introducing the -

and

2001, in the National Assembly. The Bills are hereby published for public

comment in accordance with section 74(5)(a) of the Constitution of the

Republic of South Africa, 1996 (Act 108 of 1996). Any person wishing to

comment on the proposed amendments is invited to submit written comments to

the Minister for Justice and Constitutional Development. Comments should

kindly be directed to the attention of Mr J A de Lange, Department of

Justice and Constitutional Development, Private Bag X 81, Pretoria 0001, by

not later than 10 August 2001.

Words in bold type indicate omissions from existing enactments.

Words in italics indicate insertions in existing enactments.

To amend the Constitution of the Republic, of South Africa, 1996, in

order to make provision for the appointment of Deputy Ministers from

outside the National Assembly; to allow a municipal council to bind the

municipality in the exercise of its executive and legislative authority if

this is necessary to secure loans or investments for the municipality; to

enable the enactment of national legislation to provide for the exercise of

executive and legislative authority on behalf of a municipality in certain

circumstances; to make provision for the head of the Constitutional Court

to be the Chief Justice of South Africa; to make provision for the Offices

of Deputy Chief Justice, President of the Supreme Court of Appeal and

Deputy President of the Supreme Court of Appeal; to enable the Legislature

to regulate the term of office and retirement age of Constitutional Court

judges by means of an Act of Parliament; and to provide for matters

connected therewith.

BE IT ENACTED by the Parliament of the Republic of South Africa, as

follows:-

Amendment of section 51 of Act 108 of 1996

1. Section 51 of the Constitution of the Republic of South Africa, 1996

(hereinafter referred to as the Constitution), is hereby amended by the

substitution for subsection (1) of the following subsection:

"(1) After an election, the first sitting of the National Assembly

must take place at a time and on a date determined by the President

of the Constitutional Court Chief Justice, but not more than

14 days after the election result has been declared. The Assembly may

determine the time and duration of its other sittings and its recess

periods.

Amendment of section 52 of Act 108 of 1996

2. Section 52 of the Constitution is hereby amended by the substitution

for subsection (2) of the following subsection:

"(2) The President of the Constitutional Court Chief

Justice must preside over the election of a Speaker, or designate

another judge to do so. The Speaker presides over the election of a

Deputy Speaker.".

Amendment of section 64 of Act 108 of 1996

3. Section 64 of the Constitution is hereby amended by the substitution

for subsection (4) of the following subsection:

"(4) The President of the Constitutional Court Chief

Justice must preside over the erection of the Chairperson, or

designate another judge to do so. The Chairperson presides over the

election of the Deputy Chairpersons.".

Amendment of section 86 of Act 108 of 1996

4. Section 86 of the Constitution is hereby amended by the substitution

for subsections (2) and (3) of the following subsections:

"(2) The President of the Constitutional Court Chief

Justice must preside over the election of the President, or

designate another judge to do so. The procedure set out in Part A of

Schedule 3 applies to the election of the President.

(3) An erection to fill a vacancy in the office of President must

beheld at a time and on a date determined by the President of the

Constitutional Court Chief Justice. but not more than 30

days after the vacancy occurs.".

Substitution of section 93 of Act 108 of 1996

5. The following section is hereby substituted for section 93 of the

Constitution:

"Deputy Ministers

93. The President may appoint-

(a) any number of Deputy Ministers from among the members of the

National Assembly; and

(b) no more than two Deputy Ministers from outside the Assembly: to

assist the members of the Cabinet, and may dismiss them. ".

Amendment of section 110 of Act 108 of 1996

6. Section 110 of the Constitution is hereby amended by the

substitution for subsection (1) of the following subsection:

"(1) After an election, the first sitting of a provincial

legislature must take place at a time and on a date determined by a

judge designated by the President of the Constitutional Court

Chief Justice. but not more than 14 days after the election

result has been declared. A provincial legislature may determine the

time and duration of its other sittings and its recess periods.".

Amendment of section 111 of Act 108 of 1996

7. Section 111 of the Constitution is hereby amended by the

substitution for subsection (2) of the following subsection:

"(2) A judge designated by the President of the Constitutional

Court Chief Justice must preside over the election of a

Speaker. The Speaker presides over the election of a Deputy Speaker.".

Amendment of section 128 of Act 108 of 1996

8. Section 128 of the Constitution is hereby amended by the

substitution for subsections (2) and (3) of the following subsections:

"(2) A judge designated by the President of the Constitutional

Court Chief Justice must preside over the election of the

Premier. The procedure set out in Part A of Schedule 3 applies to the

election of the Premier.

(3) An election to fill a vacancy in the office of Premier must be

held at a time and on a date determined by the President of the

Constitutional Court Chief Justice, but not later than 30

days after the vacancy occurs.".

Amendment of section 155 of Act 108 of 1996, as amended by section 1 of Act

87 of 1998

9. Section 155 of the Constitution is hereby amended by the addition of

the following subsection:

"(8) National legislation may provide for the exercise of

executive and legislative authority on behalf of a municipal council to

the extent necessary-

(a) to govern the municipality when the council for any reason

cannot function: or

(b) to resolve a serious and persistent financial emergency in the

municipality.".

Amendment of section 156 of Act 108 of 1996

10. Section 156 of the Constitution is hereby amended by the addition

of the following subsection:

"(6) The council of a municipality may within a framework

prescribed by national legislation bind itself and a future council in

the exercise of its executive and legislative authority if this is

necessary to secure loans or investments for the municipality.".

Amendment of section 167 of Act 108 of 1996

11. Section 167 of the Constitution is hereby amended by the

substitution for subsection (1) of the following subsection:

"(1) The Constitutional Court consists of a President, a Deputy

President the Chief Justice of South Africa. the Deputy Chief

Justice and nine other judges.".

Amendment of section 168 of Act 108 of 1996

12. Section 168 of the Constitution is hereby amended by the

substitution for subsections (1) and (2) of the following subsections:

"(1) The Supreme Court of Appeal consists of a Chief Justice, a

Deputy Chief Justice President, a Deputy President and the

number of judges of appeal determined by in terms of an

Act of Parliament.

(2) A matter before the Supreme Court of Appeal must be decided by

the number of judges determined by in terms of an Act of

Parliament.".

Amendment of section 174 of Act 108 of 1996

13. Section 174 of the Constitution is hereby amended by the

substitution for subsections (3) and (4) of the following subsections:

"(3) The President as head of the national executive, after

consulting the Judicial Service Commission and the leaders of parties

represented in the National Assembly, appoints the President and

Deputy President of the Constitutional Court Chief Justice and

the Deputy Chief Justice and, after consulting the Judicial Service

Commission, appoints the Chief Justice and Deputy Chief Justice

President and Deputy President of the Supreme Court of Appeal.

(4) The other judges of the Constitutional Court are appointed by

the President, as head of the national executive, after consulting the

President of the Constitutional Court Chief Justice and

the leaders of parties represented in the National Assembly, in

accordance with the following procedure:

(a) The Judicial Service Commission must prepare a list of nominees

with three names more than the number of appointments to be

made, and submit the list to the President.

(b) The President may make appointments from the list, and must

advise the Judicial Service Commission, with reasons, if any of

the nominees are unacceptable and any appointment remains to be

made.

(c) The Judicial Service Commission must supplement the list with

further nominees and the President must make the remaining

appointments from the supplemented list.".

Amendment of section 175 of Act 108 of 1996

14. Section 175 of the Constitution is hereby amended by the

substitution for subsection (1) of the following subsection:

"(1) The President may appoint a woman or a man to be an acting

judge of the Constitutional Court if there is a vacancy or if a judge

is absent. The appointment must be made on the recommendation of the

Cabinet member responsible for the administration of justice acting

with the concurrence of the President of the Constitutional Court

and the Chief Justice.".

Substitution of section 176 of Act 108 of 1996

15. The following section is hereby substituted for section 176 of the

Constitution:

"Terms of office and remuneration

176. (1) A Constitutional Court judge is appointed for a

non-renewable term of 12 years, but must retire at the age of 70.

(2) Other judges hold office until they are

discharged from active service in terms of an Act of Parliament.

(3) (2) The salaries, allowances and benefits of judges

may not be reduced.".

Amendment of section 178 of Act 108 of 1996, as amended by section 2 of Act

65 of 1998

16. Section 178 of the Constitution is hereby amended-

(a) by the substitution for paragraph (b) of subsection (1) of the

following paragraph:

"(b) the President of the Constitutional Court President

of the Supreme Court of Appeal ;";

(b) by the substitution for paragraph (k) of subsection (1) of the

following paragraph:

"(k) when considering matters specifically relating to a

provincial or local division of the specific High

Court, the Judge President of that division and the Premier of the

province concerned, or an alternate designated by each of them.";

and

(c) by the substitution for subsection (7) of the following subsection:

"(7) If the Chief Justice or the President of the Constitutional

Court President of the Supreme Court of Appeal is

temporarily unable to serve on the Commission, the Deputy Chief

Justice or the Deputy President of the Constitutional Court

Supreme Court of Appeal as the case may be, acts as his or

her alternate on the Commission.".

Amendment of section 239 of Act 108 of 1996

17. The following definition is hereby inserted in section 239 of the

Constitution:

" 'Chief Justice' means the Chief Justice of South Africa

referred to in section 167(1);".

Substitution of Schedule 2 to Act 108 of 1996, as amended by section 2 of

Act 35 of 1997

18. The following Schedule is hereby substituted for Schedule 2 to the

Constitution:

"Schedule 2

OATHS AND SOLEMN AFFIRMATIONS

Oath or solemn affirmation of President and Acting President

1. The President or Acting President, before the President of the

Constitutional Court Chief Justice, or another judge designated

by the President of the Constitutional Court Chief Justice,

must swear/affirm as follows:

In the presence of everyone assembled here, and in full realisation of

the high calling I assume as President/Acting President of the Republic of

South Africa, I, A.B., swear/solemnly affirm that I will be faithful to the

Republic of South Africa, and will obey, observe, uphold and maintain the

Constitution and all other law of the Republic; and I solemnly and

sincerely promise that I will always-

- promote all that will advance the Republic, and oppose all that may

harm it;

- protect and promote the rights of all South Africans;

- discharge my duties with all my strength and talents to the best of

my knowledge and ability and true to the dictates of my conscience;

- do justice to all; and

- devote myself to the well-being of the Republic and all of its

people.

(In the case of an oath: So help me God.)

Oath or solemn affirmation of Deputy President

2. The Deputy President, before the President of the Constitutional

Court Chief Justice or another judge designated by the Chief

Justice, must swear/affirm as follows:

In the presence of everyone assembled here, and in full realisation of

the high calling I assume as Deputy President of the Republic of South

Africa, I, A.B., swear/solemnly affirm that I will be faithful to the

Republic of South Africa and will obey, observe, uphold and maintain the

Constitution and all other law of the Republic; and I solemnly and

sincerely promise that I will always-

- promote all that will advance the Republic, and oppose all that may

harm it;

- be a true and faithful counsellor,

- discharge my duties with all my strength and talents to the best of

my knowledge and ability and true to the dictates of my conscience;

- do justice to all; and

- devote myself to the well-being of the Republic and all of its

people.

(In the case of an oath: So help me God.)

Oath or solemn affirmation of Ministers and Deputy Ministers

3. Each Minister and Deputy Minister, before the President of the

Constitutional Court Chief Justice or another judge designated

by the President of the Constitutional Court Chief Justice.

must swear/affirm as follows:

I, A.B., swear/solemnly affirm that I will be faithful to the Republic

of South Africa and will obey, respect and uphold the Constitution and all

other law of the Republic; and I undertake to hold my office as

Minister/Deputy Minister with honour and dignity; to be a true and faithful

counsellor, not to divulge directly or indirectly any secret matter

entrusted to me; and to perform the functions of my office conscientiously

and to the best of my ability.

(In the case of an oath: So help me God.)

Oath or solemn affirmation of members of the National Assembly, permanent

delegates to the National Council of Provinces and members of the

provincial legislatures

4. (1) Members of the National Assembly, permanent delegates to the

National Council of Provinces and members of provincial legislatures,

before the President of the Constitutional Court Chief

Justice or a judge designated by the President of the Constitutional

Court Chief Justice, must swear or affirm as follows:

I, A.B., swear/solemnly affirm that I will be faithful to the Republic

of South Africa and will obey, respect and uphold the Constitution and all

other law of the Republic; and I solemnly promise to perform my functions

as a member of the National Assembly/ permanent delegate to the National

Council of Provinces/member of the legislature of the province of C.D. to

the best of my ability.

(In the case of an oath: So help me God.)

(2) Persons filling a vacancy in the National Assembly, a permanent

delegation to the National Council of Provinces or a provincial legislature

may swear or affirm in terms of subitem (1) before the presiding officer of

the Assembly, Council or legislature, as the case may be.

Oath or solemn affirmation of Premiers, Acting Premiers and members of

provincial Executive Councils

5. The Premier or Acting Premier of a province, and each member of the

Executive Council of a province, before the President of the

Constitutional Court Chief Justice or a judge designated by the

President of the Constitutional Count Chief Justice must

swear/affirm as follows:

I, A.B., swear/solemnly affirm that I will be faithful to the Republic

of South Africa and will obey, respect and uphold the Constitution and all

other law of the Republic; and I undertake to hold my office as

Premier/Acting Premier/ member of the Executive Council of the province of

C.D. with honour and dignity; to be a true and faithful counsellor; not to

divulge directly or indirectly any secret matter entrusted to me; and to

perform the functions of my office conscientiously and to the best of my

ability.

(In the case of an oath: So help me God.)

Oath or solemn affirmation of Judicial Officers

6. (1) Each judge or acting judge, before the Chief Justice of the

Supreme Court of Appeal or another judge designated by the Chief

Justice, must swear or affirm as follows:

I, A.B., swear/solemnly affirm that, as a Judge of the Constitutional

Court/Supreme Court of Appeal/High Court/ E.F. Court, I will be faithful to

the Republic of South Africa, will uphold and protect the Constitution and

the human rights entrenched in it, and will administer justice to all

persons alike without fear, favour or prejudice, in accordance with the

Constitution and the law.

(In the case of an oath: So help me God.)

(2) A person appointed to the office of Chief Justice of the

Supreme Court of Appeal who is not already a judge at the time of that

appointment must swear or affirm before the President of the

Constitutional Count Republic of South Africa.

(3) Judicial officers, and acting judicial officers, other than judges,

must swear/affirm in terms of national legislation.".

Amendment of Schedule 3 to Act 108 of 199C, as amended by section 2 of Act

3 of 1999

19. Schedule 3 to the Constitution is hereby amended by the

substitution for item 9 of Part A of the following item:

"Rules

9. (1) The President of the Constitutional Court Chief

Justice must make rules prescribing-

(a) the procedure for meetings to which this Schedule applies;

(b) the duties of any person presiding at a meeting, and of any

person assisting the person presiding;

(c) the form on which nominations must be submitted; and

(d) the manner in which voting is to be conducted.

(2) These rules must be make known in the way that the President

of the Constitutional Court Chief Justice determines "

Amendment of Schedule 6 to Act 108 of 1996, as amended by section 3 of Act

35 of 1997 and section 5 of Act 65 of 1998

20. Schedule 6 to the Constitution is hereby amended-

(a) by the deletion of subitems 2(b) and (3)(b) of item 16; and

(b) by the addition to item 16 of the following subitem:

"(7) (a) Anyone holding office when the Constitution of the

Republic of South Africa Amendment Act, 2001 takes effect as -

(i) the President of the Constitutional Court becomes the Chief

Justice as contemplated in section 167(1) of the new

Constitution;

(ii)the Deputy President of the Constitutional Court becomes

the Deputy Chief Justice as contemplated in section 167(1) of

the new Constitution;

(iii)the Chief Justice becomes the President of the Supreme

Court of Appeal as contemplated in section 168(1) of the new

Constitution: and

(iv)the Deputy Chief Justice. becomes the Deputy President of

the Supreme Court of Appeal as contemplated in section 168(1)

of the new Constitution

(b) All rules regulations or directions made by the President of the

Constitutional Court or the Chief Justice in force immediately

before the commencement of the Constitution of the Republic of South

Africa Amendment Act, 2001 continue in force subject to any

amendment or repeal thereof unless inconsistent with the context or

clearly inappropriate a reference in any law or process to the Chief

Justice or to the President of the Constitutional Court, must be

construed as a reference to the Chief Justice as contemplated in

section 167(1) of the new Constitution "

Short title and commencement

21. This Act is called the Constitution of the Republic of South Africa

Amendment Act, 2001, and comes into operation on a date fixed by the

President by proclamation in the Gazette.

(Published in terms of Rule 258(3) of the Rules of the National Assembly)

The Bill amends the Constitution of the Republic of South Africa, 1996

(Act No. 108 of 1996) (the Constitution), in respect of the following three

areas:

- The judiciary.

- The appointment of Deputy Ministers.

- Local governments.

A The judiciary (Clauses 1 to 4, 6 to 8 and 11 to 20)

(a) Firstly, provision is made for the office of the President of the

Constitutional Court to become that of the Chief Justice of South

Africa (Clause 11) This necessitates a number of consequential

amendments, including the conversion of the offices of-

- "Deputy President of the Constitutional Court" to "Deputy Chief

Justice";

- "Chief Justice" (of the Supreme Court of Appeal) to "President of

the Supreme Court of Appeal" (clause 12); and

- "Deputy Chief Justice" to "Deputy President of the Supreme Court

of Appeal".

(b) Secondly, section 176 of the Constitution is substituted in order

to enable the Legislature to regulate the term of office and

retirement age of Constitutional Court judges by means of an Act of

Parliament. At present section 176 provides that Constitutional

Court judges hold office for a non-renewable term of l2 years, and

must retire at the age of 70, whereas other judges hold office until

they are discharged from active service in terms of an Act of

Parliament. (Clause 15.)

B The appointment of Deputy Ministers (Clause 5)

(a) In terms of section 91(3) of the Constitution, the President may

select any number of Ministers from among the members of the

National Assembly, and may select no more than two Ministers from

outside the Assembly. In terms of section 93, Deputy Ministers may,

however, be appointed from among the members of the National

Assembly only.

(b) The effect of the requirement in section 93 that Deputy Ministers

must be appointed from among the members of the National Assembly,

is that, if the president appoints a Deputy Minister from a party

that has very few members of Parliament, that party's effective

participation in the ordinary business of Parliament might be

compromised severely.

(c) Clause 5 of the Bill is consequently aimed at bringing section 93

into line with section 91(3), by making provision for the

appointment of not more than two Deputy Ministers from outside the

National Assembly.

C Local governments (sinuses 9 and 10)

(a) The object of clause 9 is to help municipalities to continue

functioning whilst experiencing serious problems, as they

restructure to resolve such problems. The Bill enables Parliament to

enact legislation to allow for the exercise of executive and

legislative authority on behalf of a municipality in circumstances

where the council of a municipality for any reason cannot function

or when this becomes vital to resolve a financial emergency in a

municipality.

(b) The object of clause 10 is to empower local governments to borrow

long-term funds. It seeks to empower municipalities to bind

themselves in future in the exercise of their executive and

legislative powers in order to borrow funds for capital at a cheaper

rate and over a longer term.

(c) Both amendments give effect to the published "Policy- Framework for

Municipal Borrowing and Financial Emergencies" and the Municipal

Finance Management Bill, both endorsed by Cabinet and published on

28 July 2000 in Government Gazette No. 21423, Notice 2738 of 2000.

(d) The first part of the amendment to section 155 is self evident and

relates to situations where a municipal council is unable to

function and hence to provide governance in the municipality. The

inability to govern may be due to various reasons, such as mass

resignations in the council, the removal of councillors for

misconduct, the dissolution of a council following an intervention

in teens of section 100 or 139, etc. In such a case national

legislation should provide caretaker arrangements for the governance

of the municipality until a by-erection can tee held and allow, for

instance, the appointment of an administrator.

(e) The second part of the amendment to section 155 is necessary to

provide a missing piece in the Government's overall strategy for

dealing with municipal financial problems. The published draft

Municipal Finance and Management Bill contains comprehensive

mechanisms, processes and procedures for municipal monitoring,

reporting and auditing, including provisions to address financial

problems in municipalities and the restructuring of municipal

finances where necessary. There is uncertainty as to whether the

proposed financial restructuring provisions are constitutional where

these provisions provide for the exercise of municipal executive and

legislative authority on behalf of the municipality. The "Policy

Framework for Municipal Borrowing and Financial Emergencies"

envisions the creation of a Municipal Finance Emergency Authority,

which could direct the financial structuring of a municipality when

there is no alternative.

(f) Financial emergencies can arise from many causes, sometimes

including circumstances beyond the control of the council then in

office. The restructuring process envisioned in the Policy Framework

could be invoked by the municipality itself; if it seeks relief from

unmanageable debt, by an MEC or Minister if necessary to supplement

a national or provincial intervention in terms of section 100 or

139, or by a party to a contract if the municipality is in default

of its contractual obligations. The underlying purpose of the

policies outlined in the Policy Framework is to restore the

municipality to financial health as soon as possible. Safeguards

will be included to ensure that all stakeholders have input into the

formulation of a recovery plan and that essential services are

continued during the restructuring process.

(g) The amendment to section 156 allows a municipal council to bind the

municipality as to how is will exercise its future discretion, if

that is necessary, to make credit more available or affordable. In

order to ensure a proper exercise of the powers granted to

municipalities through this amendment, the clause states explicitly

that these powers may only be exercised within a framework

prescribed by national legislation.

(h) The proposed amendments to sections 155 and 156 together lay the

foundation for national legislation to implement the Policy

Framework for Municipal Borrowing and Financial Emergencies referred

to above.

Parliamentary procedure

The State Law Advisers and the Department of Justice and Constitutional

Development are of the opinion that the Bill must be dealt with in

accordance with the procedure established by section 74(3)(a) of the

Constitution since it contains no amendment which

(i) relates to a matter that affects the National Council of

Provinces;

(ii)alters provincial boundaries, powers, functions or

institutions; or

(iii)amends a provision that deals specifically with a

provincial matter.

Words in bold type indicate omissions from existing enactments.

Words in italics indicate insertions in existing enactments.

To amend the Constitution of the Republic of South Africa, 1996 -

- to provide for the introduction of certain financial legislation in

the National Assembly only, and only by-the Cabinet member responsible for

national financial matters;

- to provide for Bills regulating certain financial matters to be dealt

with in Parliament in terms of section 76 (1) of the Constitution;

- to extend the definition of a money Bill;

- to provide for national supervision of local administration if a

municipality fails to comply with an obligation in terms of legislation or

the Constitution;

- to further regulate national supervision of provincial

administration;

- to extend the principle that provinces' equitable share of revenue

raised nationally are direct charges against the National Revenue Fund, to

local government's equitable share;

- to further regulate the withholding of funds by the national treasury

if organs of state commit a serious and material breach of legislation

prescribing treasury norms and standards;

- to provide that the enactment of national framework legislation

governing the policies of organs of states on preferential procurement

should be obligatory;

- to provide for the enactment of national framework legislation in

connection with the withdrawal of money as direct charges against a

Provincial Revenue Fund and certain payments from a Provincial Revenue Fund

to municipalities;

- to reduce the number of members of the Financial and Fiscal

Commission, and to change the appointment procedure;

- to make further provision for the regulation of municipal and

provincial borrowing powers; and

- to provide for matters connected therewith.

BE IT ENACTED by the Parliament of the Republic of South Africa as

follows:-

Amendment of section 73 of Act 108 of 1996

1. Section 73 of the Constitution of the Republic of South Africa, 1996

(hereinafter referred to as the Constitution), is hereby amended -

(a) by the substitution for subsection (2) of the following subsection:

"(2) Only a Cabinet member or a Deputy Minister, or a member or

committee of the National Assembly, may introduce a Bill in the

Assembly, but only the Cabinet member responsible for national

financial matters may introduce the following Bills in the

Assembly:

(a) a money Bill in the Assembly; or

(b) a Bill which provides for legislation envisaged in Chapter 13

except when that legislation

(i) relates to the financial administration of Parliament or the

provincial legislatures;

(ii) determines a matter mentioned in section 219; or

(iii) regulates rates on property in terms of section 229 (2)

(b)."; and

(c) by the substitution for subsection (3) of the following subsection:

"(3) A Bill referred to in section 76 (3), except a money

Bill a Bill referred to in subsection (2) (a) or (b) of this

section may be introduced in the National Council of

Provinces.".

Amendment of section 7C of Act 108 of 1996

2. Section 76 of the Constitution is hereby amended by the substitution

for paragraph (b) of subsection (4) of the following paragraph:

"(b) envisaged in Chapter 13 and which affects contains a

provision affecting the financial interests of the provincial

sphere of government "

Substitution of section 77 of Act 108 of 1996

3. The following section is hereby substituted for section 77 of the

Constitution:

"Money Bills

77. (1) A Bill that is a money Bill if it -

(a) appropriates money; or

(b) imposes national taxes, levies, or duties or

surcharges is a money Bill;

(c) abolishes or reduces, or grants exemptions from, any national

taxes, levies, duties or surcharges: or

(d) authorises direct charges against the National Revenue Fund.

except a Bill envisaged in section 214 authorising direct

charges

(2) A money Bill may not deal with any other matter except a

subordinate matter incidental to the appropriation of money,

or the imposition abolition or reduction of, or the

granting of exemptions from, taxes, levies or duties or the

authorisation of direct charges.

(2)(3) All money Bills must be considered in

accordance with the procedure established by section 75. An Act of

Parliament must provide for a procedure to amend money Bills before

Parliament. ".

Substitution of section 100 of Act 108 of 1996

4. The following section is hereby substituted for section 100 of the

Constitution:

"National supervision of provincial and local administration

100. (1) When a province or municipality cannot or does not

fulfil an executive obligation in terms of legislation or the

Constitution, excluding an obligation to pass legislation in the

case of a province. the national executive may intervene by taking

any appropriate steps to ensure fulfilment of that obligation,

including -

(a) issuing a directive to the provincial executive or the

municipality describing the extent of the failure to fulfil

its obligations and stating any steps required to meet its

obligations; and

(b) assuming responsibility for the relevant obligation in that

province or municipality to the extent necessary to -

(i) maintain essential national standards; or

(ii) meet established minimum standards for the rendering

of a service;

(ii)(iii) maintain economic unity;

(iii)(iv) maintain national security; or

(iv) (v) prevent that province or

municipality from taking unreasonable action that is

prejudicial to the interests of another province or

municipality or the country as a whole.

(2) If the national executive intervenes in a province or

municipality in terms of subsection (1) (b) -

(a) notice of the intervention must be tabled in submitted

to the National Council of Provinces within 14 days of its

first sitting after the intervention began,

(b) the intervention must end unless it is approved by if

the Council within 30 days of its first sitting after the

intervention began by resolution requests the national

executive to stop the intervention; and

(c) the Council must may review the intervention

regularly and make any appropriate recommendations to the national

executive.

(3) National legislation (a)may regulate the process

established by this section; and (b) must co-ordinate the process

established by this section with the process established by section

139.".

Substitution of section 120 of Act 108 of 1996

5. The following section is hereby substituted for section 120 of the

Constitution:

"Money Bills

120. (1) A Bill that is a money Bill if it -

(a) appropriates money; or

(b) imposes provincial taxes, levies, or duties

or surcharges is a money Bill;

(c) abolishes or reduces or grants exemptions from any provincial

taxes, levies, duties or surcharges: or authorizes direct

charges against a Provincial Revenue Fund.

(2) A money Bill may not deal with any other matter except a

subordinate matter incidental to the appropriation of money, or

the imposition abolition or reduction of, or the granting of

exemptions from taxes, levies or duties or the authorisation of

direct charges.

(2)(3) A provincial Act-must provide for a procedure

by which the province's legislature may amend a money Bill.".

Substitution of section 139 of Act 108 of 1996

6. The following section is hereby substituted for section 139 of the

Constitution:

"Provincial supervision of local government

139. (1) When a municipality cannot or does not fulfil an

executive obligation in terms of legislation or the

Constitution, the relevant provincial executive may intervene by

taking any appropriate steps to ensure fulfilment of that obligation,

including -

(a) issuing a directive to the Municipal Council

municipality, describing the extent of the failure to

fulfil its obligations and stating any steps required to meet

its obligations; and

(b) assuming responsibility for the relevant obligation in that

municipality to the extent necessary to -

(i) to maintain essential national standards;

or

(ii) meet established minimum standards for the rendering

of a service;

(ii)(iii) to prevent that Municipal

Council municipality from faking unreasonable action

that-is prejudicial to-the interests of another municipality or

to the province as a whole; or

(iii) (iv) to maintain economic unity.

(2) If a provincial executive intervenes in a municipality in terms

of subsection (1) (b) -

(a) the intervention must end unless it is approved by the

Cabinet member responsible for local government affairs within

14 days of the intervention;

(b)(a) notice of the intervention must be tabled

in submitted to the provincial legislature and

in the National Council of Provinces within 14 days of

their respective first sittings after the intervention

began;

(c)(b) the intervention must end unless it is

approved by if the Council within 30 days of its first

sitting after the intervention began by resolution

requests the provincial executive to stop the intervention;

and

(d)(c) the Council must may review the

intervention regularly and make any appropriate recommendations

to the provincial executive.

(3) National legislation may regulate the process established by

this section.".

Amendment of section 159 of Act 108 of 1996, as amended by section 1 of Act

65 of l998

7. Section 159 of the Constitution is hereby amended by the

substitution for subsection (3) of the following subsection:

"(3) A Municipal Council, other than a Council that has been

dissolved following an intervention in terms of section 100 or

139, remains competent to function from the time it is dissolved or its

term expires, until the newly elected Council has been declared

elected.".

Amendment of section 163 of Act 108 of 1996

8. Section 163 of the Constitution is hereby amended by the

substitution for paragraph (b) of the following paragraph:

"(b) determine procedures by which local government may -

(i) consult with the national or a provincial government;

and

(ii) designate representatives to participate in the

National Council of Provinces and

(iii) nominate persons to the Financial and Fiscal

Commission".

Amendment of section 213 of Act 108 of 1996

9. Section 213 of the Constitution is hereby amended by the

substitution for subsection (3) of the following subsection:

"(3) A province's The equitable share of revenue

raised nationally to which provinces and local government are

entitled in terms of section 214 is a direct charge against the

National Revenue Fund.".

Amendment of section 216 of Act 108 of 1996

10. Section 216 of the Constitution is hereby amended by -

(a) the substitution for subsection (2) of the following subsection:

"(2) The national treasury, with the concurrence of the Cabinet

member responsible for national financial matters, may stop the

transfer of funds to an organ of state only for serious or persistent

material breach of the measures established in terms of subsection

(1) The national treasury must enforce compliance with the

measures established in terms of subsection (1) and may stop the

transfer of funds to an organ of state if that organ of state commits a

serious or persistent material breach of those measures."; and

(b) the substitution in subsection (3) for the words preceding

paragraph (a) of the following words:

"(3) A decision to stop the transfer of funds due to a

province in terms of section 214 (1) (b) may be taken only in

terms of the circumstances mentioned in subsection (2)

and".

Amendment of section 217 of Act 108 of 1996

11. Section 217 of the Constitution is hereby amended by the

substitution for subsection (3) of the following subsection:

"(3) National legislation must prescribe a framework within which

the policy referred to in subsection (2) maymust be

implemented.".

Amendment of section 221 of Act 108 of 1996, as amended by section 2 of Act

2 of 1999

12. (1) Section 221 of the Constitution is hereby amended -

(a) by the substitution for subsection (1) of the following subsection:

"(1) The Commission consists of the following women and men

appointed by the President as head of the national executive:

(a) a chairperson and deputy chairperson;

(b) nine persons each of whom is nominated by the Executive

Council of a province, with each province nominating only one

person two persons chosen after consulting the Premiers

of the provinces;

(c) two persons nominated by chosen after consulting

organised local government in terms of section 163; and

(d) nine two other persons."; and

(b) by the substitution for subsection (2) of the following subsection:

"(2) Members of the Commission must have appropriate

expertise relevant to the functions of the Commission."

(2) Subsection (1) takes effect on 1 April 2002.

Amendment of section 226 of Act 108 of 1996

13. Section 226 of the Constitution is hereby amended by the addition

of the following subsection:

"(4) National legislation may determine a framework within which -

(a) a provincial Act may in terms of subsection (2) (b) authorise

the withdrawal of money as a direct charge against a Provincial

Revenue Fund: and

(b) revenue allocated through a province to local government in that

province in terms of subsection (3) must be paid to

municipalities in the province.".

Amendment of section 228 of Act 108 of 1996

14. Section 228 of the Constitution is hereby amended by the

substitution for paragraph (b) of subsection (1) of the following

paragraph:

"(b) flat-rate surcharges on the tax bases of any tax, levy

or duty that is imposed by national legislation, other than the tax

bases of on corporate income tax, value added tax, rates on

property or customs duties.".

Substitution of section 230 of Act 108 of 1996

15. The following section is hereby substituted for section 230 of the

Constitution:

"Provincial and municipal loans

230. (1) A province or a municipality may raise loans for capital or

current expenditure, in accordance with reasonable conditions determined

by national legislation but loans for current expenditure -

(a) may be raised only when necessary for bridging purposes during a

fiscal year and

(b) must be repaid within twelve months the same fiscal year.

(2) The power of a province or a municipality to raise loans may be

regulated by national legislation.

(2)(3) National legislation referred to in subsection

(1) (2) may be enacted only after any recommendations of the

Financial and Fiscal Commission have been considered.".

Short title

16. This Act is called the Constitution of the Republic of South Africa

Second Amendment Act, 2001, and comes into operation on a date fixed by the

President by proclamation in the Gazette.

(Published in terms of Rule 258(3) of the Rules of the National Assembly)

The broad object of the Bill is to address a range of practical

difficulties that were encountered in implementing the Constitution,

especially the financial regime established by the Constitution. As these

difficulties are diverse and mostly unrelated, the object of each proposed

amendment contained in the Bill could best be explained under a discussion

of the sections that are affected.

1. Section 73

Section 73 (2) establishes the principle that only a Cabinet member, a

Deputy Minister or a member or committee of the National Assembly may

introduce draft legislation in the National Assembly, but that only the

Cabinet member responsible for national financial matters, i.e. the

Minister of Finance, may introduce a money Bill in the Assembly. The Bill

proposes that the principle that only the Minister of Finance may introduce

a money Bill be extended to all legislation emanating from the provisions

of Chapter 13 of the Constitution, except when that legislation-

(a) relates to the financial administration of Parliament or the

provincial legislatures; or

(b) deals with the remuneration of persons holding public office

mentioned in section 219, or

(c) regulates rates on property in terms of section - 229 (2) (b).

The effect of this amendment is that only the Minister of Finance would

be constitutionally competent to introduce in the Assembly money Bills and

generally most other financial legislation which gives effect to Chapter

13. The financial legislation that would be affected by the amendment

relates exclusively to typical financial matters that impact on

macro-economic policy and the financial administration of the state.

Normally this legislation would fall within the line function of the

National Treasury, and the aim of the amendment, therefore, is to ensure

that the National Treasury assesses such draft legislation and the impact

it may have on macro-economic policy and the financial administration of

the state before such legislation is introduced.

2. Section 76 (4) (b)

The proposed amendment of this section is a med at avoiding the

splitting of draft financial legislation into section 75 and 76 Bills where

some provisions of the legislation affect the provinces and others do not.

It is accordingly proposed that a Bill envisaged in Chapter 13 of the

Constitution in future be dealt with in the parliamentary proceedings in

terms of section 76 (1) if it contains a provision affecting the financial

interests of the provincial sphere of government; in other words in terms

of the procedure which requires the Bill to be passed by the National

Council of Provinces as well. This amendment would not affect the

parliamentary proceedings on money Bills which in terms of sections 77 (2)

and 76 (6) of the Constitution must be dealt with in accordance with the

section 75 procedure.

3. Section 77

This section defines a money Bill. The proposed amendment extends this

definition to include Bills abolishing or reducing, or granting exemptions

from, any national taxes, levies, duties or surcharges, or authorising

direct charges against a Revenue Fund. Read with section 73, the

implication of this proposed amendment is that only the Minister of Finance

would be competent to introduce legislation which abolishes or reduces, or

grants exemptions from, any national taxes, levies, duties or surcharges or

which authorises the withdrawal of money from the National Revenue Fund as

direct charges against the Fund.

4. Sections 100 and 139

Section 100 of the Constitution empowers the national executive to

intervene in a province if the province fails to fulfil an executive

obligation imposed on the province in terms of legislation or the

Constitution. If the national executive intervenes in terms of this

section, it may either direct the province to take steps to meet its

obligations or otherwise assume responsibility for the relevant obligation

if that is necessary to maintain national standards, to meet established

minimum standards for the rendering of a service, to maintain economic

unity, to maintain national security or to prevent unreasonable action from

the province. A similar provision is found in section 139, which provides

for a province to intervene in a municipality if the municipality fails to

fulfil an executive obligation imposed in terms of legislation. The

Constitution does not provide for the national executive to intervene in a

municipality directly. Such interventions are restricted to a province as

the Constitution currently reads.

This regime created by sections 100 and 139 in terms of which the

national government may intervene in a defaulting province and only a

province may intervene in a defaulting municipality, is out of line with

the other provisions of the Constitution, which depicts government as three

distinctive, inter-dependant and inter-related spheres. To the extent then

that the constitutional relationships between the three spheres are

generally direct and not hierarchical, sections 100 and 139 must be seen as

a constitutional anomaly that should be corrected by extending the power to

intervene in municipalities to the national government as well..

Another reason why these sections should be corrected is the fact that

provinces have very little capacity in some functional areas, such as water

and electricity supply systems. If a municipality defaults on its

obligations in this regard, there is very little a province can do by way

of an intervention apart from facilitating national institutions to assume

the responsibility.

The Bill consequently proposes amendments to both sections. It is

suggested that section 100 be amended to give the national executive the

same power to intervene in a non-complying municipality as section 139

confers on provinces. The section 139 power of a province to intervene will

not be affected by the amendment, but will remain and become a concurrent

power. As such there would appear to be a need for coordination of the

processes established by the two sections. It is proposed that such

coordination be provided by national legislation, and a provision to this

effect is accordingly inserted in section 100 (3).. Apart from these

amendments, it is also proposed to make certain technical changes to

section 100, viz:

- The adjective "executive" before the word "obligation" is deleted as

the Constitution and certain legislation such as the Local Government:

Municipal Systems Act, 2000, place certain obligations of a legislative

nature on municipalities, e.g. the annual passing of a budget. Legislative

obligations of provinces are specifically excluded as the national

executive cannot pass provincial laws by way of an intervention.

- Section 100(1)(b)(i) is split into two separate subparagraphs to

disconnect the maintenance of essential national standards from the words

"for the rendering of a service". These words should apply to the second

part of the sentence only, viz. to established minimum standards. See in

this connection section 44 (2) (c) and (d) where the distinction is

properly drawn.

- Section 100(2)(b) is changed to give the National Council of

Provinces a direct veto over national interventions instead of the current

process requiring the Council's approval within 30 days as a precondition

for the survival of the intervention.

- The current burden on the NCOP in terms of section 100 (2) (c) to

review the intervention regularly and to make appropriate recommendations

to the national executive, is removed and replaced by a discretionary

power. This means that the NCOP may review an intervention at any time and

make recommendations if it so chooses.

The proposed amendments to section 139 are confined to technical

changes similar to those suggested for section 100. (See bullets above.)

5. Section 120

This section defines the provincial equivalent of a money Bill. The

definition of provincial money Bills is amended along similar lines as

proposed for national money Bills and includes Bills which abolish or

reduce, or grant exemptions from, any provincial taxes, levies, duties or

surcharges, or which authorise direct charges against the Provincial

Revenue Funds. As section 119 currently states that only the member of the

Executive Council responsible for financial matters in the province may

introduce a money Bill in the provincial legislature, the effect of the

amendment is that only the MEC for finance in a province is competent to

introduce legislation abolishing or reducing, or granting exemptions from,

any provincial taxes, levies, duties or surcharges, or authorising the

withdrawal of money from a Provincial Revenue Fund as direct charges

against the Fund. This amendment is necessary to ensure integration and

coherence, and also financial discipline, in the provincial budget process.

6. Section 159 (3)

This is consequential to the amendment of section 100, which extends

the national intervention power to municipalities. Subsection (3) of

section 159 refers to a municipal council which has been dissolved

following an intervention in terms of a provincial intervention under

section 139. This amendment adds a reference to section 100 as a

dissolution of a municipal council will also be possible in terms of an

intervention under section 100.

7. Section 163 (b) (iii)

It is proposed that this section be amended to delete the current

obligation on Parliament to provide in an Act of Parliament for the

determination of a procedure in terms of which local government may

nominate persons for appointment to the Financial and Fiscal Commission.

This amendment is consequential to the proposed amendment of section 221

concerning the composition of the Commission.

8. Section 213

In terms of section 213 money can tee withdrawn from the National

Revenue Fund either in terms of an appropriation by an Act of Parliament or

as a direct charge authorised by the Constitution or an Act of Parliament.

The section currently provides that provinces' equitable share of revenue

raised nationally must be paid to provinces as a direct charge against the

Revenue Fund but is silent on how local government's equitable share must

be withdrawn from the Fund. The Bill proposes to extend this principle to

local government's equitable share.

The proposed change is based on practical considerations and on the

current need for two separate Acts of Parliament to authorise the same

transfer. Currently the annual Division of Revenue Act contemplated in

section 214 which, like the budget, is passed annually, must provide for

the division of revenue raised nationally among the spheres and for

additional allocations to provinces and municipalities from the national

share. The Division of Revenue Act is not an appropriation Act and its

revenue division provisions cannot be understood as authorising the

withdrawal of funds from the Revenue Fund. This necessitates the inclusion

in the budget as ordinary appropriations of those transfers that are not

direct charges, such as local government's equitable share and any

additional allocations to provinces and municipalities.

9. Section 216

The proposed amendments to section 216 are merely technical in nature

and clarify certain ambiguities in the section without affecting the

constitutional principles embodied in the section. These principles remain

unaltered.

Subsection (2) as presently formulated is particularly ambiguous and on

a literal reading has certain consequences that could never have been

intended. To facilitate a better understanding of the true intention and to

avoid misinterpretations and misunderstandings between affected parties, it

is proposed that the whole subsection be redrafted as proposed in the Bill.

The redraft firstly avoids the words in the current subsection that the

National Treasury may stop the transfer of funds to an organ of state only

with the concurrence of the Cabinet member responsible for national

financial matters. These words obscure the content of the "national

treasury" and do not recognise the fact that the Cabinet member responsible

for national financial matters is the head of the national treasury and in

fact the institution in which the power and authority of the national

treasury vest. To suggest, as the current formulation implies, that the

National Treasury and the Cabinet member responsible for national financial

matters are different institutions, is artificial and practically

untenable. Secondly, the current formulation implies that the only

circumstances in which the stopping of funds to an organ of state is

allowed, is when the organ of state commits a serious or persistent

material breach of the norms and standards prescribed in terms of section

216 (1). This interpretation obscures the whole practice of transfer

payments, but especially the enforcement of the conditions on which

conditional grants are given to provinces and municipalities in terms of

section 114 (1) (c). Obviously, the idea of a conditional grant is that if

the conditions are not met, the grant may be stopped. The question whether

a province or a municipality has committed a serious or persistent material

breach of the treasury norms and standards should have no bearing on a

decision to stop transfers of a conditional grant when conditions are not

met, and section 216 (2) should not come into play when transfers are

stopped because of non-compliance with the conditions of a grant.

The redraft of section 216 (2) now makes it clear that the stopping of

funds is a mechanism to enforce the treasury norms and standards prescribed

in terms of subsection (1), but a mechanism that may be used only where

there is a serious or persistent material breach of these norms and

standards. It avoids the implication of the current formulation that the

only instance where the stopping of funds is allowed is when a serious or

persistent material breach of the norms and standards has been committed.

For the same reason, the proposed amendment to section 216 (3) brings

the section into line with its true intention, and confines its application

to the stopping of a province's equitable share.

10. Section 217

This section provides that when organs of state and certain other

institutions procure goods and services they must do so in accordance with

a system that is fair, equitable, transparent, competitive and

cost-effective. It further allows organs of state and institutions to

implement a procurement policy providing preferences for persons

disadvantaged by unfair discrimination. The proposed amendment to this

section makes it mandatory for organs of state and institutions to

implement their preferential procurement policies within a framework set

out in national legislation.

11. Section 221

The proposed amendment to this section alters the composition of the

Financial and Fiscal Commission by reducing the number of members from 22

to 8 persons. Currently each of the provinces is entitled to nominate one

person, whilst the President may appoint nine additional members to balance

the nine provincial members. In terms of the amendment the President will

appoint two members after consulting the provinces and two additional

members. The two local government members are retained but will in future

be appointed by the President after consultation with organised local

government. A previous amendment to the Constitution removed the need for

the chairperson and deputy chairperson to be full-time members of the

Commission.

12. Section 226

The Bill proposes the addition of a further subsection which would

enable Parliament to determine a framework within which provinces

- may authorise direct charges against their Revenue Funds; and

- must pay revenue allocated through a province to local government

in that province to municipalities in the province.

Framework legislation is necessary to achieve proper and uniform

budgetary processes in the provinces and also to ensure that direct charges

are treated by all provinces as an exceptional form of authorising

expenditure. There is also a need in the context of section 226 to ensure

that the allocation of money to local government through a province is

divided among municipalities in the province in accordance with national

government's criteria.

13. Section 228 (1) (b)

In terms of the existing provision provinces are empowered to impose

flat rate surcharges on the "tax bases" of any levy or duty other than the

tax bases of corporate income tax, value-added tax, rates on property or

customs duty. The reference to "tax bases" is deleted as these words have

no definite meaning in the context they appear in the section.

14. Section 230

The proposed amendment deletes the requirement that a province or

municipality may raise loans for capital or current expenditure only "in

accordance with reasonable conditions determined by national legislation"

and replaces it untie the same controlling mechanisms that apply in the

case of provincial and municipal fiscal powers. See sections 228 (2) and

229 (2).

Parliamentary procedure

The State Law Advisers and the Department of Justice and Constitutional

Development are of the opinion that the proposed amendments fall within the

ambit of section 74(3)(b) of the Constitution and consequently require the

approval of both the National Assembly and the National Council of

Provinces.