Why has Parliament not yet made a substantive amendment to the national Budget?

Seán Muller

The Constitution gives Parliament the power to amend proposed public finance legislation (‘money bills’)[1]. It stipulates that Parliament must pass its own legislation to guide the amendment process. The assignment of such powers implies a budget process, and related processes, in which Parliament plays a robust, active role in deciding fiscal policy, the extent of borrowing, how revenue is collected and how societal objectives are prioritised in government expenditure. Has the fifth Parliament lived up to this expectation? One way to address that question is to ask whether Parliament has made any material amendments to Budget or related legislation and, if not, why. The remainder of this article briefly explains the relevance of amendments, why the fifth Parliament has not in fact made any such amendments and what lessons should be drawn for the sixth Parliament.

Institutionalising amendment powers: the Money Bills Act and Parliamentary Budget Office

In principle, both the oversight and amendment process, as well as the Office, should have been fairly well-established by the time the fifth Parliament was inaugurated in 2014. In reality, setting up the PBO only began in earnest with the appointment of a Director in 2012. The approach of the fourth Parliament appears to have been no less inclined to rubber-stamp budgets than its predecessors. Only half of the ten non-administrative PBO posts were filled by the end of the fourth Parliament with a further two being filled shortly after the start of the fifth Parliament. The result was that the fifth Parliament began with a great deal of work still to do.

The absence of institutional capacity was compounded by the need for the newly-established finance and appropriations committees, with many new members and chairpersons, to rapidly process a large amount of legislation. For a start, the fourth Parliament had not completed processing of the 2014 Budget legislation, meaning that the appropriations committees had to pass the Appropriation Bill and the finance committees had to pass tax legislation shortly after beginning their term. The committees also needed to produce budget review and recommendation reports (BRRRs) for the departments and entities over which they had oversight, prior to then processing the Medium-Term Budget Policy Statement (MTBPS). This background should be borne in mind when considering the subsequent performance and approach of committees.

The nuances of amendment

A material amendment to the Budget or other money Bills is generally seen as a sign that a legislature is willing and able to go against the proposals of the Executive. There is a sense in which this is inherently desirable, because the contrary position -- in which such amendments are never made -- appears to undermine the possibility of an amendment and therefore the actual oversight authority of Parliament.[2] In South Africa, to my knowledge, no such amendment has ever been made; this does call into question the practical significance of Parliament’s power. In 2016 the official opposition, Democratic Alliance, proposed a raft of amendments to the 2016 Appropriation Bill, but these were rejected by the MPs of the majority ANC with little discussion of substantive merits. Since it is within the parliamentary process that public submissions can be made, whereas this is not the case for the Executive’s budget process and drafting of some other money Bills, the unwillingness or inability of the legislature to make amendments therefore undermines broader public accountability.

With this said, it is important not to overstate the case, since there are nuances to this perspective. An amendment by the legislature need not be in the public interest, since the legislature – like the Executive – could have a variety of motives. Furthermore, depending on the quality of the analysis upon which the legislature has based such a decision, any substantive basis for it may also be open to question. It is therefore important to distinguish between the procedural and institutional significance of a material amendment, as opposed to the substantive merits of it.

A final nuance is the distinction between the formal amendment of a piece of legislation as per the provisions of the Money Bills Act, versus amendments to draft legislation or tabled Bills by the Executive itself in response to matters raised by Parliament or through oversight processes. A notable example is the tax legislation tabled annually. In a number of instances, representatives of the National Treasury or Ministry of Finance have indicated that they strongly prefer such ‘consensual’ amendments; a primary justification being that a formal amendment may be highly disruptive to the functioning of the state.

The Treasury view has merit, but is arguably also overstated. It has merit because if the point is to materially change a public finance proposal, the first step should be to aim to reach agreement. Indeed, that is surely the point of legislative engagement and associated public participation. Only where such processes fail – where the Executive refuses to concede to an entrenched position of the legislature – should a formal amendment be considered. On the other hand, it is natural that the Executive would want to avoid the inconvenience, and chagrin, of a forced concession. Of more significance is the fact that the standard Budget process does not materially incorporate input from the legislature or the public, meaning that the fiscal framework, division of revenue bill and appropriations bill are tabled in a manner that effectively means an informal, or entirely consensual, amendment is not possible.

Another component of the Treasury argument is that substantial changes to the Budget ought to be made over the medium-term, that this is part of the reason for tabling the MTBPS, and the Money Bills Act implicitly envisages a process whereby legislature engagement with the MTBPS and previous Budgets feeds into the Budget decisions of a given year. Again, there is merit to this view. There are examples where legislature emphasis of a particular issue appears to have led to a greater expenditure allocation in subsequent years. However, these tend to be fairly minor matters in the broader scope and extent of the Budget. That may well be partly the fault of the legislature, by virtue of its failure to meaningfully take a medium-term view of social and economic priorities in relation to fiscal decisions. There is no doubt that Parliament has the potential to meaningfully influence fiscal policy and the Budget in this way, but it has demonstrated a lack of capacity (broadly defined) and will to do so. While engagements within a medium-term process may be favoured by the Executive, and constitute a goal to which the legislature should strive, it is more likely that the legislature can effectively and competently make in-year amendments of slightly more limited scope.

The traditional Treasury line of prudence and caution has also been substantially undermined by the Executive itself during the fifth Parliament. Dramatic changes to fiscal policy, like the introduction of ‘free higher education’ and an increase in VAT from 14% to 15%, were tabled in the legislature without having previously been tabled in the MTBPS. What this demonstrates is that when the Executive is inclined to do so, it deviates from the cautious approach described above.[3] While the conventional wisdom that has established itself in the democratic era viewed the Executive as fiscally responsible – and therefore any legislature influence being towards irresponsibility – the political era in which the fifth Parliament operated has shown that the opposite is also possible. Had the country continued down a path of populist (or otherwise poorly founded) fiscal decisions and erosion of key institutions, the role of the legislature as a bulwark against fiscal crisis may have come dramatically to the fore. A notable example is the possible role the legislature could play in refusing to approve contingent liabilities that would have to be incurred for a large-scale nuclear procurement programme.

Towards meaningful amendment powers

It should be clear from the above that the two main obstacles to meaningful implementation of Parliament’s amendment powers are:

  1. Institutional capacity
  2. Political will

As regards the former: there is an unfortunate tendency in the South African public sector, and no less in Parliament, to associate ‘lack of capacity’ with ‘insufficient funds’ or ‘an inadequate number of posts’. In some service delivery areas this is correct. But in the case of bureaucracies, dramatic improvements of institutional capacity could be obtained by selecting staff and managing institutions better. The latter is the case with Parliament – regular protestations by the legislature and PBO about insufficient funding should be viewed accordingly. The role of content advisors provides one illustration; each committee has a content advisor and at the time of writing this role is remunerated at more than a million Rand per year. Correspondingly, all technical staff in the PBO are remunerated at this level or higher. These salaries, in terms of real purchasing power, compare favourably to international counterparts. Yet there is relatively little to show for much of this expenditure in terms of technical competence, with close inspection of the legislature’s analysis and reporting on public finance issues revealing either superficiality or a heavy dependence on the Executive. Despite that, and rather than implementing a rational and fair system for renewing what were five-year contract advisor posts, based on performance and demonstrated competence, Parliament recently announced that these would be made permanent.

Sufficient technical capacity is critical for decisions to be made in the public interest. However, they also have legal importance. The Money Bills Act details extensive requirements that must be satisfied in order for amendments to be made. While it may seem unlikely that a person or organisation will litigate against a parliamentary amendment, it is not impossible – especially if the amendment materially impacts on an interest group.[4] As things stand, I would suggest that for many types of amendments the legislature is unlikely in its current state to be able to defend such an action with sufficiently credible technical analysis and justification.

Another dimension to capacity is the need for clearly established, broadly understood administrative processes by which an amendment would be made. Some flexibility has recently been introduced into the timelines for oversight of Budget documentation by amendments to the Money Bills Act. However, the usual periods for oversight do not give enough time for public input, never mind substantive debate, determination that Parliament will push for an amendment, along with the drafting and necessary substantiation of such an amendment. These constraints exist by virtue of the current legislation, but are compounded by the apparent lack of any serious institutional effort to develop clear, agreed protocols on how the process would unfold. Such protocols would also need to account for a range of different types of amendments, involving different committees, varying legislative requirements and specific technical expertise.

Political will to make an amendment seems unlikely to change in the short-run unless there is a corresponding change in the approach of the African National Congress (ANC) – since the ANC is likely to win a majority in the 2019 national elections and therefore a corresponding majority in Parliament. The recent political weakening of the National Treasury and Ministry of Finance may open greater space for amendments or concessions, but whether those will be in the public interest is a separate matter. As noted above, while there is a certain inherent desirability of amendments, ultimately the public interest remains paramount.

Under the fifth Parliament there were some important improvements. For example, the Standing Committee on Finance introduced a procedure where National Treasury was required to respond to public submissions in a special committee meeting where further discussions would then take place. This substantially improved engagement with the annual Budget’s fiscal framework, albeit still within ridiculously short timeframes. Committee chairs showed a willingness to tackle certain key issues, such as the Standing Committee on Appropriations request that the PBO produce an independent analysis of the merits of nuclear procurement – even if the final analysis failed to adequately serve the mandate of the committees or the Office. Relatedly, amendments to the Money Bills Act have strengthened the PBO in law and that presents some promise if an appropriately credible Director is appointed by the sixth Parliament. This appointment and the process followed will have a profound influence on fiscal oversight capacity – either for the better or for the worse.

With the potential for no party securing an outright majority in Gauteng, it may be that the significance of money Bills amendment powers is first demonstrated by a provincial legislature rather than Parliament itself.

[1] There are corresponding provisions for provincial legislatures – see Muller (2019), “Fiscal oversight by Parliament and Provincial Legislatures”.

[2] In some countries a material amendment to the Budget is seen as a wholesale rejection of the position of the government, meaning that it has political significance far beyond the substance of the issue at hand. However, this is not an aspect of South Africa’s political culture and the Constitutional framing and subsequent elaboration of amendment powers indicates that amendments are not envisaged as ‘votes of no confidence’ in the government.

[3] As was illustrated by the resignation of the Budget Office in the National Treasury shortly before the announcement of the massive increase in higher education expenditure, this inconsistency is between institutions within the Executive rather than necessarily within the institutions themselves.

[4] As with other matters of public importance, a situation in which the legislature amends a money Bill and this is subject to litigation may well be beneficial in as much as the courts thereby provide detailed clarification on the powers and responsibilities of the various parties.

Dr Seán Muller is a senior lecturer at the University of Johannesburg's School of Economics and a Research Associate at the Public and Environmental Economic Research Centre (PEERC). He worked as an economist in the Parliamentary Budget Office from 2014 to 2016, and currently participates in a European Union-funded project 'Putting People in Parliament'.

Share this page: