ATC121120: Progress Report of the Standing Committee on Finance on the Financial Management of Parliament Act, Act 10 Of 2009, dated 20 November 2012

PROGRESS REPORT OF THE STANDING COMMITTEE ON FINANCE ON THE FINANCIAL MANAGEMENT OF PARLIAMENT ACT, ACT 10 OF 2009, DATED 20 NOVEMBER 2012

The Standing Committee on Finance reports as follows:

1. Introduction and Background

The Standing Committee on Finance (the Committee) was established in terms of section 4(1) on the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009) (the Act). The Act came into operation on 16 April 2009.

The mandate of the Committee is conferred on it by the Constitution, legislation, the standing rules or a resolution of a House, including considering and reporting on-

(a) the national macro-economic and fiscal policy;

(b) amendments to the fiscal framework, revised fiscal framework and revenue proposals and Bills;

(c) actual revenue published by the National Treasury; and

(d) any other related matter set out in the Act.

Further to the above, the mandate also encompasses the Committee’s functions to consider and report on legislation and to maintain oversight of the exercise of national executive authority within its portfolio.

On 20 September 2012 the National Assembly, citing technical challenges that have become apparent during the implementation of the Act, passed a resolution, instructing the Committee to review the Act with a view to introduce amending legislation if necessary.

The resolution of the Assembly requires the Committee to:

(a) evaluate the application of the legislation including those provisions relating to the authority of provinces to enact financial management legislation and the timeframes associated with various reporting mechanisms;

(b) take account of the work done by the Speaker’s Forum; and

(c) report to the National Assembly by 22 November 2012.

2. Progress

On 11 August 2011, in Premier: Limpopo Province v Speaker: Limpopo Provincial Legislature and Others (CCT 94/10) , the Constitutional Court held that provincial legislatures do not have authority to pass legislation with respect to their financial management. The Court found that a provincial legislature is competent to legislate on its own financial management only if this matter has been expressly assigned to it by national legislation. Consequently, the Court declared the Financial Management of the Limpopo Provincial Legislature Bill unconstitutional. Subsequently, on 22 March 2012, the Court also found various provincial Acts dealing with financial management of provincial legislatures unconstitutional. The declarations of invalidity of these Acts are suspended for a period of 18 months from the date of judgment. The parties to the matter, including Parliament, must file a report with the Court indicating what steps have been taken to remedy the defect by 9 September 2013. As a result, Parliament is required to pass legislation dealing with the financial management of provincial legislatures.

Therefore, the review of the Financial Management of Parliament Act must result in providing a regulatory framework for the financial management of provincial legislatures. In this regard the Committee will take account of the work of the Speaker’s Forum.

Another matter that requires attention is aligning the provisions in section 4 of the Act, which contemplate the oversight mechanism, to the governance structures existing in Parliament. The Committee was advised that the procedure dealing with unspent funds of Parliament and the timeframes in respect of the submission of the annual report, including the audited financial statements, may require a review.

3. Way forward

The Committee resolved to convene a workshop in the first term of 2013 to discuss the House resolution and receive inputs from all stakeholders, including the Executive Authority of Parliament, the Minister of Finance, Speakers of provincial legislatures, Members of Executive Councils responsible for Finance in the provinces, the Secretary to Parliament, Secretaries of provincial legislatures, and other officials concerned.

Report to be considered.