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

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Finance Standing Committee

23 September 2008
Chairperson: Mr N M Nene
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Meeting Summary

Adv Frank Jenkins (Parliamentary Legal Advisor) and Ms Alta Folscher (Independent Consultant) were present at the meeting in their capacity as contributing drafters of the Money Bills Amendment Procedure and Related Matters Bill. The committee was briefed on the sections of the Bill that had been changed and these included the preamble, definitions and clauses 4, 7, 8, 10, 14 and 15.
The drafters were asked to track what happened to the income tax schedule throughout the Bill to ensure that it did not get lost along the way. The wording of sub-clause 15 (3) referring to ‘subject to capacity’ was seen to be very broad by several members and a comment was made that the reference to the ‘nations finances’ was incredibly general. Members asked what the procedure was for the appointment of the director of the PBO and if the term of office was renewable, when the amendment cycle and would start queried the issue of the timing of the establishment. They furthermore noted that the election raised its own practical problems. The adjustments were timing of the adjustment budget and the process in relation to special adjustments were also the subject of some discussion.

The Matters for Inclusion in the Rules (the Rules) were reviewed.
The committee deliberated on the correct procedure for the Medium Term Budget Policy Statement (MTBPS), the schedule for the consideration of the Fiscal Framework and the Division of Revenue Bill and the process of reading debates and voting with relation to the Appropriations Bill.

The Committee, having considered the Bill clause by clause, approved the Bill for introduction to the House together with recommendations of matters for inclusion in the rule.
The Committee further adopted its the report on the Bill.

Meeting report

Draft Money Bills Amendment Procedure and Related Matters Bill: Deliberations and Finalisation
Adv Frank Jenkins, Parliamentary Legal Advisor, reported that that he had taken the decisions made by the committee at the last meeting on the Money Bills Amendment Procedure and Related Matters Bill (the Bill) and incorporated them into this revised draft Bill.
The preamble had been changed. Adv Jenkins took the committee through the changes to the Definitions section which included changes to ‘budgetary revenue and expenditure’, ‘day’ and “extra-budgetary revenue and expenditure’ to replace the previous use of ‘funds’.

The previous clause 4 on Fiscal Responsibility details had been moved to clause 8 under the heading: “Adopting the fiscal framework”. He also noted the consequential numbering changes.
Clause 7 - Introduction of the Division of Revenue Bill, the national budget and the Appropriations Bill – the reference to the Revenue Bills had been removed.
Sub- clause 7 (2) (d) on tax and other revenue proposals was an attempt to capture the schedule. This was also reflected in sub-clause 7 (2) (a). The estimate of aggregate general government expenditure and public sector debt level would not include private debt and the previously agreed upon attachments to the budget had been included in clause 7.

Ms B Hogan (ANC) asked if the Fiscal Framework referred to in sub-clause 8 (1) included the income tax schedule. This was also an issue in sub-clause 10 (7). She asked the drafters to track what happens to the income tax schedule throughout the Bill to ensure that it did not get lost along the way.

Adv Jenkins agreed and reported that Ms Folscher had expressed the view that clause 8 may need particular attention. His understanding was that the income tax schedule was part of the budget.

Ms Alta Folscher, Independent Consultant, replied that this issue was also relevant for inclusion in the rules and asked if the assumption was that the Portfolio Committee on Finance would have one process for both (budget and income tax schedule).

The Committee agreed that this would be accepted.

On clause 10 (Passing the Appropriations Bill), he reviewed the comment made by Ms Folscher querying the use of ‘updated’. Sub-clause 10 (5) dealt with the issues of amendment powers and conditional appropriations that referred to a structural element of the Bill.
Sub-clause 10 (7) allowed for both houses to propose amendments but if one read 10 (7), it seemed to take away the power to reject an Appropriation Bill. Adv Jenkins suggested an alternative wording in order to convey the sense that Parliament would finish the consideration of the Appropriations Bill within four months.
Adv Jenkins noted the inclusion of ‘transfer payments’ in sub-clause 10 (8) (c). Sub-clause 10 (8) (d) was a provision for the rules of the Portfolio Committees, Select Committee and the Joint Committees to allow them to make suggestions that fell into their mandate.

Ms J Fubbs (ANC) was concerned with the separation of powers and pointed out that this did not mean the Bill completed the process until it became an Act and was signed by the President. She had hoped that it would say ‘accepted, amended or rejected’ and then was sent to the President as a matter of Constitutional formality.

Adv Jenkins responded that the suggestion would receive attention.

Adv Jenkins continued with the discussion of the Bill with clause 11 (Passing the Revenue Bills). He pointed out that fiscal responsibility pertained specifically to the Revenue Bills.

Ms Fubbs was not sure why ‘may’ was used in sub-clause 11 (3) and wanted to know why this was a choice.

Adv Jenkins replied that this may be an aftershock from where the Revenue Bills were also referred to the Select Committee on Finance in the National Council of Provinces (NCOP). Because this was a Section 75 bill, this went to subtle difference in the Constitution. He suggested that it would be acceptable to take it out, nevertheless, he was convinced that sub-clause 11(4) captured this adequately.

Adv Jenkins reviewed the addendum document on clause 15 – the Parliamentary Budget Office (PBO).

Ms Fubbs commented the wording of sub-clause 15 (3) referring to ‘subject to capacity was very broad’ and asked if everyone felt confident that the PBO would not be inundated.

Referring to sub-clause 5(a) she pointed out that leadership skills should be important and that qualifications should not exclude the best person for the job.

Mr N Singh (IFP) agreed that the wording of sub-clause 15 (3) would constrain Parliament in terms of meeting their objectives.

Ms Hogan agreed on 15 (3) and stated that ‘subject to capacity’ was very broad. She remarked that this PBO will be there to support the 4 committees.

Dr D George (DA) thought that 15 (3) was incredibly general when it referenced the ‘nations finances’. He suggested that perhaps they could narrow it down to into include research the Fiscal Framework and exclude other arbitrary aspects of the nation’s finances.

Mr K Moloto (ANC) also felt that ‘nations finances’ was too broad and felt it should refer to sub-clause 15 (2) which details the functions of the PBO. He was quite happy with the issue of capacity and thought it should be read sub-clause 15 (4).

The Chairperson added that 15 (4) should be invoked if the PBO did not have their own capacity.

Ms Hogan added that they would also have a budget that would serve as a constraint.

The Chairperson asked if they could leave that one as it stood.

The Committee agreed.

Ms Hogan asked when the amendment cycle would start. It was her view that it would start with the review of departments’ budgets. Perhaps it should start by 1 July as the budget got adopted at the end of June.

Adv Jenkins replied that on the issue of the commencement of the Bill, his feeling was that certain parts of the Bill needed to be sequenced. The date on which it came into operation would be determined by the President or Parliament or the Speaker; or the Speaker and Chairperson jointly 

The alternative was to let it come into operation all at once and to this end, perhaps they could have a broad (umbrella) clause to this effect.

Ms Folscher read a comment on behalf of the Joint Budget Committee, which stated that in order to expedite the commencement of the Budget Office; the most urgent functions should be put into place for the cycle to start.

Ms N Mokoto (ANC) asked what the procedure was for the appointment of the director of the PBO and if the term of office was renewable.

Ms Fubbs raised the issue of the timing of the establishment and noted that the election raised its own practical problems. If they waited until next year and the new Parliament, it would delay the process. If they did not wait, then the problem would be that the PBO was established by the previous Parliament. These were just some of the important practical considerations.

Adv Jenkins responded that the PBO and the Bill would commence simultaneously.

Ms Hogan suggested that the head of the PBO be appointed on recommendation of the Appropriations office as she did not see Parliament being able to set up structures before the elections.

The Chairperson queried what needed to be added to sub-clause 15 (6) in order to beef it up.

Ms Mokoto asked if there should be an ad hoc committee to intervene. She also asked what the term of office was. In a previous version of it had been the clause 5 years but was not stipulated in the current clause 15.

Adv Jenkins responded that the rules may take some time to change on the issue of the ad hoc Committee. This was of concern to him and he suggested a different appointment procedure. Furthermore the process of recommendations could be considered by the Portfolio Committees. The preferred process could then be included to remove uncertainty.

Mr K Marais (DA) added that one would have to spell out who was going to appoint the ad hoc Committee and who would sit on it.

Ms Folscher commented that if one wanted this office to be independent, to have value and be well skilled then perhaps there would be value in a public, transparent appointment procedure. For instance, to specify that interviews for the Director’s position must be held in open committee.

The Chair asked the drafters to note that comment for the process of the appointment of the Director of the Parliamentary Budget Office.

Ms Hogan asked if the bill would take effect from 1 July and if there was a cut off time for the appointment of a Director of the Budget Office.

Ms Fubbs suggested that perhaps they should consider the February to April process because if they delayed this process, the instrument of amendment would be delayed as well. They should have to opportunity to amend the budget after Parliament reconvenes. This could be achieved by having core personnel in place in the Budget Office.

There was the matter of how one would select, elect of identify personnel but the problem was: who would be in Parliament next year to do this.  The key would be, having a Director in place long before June - by April or May next year.

Mr Moloto remarked that there were risks attached to the effective date.

Adv Jenkins responded that the implementation was to be completely in the hands of Parliament. He added that perhaps there was space in the current budget for a bit by bit, piecemeal implementation. The legislation did not guarantee anything as to when or how the PBO would be established.

Mr Mnguni agreed with Adv Jenkins.

Ms Hogan reiterated her previous point that the income tax schedule should be referenced in every part of the Bill.

The Chairperson commenced the, clause by clause, consideration of the
Draft Money Bills Amendment Procedure and Related Matters Bill.

The Chairperson asked if the correct section of the Public Financial Management Act (PFMA) was referenced (Section 12 (1))

Adv Jenkins responded that this was the correct section. He was not aware of the new PFMA being passed and therefore, this was definitely the correct section.

Ms Fubbs queried the timing of the adjustment budget and the process in relation to special adjustments.

Ms Folscher responded that the final limit would be 30 days. She noted that there was no category for special adjustments in the PFMA. The question was whether the Committee would allow special adjustments to be dealt with during the recess period.

The Chairperson added that if a special situation arose, special arrangements would kick in.

The query about the recess period was covered by the definition of ‘day’.

Adv Jenkins agreed that the issue of recess was in the hands of Parliament and it was within their domain to use their discretion to decide on special situations.

Ms Hogan stated that they should consider the Rules before proceeding with finalising the Bill, as the Rules would have to be attached to the report that went to the House.

Ms Folscher reported that she had set out the complete cycle in the Matters for Inclusion in the Rules. This would need to be reviewed and they still needed to confirm the actual dates.

Ms Hogan referred to the sub-points 1, 2, 3 and 4 under (1). On sub-points 1 and 2, she asked if the debate should be in the House and to which Minister the reply should be given. She suggested that they leave sub-points 2 and 3 out.

Ms Folscher responded that this was a timing issue and that there was really only a month in which committees could do their reports after the Medium Term Budget Policy Statement (MTBPS) was tabled.

Ms Hogan remarked that the problem was that there was very little detail for the committee to use. This was an opportunity for the Portfolio Committee to comment on the MTBPS as it affected them and it should be seen as part of their influence.

Adv Jenkins replied that he rules were meant as a guide and they were based on an institutional memory. They should therefore set out the manner in which the processes took place.

Ms Folscher continued with the review of the rules and stated that this was a good place to look at the cycle from the Fiscal Framework to the Division of Revenue Bill and the Appropriations Bill and how to get everything done within four months. She had assumed three weeks would be used for the consideration of the Fiscal Framework and if both bills were still to be passed that would allow roughly two weeks for the NCOP - if the National Assembly (NA was allowed two months for the consideration of the amendments. (Gantt Chart schedule is included in Matters for Inclusion in the Rules document)

Ms Hogan responded that they did not usually spend six weeks in the NA on the Division of Revenue Bill and would suggest that they could shorten the period that the Bill was dealt with in the NA. It could perhaps be two weeks for consideration by the NA and four weeks for the NCOP.

She also queried the exact process of the first reading debate under the heading of the Appropriations Bill. When they went into the first reading debate, portfolio committees would then debate their reports. This gave the House an opportunity to look at the arguments of a portfolio committee. At the second reading debate they would go through the appropriations and then they would vote on the budget votes and programmes.

Adv Jenkins responded that this issue was taken care of within the committee and suggested that sub-point 4 needed to reflect that the Minister should respond to the reports in the House.

The Chairperson added that this was covered by the second reading debate on the Appropriations Bill

Ms Fubbs clarified that this process would be line by line, vote by vote and the amendments would be pursued in that process.

The committee agreed.

Ms Hogan raised the issue of the necessity of a Parliamentary record.

Ms Fubbs asked if they should not have the amendments first as the process of amendments being raised after the debate seemed back to front in her opinion.

Ms Hogan responded that the amendments would come through in the first reading debate. The Portfolio Committees would then engage on the amendments. This would be followed by a second reading debate in which members would motivate for the amendments.

Adv Jenkins asked if the Minister physically tabled the bill during the first reading debate.

Ms Hogan responded that the Minister tabled the budget in the budget speech, then the whole process went through Parliament. The Appropriations Committee then reported to the House with the amendments followed by a debate on those amendments. Then the portfolio committees would debate their particular votes. The second reading debate would then open. The House would then have had the benefit of the debates on each individual portfolio vote, with a view to amending the Appropriations Committee report. So there would be a debate on each of the amendments and a vote on each of those.

Adv Jenkins responded that he would consult with the Table Staff on this issue in order to get the terminology right.

Ms Hogan asked if they could bypass the second reading debate and go straight to the voting.

The committee agreed upon inclusions to the rules.

The Chairperson read the report of the committee.

The Committee approved the Money Bills Amendment Procedure and Related Matters Bill for introduction to the House together with recommendations of the matters that must be included in the rules.
The meeting was adjourned.


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