Financial Management of Parliament Bill: National Treasury briefing

Meeting report

FINANCE PORTFOLIO COMMITTEE
15 November 2005
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: NATIONAL TREASURY BRIEFING

National Treasury presentation
Financial Management of Parliament Bill [please email [email protected]]

SUMMARY
National Treasury presented detail on the proposed Financial Management of Parliament Bill. Planning, budgetary and related matters were discussed. Treasury provided views on the relevance of a separate piece of legislation for Parliament and advocated the incorporation of an additional Chapter into the Public Finance Management Act to address concerns. Reference was made to the role of Chapter 9 institutions and the responsibility of the executive authority in making budget allocations. Proposed additions and deletions were explained.

Members asked a number of questions including the views of National Treasury towards the Bill, the potential conflict of the Bill with existing legislation, whether Parliament would continue to receive additional amounts as requested, the implications for the Bill if the Minister of Finance rejected it, the need to maintain the autonomy of Parliament, the danger of separate legislation in creating irreconcilable financial arrangements, whether an empirical study of international experiences had been conducted and the envisaged impact for Parliament of inclusion in the Public Finance Management Act.

MINUTES
National Treasury presentation
Mr N Du Plessis (Treasury Chief Director) provided detail on National Treasury’s position regarding the proposed Bill. Information was provided on planning, budgeting and related matters. The potential impact of separate financial management legislation for legislatures and the role of the executive authority in terms of budget allocation were discussed. Detail was provided on the financial affairs of Constitutional institutions that remained accountable to Parliament. Various comments on specific provisions were provided and proposed additions and deletions explained.

Discussion
The Chairperson stated that the position of Treasury seemed to indicate that the financial management of legislatures should be regulated by provisions in the Public Finance Management Act (PFMA).

Mr S Asiya (ANC) asked for further clarity on the views of National Treasury regarding the Bill. Members should ensure that the Bill did not conflict with existing legislation. He asked whether the Bill was in conflict with Section 4 of the PFMA.

Dr Van Dyk (DA) stated that more information was required on the budgeting process of Parliament. The PFMA advocated a bargaining process in terms of additional allocations where respective departments put forward cases to receive more money. The Bill sought to create a consultative arrangement between Parliament and the Treasury. He asked whether Parliament would be treated differently to other departments or whether requested additional amounts would be provided. An inability to acquire extra resources when needed could impact negatively on Parliament’s ability to conduct oversight over the executive.

Mr Y Bhamjee (ANC) sought clarity on the implications for the Bill if the Minister rejected the proposals contained therein. The framework of norms and standards between various departments and Parliament could be different in application. The autonomy of Parliament should not be compromised by the inclusion of a specific Chapter in the PFMA.

Mr Kabela (ANC) declared that separate legislation carried the risk of irreconcilable financial arrangements. He asked for further detail on the envisaged impact of the Bill on Local Government. The Bill had to be in line with National Treasury’s framework on adjustment budgets.

Mr B Mnguni (ANC) stated that the conclusion of Treasury appeared to be the addition of a separate Chapter in the PFMA as opposed to the creation of a separate piece of legislation. He asked what relevance the proposed Bill had if Treasury intended to support the inclusion of a new Chapter in the PFMA.

Mr Du Plessis responded that Treasury advocated uniformity in legislation and discouraged the imposition of different pieces of legislation that could result in ambiguities. Parliament had to decide whether a separate piece of legislation was required. Treasury could merely provide advice to improve aspects of the Bill. A comparison had been conducted between existing legislation and the Bill to determine the suitability of the proposals. Consultation with the Minister of Finance would be conducted but the ultimate decision lay with Parliament.

Ms M Mbina (Chief Director: Administration Services) added that the accounting norms and standards in the public sector had to be uniform. A separate piece of legislation was unnecessary. The financial management of Parliament could be adequately catered for by means of a chapter in the PFMA. Various accounting systems were in operation in the public sector and further complication was inadvisable. Parliament had the right to decide whether a separate piece of legislation was required. The autonomy of Parliament should not be compromised at any stage but the standard rules should be adhered to. Financial resources originated from the same source and all recipients had to comply with regulations.

Mr Du Plessis added that the allocation of budgets was a consultative process and the national fiscal policy had to be taken into consideration. The Bill proposed an alternative consultation process between Parliament and the Minister of Finance to determine allocations. The PFMA contained norms and standards. A separate chapter in the PFMA would acknowledge the independence of Parliament but compliance with normal practices had to transpire such as the submission of Annual Reports timeously. Another option was for the Minister of Finance to issue more detailed and specific norms and standards for Parliament to accommodate certain particular requirements. A conflict of interest could arise if the executive authority also acted as the Treasury for Parliament. Specific financial management legislation for Local Government councils could be formulated in the near future. Requests for additional funding had to meet PFMA requirements such as unforeseen and unavoidable expenses. The current Bill would influence the PFMA Amendment Bill process next year.

Mr M Johnson (ANC) asked whether an empirical study focused on international cases of legislative financial management had been conducted. A task team comprising Members should be established to interact with National Treasury and other stakeholders on the relevance of the Bill.

Mr Kabela stated that the Committee had been tasked with reaching finality on the proposed legislation by Parliament. He proposed that the Committee should advise the Minister of Finance that the Bill would be processed by the Committee and that certain provisions in the PFMA would have to be amended if the Bill was tabled. The Minister of Finance should be invited to appear before the Committee early in the new year. The Committee should also meet with Parliamentary administration officials to ascertain the dominant views in Parliament. Any correspondence with the Minister could be provided to the officials to assist in deliberations.

The Chairperson reminded Members of the purpose of the meeting which was to hear the views of National Treasury on proposed separate legislation for the financial management of Parliament.

Dr Van Dyk stated that if the Bill was discarded and Parliament was included in the PFMA, then the possibility existed that the Minister might limit resource allocations for Parliament to the detriment of oversight responsibilities. Clarity was sought on the potential impact of inclusion in the PFMA for Parliament.

Mr Du Plessis noted that the correspondence between the Minister and the Speaker of Parliament could be made available to Members. The Minister was not in favor of a separate piece of legislation. No case studies focused on international experiences had been conducted. Treasury’s argument was based on the Constitution that required uniform financial legislation.

Ms Mbina added that Parliament had always received additional funding from Treasury after furnishing a request. No limit on budgetary allocations should be expected if Parliament was incorporated into the PFMA.

Mr Du Plessis added that a proposed PFMA Chapter would recognise the differences in budgetary processes between Parliament and government departments.

Mr Benjamin (Legal Drafter) stated that the presence of a five-year planning cycle for Parliament would support the argument for a different financial management approach. Chapter 9 Constitutional institutions had to be accommodated either in a proposed new Chapter in the PFMA or in a separate piece of legislation such as the Bill. Regulations could provide a more flexible approach to the issue rather than attempting to include all aspects in a Bill. The Bill could be perceived in certain quarters as being over-prescriptive. He asked whether any differences existed between the proposed legislation and norms and standards applied in provincial legislatures.

Mr Du Plessis responded that Parliament had to move towards an annual operational plan in future but the timing was not correct at this stage. Consistency was required between various planning processes in the public sector. Parliament still had to submit Annual Reports for the present financial year. Improved capacity was needed to achieve this. Transfer payments for Chapter 9 institutions were made on the vote of Parliament and were subject to the same financial management arrangements as Parliament. One piece of legislation would be appropriate for provincial legislatures and Parliament.

The Chairperson stated that Members had received adequate information to apply its collective mind to the proposed Bill and the process would continue. A draft Committee report on the Medium-Term Expenditure Budget was perused by Members. Certain typographical errors were identified and corrected. Treasury had placed a mechanism in place to monitor the implementation of public-private partnerships and oversee the training of interns. The report would make reference to such a mechanism. The Committee adopted the report. A strategic planning workshop would be conducted at the end of January 2006 prior to the commencement of the first parliamentary quarter.

The meeting was adjourned.