of the heading of "fiscal responsibility" made too much difference.

Ms J Fubbs (ANC) said that the main point was to ask whether fiscal responsibility was a concept or a process. She had looked at issues in clause 5 and clause 7, both of which required an understanding of "fiscal responsibility". A concept should be understood before it was applied, and purely from that point of view there was some inconsistency.

Ms B Hogan (ANC) said that the phrase “fiscal responsibility” was not being used in quite the same strong sense as it was in New Zealand. This clause was merely setting out the factors that should be taken into account, and there was some leeway, as there must be an appropriate balance. In a strict fiscal responsibility clause, the targets would be specifically set out. That was not being done and there was no spelling out of the quantums. She preferred this to be contained in clause 9, because it was not set up as a procedure above all else.

Ms Mabe said that, on second thoughts, perhaps it could precede clause 9, as a new clause.

The Chairperson said that he thought that it fitted nicely into clause 9, and he had the support of most Members.

Ms Folscher said that the fiscal responsibility clause applied to the whole Bill, and it did say that Parliament must ensure that it considered all things when applying the Act. Within that clause there were a number of other aspects around appropriations. Technically it did not matter because all decisions taken under the Act must be made when bearing certain factors in mind.

Adv Jenkins said that the issues binding parliament were the adoption of the fiscal framework and the division of revenue. Clause 10(4) said that the division of revenue (DOR) must be consistent with the adopted fiscal framework, and the same applied to passing of revenue bills, appropriations and so on. That was, by another name, the fiscal responsibility. That was the thinking behind the procedural issues.

Ms Hogan said that she had some difference of opinion on the meaning. “Fiscal responsibility” had specific economic meanings. She was loath to impose a clause that required fiscal responsible behaviour as what was fiscally responsible now may not be so in future years. It was correct to elevate the adoption of the fiscal framework, not the principles of fiscal responsibility. However, the Bill must spell out the basis and the consequences of that fiscal framework.

The Chairperson asked that elements of fiscal responsibility be kept under the implementation of the fiscal framework. He particularly liked the formulation of the new clause 9(5).

Adv Jenkins added that "ensure that" would apply only to (a) to (d); he would make the necessary grammatical changes.

Clause 6
Adv Jenkins noted that clause 6(5) was speaking about the budget review recommendation report. The suggestion was to submit the report also to any member of Cabinet responsible for the department to which the vote applied.

Clause 8
Adv Jenkins noted that the intention during the discussions previously was to have all the Bills introduced at the same time. However, not all of the revenue Bills would be able to be submitted simultaneously. Therefore, he said that the reference to revenue Bills would be omitted from subclause(1). Subclause (2) would set out requirements, in addition to Section 27 of the Public Finance Management Act (PFMA), to bring in documents pertaining to estimates of revenue collection. Therefore the fiscal framework would be included as part of the budget. Tax and other revenue proposals would also be added, including the contribution of the different revenue categories for the financial year and subsequent two years. In clause 8(2) (e) the aggregate debt levels would be qualified by reference to "general government and public sector".

Clause 11
Adv Jenkins noted that this clause dealt with Appropriation Bill provisions. Previously, when the Appropriation Bill was received it would be referred to the Appropriations Committee (AC) whilst other votes would be referred to Portfolio Committees (PC). The suggestion was to change the "parts on estimates of national expenditure" with new wording (see attached document, page 4). This was not a change in substance.

Ms Folscher said that the Estimates of National Expenditure (ENE) could either be put in the definitions, or it could be specified what information Parliament wanted. This wording set out those specifications, and was considered preferable as it was a wider description that would allow for National Treasury to change what it might require in future.

Ms Hogan said that there was an anomaly around getting the ENE and then getting the strategic plans and budgets. She would like to see the Portfolio Committee deal with this. She suggested that perhaps the wording should not make reference to the ENE, but rather to “proposals dealing with priorities” or something similar.

Ms Folscher said that the currently what was in the ENE would make it difficult for the PCs, because their performance information was so poorly specified. She wondered if there was anything that would give Parliament the legal backing to ask, for instance, for specific information such as how many houses had been built or similar details. Some PCs were asking for this information, but they did not always get the exact feedback.

Ms Hogan said that if the PCs were asking for what departments had delivered, that would be considered later in the year, as it would be in the Annual Report. What the PCs required was the budget and strategic plans, and she suggested that perhaps it should be limited to that. However, Parliament had the right to ask for information. The budget and strategic plans of departments was not made available when the Minister tabled the Appropriations Bill and she asked why this was not done. The summaries in the ENE were National Treasury summaries. She said that surely all Departments should be submitting their strategic plans at the same time. The information in the ENE had of course come from departments, so it would be available.

Ms Fubbs said that it was one thing to have the strategic priorities and objectives, but the critical issue was the allocation of all resources, not just financial ones, and the measures that would be adopted. At the moment generic issues were put up. She felt that departments should specify the resources and the measures they would take to achieve their measurable objectives. Parliament could then exercise proper oversight. It was difficult to see if an allocation required amendment in terms of the priority if that was not done.

Ms Mabe agreed that PCs did struggle to get information from departments, and the situation sometimes continued for years. Although the strategic plans were tabled, the fact was that PCs could not check performance in real terms. She agreed that what Ms Folscher had said would give more effective oversight.

Ms Folscher clarified that what was proposed here would replace the parts dealing with ENE, and the Bill would set out what should happen after adoption of the fiscal framework. This could still stand if the strategic plan were to be tabled on the same day.

Ms Hogan said that with the definition before it, it was clear that Parliament required something more than the ENE. Portfolio Committees could give notice of hearings on the budget and strategic plan on an earlier day. Maybe there should be a clause to say that the budget and strategic plans must be tabled not later than a certain date. It was necessary to have these synchronised at a certain time in order to have amendments to the ACs considered by a certain date.

The Chairperson noted that the dates in the PFMA were set out in the regulations, not in the Act. There had been a change in regard to how often these could be tabled. Only an update should come with the annual budgeting process. He suggested that there should be attention paid also to how this would be tightened.

Mr B Mnguni (ANC) noted that this should be tabled before a certain time. He thought that if the changes were made as proposed, this would be sending everything to the Appropriations Committee.

Ms Folscher said that this was not so.

Ms Hogan noted a grammatical error; the sentence should continue with a reference to the Revenue Committee, so the full stop must come out.

Adv Jenkins agreed.

Adv Jenkins then referred the Committee to clause 8(2) (g) which contained the catch-all phrase of "any other information requested by the Committee from time to time". This could be made more specific and PCs could say what they wanted on a regular basis.

Ms Folscher asked if "the prevailing strategic plan" should be replaced with "updated strategic plans" and the date.

The Committee agreed with this.

Ms Folscher said that this should be tabled in the two or three week period.

Ms Mabe agreed that the updated plans must be provided.

Ms Hogan said that "the narrative" should be replaced with "the proposals setting out the strategic priorities" to avoid the situation where there could be selective choices.

Ms Hogan asked also what would happen if there was a change to the fiscal framework.

Adv Jenkins said that the wide formulation would then apply. If the fiscal framework was amended, and Parliament would like to have an amended strategic plan, then Parliament could request that, under clause 8(2) (g). He did not think that this would bind Parliament. The amendment would be likely to involve a sub vote being changed, or something similar. Each must be considered on a case-by-case basis.

Ms Hogan replied that a strategic plan must be tabled each year. The update would be needed by a certain time to get the AC's work finished, in order to get it through the House. If there was a change, then the AC must engage with the PCs to decide how the changes would be effected. It was in Parliament's domain.

Mr Moloto said, for instance, that if Parliament wanted to increase the deficit by 2%, then this Bill would allow Parliament to specify the items that it wanted to consider.

Mr Mnguni noted that departments would have to align themselves with what Parliament had changed.

Mr Singh said that there was no reference to Strategic Plans in the PFMA. Section 27(4) referred to “measurable objectives for each of the Department's main divisions".

The Chairperson noted that strategic plans were covered in the Treasury Regulations.

Ms Folscher added that they were also in the Public Service regulations.

Adv Jenkins said that the drafters would refine that to provide for the provision of the tabling of the strategic plan. Treasury Regulations said that this must be within 7 days. If Parliament was given a time line to approve the fiscal framework then this would give some guidance.

Ms Folscher noted that the period was currently sixteen days for the fiscal framework to be adopted. After that the Division of Revenue Bill came to the NA and then to the NCOP. Currently the Bill allowed for 30 days for consideration by each house. Only after that could the AC start its work. There was nothing to stop the PCs, during those 60 days of the DOR Bill consideration, from doing their work, otherwise Parliament could not pass the budget within 4 months. By the time the fiscal framework was adopted, the strategic plans must be tabled. The period of seven days in line set out in the Treasury regulations was not enough, as the Budget Office would want to see this further in advance.

Ms Fubbs thought that once the budget had been tabled, the Strategic Plan should really be available at the same time, because it would have informed the budget. The Joint Budget Committee had been taking this up for some time. She thought the strategic plans must be done before the budget, so they should be ready.

Adv Jenkins said that this was quite correct. National Treasury must look at Strategic Plans before allocating budget.

Ms Hogan suggested that there should be a clause to say "not later than after the adoption of the fiscal framework". Sometimes there were too many changes, so she felt that the final two weeks to make changes should be allowed.

Adv Jenkins then moved to the amendments being proposed to clause 11(6)(d). The Committee had this still as an outstanding issue. The proposal was to insert another sub-clause (5), to bring in the amending powers of Parliament. It seemed better to put this in here rather than in the Standing Rules. The proposal was to give the power to the Committee to advise the AC that the subdivision should be appropriated conditionally, to ensure that the money requested for the main division would be spent effectively, efficiently and economically. Some further requirements were set out (see attached document, page 4). No more than 10% of the funds appropriated could be appropriated conditionally. The committee would specify the conditions. The Minister must have two days to respond. A recommendation to the House must contain the response from the Minister, and the House must consider that recommendation within seven days after the report to the House.

The Standing rules should provide for other committees to consult with the Committee on Appropriation and the Standing rules must provide how this should be done.

Ms Hogan did not have a problem with the proposal for a conditional freeze. However, she was not clear on the proposals for 11(6)(d). She thought that amendments would go to the Appropriations Committee anyway, and she thought that this should not be in the rules, but part of the procedure.

Ms Hogan noted that the Appropriation Bill said that the total vote was being looked at, and each Department's progress. This Bill only allowed for amendments between programmes. It could not deal with sub-programmes. This was not trying to take over the Executive's authority However, she would like to have a right to exclusively appropriate on a specific line item. She gave the example of a department having a perennial problem that was raised time after time at the Standing Committee on Public Accounts (SCOPA), and a conditional freeze might be imposed, but may not improve the situation. She would like to see the power to have a specific appropriation for a specific event, instead of merely saying that the format changes would include the subdivisions of a programme.

Ms Folscher said that the PFMA had some language to this effect already, in the virement clause. An amount could be specifically and exclusively mentioned for a purpose under a main division within a vote. A Committee could specify either that the Department spend less than in the ENE, or spend more for a specific purpose within the main division of a vote.

Mr Moloto said that this was clear, but the proper wording must be presented.

Mr Singh asked what was informing the 10% figure. He also asked about the functions being transferred from one department to another, where funds must follow the functions. He asked if this should be included in this Bill.

Ms Hogan said that this was the issue of unfunded mandates. She suggested that when the Committee dealt with the clauses on the Budget Office this should be considered. The American Budget Office had three specific mandates, including tracking unfunded mandates and giving reports on them, as this would alert Members and give an indication of what was not being funded.

Adv Jenkins, after the tea break, proposed new wording along the lines of "Another Committee may advise a Committee on Appropriations that an amount must be appropriated specifically and appropriately for a purpose mentioned under a main division within a vote". A PC could then ask a department to insert in the budget more, or less, or spending where none was specified, for a purpose.

Ms Hogan would prefer this to be put in the amending powers of a Committee. She would not like the PC to have to advise an Appropriation Committee. She suggested that Parliament must appropriate. There should be the ability to do a specific appropriation.

Ms Folscher asked if, in the sub-clauses around the rules, there should be mention of this, or whether this should be done together with the other amendments that such Committees may advise the AC on.

Ms Hogan suggested this should be inserted in the part of the Bill dealing with the powers to amend. It should read that any Committee of parliament could amend before the matter went to the House.

Ms Fubbs suggested that clause 11(2) already had reference to this, and this was to her mind all part of appropriations. She suggested that this clause be inserted here.

Adv Jenkins summarised that the proposal was to insert the powers of amending committees after the reference to the conditional freeze. This would happen through the AC. In order to amend a subdivision of a Vote, this would be reported to the House.

Mr Moloto thought that this must go through the AC.

Adv Jenkins noted that clause 11(6)(c) was being amended to provide also for transfer payments.

Mr Singh said that national departments might ask the province to do something for which it had no funding. He asked if in these circumstances the province could come to the Appropriations Committee and ask for funds.

Ms Hogan thought this was the role of the NCOP Committee in the budget process. It could probably appear before either House.

Mr Swart suggested that the unfunded mandates should be looked at under the Budget Committee.

The Chairperson said that he would allow for discussion on this issue at this point.

Ms Hogan pointed out that one of the responsibilities of the Budget Office should be to advise Parliament of the unfunded mandates.

Mr Moloto agreed if might be useful to put it under the clause on the fiscal framework.

Ms Folscher said that the principle of the fiscal framework was that the balance between revenue and expenditure and borrowing must be looked at. Expenditure issues would be part of that, but the intention was to avoid looking at specific spending. Appropriation would firstly be considered during the DOR process, which also included the conditional funds that were supposed to fund mandates of provinces. The unfunded mandates needed to be raised at the time of considering the DOR. The equitable share may cater for the situation where the department required provinces to do things that were then not funded. By the time of appropriations it was often too late to look at unfunded mandates.

Ms Hogan said unfunded mandates did exist, and provinces could raise the issues of unfunded mandates during the DOR process.  However, funding may need to come from reallocations within existing revenue. When the PCs were reviewing the budgets, they should take note of any unfunded mandates in the strategic plans of the departments. They should not necessarily amend, but should start drawing attention to these mandates. The Budget Office should also perhaps report, before the tabling of the Medium Term Budget Policy Statement, on unfunded mandates.

Mr Singh said that this should also extend to conditional grants. Departments were passing money to provinces to renovate hospitals, and very little spending did occur. That was a serious area of concern. The unfunded mandates and conditional grants should be looked at together.

Ms Hogan said that the failure to spend amounted to failure to deliver, and it was part of the purpose of having an amending money bill. If the Auditor General consistently reported non spending, then Parliament would have the power to freeze a conditional grant until the department could present the plans on roll out. The unfunded mandate would occur when there were hidden traps in the Agency, as opposed to failures of delivery, which would fall under the conditional grant, and the two must be distinguished.

Ms Folscher said that the Bill must create opportunities and a place for any public finance problem to be reviewed by Parliament. She would caution that perhaps specific problems should not be set out in detail in the Bill, to avoid the interpretation being placed that only those items would pertain, and not others. To specify only unfunded mandates might cut out consideration of other mandates over time.

Clause 12
Adv Jenkins noted that this had to do with passing of the revenue Bills. These must be consistent with the adopted fiscal framework. Previously the Committee had said that there were also additional issues to be considered, such as the principles of tax collection, composition of the tax base between direct and international tax, regional and international trends and so forth. The drafters therefore proposed that when considering the revenue bills, there should be adoption with the fiscal framework, and then those matters must be taken into account. Therefore clause 12(4) set out that the total amount of revenue raised must be consistent with the approved fiscal framework, and then other factors were listed in clauses (b) to (e). This effectively had broadened the compliance issue for amendment of revenue bills.

Mr Swart suggested addition of a new sub-clause to consider the impact on provincial and local government.

Ms Fubbs pointed out that this dealt with revenue.

The Chairperson pointed out that it must be consistent with the Division of Revenue bill and this would be covered.

Mr Singh suggested the insertion of a comma after "bills" and before "Parliament" in the first sentence.

Mr S Marais (DA) suggested that this should also address service delivery and competitiveness within the region,

Adv Jenkins noted that he had dealt with this issue during the deliberations on the phasing out of regional service levies. Provinces had the ability to raise some levies. He said it would be difficult to come up with how collection of taxes at national level would impact upon local level, other than if individuals or companies at local level might be overtaxed, but that would not really affect the levels of government. Provinces had to go through quite a difficult process to get permission to raise levies.

Clause 13
Adv Jenkins noted that transfer payments were being inserted into clause 13(16)(b), which spoke to recurrent and capital expenditure.

New Clause, after clause 14
Adv Jenkins said that a new clause was proposed, that allowed the Minister to propose technical corrections, from the floor, or to a Committee, without having to go through all the budget cycle and motivations. He stressed that this would pertain only to technical corrections.

Clause 15
Adv Jenkins noted that in line with comments made previously, he had looked at options to ensure that the Budget Office (BO) would be capacitated to fulfil its functions, and there were two options; either to have it completely separate from the Parliamentary administration, or alternatively inside it. The previous draft said that the Secretary to Parliament should establish a budget office within parliament, and that wording would remain if the Committee were to decide that accountability should remain there. However, there were other examples - the Congressional budget office operated outside of Congress except for conditions of employment. The NA and NCOP Tables accounted politically to political office bearers for performance, but financially to the Secretary for Parliament.

To cater for the second possibility, that it be separate from the Parliamentary Administration, the heading had been changed to “Parliamentary Budget Office”. Instead of specifying who must establish it, this was worded in the passive voice of “There is hereby established a Parliamentary Budget Office”. It was suggested that the Speaker of the NA and the Chairperson of the NCOP must appoint a person as Director of the Parliamentary Budget Office, for a suggested term of 4 years. He said that perhaps it should be specified what would happen if the position became vacant, or the term could be adjusted. If the power to appoint was given to political office bearers, they would not want to appoint someone indefinitely. Either the term for the Director should be shorter than a parliamentary term, or it should be renewable. He suggested that perhaps it could be a five-year term, with the proviso that if the position became vacant then the new incumbent would serve the remainder of the initial five year term only, or that it should be shorter than five years. He suggested this issue would need to be considered by the Committee. 

Mr Marais asked what "requisite financial and leadership skills" meant, and if it was objective enough. There was no mention of any qualifications. He thought that a properly qualified person must be appointed who could understand the subject.

The Chairperson suggested that the Committee also revert to this point.

Mr Swart agreed with the principle of Mr Marais’s suggestion, but said that it was impossible to set out in the legislation what the qualifications should be. This proposed wording was similar to that used for appointment of municipal managers.

Adv Jenkins noted that subclause (3) dealt with the salary and allowance of the Director, saying that it should take into account the knowledge and experience of the person, and be substantially similar to the top ranks of the public service.

Subclause (4) set out the provisions around removal, and noted that the finding must be done by a joint sitting of the Committees on Finance and Appropriations of either House, or the adoption by either House of a resolution calling for that removal. This wording had been adapted from the wording in the Constitution relating to Chapter 9 bodies. It was slightly less onerous, because the resolution of only one House was necessary. This was similar to the Congressional Budget Office provisions.

Adv Jenkins noted that subclause (5) required there to be transfers of funds, on which the Director must report. Transfer of funds from Parliament to another entity was covered by the draft Financial Management of Parliament Bill.

Subclause (7) dealt with appointment of personnel, and (8) said that they should be regarded as officials within the Parliamentary Service for the purposes of salaries, allowances and conditions of employment. Subclause (9) dealt with delegations of authority, and subclause (10) dealt with outside consultants for contracts not exceeding one year. Further consequential amendments were made in regard to the numbering.

Adv Jenkins then said that the initial Clause 15(3)(a) to (d) had attempted to establish the functions and duties of the Budget Office. However, he suggested that this now be removed, and a reformulation was given on page 7 of the attached document. This set out functions, including the providing of objective analysis to committees, undertaking research, and making estimates on the financial cost of proposals. The core function was to deal with the functions of the four Committees. After that, any other requests from other committees or individual members could be considered, but restrictions were set out. These were similar to the Congressional Budget Office functions. He warned that it would not be desirable to overburden the Budget Office, and spelling this out in legislation should hopefully avert such a problem.

Mr Swart said that there was no specification of personnel and funding for the Budget Office. He believed also that the wording should be amended to allow for a report on the use of the funding and the budgetary requirements.

The Chairperson noted that clause 15(3)(7) set out the appointment, but he wondered if that adequately explained how the Office would look.

Adv Jenkins said that the Director would be leading the office and therefore leadership and financial skills would be important. Experience and knowledge would be considered under salary determinations. When it came to personnel, the experience and qualifications would be important. He conceded that maybe it would be better, in sub-clause (7), to say that the Director "must" (not "may") appoint persons. That would imply that there must be more personnel, in addition to the outsourced functions. It was very difficult to determine exact qualifications but this could be investigated. It was currently a moving target.

Ms Hogan said that she would like to address the functions of the office. She thought that the formulation was too broad when it stated "do research on request". There was a need to be more proactive, and she said that the Budget Office must provide a substantive analysis and review of proposals presented each year, with a report back.

Furthermore, this Budget Office should not replace the work of the PC's researchers, and should not do research for all committees. She said that because of this, there should be clauses about the services in terms of the budget rendered to the AC and the Portfolio Committee on Finance. Other services to other Committees should only be done when there was agreement that the normal research component could not do the work. Perhaps it should be set out that there must be subject specialists in the budget office - for instance those with understanding of the health budget or the police budget - and a policy analyst to look at implications of proposals. That specialist researcher would then liaise with the PC researchers. If the House were to request something of the Budget Office, that should come through the Speaker or a resolution of the House. She did think that Parliament should be able, through resolution of the House, to request regular reports on standing matters. She wondered if there should not be liaison with the Financial and Fiscal Commission (FFC), Human Sciences Research Council (HSRC) and other research agencies on the wording of this Bill.

Mr Moloto was concerned about the removal provisions in clause 15(4). If the NCOP were to decide on removal, but the NA did not agree, then there would be a problem, so he suggested that perhaps the concurrence of both houses should be required.

Ms Fubbs agreed; as presently worded this created the opportunity for inconsistency or retaliatory actions. 

Ms Mabe agreed with Adv Jenkins that the "may" should read "must" in subclause 15(7).

Ms Fubbs suggested that there be mention of an extension of a contract for a period of one year, if the intention was to tie it in to political office terms.

Ms Fubbs agreed that it was a good idea to look at other forms of organisations. Although some of the points around the Congressional model were useful, it would be difficult for South Africa to adopt that model completely. The Budget Office in South Africa would have to be far more adept during the early stages in providing skills, and must be in a position to be up and running from inception. The purpose of the Budget Office must be established. This was not a "second Treasury" and she had not clearly unpacked what exactly their core functions were to be. The question of salary was also of concern, as Parliamentary staff’s terms and conditions meant that the best could not always be attracted. Perhaps the Parliamentary Service could be a guideline but this would have to be further considered.

Ms Fubbs thought that once the Budget Office was established every MP would try to call on its services and that would defeat the object of the exercise.

Mr Marais referred to the term of appointment. The Budget Office could not stop working when the Parliamentary term ended and there must be an overlap for continuity. He did not think that a four year term was practical.

In respect of experience and qualifications, Mr Marais said that the Director must clearly be at a high level, but the present wording said nothing about qualifications as long as he had financial and leadership skills. This must be specified, especially since the qualifications of those under him were set out.

Mr Singh referred to the establishment of the Budget Office, and wondered who the custodian would be - and whether the Secretary of Parliament would not have to budget for it and its staff. He asked why the reference to the Secretary was taken out.

Mr Singh noted that the Director should be non -partisan, but he was worried about the consultation with the Chairpersons of the Committee, considering that he should rather consult with the Committees as a collective. In the Congressional model the Committees made the recommendations.

Mr Singh agreed that there should not be a lacuna in the period of contract and this would have to be further examined.

Mr Singh wondered if there was some way of stipulating a level of salary - such as level 13, or linking it to a specific designation.

Mr Singh noted, in respect of the qualifications, that the Congressional Budget Office was staffed with economists and public policy analysts.

Mr Moloto thought that perhaps the phrasing of the Bill could make the responsibility of the Budget Office broader by requiring it to report to the House on establishment, recruitment and so forth.

Ms Hogan mentioned that when dealing with the oversight and accountability framework, Mr Doidge's office had worked actively on proposals around the Budget Office. That might be a useful reference point.

Ms Hogan was unhappy with the suggested term of office, as even five years was too short. Institutional memory in Parliament was not good, and if this Office was expected to produce thoroughly competent work there should be a longer term to build up a solid base. She did not believe that the Speaker and Chairperson should appoint, but that this should be the function of the House, by resolution, so that it was a multiparty decision. When a new Parliament came into being, the House, at its first sitting, must therefore confirm the positions.

Ms Hogan agreed that the core functions of the Budget Office must be spelt out. One of those must be to monitor and integrate information arising out or reports adopted by the House, coming from various quarters, because Standing Committee on the Auditor General and the Portfolio Committees would produce reports on the Annual Reports of departments. All that information being fed through must be captured and monitored. The Budget Office should not look at “cold figures” but should be oversight-orientated and look at the outputs. It might lay before the House a consolidated report of matters. She noted that in years to come, the Budget Office would have the benefit of the debate on the Medium Term Budget Policy Statement, and its role in relation to the Finance Committee might be to confirm this, to make alternative suggestions, or to network with various bodies to advise on contentious matters in the Economic Policy Framework. Some aspects of its work might be left to the relationship with each PC, but some must be established in terms.

Ms Hogan also noted that the idea of a “super-elite” should be avoided, which could arise if there were to be a well resourced Budget Office and then Committee researchers at a lower level. The Budget and Research Offices should have a cooperative relationship and build capacity, and the basis for that would be firmly established by having subject specialists with a cooperative relationship with research components. She asked if Ms Folscher could give some indication of the "traps" found by researchers on budget.

Ms Hogan believed that the central relationship must be to the Finance Committee and the AC. Therefore, the Budget Office would have to develop a tax / revenue specialist capacity.

The Chairperson said that clearly there was more flesh required on the budget office provisions. He said that the drafters should take the suggestions, and also look at how other budget offices were structured. He would not like to see an exact match to the Congressional Budget Office but some of the provisions might be useful.

Adv Jenkins proposed that the proposals already in clause 16 would be removed and a separate working document on the Budget Office would be prepared. The remainder of the Bill would be re-drafted in accordance with suggestions made.
 
Ms Folscher asked if it might not be more useful, rather than specifying all structures in the Bill, for the Director to make reports from time to time to Committees on the structure of the Office.

Mr Singh said that this structure should be informed by research. He would also like to know the financial implications for the establishment of the Office.

The meeting was adjourned.

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