Notes on the Money Bills Amendment Procedure and Related Matters Act presentation

Slide 1 
Government Gazette No. 32137 indicated that the President had assented to the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009) and the Act was published on 16 April 2009. The Act therefore comes into effect on this date. 

Slide 2
The long title of the Act states that the Act aims to “provide for a procedure to amend money Bills before Parliament and related matters.” Section 3 of the Act provides that the “Act applies to all proposed amendments to money Bills before Parliament.” 
In broad terms the Act provides the procedure for Parliament to amend the budget, which includes the annual Division of Revenue Bill, although this Bill is not classified as a money Bill in terms of the Constitution, the annual appropriation Bill and adjustments appropriation Bill, as well as revenue Bills such the annual Taxation Laws Amendment Bill. Provision is also made for the procedure to amend other money Bills. The administrative support to ensure the integrity of the procedure is provided for in the Act; viz. the Parliamentary Budget Office (PBO

Slide 3
The procedure hinges on the constitutional obligation of Parliament to maintain oversight of the exercise of national executive authority. [see Preamble and section 2.] Therefore the annual assessment of national departments by the National Assembly through its committees provides the starting point of the procedure. In this respect the Act requires committees of the Assembly to submit annual budgetary review and recommendation reports (BRRR) after the adoption of the Appropriation Bill and prior to the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) [Section 5(4)].  This period is usually between June and November. The Minster of Finance and the relevant member of Cabinet are informed of the assessment. 
Parliament’s reporting on the MTBPS is the next oversight element in the procedure [Section 6 ]. 
The BRRR and the reports on the MTBPS serve as an indication whether amendments might be proposed to the fiscal framework and the budget Bills when these are introduced the following year. In fact, when the Minister of Finance introduces the national annual budget, a report to Parliament setting out how the Division of Revenue Bill and the national budget give effect to, or the reasons for not taking into account, the recommendations contained in the BRRR and the reports on the MTBPS. [Section 7(4)]. The context to amend the fiscal framework, and thereafter the Division of Revenue Bill, is now set. 

Slide 4
Section 5(1) of the Act requires that a BRRR refer to the following:
(a) the medium term estimates of expenditure of each national department, its strategic priorities and measurable objectives, as tabled in the National Assembly with the national budget;
(b) prevailing strategic plans;
(c) the expenditure report relating to such department published by the National Treasury in terms of section 32 of the Public Finance Management Act;
(d) the financial statements and annual report of such department;
(e) the reports of the Committee on Public Accounts relating to a department; and
(f) any other information requested by or presented to a House or Parliament.
Section 5(3)) provides that the BRRR must provide an assessment of the department’s service delivery performance given available resources; an assessment on the effectiveness and efficiency of the departments use and forward allocation of available resources; and may include recommendations on the forward use of resources.

Slide 5
The MTBPS updates the medium term expenditure framework / multi-year budget projections and presents Parliament with an opportunity to prepare for the budget of the next financial year. 
Section 6 of the Act requires the Minister of Finance to submit to Parliament the MTBPS at least three months prior to the introduction of the national budget and sets out the required contents of the MTBPS, including, a revised multi-year fiscal framework, the spending priorities of national government for the next three years, and a review of actual spending by each national department and each provincial government between 1 April and 30 September of the current fiscal year.
The revised fiscal framework and related documentation is referred to the respective committees on finance, the spending priorities to the respective committees on appropriations; and, the referral of the review of actual spending remains within the discretion of the Houses in terms of the respective rules. Houses may require their committees on finance or appropriations to consult with any other committee in considering matters referred to it. Committees must report within 30 days from the date of the tabling of the MTBPS, and the reports may recommend amendments to the fiscal framework or the division of revenue should these remain materially unchanged when submitted with the national budget.
The reports from the committees on finance and committees on appropriations must be submitted to the Minister of Finance within 7 days after its adoption by the House.

Slide 6
Section 4 of the Act requires that each House establish a committee on finance and a committee on appropriations, with all the powers and functions conferred by the Constitution, legislation, the standing rules or a resolution of a House. Most of the functions of these committees are set out in sections 4, 6 (MTBPS) and 15 (Parliamentary Budget Office).

Slide 7
A. Committees on finance to consider and report on: •the national macro-economic, fiscal policy, revised multi-year fiscal policy and explanations;
•amendments to the fiscal framework, revised fiscal framework and revenue proposals and Bills;
•actual revenue published by the National Treasury; and
•any other related matter set out in the Act.
B. Committees on appropriations to consider and report on:•spending issues, including the the spending priorities in MTBPS;•amendments to the DORA (and related issues in the MTBPS) & Appropriation Bill; 
•recommendations of the FFC;
•reports on actual expenditure published by the National Treasury; and
•any other related matter set out in this Act.
C. Joint responsibilities of committees on finance & appropriations	
•Section 15(5): must recommend to the respective Houses, in an open and transparent manner a person for position as Director and the conditions of service. The removal of Director is similar.
•Section 15(13) the Director, in consultation with the committees, must determine the Structure of PBO; and, the conditions of service of deputy directors and personnel.

Slide 8
In addition to pinning the procedure established in the Act on the oversight function of Parliament, section 2 also require that the application of the Act must “take into account the relevant fiscal framework submitted to and adopted by Parliament.” 
The “fiscal framework”, defined in the Act, is the relationship between revenue (including borrowing) and expenditure (including cost of financing). 
Procedurally, the Act requires a certain sequence, starting with the introduction of the fiscal framework and its adoption, with or without amendments, by Parliament. Secondly, sections 8(9) &  9(4)) provide that any amendments to the Division of Revenue Bill, the revenue Bills or the Appropriation Bill must be consistent with the adopted the fiscal framework. Lastly, section 10(3) provides that amendments to the Appropriation Bill may only be considered after the Houses passed the Division of Revenue Bill and subsection (4) provides that any amendment to the Appropriation Bill  must be consistent with the adopted fiscal framework and the Division of Revenue Bill passed by Parliament. The procedure therefore hinges on a sequencing of the fiscal framework, Division of revenue Bill and the Appropriation Bill, each stage determining the next

Slide 9
In addition to the procedural requirements applicable when amending money Bills, the Act provides for principles that Parliament and its committees must follow. Section 8(5) of the Act provides that when taking any decision in terms of the Act – in other words, any report pursuant to Parliament’s oversight function, report on the MTBPS, amendment to the fiscal framework, amendment to a money Bill or the Division of Revenue Bill – that Parliament and its committees must ensure an appropriate balance between revenue, expenditure and borrowing; reasonable debt levels and debt interest cost; the cost of recurrent spending is not deferred to future generations; and, adequate provision for spending on infrastructure development, overall capital spending and maintenance. Consideration must also be given to the short, medium and long term implications of the fiscal framework, division of revenue and national budget on the long-term growth potential of the economy and the development of the country. Finally, cyclical factors that may impact on the prevailing fiscal position; and, public revenue and expenditure, including extrabudgetary funds, and contingent liabilities must be taken into account. . 
In amending revenue Bills, section 11(3) provides that Parliament and its committees must ensure that the total amount of revenue raised is consistent with the approved fiscal framework and the Division of Revenue Bill; take into account the principles of equity, efficiency, certainty and ease of collection; and, consider the impact of the proposed change on the composition of tax revenue with reference to the balance between direct and indirect taxes; as well as regional and international tax trends the impact on development, investment, employment and economic growth.

Slide 10 
Together with the budget and the fiscal framework, the Minister of Finance is required to introduce, amongst others, tax and other revenue proposals, the Division of Revenue Bill and the Appropriation Bill. The fiscal framework and revenue proposals must be referred to the committees on finance who are required to hold joint public hearings (section 8(2)). The committees have 16 days after tabling wherein to report to the respective Houses (section 8(3)) accepting or amending the fiscal framework (section 8(4)). If amendments are proposed, the committee must allow the Minister of Finance at least 2 days to respond, which response must be included in the committee report (section 8(7)). The respective House must also consider the report within 16 days of tabling. If there is a material difference between the resolutions of the Houses, the NA must reconsider its resolution and pass it again, with or without amendments. 
After the adoption of the fiscal framework, the Division of Revenue Bill and the Appropriation Bill are referred to the committees on appropriations of the Assembly to follow the legislative procedure as set out in the Constitution. However, the Act requires that the Division of Revenue Bill must be passed by Parliament “no later than 35 days after the adoption of the fiscal framework” (section 9(3)), and the Appropriation Bill within 4 months from the start of the financial year to which it relates (section 10(7)). In considering these Bills the respective committees must conduct public hearings, consult with other parliamentary committees, and allow affected members of Cabinet, provinces, and local governments to respond to the proposed amendments, as provided for in the rules (sections 9(5) and 10(8)). Specifically, the Minister of Finance must be given at least 3 days, in the case of the DORB, and at least 10 days, in the case of the Appropriation Bill, to respond. The responses from the members of Cabinet must be included in the committee report (sections 9(8) and 10(11)). 

Slide 11
In respect of the Appropriation Bill, section 10 of the Act provides that another committee may advise a committee on appropriations that a sub-division of a main division within a vote be appropriated conditionally; or that an amount must be appropriated specifically and exclusively for a purpose mentioned under a main division within a vote.
In the case of a conditional appropriation, the proposal must be aimed "to ensure that the money requested for the main division will be spent effectively, efficiently and economically, provided that:
(a) the committee must specify the conditions that need to be met before the Committee on Appropriations may recommend to the House that the funds be released;
(b) the Minister or the affected member of Cabinet must be given 2 days to respond to the proposed conditional appropriation;
(c) a recommendation to the House that a sub-division of a main division within a vote is appropriated conditionally must be accompanied by the response from the Minister and the affected member of Cabinet, as the case requires; and 
(d) the House must consider the recommendation of the Committee on Appropriations to release the funds within 7 days after that committee
reported to the House.” 

Slide 12
Section 11 requires that the revenue Bills be referred to the committee on finance of the National Assembly and, after approval, to the National Council of Provinces for consideration by its committee on finance. As indicated already, any amendment to a revenue Bill must comply with the principles of taxation set out in section 11(3).  
Section 11(4) requires that committees on finance must, in terms of the rules: 
•hold public hearings on the revenue Bills;
•consult with other committees; and
•report to the House in terms of sub-section (7).
[The reference to subsection (7) is a typographical error. It should refer to subsection (6), which requires that a report motivates amendments in terms of the principled rails discussed above (sections 8(5) and 11(3)); and include comments from the Minister of Finance on any proposed amendments.]
Subsection (5) provides that the Minister of Finance “must be given at least 14 days to respond to any proposed amendment.”

Slide 13
Section 12 provides for the national adjustments budget, including the introduction of an adjustments appropriation Bill, a revised fiscal framework if the adjustments budget effects changes to the fiscal framework and a division of revenue amendment Bill if the adjustments budget effects changes to the Division of Revenue Act for the relevant year. The referral of these instruments follow the same sequence as the budget process; namely, the revised fiscal framework to a joint sitting of the committees on finance; the division of revenue amendment Bill to a joint sitting of the committees on appropriations after the adoption of the revised fiscal framework; and, in the event of a revised fiscal framework, an adjustment appropriation Bill to the committee on appropriations of the National Assembly only after the Division of Revenue Amendment Bill is passed by Parliament. The requirement for joint sittings is in the interest of time as the timeframes set out in section 12 are tight. 
The committees have 9 days to report on either the revised fiscal framework or the Division of Revenue Amendment Bill. If amendments are proposed, the Minister of Finance has 2 days to respond to the proposed amendments to the fiscal framework and 4 days to proposed amendments to the division of revenue. The reports must include the comments from the Minister. The report on the adjustments budget must be submitted within 30 days after the tabling of the national adjustments budget. This report must follow the format as the report on the Appropriation Bill set out in section 10(10). In the case of a report recommending amendments to the Adjustment Appropriation Bill, the Minister of Finance must be given at least 4 days to respond, which report must include the comments. 
Provision is also made for consultation between committees.

Slide 14
Section 13 provides for the procedure to consider amendments to Money Bills other than the Appropriation Bill, Revenue Bills,  or the Adjustments Appropriation Bill. These Bills must be referred to the respective committees on appropriations who are required to conduct public hearings on the Bill. If a committee on appropriations propose amendments to such a money Bill it must allow the Minister of Finance at least 14 days to respond to the proposed amendments before reporting to the relevant House. The reports must indicate that the proposed amendments are consistent with the prevailing fiscal framework; and the manner in which the proposed amendments comply with the principled rails (see section 8(5)) discussed above. The report must also include the comments of the Minister.

Slide 15
Section 14 of the Act provides for amendments to a money Bill proposed by the Minister of Finance to a House or committee. Such proposals are limited to amendments in order to make technical corrections to a money Bill. This provision was used for the amendments to the Appropriation Bill, 2009. 

Slide 16
The implementation of the Act, including research and analytical support to the committees established by the Act, must be supported by the Parliamentary Budget Office established in section 15. This Office must provide “independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills.” Other functions are provided for in detail in the Act.
The Office is headed by a director who is appointed by resolution of the Houses on recommendation of the committees on appropriations and committees on finance. The recommendation must include the conditions of service, including salary and allowance on the level of a top ranking public servant. The removal of the Director is also on recommendation of the committees to the Houses on grounds of misconduct, incapacity or incompetence. The Director must report any inappropriate political or executive interference to Parliament. 
Deputy directors and personnel of the Office are appointed by the Director who must, in consultation with the committees on appropriations and the committees on finance, determine the structure of the office and the conditions of service of the deputy directors and personnel. These committees are further required to nominate a person in the employ of the Office to act as Director in the event that the post of Director is vacant or if the Director is unable to fulfill the functions of the position.
The budget of the Office is part of the budget of Parliament and the funds are transferred to the Office. The Director is the accounting officer who must account to Parliament.

Slide 17

Slide 18
A final note on the interaction between committees envisaged in the Act: 
The finance and appropriations committees are central to the consideration of the annual national budget by Parliament and interact with portfolio and select committees in the process of recommending amendments to the fiscal framework, Division of Revenue Bill, Appropriation Bill, Taxation / Revenue Bills, and adjustments budget. Oversight reports (BRRR) and reports on the MTBPS provide the bases for the consideration of the fiscal framework and the DORB. 
This budgetary review and recommendation report (BRRR) must include a reference to financial statements of a department and reports of SCOPA relating to the relevant department (section 5(1)(e)). In other words, the Assembly and its portfolio committees must use the reports of SCOPA to conclude this function. The Act further encourage synergies between the committees by requiring that when the committees on appropriations consider the Division of Revenue Bill, the rules must provide for the participation of the chairs of other committees (section 9(5)). Similarly, when the Appropriation Bill comes before the committees on appropriations, the rules must provide for a consultation process with other committees (section 10(8)). [Section 11 requires the same in respect of the relationship between the committees on finance and other committees. Section 12(16)(b) requires the same in respect of the relations between the committees on appropriations and other committees, when dealing with the adjustments appropriation Bill.] In  respect of the procedure relating to the amendment of the Appropriation Bill, another committee may recommend to the appropriations committee a conditional appropriation or a specific and exclusive appropriation (sections 10(5) & (6)). Should the committee on appropriations recommend an amendment to the Appropriation Bill to a House, such recommendation must indicate, amongst others, how it relates to the reports of the Auditor-General and committee reports adopted by the House (which include SCOPA reports and BRRR).