THE ROLE OF THE STANDING COMMITTEE ON APPROPRIATIONS IN THE ESTABLISHMENT OF THE PARLIAMENTARY BUDGET OFFICE

04 February 2010

1.	Background

Section 77 of South African Constitution gives powers to Parliament to amend money bills. This is an important legislative provision that empowers Parliament to influence government budget thereby ensuring that the most urgent priorities of the country are funded. In giving effect to Section 77 of the Constitution, Parliament introduced Money Bills Amendment Procedure and Related Matters (also known as Act 9 of 2009), which was promulgated in April 2009 as an instrument for amending money bills. This Act further established a Parliamentary Budget Office (PBO) to support the implementation of the Act and serve as an independent, objective and professional support structure to the committees of finance and appropriations of both Houses. The Act regulates for the appointment of the Director who will run the affairs of the PBO. This appointment is an important milestone in the implementation of the Act and the establishment  of the PBO.

This brief therefore seeks to highlight the role of the committee in profiling the Director’s position, and the appointment thereof. 

2.	Legislative provisions regarding the appointment of the Director

Section 15 (5) of Act 9 of 2009 regulates for the appointment of the Director. According to this section the responsibilities of both committees on finance and appropriations are limited to recommending to the respective Houses:
•	A person with the requisite experience, qualifications and leadership skills to manage the PBO for appointment as a Director by resolution of both Houses and
•	The conditions of services including the salary and allowance of the Director.

The Act further requires that the committees on finance and appropriations must be consulted in determining:
•	The structure of the PBO and 
•	The conditions of service of the deputy directors and personnel of the PBO.

3.	Current Institutional Processes

As part of the implementation strategy of Act 9, the House Chairpersons of both Houses initiated various meetings with the Administration of Parliament. Emanating from these meeting the administration developed an action plan setting out the implications of the legislation and made a number of proposals. Among other things, the action plan proposed a formalisation of a Political Task Team and the establishment of the Technical Support Team. These proposals were endorsed by the presiding officers of both Houses. 

This Action Plan identified a number of activities, including:

•	Analysis of stakeholders and mapping business processes that are affected by the implementation of the Act.
•	Developing a parliamentary rules and procedures.
•	Establishment of a Parliamentary Budget Office (PBO).
•	Design and implementation of change management strategy.

The establishment of the PBO and specifically the appointment of a Director were identified as key priorities

	Establishment of Structures 

As proposed in the action plan, two structures were established to assist in the implementation of Act 9. These include the Political Task Team and Technical Team, and different roles were assigned.

Political Task Team: The Political Task Team was established by the direction of the presiding officers of both Houses, as follows:

•	House Chairpersons in charge of committees in both Houses.
•	The chairpersons of the committees on finance and appropriations.
•	Chairpersons of the sub-committees on the review rules in both Houses and 
•	Programming whips of both Houses.
 
Among others, the Political Task Team was assigned the following roles and it reports to the presiding officers on a regular basis:

•	Coordinate the implementation of the Money Bills Amendment Procedure and Related Matters Act
•	Provide political direction to the process.
•	Draft a programme for the implementation of Act 9.

Technical Task Team: Furthermore, a Technical Task Team was established, comprising of officials from various offices within Parliament. Its core responsibility is to provide support to the Political Task Team, in the form of  technical, legal and procedural advice. 

	Summary of the Decisions taken by Political Task Team

On the Political Task Team meeting held on 28 October 2009, the following are among the resolutions that were made with regard to the establishment of PBO:

•	Advertisement for the Director to be placed by January 2010.
•	Interviews to take place in February 2010.
•	Director to assume duty in April 2010.
•	The Deputy Secretary to brief House Chairpersons of Committees on the job requirements and propose job description of the Director of the Office as soon as possible.
•	Propose an organogram and possible secondment of senior parliamentary officials to the Budget Office.
•	Clarity to be obtained with regard to the funding of advertisements and setting up of the Office and budget provision to be made for the Office in the new financial year.
•	Office space to be identified and secured.

On the Political Task Team meeting held on 15 November 2009, the following resolutions were taken with regard to the establishment of the Budget Office:

•	Deputy Secretary to Parliament to consult with the Secretary to Parliament on matters relating to the Budget Office and give feedback to political task team
•	The interim process to be put in place until the 31st of March 2010. 

Furthermore, the Political Task Team resolved as follows in the meeting held on 27 November:
 
•	Full report on the establishment of budget office to be presented to the Political Task Team on 14 January 2010.
•	Aim remained to have the director of the Budget Office appointed by April 2010.

4.	Some lessons from international experiences (parliamentary budget office staff profile in the international level)

The effectiveness of budget office in policy making depends on the expertise of the employed staff. The employment of required people mainly depends on the requirements and the availability of certain skills. In order for the Committee to come up with the criteria for employing the head of the PBO, it is important to draw from experiences and practices from other countries such as Canada and Uganda. The Canadian PBO is headed by only one Parliamentary Budget Officer or Director General with one administrative assistant. The structure of this office has been divided into three divisions which include Economic and Fiscal Analysis, Expenditure and Revenue Analysis and Students and Interns programme.  The division on Economic and Fiscal Analysis consists of Economic Analysts and Advisors and senior advisors whereas the division on Expenditure and Revenue Analysis also consists of financial analysts and advisors.  In this regards each division is headed by its Director which reports directly to the PBO or Director General. 

The Parliamentary Budget Office of Uganda is headed by one Director or PBO. This Office is divided into two different Divisions which include Macro Economic division and Fiscal and Finance division.  Each division is headed by the Assistant Director and there are those individuals who are reporting directly to the Director General.  The Macro Economics division consists of Principal economist in macro and sectoral, senior economist and economists, whereas Fiscal and Finance division consists of principal economist in Expenditure and Tax.  Table below indicate the staffing of the Budget Office in other countries, and there is no doubt that South Africa can learn something from these experiences.

5.	Proposed Approach of the Standing Committee on Appropriations

The Standing Committee on Appropriations held its annual plan on 02 and 03 January 2010. This planning session aimed to structure the programme of the committee for effective oversight. Central to its work, the committee identified the implementation of Act 9 and the establishment of PBO as its immediate priorities. The attention of the committee was drawn by the current developments that are leading to the establishment of the PBO. To this end it requested a briefing on the current processes that are followed by Parliament through the leadership of the Presiding Officers. This brief was provided to the Committee by the Chairperson. While understanding that the current institutional processes are the product of political initiative, the committee viewed its role and other finance committees as instrumental in the unfolding of events. It noted that these committees are empowered by the Act to participate in these processes, and further raised its concern on the minimum participation. 
The committee notes the silence of Act 9 with regard to the responsibility of profiling the Director’s position. It, however, believes that it should have a meaningful role in this process together with other finance and appropriations committees since they are in a better position to know the kind of expertise required for the post. The committee resolved to influence this post profiling together with other finance and appropriations committees. The committee agreed on the need to initiate a process of soliciting and consolidating proposals of these committees with the view to forwarding them to the Political Task Team for consideration.

The Committee is of a view that central to the design of these requirements is the understanding of the provisions Act 9, particularly section 15. The Committee views the core functions of the PBO as a catalyst that outlines the calibre of an incumbent required for the position. These functions include:

•	Providing independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money bills.
•	Undertaking research and analysis for the committees of finance and appropriations of both Houses.
•	Annually providing reviews and analysis of the documentation tabled in Parliament by the Executive in terms of Act 9.
•	Providing advice and analysis on proposed amendments to the fiscal framework, the Division of Revenue Bill and money bills, and on policy proposals with budgetary implications.
•	Monitoring and synthesising matters and reports tabled and adopted in a House with budgetary implications, with particular emphasis on reports by other committees.
•	Keeping abreast of policy debates and developments in key expenditure and revenue areas.
•	Monitoring and reporting on potential unfunded mandates arising out of legislative, policy and budgetary proposals, and
•	Undertaking any other work deemed necessary by the Director to support the implementation of Act 9.

Furthermore, the Committee takes the importance of monitoring Executive actions very seriously. Effective oversight ensures that the Country’s resources are directed where they are most needed and are utilised in the most efficient and economical manner. The amendment and monitoring of the budget play a significant role in achieving these objectives. The necessary skills matching those of the Executive are fundamentally important for the legislature to perform effective oversight. The Committee further views the responsibilities of the PBO as valuable in shaping government policy and influencing parliamentary processes.  Any person who will be appointed to the Director’s position should have the necessary and relevant expertise to deliver on the mandate the Budget Office. It is after considering all these factors and learning from other countries’ experiences that the Committee believes that the following should be among the requirements of this position:

•	Academic qualifications in Economics (preferable at Doctorate degree level)
•	Extensive experience in research (public finance) and policy analysis
•	Sound understanding of government policies and South African budget process.