Drafted by: A Fölscher

1 Purpose of the Document *

2 Brief Background to date: *

3 JBC Recommendations for a Conceptual Framework and Parliamentary Budget Process *

4: Way Forward *

Annex 1: Workshop proceedings *

Annex II: The current parliamentary budget process as per the NA Rules *

ANNEX III: Comparative international examples *

This document sets out a conceptual framework, draft processes and a way forward for the work of the Joint Budget Committee. It is a response to the Committee’s Terms of Reference and the result of a workshop by the full committee on 3 June 2003 (see Annex I for workshop programme).

The document contains a set of recommendations and is intended as a discussion document with other stakeholders in the parliamentary budget process.

The South African Constitution grants parliament the right to amend money bills, but requires further legislation on the procedure by which amendments will be effected (Sec 77(2)). To date this legislation has not been drafted successfully.

The Budget Reform Task Team arose out of an initiative started by the Minister of Finance in recognition of the need for Parliament to be more involved in the budget process. The task team explored various ways to enhance Parliament’s role in the budget process. Its work culminated in a concept document that discussed principles for reform, the possible scope of Parliament’s role, possible limitation to amendments and the role of the NCOP in intergovernmental fiscal relations. It also recommended structures and processes to institutionalise an effective role for Parliament.

The BRT recommended a three-tiered committee system to consider money bills and possible amendments involving both Houses of Parliament. The Joint Budget Committee is a key element in the proposed structures. In October 2002 the National Assembly established the Joint Budget Committee in view of the BRTs work and tasked it to:

1. Make proposals regarding the processes Parliament should follow with regard to its role in developing budgets in line with constitutional requirements;
2. Consider the allocations proposed in the Medium Term Expenditure Framework (MTEF) and the Appropriation Bill, conduct hearings and report to Parliament on these matters;
3. Consider the Medium Term Budget Statement (MTBPS) and report on it;
4. Monitor monthly published actual revenue and expenditure per department against budget projections and report quarterly to Parliament.

The NA resolution clearly demarcates the role of the JBC in the specification that both the MTBPS and the Budget Review should be considered with the exception of those sections dealing with the macro-economic situation and revenue. However, the JBC discussed the need to review the Terms of Reference (TORs) in light of the feasibility of the constraints imposed and in light of disagreement at the time of constituting the committee. The JBC decided to keep open the possibility of amending the TORs.

The JBC agreed that its developmental work in terms of the first task above has two aspects:

1. Firstly, in the short to medium term the JBC is tasked with setting out practicable processes for immediate effective parliamentary interaction with the executive on the distribution and proposed application of expenditure in the MTEF and the national budget appropriations.
2. Secondly, in the medium to long term the JBC is tasked with developing institutional arrangements for the future implementation of effective amendment powers for parliament as a whole.

This meant that the focus for the immediate work (and therefore the first workshop) is the first aspect. However, a workable process for the first aspect would provide the blueprint on the basis of which amendment powers could be implemented. Therefore, while the JBC formulated processes that are immediately useful, it kept in mind that these processes should in future provide an institutional base for developing an optimal set of amendments to the Executive’s budget proposals. Also, the principles that would apply to the first aspect, would hold for the second.

The JBC also agreed that in both aspects, it would need to discuss matters with relevant stakeholders inside and outside of Parliament. As regards the second aspect, seamless execution of amendment powers would require close integration of the JBC’s work with that of the NA Portfolio Committee on Public Finance (macro-economic issues, fiscal policy, asset and liability management) and the NCOP Select Committee on Finance (DOR – vertical and horizontal division of revenue). Coordination with the work of SCOPA would also be beneficial to the process as a whole.

The rest of this document discusses the detail of the JBC recommendations, mainly for the first aspect. It does so in three sections: firstly a set of guiding principles are discussed; secondly a conceptual framework for the JBC’s tasks and thirdly, the sequencing of a parliamentary budget process. The final section looks at the way forward and details the further tasks of the JBC.

The JBC adopted the principles set out by the BRT. The main gist of the principles is repeated and expanded here. For further elaboration, please see the final BRT conceptual document.

1. The provisions and spirit of the Constitution is the bedrock of the role of Parliament and the legislation to be drafted from this process. Parliament should pay attention to the respective roles of the executive and the legislature on the one hand, and to the rights and obligations of Parliament on the other.
2. Parliament will not duplicate or take over the executive’s role of drafting and implementing the budget. Parliament’s role in the budget is primarily one of oversight over executive action, not of action itself.
3. Parliament’s role in the budget should not disrupt the integrity of the budget, or the integrity of the expenditure management system. The executive has superior information to draft the budget – amendments by parliament should not result in poorer budget decisions.
4. Parliament’s role in the budget should not allow departments a second bite at the policy apple, ie if departments new policy proposals have already been rejected by the executive, the parliamentary budget process should not allow a second avenue to fund new proposals.
5. The process should be cooperative and consensual to limit the possibility of Parliament making dysfunctional changes. The process should therefore provide opportunity for executive agreement to changes.
6. Parliament’s role in the budget process should be designed to strengthen the overall budget reform programme. Parliament’s intervention should strengthen accountability and thereby the incentives for public managers and office holders to be fiscally responsible, to allocate resources to priorities and to minimise wastage.
7. Parliament’s role in the budget should be more focused on influencing the outer years of the MTEF than on amendments to the budget year (first year of the MTEF). Amendment powers should only be used in the last resort.
8. Parliament’s role in the budget process should minimise the loss of predictability of policy and fund flows. Currently the Appropriation Act, the DOR and Provincial Appropriation Acts are only approved in the 4^th to 5^th months of the fiscal year. Delays in implementation of budgets is minimised currently because departments have certainty about the future legality of new policy proposals once national cabinet and provincial executive councils have approved allocations. Even though they cannot spend additional moneys or money on new policy proposals before the budget is passed, they could in principle plan their year on their Cabinet approved budget proposals. How Parliament and provincial legislatures effect their amendment powers should minimise the loss of that certainty to minimise delays in implementation of budgets.
9. The role Parliament defines for itself in the budget should balance influencing policy, with the right to make amendments with the obligation to hold the executive to account. This means that Parliament should limit what it does during the drafting phase of the budget, so that its oversight in the legislative phase remains meaningful, ie MPs interaction with the budget during the drafting phase should not prevent them from having an objective view during the legislative phase. Similarly, Parliament should limit what it does in the legislative phase, so that it does not compromise its ability to hold the executive to account, ie the amendments Parliament makes to the budget should not interfere with its ability to hold the executive to account for service delivery. In practice Parliament should prioritise between these phases as its time and capacity is limited.

Process principles

10. Parliament should speak with a unified voice. Notwithstanding the right of each of the Houses to differ, the process in Parliament should allow the Houses to reach some consensus on reactions to the budget before submitting position papers to the executive or tabling amendments in either, unless that portion of the budget process specifically relates to one House’s responsibility or role.
11. The NCOP has a particular role to play in the budget process. Any reform must be made with consideration of the fact that the NCOP’s role is unique and necessary in terms of presenting provincial interests. The NCOP’s role does not need to mirror or duplicate that of the NA, but should be complementary.

Prior requirements

12. Parliament should consciously define what information it needs to fulfil its role in the budget process and put in place institutionalised mechanisms to ensure receipt of the information.
13. Similarly, Parliament should consciously establish what capacity it would need to play a meaningful role in the budget process, and seek the necessary budget. Strong and stable analytical capacity in Parliament is essential if its intervention is to contribute towards to improved budgetary decisions. Sufficient funding to build an internal objective research capacity is therefore in the interest of all stakeholders in the budget.

Demarcation principles

14. The NCOP is the primary vehicle for considering intergovernmental fiscal relations issues. Therefore, the process for intervention the Committee proposes below does not hold for Parliamentary intervention in the vertical division of revenue between the spheres of government and the horizontal division of revenue between the provinces. These issues, which find their legislative expression in the Division of Revenue bill (DOR), are more within the unique mandate of the NCOP than the NA and have been the subject of much research in the NCOP. The JBC therefore leaves it to the NCOP Select Committee on Finance to be the primary driver of the agenda on the issues and the DOR. Having said that, however, the JBC does not preclude parliamentary intervention with regard to the DOR being channelled through the committee, as it would still fall within its mandate insofar as the vertical and provincial horizontal divisions of revenue are in principle allocation of funds under the MTEF. It would merely leave the lead in these issues to the NCOP for the time being.
15. The JBC interpreted its TOR and the demarcation of macro-economic and revenue issues as meaning that it is precluded from oversight over fiscal policy. However, the JBC noted its concern with this exclusion: it may be very difficult to consider issues of the distribution of expenditure in isolation from issues of fiscal policy.
16. Therefore the JBC interprets its mandate as oversight over the allocation and use of funds between and within functions of government.

The JBC acknowledged that it would be facing challenges in fulfilling its task. These are picked up several times in the document, but they are reflected here as separated out by the JBC for specific emphasis.

Information and capacity: Parliament will be unable to add value to the budget process without sufficient, timely and good quality information and sufficient capacity to make use of the information. The JBC acknowledged that there is good information in the public domain, but that Parliament would need to be concise in formulating exactly what additional information it may require. The JBC was aware of the budget constraints it would be facing in seeking additional capacity and of the need to be pro-active in formulating a strategy around it.

Protecting Parliament’s integrity: The JBC noted that the processes and principles for Parliamentary intervention in the budget should be designed in such a way that it protects the integrity of the institution and carefully balances transparency and public access to the institution with vulnerability to (illegal) influence. The JBC identified two scenarios under which the integrity of the institution may be compromised: Firstly, JBC members noted that the lack of amendment powers is currently protecting Parliament against undue overt and covert lobbying pressure on spending proposals. While amendment powers are required under the Constitution and in terms of the balance of power between the branches of government, care should be taken to minimise the vulnerability of powerful budget committees to excessive external lobbying and possible illegal actions by interest groups. Secondly, should Parliament ever by elected in a constituency system, amendment powers should not become an instrument whereby MPs could unduly seek favour within their constituency.

Legislating for the future: The JBC acknowledged that the processes it proposes should be functional in the current economic and political configuration, but also establish the principles and effective practice for the future, when Parliament may for example be constituency-based, a coalition government be in place, or the executive fiscally less responsible. The JBC also acknowledges that the process it establishes may be the blueprint on which provincial processes are based.

Changes to rules: Currently the NA rules (see Annex II) require a report to submitted to the NA within seven days of the main appropriation bill being referred to the Portfolio Committee on Public Finance. The consideration of the First Reading and the votes in the schedule to the Appropriation bill can only be discussed after the committee’s report has been tabled. If the procedure proposed below is to be followed, the rules of the NA would need to be adjusted. This is only one example of how Parliamentary rules would need to be adjusted to allow for the JBC proposals.

1. The JBC agreed that on the basis of the above principles and its terms of reference its most urgent task is to set out a process for parliament’s intervention in the MTEF and national budget process. Insofar as the NCOP is the main driver for a process on the DOR, and the NA Portfolio Committee on Public Finance the main driver for a process to comment on macro-economic and fiscal issues, the JBC would focus its immediate attention on defining a process for intervention on the allocation and use of funds between and within functional budget areas and votes.
2. The JBC agreed that the immediate focus of parliament’s efforts in the development of budgets (ie prior to parliamentary approval of the Appropriation Bill and in its comments on the MTBPS and Appropriation Bill) should be on influencing executive decision-making on changes to allocations in the outer two years in subsequent budgets. It is clear that in the absence of effective amendment powers, Parliament’s role would be confined to that of influence, and it would remain up to the executive to take note of Parliamentary concerns. In order to strengthen parliamentary influence in this regard, the JBC would require an official response from the executive to the concerns it raised with regard to the outer years, in subsequent budget documents. Exactly how this response is to be integrated into the existing budget documentation and process will be finalised in discussion with the executive.
3. The JBC also reiterated the BRT statements that amendment powers in the first place are an instrument to strengthen parliamentary influence and should, in the second place, only be used in the last instance if parliament on the basis of information and research is convinced that its earlier concerns have not been addressed in the interest of effective and efficient use of resources.
4. The JBC agreed with the conceptual work of the BRT that the role of Parliament, and the JBC’s interventions in the MTEF and national budget process, has three main and interdependent aspects.
1. Firstly, the JBC would try to influence budget policy in the drafting phase of the budget process.
2. Secondly, the JBC would in the medium to long term amend the executive’s proposed allocations in the legislative phase of the budget process.
3. Thirdly, the JBC would practice oversight over actual expenditure in the implementation phase of the budget process.
5. The JBC agreed that its role should be a mixture of facilitation and substantive decision-making. As regards facilitation the committee will not endeavour to take over the role played by portfolio committees in engaging with departmental level budgets, nor the role of the NA Finance Committee and the NCOP Select Committee on Finance. However, the process set out by the JBC would facilitate the processes in each of these committees and facilitate the integration of information from these processes, eg by providing guidelines on urgent issues up front, and by setting out a schedule for processes. The JBC itself would act as a clearing-house for these processes, and would take decisions on outstanding matters from these processes that fall within its mandate – eg decide on trade-offs between competing demands from different portfolio committees.
6. The JBC acknowledged that its membership should ideally include portfolio and cluster committee members, to facilitate integration.

1. The JBC agreed that it would follow one process to influence budget policy in the drafting phase and to amend the budget (in future years) in the legislative phase. This would allow for the most effective response and for the most efficient use of parliamentary time and capacity. This one process would be concentrated in the three months following the tabling of the budget, with a smaller round around the MTBPS, but would draw on on-going year round work in the portfolio committees and the JBC on the implementation of the budget. This means that in practice the work of parliament in the three areas detailed above, would be integrated.
2. The outputs of this one process would primarily be an annual report on the MTEF and the Appropriation Bill tabled in Parliament. This report would clearly distinguish between issues for debate for the upcoming fiscal year (in future proposed amendments would also be included) and issues of concern with recommendations for changes to expenditure plans and allocations for the outer two years. The JBC recognises that there may be value in timing parliamentary decision-making on the latter with the executive’s drafting process: eg, portfolio committee recommendations should be able to influence departmental level processes to draft budget proposals, or JBC committee concerns with the executive’s determination of macro policy priorities in April/May and top-level decision making in August/September and October. This need should be balanced with the need to spend optimal time on the parliamentary process. Also, the JBC recognised that while there is a limited time frame to table its comments on the Appropriation Bill, while there is more time to raise concerns and table recommendations for changes to future budgets. The JBC agreed to look at these issues more closely in future workshops to formulate clearer guidelines on options for JBC level and portfolio committee level outputs.
3. The JBC agreed that it has until the tabling of the MTBPS and the Budget in 2004 to finalise its proposals for a full Parliamentary budget process. The 2004 legislative phase would be the first round of implementing the process, with the 2003 MTBPS being the starting point. (However, the JBC would need to take account of 2004 being an election year and the likely changes that may be required in the process.)
4. Applying the principles discussed above, the JBC also agreed that intervention by Parliament, would be driven by any or a combination of three factors:
1. Firstly, Parliament would have cause for intervention if there is a mismatch between policy and proposed allocations. For example, if on account of information and analysis Parliament is convinced that the distribution of expenditure within the justice sector is unlikely to contribute towards improved human resource deployment and service delivery, it will query the proposed distribution in the outer years, or, in future, propose to amend the allocation for the coming fiscal year if its queries in this regard in previous years have not been answered to its satisfaction. (See box below for further detail.)
2. Secondly, Parliament would have cause for intervention if on the basis of past performance, it is convinced that the allocations to a specific department or activity, are unlikely to be spent well.
3. Thirdly, Parliament would have cause for intervention if it is able to identify waste or inefficiencies, or, inversely, potential efficiency gains within functional areas or votes.

 

 

 

5. Conservative application of the principles in iv above, would contribute significantly to the protection of the institution’s integrity. Parliament would not amend the budget or propose future allocation shifts based on new policy options or activities introduced by Parliament. In other words, amending the budget should not become a ‘back-door’ for legislation. Also, Parliament would not become a second bite at getting policies approved that had already been rejected by the executive. Parliament would merely weigh up allocations and the objectives already approved to assess whether allocations are adequate and have been distributed effectively.
6. Parliament would fulfil its role in the MTEF and national budget process through a three-tiered committee system.
1. The JBC would fulfil its role in two phases: at the start of the parliamentary process (where it could link with the NA finance committee processes) and at the conclusion of the process.
2. In start-up phase, the JBC would have an a priori guiding role in Parliament’s intervention in the MTEF and national budget. On tabling the NA would refer the Appropriation Bill to the JBC. Based on its past experience in scrutinising previous budget proposals, the MTBPS and actual expenditure and revenues, as well as on a set of hearings immediately after the tabling of the Appropriation Bill, the JBC would highlight areas of concern on allocations between and within functional budget areas for the portfolio and cluster committees to pick up.
3. The engines of the committee system would be the subsequent work done in the portfolio committees on micro-fiscal issues (See Box 2 above). The committees would, based on their scrutiny of past performance, current budget proposals (Appropriation Bill and the NEE) and future policy directions of national departments, propose major and minor shifts in allocations within the budgets of their associate departments and draft comments on the contextual information underlying budget proposals. Portfolio committees would have the power to make decisions on changes to allocations and proposals for future allocations within the vote ceilings. Proposals that drive allocations outside of the vote ceilings, would need to be submitted to the JBC through the cluster committees.
4. The cluster committees would act as a clearing house for committee proposals, ie if committees felt that departments did not have sufficient funds to fulfil their policy mandates as approved by the executive motivations for additional funds within a cluster ceiling could be considered at the cluster level. Also, cluster committees would be instrumental in coordinating and integrating policy and allocations across sectors, supporting executive initiatives in this regard. Cluster committees would not have decision making powers but will refer their proposals to the JBC.
5. The JBC would finally scrutinise portfolio and cluster committee recommendations and make decisions on trade-offs between votes and functional clusters. These would be passed back to the portfolio committees for implementation at vote level. The JBC would streamline cluster committee recommendations and recommendations for expenditure shifts into an overview report for tabling in Parliament. The JBC would also take into account the result of its own research on cross-cutting and/or additional issues it raised on the basis of its earlier deliberation and hearings on the budget.

7. Portfolio committees will be required to motivate every amendment they propose, or every change they require in the outer year allocations. This would serve to discipline the number of amendments and ensure higher quality information at higher levels of decision-making.
8. The JBC noted that it may be conducive to a good parliamentary budget process if the JBC has the power to create ad hoc committees / sub-committees looking at cross cutting issues in the budget (eg poverty relief, rural development, gender) in support of/to add capacity to its own over-arching deliberations. These committees/sub-committees would be created on an annual basis after the initial set of hearings and the initial session of the committee in approving an early committee report. The committees would contribute additional capacity to investigate issues.
9. The main JBC hearings on the MTEF and appropriation bill would be held just after Budget Day. These hearings could be by application and/or invite. The JBC would formalise criteria and a process to assess applications within the framework of the public’s right of access to the legislature. The JBC would be able to call back or call additional inputs for its second set of deliberations once portfolio and cluster committee reports are submitted.
10. Throughout the deliberations of the portfolio and cluster committees and the JBC ample opportunity should be given to the executive mirror institutions to reply to queries, and query planned parliamentary interventions. As regards parliamentary recommendations for changes to the outer years of the MTEF, the committees should ensure that they have full information from the executive pertaining to the issues, and that they have engaged the executive in a thorough dialogue. As regards to amendments to allocations for the upcoming fiscal year, the process should be consensual. In its further work on amendment powers, the JBC would need to pay attention to instruments to make it consensual, such as the targeted use of executive veto’s and/or procedural mechanisms to reach consensus.
11. Parliament should define what additional information it would require on a regular basis from the executive and at what level (ie portfolio committee level, cluster or JBC level) to reach informed conclusions on expenditure plans. The JBC already identified the need to enforce the PFMA provisions for the timely tabling of departmental strategies, business plans and annual reports, as well as the need for routine access to planning assumptions and datasets used by the executive to plan and budget.
12. The JBC recognised that in considering the MTEF provincial interests would need to be presented earlier than through the deliberation of the JBC. Therefore, in addition of the integration with the NCOP DOR processes, the JBC would in future need to think through how Portfolio Committees can accommodate NCOP interaction on national budget issues affecting provinces. The earlier integration of NCOP concerns would shortcut the current NCOP process on the Appropriation Bill.
13. Paragraphs v to xii above mostly applies to the TOR role assigned to the JBC to consider the MTEF as set out in the Budget Review (supported by the NEE) and the Appropriation Bill. The JBC would follow a much smaller process to comment on allocation of funds in the MTBPS.
1. There would be a set of hearings on MTEF distribution of expenditure in the MTBPS.
2. The JBC would need to clarify with the NCOP Select Committee on Finance how the JBC report would integrate with or dovetail with NCOP mandates on it.
3. On the basis of these the JBC would draft a report for tabling in the NA (and the NCOP depending on resolution on point b above).
4. Therefore there would be no portfolio committee processes.
5. The JBC’s deliberations on the MTBPS would be linked to its ongoing work in the drafting and legislative phase of the budget process.

14. The MTBPS provides parliament with an early indication of whether its earlier concerns have been taken up in executive proposals. As such it may be a good document within which Parliament will require the executive to respond to its earlier concerns and recommendations.

1. The requirement in the JBC TORs for quarterly reports to parliament on actual spending and revenue in national departments provides a focal point for parliamentary oversight over implementation during the budget year.
2. The main focus of the JBC’s efforts would be the comparison of revenue and expenditure by department against budget. It would utilise monthly expenditure reports released by the National Treasury to compile ongoing indexes of revenue and expenditure performance, highlighting at the least which departments performed under or over the norm.
3. The JBC’s efforts in this regard would need to integrated with Portfolio Committees’ oversight responsibilities. The JBC’s is in a position to complement Portfolio Committees’ detailed scrutiny with comparative perspectives, while the Portfolio Committees’ superior command of departmental level information can complement the JBC’s findings.
4. The JBC agreed on the desirability of the JBC’s efforts going beyond a purely financial comparison. It should endeavour to
1. Take account of the effects of seasonality on departmental expenditure patterns.
2. Highlight and disincentivise the’dumping’ of expenditures at the end of the fiscal year through its oversight activities
3. Track the use of the contingency reserve throughout the budget year
4. Reconcile the Adjustment budget with the main budget and actual expenditures.
5. Identify underspending early (taking into account seasonality of expenditure) and raise concerns in order to effect smaller policy corrections earlier.

1. Over time and as executive information systems improve, expand its scope from monitoring actual inputs into matching actual inputs with actual outputs towards the achievement of measurable objectives.

1. The implementation of JBC recommendations for oversight of actual expenditure should be immediate. The JBC should mould its monitoring and reports to parliament to incorporate the issues above as soon as possible.
2. The main output of the JBC on oversight over actual expenditures would be quarterly reports to parliament. However, the JBC would also alert specific Portfolio Committees to investigate extraordinary expenditure patterns in their relevant departments.
3. The JBC would institutionalise executive response to its actual expenditure reports, requiring explanation of significant deviation from the norm from the executive, whether Treasury or individual departments, prior to and for inclusion in subsequent actual expenditure reports.

The new process as discussed above and sequenced below would require considerably changes to the Parliamentary calendar. The time line set out is still vague: the JBC would need to consult with other committees, including the finance committees, the Rules Committee and with at least some portfolio committees to get a better understanding of what is feasible. The JBC is aware that the full process is complex and requires considerable capacity. It sees the implementation of the process as a change management process, and realises that it would need to consider carefully how that process will be tackled over time.

However, the process as set out below provides a discussion blueprint.

The JBC proposes the following process (see Schema 1):

February:

1. After the Budget Review and Appropriation Bill have been tabled in the National Assembly, the Appropriation Bill is referred to the NA Finance Committee to consider the macro-economic, fiscal and asset and liability management issues, and the JBC to consider the allocation and use of funds between and within sectors and votes.
2. The JBC holds hearings on the distribution of revenue between sectors and within sectors, and on the basis of its earlier work and the hearings, tables an interim report in Parliament that identifies the main issues within sectors that the JBC would like to be included in portfolio committee debates, main issues between sectors and some cross-cutting areas that the committee intends to research before its final report.

[NOTE: At the workshop the interim report was not discussed. It is suggested here because of the transparency benefits – giving the executive early indication of concerns and space to react, providing external interest groups/think tanks etc to come forward with existing information and analysis -- and because it will allow some of the current benefits of having a committee report before parliament considers the first reading of the appropriation bill. The JBC needs to consider whether it wants to produce an interim report summarising the main issues it would like to see addressed in Parliament’s work on the budget, or whether it just wants to submit internally guidelines on its deliberations to portfolio committees.]

3. The JBC drafts TORs for specific research issues and commissions the research (internally or externally).

March/April/May

1. The portfolio committees consider allocations within votes and interrogate spending proposals within the Treasury budget reform framework to link policy to budget proposals.

2. The cluster committees streamline portfolio committee proposals, and ensure integration within a sector between votes and departmental policy proposals
3. The Joint Budget Committee has a second round of deliberation on the budget, streamlining non-competing and resolving competing cluster committee proposals, and producing an overview report in time for the second reading of the Appropriation Bill, including findings through its commissioned research process. The Committee also crystallises parliamentary recommendations for changes to the outer years of the MTEF within the current executive budget drafting round.
4. The JBC provides feedback to Portfolio Committees for implementation.
5. Portfolio Committees report to the NA aligned with House debates on individual votes.
6. The JBC tables its final report on the MTEF, the relevant sections of the MTEF and the Appropriation Bill.

1. Second reading of the Appropriation Bill and final vote on Bill (with amendments in future).

1. NCOP vote on Appropriation Bill

1. The MTBPS is tabled in Parliament and referred to the NA Finance Committee and the JBC.
2. The JBC holds hearings on the distribution of funds over the medium term between functional areas.
3. The JBC tables its report in Parliament.

The document above details several challenges and further development forming the JBC’s next set of tasks. Some of these pertain to its immediate work of setting out a process for parliamentary intervention in the budget and others to its medium to long term task of taking the amendment powers agenda forward. The list below summarises the further issues under each area. The list is not exhaustive, ie the JBC may add further issues to it as it continues it work. However, it draws together the areas requiring further detailed work or exploration from the work done in the first workshop.

Superimposed on the detailed list three main areas were identified where the JBC would focus its efforts:

• The JBC needs to discuss its proposals and several outstanding issues with stakeholders, inside and outside of Parliament. Of these the most important are the Rules Committee, the NA and NCOP committees on finance and the Treasury. Proposals of the JBC would also need to be considered within the party political structures within Parliament.

• The JBC needs to assert itself as a committee in order to fulfil its mandate. This means that it has to be positive in defining a role for itself, describing a process and seeking the necessary changes in existing processes to fully capacitate the new process. However, the JBC also realised that it would be necessary and wise to align the JBC’s processes insofar as it is possible with the existing processes. The JBC also acknowledged that it may need to review its TORs in view of the results of its full consideration of its tasks.
• It is critical for the JBC, once it has clarity on the issues below and consensus from stakeholders on its proposals, to immediately start a process of capacity building in Parliament. Consensus and mutual understanding on the objectives of parliamentary intervention in the budget and the process is critical. Each of the Portfolio Committees would need to go through a training process to clarify their expanded role and responsibilities, for example. This process of capacity and consensus building would form part of a bigger implementation plan for the new parliamentary budget process.

The JBC acknowledged that it may need to establish working groups to consider the identified issues in detail and report back to the full committee.

1. Set out crisper time-lines for committees, once feasibility issues have been addressed in discussion with stakeholders. The JBC may need to consider phasing in the process, possibly piloting in certain sectors, given capacity constraints and the ambitious scope of the envisaged full process.
2. Define with the executive when, in what format and with which executive documentation the executive’s responses to parliamentary concerns and recommendations for shifts in outer year allocations should be tabled.
3. Clarify further the output documentation options for JBC and portfolio committee concerns and recommendations on respectively the Appropriation Bill (ie the budget for the coming fiscal year) and the MTEF (ie the outer years of the MTEF and changes to allocations in future budgets). Will one joined up report tabled in Parliament be sufficient? Should there be flexibility to table the report on the Appropriation Bill separately so as to not hold up the legislative process, but take longer to formulate recommendations for changes to the outer years? Should there be earlier inputs into the executive process, eg an input prior to April/May would be prior to Cabinet level deliberation on policy priorities?
4. Clarify further how Parliament could enforce the PFMA provisions for timely tabling of key departmental documents, eg strategic and business plans and annual reports.
5. Clarify the composition, status and powers of the Cluster Committees. Will they be fully constituted parliamentary committees? Will they be the same committees as are used for other clustering purposes? Will they be sub-committees of the JBC with additional membership from the portfolio committees, thereby institutionalising the knowledge bases in JBC members? How will NCOP select committees interact with the Cluster Committees?
6. What is the sequencing of the process through the Cluster Committees? Would their recommendations first be discussed in the Portfolio Committees before being finalised for consideration in the JBC? Or will they go directly to the JBC which would take decisions and then pass them on to Portfolio Committees for implementation?
7. Decide whether the ability to create additional ad hoc sub-committees to investigate cross-cutting issues is necessary.
8. Clarify the hearings process in the interest of fairness and equity. Eg. establish criteria and a process for vetting organisations applying to submit in the hearings, or establish criteria for determining which organisations should be invited, if the option of applying is disallowed.
9. Clarify what additional information parliament should have access to in order to formulate meaningful positions on the budget, eg departmental planning assumptions and decide on options to formalise it.
10. Clarify how the NCOP and its committees would be able to participate in NA processes after Budget Day earlier or in addition to the JBC committee processes should there be issues materially affecting the provinces
11. Clarify how the NCOP would fit into the MTBPS process, and whether the NCOP would need to consult with provinces before taking part in the MTBPS processes.
12. Immediately motivate for dedicated research capacity, and over the medium to long term motivate for additional capacity in order to manage the complex tasks it is faced with.
13. Endeavour to get clarity on the feasibility of timelines within a new process, depending on the flexibility of the parliamentary calendar and the feasible time requirements for committees in each step of the process.

The list below is certainly not exhaustive since the JBC thus far has not focused on its tasks around the amendment powers; it is merely a list of issues arising out of its discussions so far.

1. Hold further workshops to clarify the purposes of parliamentary amendment powers and relate those to practical mechanisms for effective amendment powers and the timing of implementation of these powers. The JBC acknowledged the dangers of having unfettered amendment powers. However, the committee also acknowledged that leaving the powers dormant is undesirable. The Committee therefore resolved to have future workshop to thoroughly consider the issues, review international examples, and formulate a South African set of institutional arrangements that would balance the potential costs with the potential benefits. One of the issues it would need to consider is whether amendment powers will be used as a routine mechanism in the parliamentary budget process, or only in cases of national emergency and the formal and informal rules that would govern both uses. Annex III includes a comparative table of practice elsewhere.
2. Clarify whether in setting out a Procedure for amending money bills, Parliament could also legislate curbs to its amendment powers. The JBC recognised that Parliament still needs to seek legal advice on whether Parliament could substantially limit its ability to amend money bills, eg through legislating for balanced budget amendment powers thereby rendering itself unable to affect fiscal policy. The Constitution requires Parliament to legislate procedures to amend money bills, not to limit its scope in amending money bills. This issue would need to be clarified before the JBC could take up its further work on developing a framework for amendment powers further.
3. Clarify the mechanisms ensuring a consensual process of deciding on amendments.
4. Think further on how to minimise uncertainty in order to not delay the swift implementation of budgets, eg procedurally limiting amendments to changes over the previous year’s approved budget.
5. Consider how to move the amendment powers agenda forward. The Constitution stipulates that national legislation is required. The JBC resolved that ideally this legislation should by tabled by the Minister of Finance, but acknowledged that processes towards tabling legislation may have to be driven by Parliament, ie the JBC. The JBC envisaged that a joint process with the National Treasury prior to tabling the legislation and drawing on the work of the JBC may offer a way forward.

On Tuesday 3 June 2003 the JBC held its first workshop in fulfilment of the committee’s TOR requirement to propose processes Parliament should follow with regard to its role in the development of budgets in accordance with Constitutional requirements. The Workshop was facilitated by Alta Fölscher. The Workshop Programme is provided in the box below.

Source: Hickey, A and Wehner, J. NCOP and the Budget

Krafchik, W and Wehner, J. Parliament’s Role in the Budget Process, SA Journal of Economics,

OECD, PUMA: Holding the Executive Accountable: The Changing Role of Parliament in the Budget Process, and subsequent seminars and publications. www.oecd.org -- follow links to PUMA site.

Schillinger, HR Powers and functions of the Budget Committee in the Parliamentary System of the Federal Republic of Germany

State University of New York. Parliamentary Strengthening Programme. http://www.cid.suny.edu/demo.htm