Committee Reports: New Development Bank Special Appropriation Bill [B32-15]; Finance Bill [B31-15]; 2015 MTBPS; Adjustments Appropriation Bill [B28-15]

Standing Committee on Appropriations

18 November 2015
Chairperson: Mr S Mashatile (ANC)
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Meeting Summary

During consideration of the New Development Bank (NDB) Special Appropriation Bill, the Democratic Alliance argued that the country could not afford the R2.2 billion first New Development Bank installment, due in January 2016. Within the context of the higher education funding crisis, it was advisable to use the R2.2 billion on higher education funding. The South African contribution to the Development Bank relative to its budget was extremely high. It stood at 13.5% of the national budget, compared to 2.2% for Brazil, 2.4% for Russia, and a mere 0.8% for China. The DA said that claims by the Department of Higher Education and Training that it could come up with funding, could not be relied upon. It was foreseen that DHET would cut money from other programmes, to the detriment of the previously and currently disadvantaged. It was argued that the New Development Bank (NDB) was not a national priority. The ANC countered that the country had to honour its NDB commitments. The purpose of the NDB was to assist with infrastructure building, which was indeed a national priority. The DHET had to be trusted that it had recourse to funding. The DA reserved its right to not support the Committee Report on New Development Bank Special Appropriation Bill.

The Committee adopted the Committee Reports on the New Development Bank (NDB) Special Appropriation Bill and Finance Bill and adopted them.

Although the Chairperson mentioned at the outset that the MTBPS and Adjustments Appropriation reports could not yet be adopted, the DA submitted that it was irregular for the two reports to have been referred to the Standing Committee at all, before the adoption of the Division of Revenue Amendment Bill. The implication was that it would be a breach of procedure to even consider the two reports. A legal opinion was called for. A Senior Parliamentary Legal Adviser told the Committee that an over-formalistic approach to the budget cycle had to be avoided. The Standing Committee was free to consider the two reports, as long as they were not adopted. The DA was not satisfied with the legal opinion. It felt that a simple procedural matter was being complicated, and that the Committee was thereby running the risk of acting contrary to law. ANC Members were satisfied that no law would be broken as long as there was no adoption. An ANC Member told the DA that standing committees had a different approach to portfolio committees. It was the duty of the Standing Committee to use all available time to be informed about relevant matters. The two reports were read through as a Committee, to engage in what an ANC Member referred to as a "warming-up exercise". There was practically no discussion of content. The two reports will be formally adopted on 20 November.

Meeting report

Mr Gcwabaza stood in for Mr Mashatile as Chairperson during the first part of the meeting.

Mr N Gcwabaza (ANC) noted that the reports on the Medium Term Budget Policy Statement (MTBPS) and the Adjustments Appropriation Bill could only be considered in the meeting, but not yet adopted.

Committee Report on Finance Bill: consideration and adoption
Mr M Figg (DA) introduced some DA Members attending the meeting, Ms B Bozzoli of the Higher Education Portfolio Committee, and Mr D Maynier of the Finance Standing Committee.

Mr Gcwabaza suggested that the report be read through paragraph by paragraph.

Dr Madlopha asked why the unauthorised expenditure referred to under the Presidency went back to 2008/09.

Mr Gcwabaza replied that the unauthorised expenditure happened at that point. Parliament had to authorise it in compliance with the Standing Committee on Public Accounts (SCOPA) recommendations. An Act of Parliament had to authorise the Department of Finance to do this. It had to become a charge against the National Revenue Fund. This was the final step in the process.

Ms M Manana referred to the additional Ministries of National Planning, and of Performance Monitoring and Evaluation. She asked why the two Ministries were being named like that.

The Committee Secretary replied that it referred to the creation of the two new Ministries for National Planning, and Performance Monitoring and Evaluation. At that time (2010/11) it was still two separate Ministries.

Mr Gcwabaza added that at that time there were two separate Ministries, which were later combined into one. It was referred to under the names it was called by at the time. He suggested that the comma after “Performance” be removed.

Mr Gcwabaza referred to 2.3.2 He asked about the meaning of “raised debtors”.

Mr Figg remarked that at the previous meeting he had expressed concern about the approval of R110 million for unauthorised expenditure. It was not captured in the report.

The Chairperson asked if Mr Figg wanted it added as 3.3.

Dr Madlopha commented that concern was in order if a department did not follow the correct process. But when a department was newly introduced, it had to spend. SCOPA had agreed, but said that greater care had to be taken in future.

Mr Figg said that it was important to look at overspending departments where nobody could be held liable because the process took too long. Unauthorised expenditure had to be an ongoing concern. Expenditure could be seen as necessary. What had to be avoided was a situation where it was said that "nobody was to blame".

Mr Gcwabaza felt that 3.1 alluded to Mr Figg’s sentiment.

Ms S Shope-Sithole (ANC) said that Mr Figg was correct but his concern was in fact captured. The issue had to be discussed with the relevant portfolio committees.

Mr Gcwabaza advised that 3.1 be left as is. It stated that “processing of unauthorised expenditure should be expeditious”.

Mr Gcwabaza reiterated his question about the meaning of “raised debtors”.

Mr Figg replied that raising a debtor meant to allocate an obligation to someone who owed money. It was the language used to refer to the identification of debtors.

Ms Hulley noted that there was reference to over claiming and raised debtors.

Dr Madlopha asked how people could overclaim on what they were not entitled to.

Mr Gcwabaza replied that people took chances with overclaiming. Pay offices could not identify it. It could only be identified by professionals. Pay offices paid out without checking. He noted that 4.1.2 was misplaced, as it referred to funding allocations to the New Development Bank.

Mr Gcwabaza asked for a motion to adopt the Committee Report.

Dr Madlopha moved for adoption, Ms Manana seconded, and the Committee Report was adopted.

At this point Mr S Mashatile took over from Mr Gcwabaza who was acting Chairperson.

Discussion on Correct Processing of MTBPS and Adjustments Appropriation Bill Committee Reports
The Chairperson noted that the Committee Reports on the Finance Bill and the New Development Bank could be adopted today, but the other two could not be adopted until the Division of Revenue Amendment Bill had been tabled and adopted in the National Council of Provinces (NCOP). It would be possible to adopt the two reports on the coming Friday. These first two reports did not follow the same process, and could be adopted.

Mr Figg advised that the reports should not even be considered at all, before the Division of Revenue Bill was adopted by both Houses of Parliament.

The Chairperson said that it was in order to go through the reports but not to adopt them. The Committee normally worked on its first drafts.

Mr D Maynier (DA, Finance Standing Committee) noted that the procedure was provided for by section 12(15) of the Money Bills Act that stated that in the event of a revised fiscal framework, the Adjustments Appropriation Bill had to be referred to the Appropriations Standing Committee. The operative phrase was that it could happen only after the Division of Revenue Amendment Bill (DORB) had been passed by Parliament. To have the Adjustments Appropriation Bill referred before the DORB was passed by Parliament was in itself irregular. It was not advisable to start work on the draft report. His interpretation of the statute would lead him to suggest that the draft report not even be considered. He suggested that a legal opinion be obtained. There was the danger of putting the budget procedure at risk.

Mr Gcwabaza felt that there was nothing wrong with looking at the draft committee report. Technical corrections could be made without adopting the report. It was in order to deal with technical corrections.

The Chairperson agreed to obtain a legal opinion. The reports would not be considered until that had been done. The two reports could be dealt with after the NCOP had met on the coming Friday. Normally reports were not adopted on the first day of consideration anyway. If the legal opinion was that the reports could not be considered, the matter could wait until the coming Friday.

Ms Shope-Sithole commented that she appreciated the need for a legal opinion, but the Standing Committee had to be thorough. Technical corrections could do no harm.

Committee Report on New Development Bank Special Appropriation Bill: consideration & adoption
The Chairperson commenced to take the Committee through the Committee Report on the Bill

Mr Figg commented that when the Bill was presented he indicated disappointment that money was allocated to the New Development Bank (NDB) when it could have been diverted towards higher education. The Committee had to get an opinion from the Parliamentary Budget Office (PBO) whether the Bill could be amended. The DA believed that the bank was not a priority, and that there were negative factors associated with it. There was a crisis in higher education, and the first NDB payment had to be made in January. He had obtained a legal opinion from a State Law Adviser that an article in the NDB Agreement could be changed in order that payment would not have to be made in January, to prevent entering into a situation that would have adverse effects. Installments would run over seven years, and the currency was depreciating. The original R1.6 billion obligation had already escalated to R2.2 billion. It was a R600 million increase that the country could not afford. There was no guarantee of returns on the investment made. The South African contribution to the NDB relative to its budget was extremely high. It stood at 13.5% of the national budget, compared to 2.2% for Brazil, 2.4% for Russia, and a mere 0.8% for China. It was a substantial portion of the national budget. That fact had to be included in the report. The Minister of Higher Education had made proposals for funding for the education crisis, but the suggestions were not plausible and reasonable. Higher education had to be reprioritised.

The Chairperson advised that it had to be noted that the DA did not support the authorisation of the R2.2 billion for the NDB. The DA could elaborate further as a declaration in the House.

Mr Figg said that the DA wished to propose that the PBO be approached to ask if the Bill could be changed.

Dr Madlopha said that the Department of Higher Education had indicated in a hearing that it had the money. The parties could agree to differ on the matter, but a commitment had been made to the NDB as a country.

Ms B Bozzoli (DA), from the Higher Education Portfolio Committee, commented that the Department of Higher Education did not have the money. Money would be taken from other educational projects. The bill would be dumped on them. The historically disadvantaged would end up paying the bill. The Department of Higher Education and Training (DHET) would pay, and that would be a matter of robbing the apprentice to pay for the professional. She suggested that money be found in more appropriate areas of government.

Mr Maynier said that the intention was to shift billions from the National Revenue Fund to Higher Education. Legal advice was needed on how to achieve that. The Bill could be amended, or a new special appropriations bill could be introduced.

Mr Gcwabaza said that the country could not commit to a project and then pull out. Amending the agreement would mean undoing what other BRICS countries had done. The NDB was an instrument to assist a huge infrastructure building programme. The implication of the DA argument was that SA had to stall on the construction of infrastructure. R800 billion would be made available from the national fiscus. The commitment to BRICS was to integrate with the rest of Africa. The DA was implying that the country had to approach the World Bank and the IMF. That was a debate for another day. Commitments had to be honoured. Amendment of the Adjustments Appropriation Bill had to be separated from adopting the Bill before the Committee. He did not wish to contest finding money from somewhere else for higher education. It was evident from a joint meeting two weeks before that higher education institutions were committed to finding money. It was not fair to say that there was no process. The issue the DA had raised was relevant to the Adjustments Appropriation Bill.

The Chairperson said that reasons for the DA not supporting the New Development Bank Special Appropriations Bill had to be captured in the minutes. Mr Maynier had the right to move for amendment in the House. It was almost impossible to introduce a new Adjustments Appropriation Bill.

Mr Figg said that he would love to wear a Gucci suit and a Rolex watch and ride in a Mercedes Benz, but he could not afford it. He understood that SA had obligations, but the fact was that a mistake had been made regarding BRICS. It was not affordable. At this point in time there is no money to fund the education crisis.

The Chairperson asked if the DA wished to reserve its right to support the Committee Report.

Mr Figg replied that his party wanted to see the second draft first. He was not seeing any indication that the Bill would be debated.

Mr Gcwabaza said that it was not known if there would be a full debate.

Mr Maynier asked that it be recorded that the DA proposed amendment to the New Development Bank Special Appropriations Bill. Committees had to recommend debate on a Bill. The special appropriation noted under 2.2 of the Committee Report, had to be debated.

Mr Gcwabaza replied that the Committee would state that the Bill had to be debated. There was no need for debate on the Finance Bill, but the NDB Special Appropriations Bill had to be debated. The Committee would stand by the suggestion, given developments over the preceding two weeks. He was not sure how the parliamentary plenary programme would be amended.

The Chairperson asked for a motion for adoption.

Mr Gcwabaza moved for adoption and Ms Shope-Sithole seconded.

The Committee Report was adopted.

Mr Figg noted that the DA reserved the right to support.

Legal opinion on the MTBPS and Adjustments Appropriation Bill
Adv Frank Jenkins, Senior Parliamentary legal adviser, said that the relevant Act to consult was the Money Bills Procedure Amendment Act. The Constitutional Court looked at two principles. The purpose of the legislation had to be looked at. Substance was preferred over form. That was the reason why certain timeframes had to be adhered to in the Money Bills Act. The timeframes were dealt with under the budget cycle. The Constitution had a certain way of dealing with legislation. The purpose of subsection 15 was to deal with the Adjustments Appropriation Bill. There was a fiscal rail of sequential events. Amendments had to be consistent with the division of revenue. The timeframe for the adjusted budget was tight. The Standing Committee could not report to the House before the content of the Division of Revenue Bill was known. Nothing stopped the Committee from preparing itself. It was too formalistic to say that the Committee could not touch the reports. It was only said that the Committee could not as yet report. It was not contrary to the Constitution.

Mr Maynier referred to the provision that when there was a changed fiscal framework, the Adjustments Appropriation Bill had to be referred to the Appropriations Committee. The Bill ought not to have been referred to the Committee before the Division of Revenue Bill was passed. It was a breach of the provision in the Money Bills Act.

The Chairperson remarked that the Bill had not been officially referred to the Committee. The Committee would wait for that, but wanted to work on the draft report in anticipation.

Dr Madlopha commented that it could do no harm if the Committee continued to do its work thoroughly. It did not intend to make amendments before the DORB was passed. It could confine itself to technical corrections.

Ms Shope-Sithole said that the legal adviser had cleared up Committee fears. No law was being broken. The Standing Committee worked differently from a portfolio committee. It did research on issues. Institutions briefed the Committee so that it could follow the money.

Mr Maynier maintained that the Bill not having been referred to the Standing Committee yet, placed limits on the scope of its work. He asked if it was consistent with the intention of the Act that the Standing Committee look at a Bill not yet referred to it.

Adv Jenkins replied that the Bill did exist, and that it was known that it was coming to the Standing Committee. The rules stated that the Standing Committee was in charge of its own procedures. If the Committee decided not to deal with certain parts, the process was set out in the Constitution and the Money Bills Act. There were challenges, but it was not an issue of law. It had to be asked if there had been enough public participation. The Standing Committee could decide what it wanted to do.

The Chairperson remarked that the legal issues were clear. The reports could not be formally finalised, but the drafts were there and the Standing Committee usually went through them. It was a matter of getting work started.

Ms R Nyalungu (ANC) suggested that it be done as the Standing Committee had done formerly.

Ms Shope-Sithole said that she had sympathy for Mr Maynier as the Standing Committee had had a workshop to inform it on how to work as a standing committee. The Standing Committee dealt with money and scarce resources. However, it could not be ritualistic in approach. The Standing Committee was a diligent committee.

Mr Figg insisted that the Standing Committee was in an abnormal situation. The DORB had not been passed and there had not been public hearings. The Standing Committee had to make sure that there was compliance. It was not a political issue.

Dr Madlopha pointed out that the legal adviser had said that the law was not being broken as long as the Standing Committee was not taking decisions. The Standing Committee only wanted to warm up. Members wanted to prepare themselves to be pro-active in their work. Members served on many committees and had to use the time available to deal with the matter.

Ms Bozzoli remarked that there had only been one public hearing submission on the NDB Special Appropriation Bill. There had been a few adverts on the radio. It could be imagined what would happen if student were to be alerted about the lack of public hearings.

The Chairperson said that advertisements were put out, but it was difficult to get a good response. There was not much interest. For the Adjustments Appropriation Bill, there were four or five submissions, which included COSATU and others. The Standing Committee tried its best. The written submissions had been captured.

Mr Maynier said that the obligation rested on the Committee to conduct public hearings. The four submissions on the Adjustments Appropriation Bill alluded to, were not mentioned in the draft report. The public hearing phase had been disrupted. He advised that it be focused on, while waiting for the Bill to be referred.

The Committee Secretary noted that there were no submissions for the Adjustments Appropriation Bill. The Financial and Fiscal Commission was invited to submit. For the MTBPS, affected departments were invited to submit.

The Chairperson added that written submissions were received from three students, who could not come.

Ms Shope-Sithole referred to the lack of interest mentioned by the Chairperson. Public hearings had to be taken to the rural areas. People who lived there did not have the money to make it to Parliament.

The Chairperson said that the biggest problem was currently time-frames.

Adv Jenkins remarked that public hearings had been the subject of research by IDASA. There were very few submissions on the MTBPS. The Constitutional Court had advised that more be done to get people to make submissions. Yet the content of submissions was getting better.

Mr Figg said that it was better to err on the side of caution. The DA would propose amendments later.

Mr Maynier said that amendments would be proposed when the Bill was formally referred.

The Chairperson replied that the Committee would reconvene for amendments to be proposed.

MTBPS and Adjustments Appropriation Bill Committee Reports
The two draft reports were read through as a Committee. There were no comments.

The Chairperson told Members that if they picked up something later, they could email to the Committee Secretary.

The Chairperson noted that there would be no Committee meeting on the following day. Once the NCOP was done, the Committee would be alerted. The Committee could deal with the reports on the Friday morning. If the NCOP was not done, it could be deferred until the following week.

Mr Gcwabaza said that if the NCOP concluded on the following day, there could be a meeting after them, to formally consider the report. The NCOP met at 16h30, and there could be an Standing Committee meeting after that.

The Chairperson said that it could not be known at what time the NCOP would finish. The Committee had to wait until the matter was referred. He expected that it would not be possible before Friday 20 November.

Mr Figg asked if it would be possible to sit before the House sitting on the coming Friday, if that started at 9h00.

The Chairperson said that nothing could be done before the referral. The presiding officers would inform the Committee.

The Chairperson adjourned the meeting.


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