Public Finance Management Bill [B119B-98]: briefing & voting

Meeting report

FINANCE SELECT COMMITTEE
1 March 1999
PUBLIC FINANCE MANAGEMENT BILL [B119B-98]: BRIEFING & VOTING

Documents handed out:
Public Finance Management Bill [B119B-98]
Slide Presentation on the outline of the Bill

SUMMARY:
The committee was briefed on the Public Finance Management Bill, formerly known as the Treasury Control Amendment Bill. After the motion of desirability was read, the Bill was adopted without amendments.

MINUTES:
The Chairperson, Mr Fenyane, informed the committee that the briefing would be on the section 75 Bill as the section 76 Bill was not completed yet (this Bill will be split into two Bills so as to comply with both national and provincial government requirements). He wanted to know if any members wanted to debate the Bill in the NCOP the next day. All the members replied that they did not want to do so.

Mr Ismail Momoniat (Chief Director: Intergovernmental Relations, Department of Finance) briefed the committee on the Bill, using slides. He said the Bill's underlying philosophy was for managers to focus on the output of budgets, rather than the input. This focus would be in line with countries such as New Zealand, Canada and Australia. The Bill covers all public entities and constitutional institutions (those which appear in Chapter 9 of the Constitution of South Africa). It excluded the South African Reserve Bank as well as the Office of the Auditor General.

Mr Momoniat highlighted some key definitions in Clause 1. Regarding the definition of "main division within a vote" the Chairperson wanted to know why the word "programme" could not be substituted for "main division". The answer given was that it had legal implications, hence that word could not be used.

Overspending beyond 8% is considered "unauthorised expenditure".

The definition of "irregular expenditure" meant unauthorised spending.

The involvement of both national and provincial business and public entities were part of "ownership control".

Chapter 3 was not included in the Bill as it dealt with provinces and would appear in a separate Bill. It was presently still in draft form.

Clause 8 (annual consolidated financial statements) had a time frame of 5 years for implementation.

Clause 13 allowed emergency spending by MECs and the Minister of Finance.

The underlying principle in Chapter 4 was that many adjustment budgets were not allowed.

In Chapter 5, clauses 38 to 41, the general responsibilities of the accounting officers were dealt with. Disciplinary sanctions could be enforced if there was neglect of responsibilities.

Chapter 6 involved major public entities listed in Schedule 2 and other public entities in Schedule 3; the former having significant autonomy whilst the latter varying degrees of autonomy. Entities under Schedule 3 were totally dependent on government and other sources for funding.

Major public entities, under Schedule 2, were able to borrow money, with annual approval from government needed. The other public entities, under Schedule 3, had no borrowing powers. The South African Revenue Services was an important institution under this Schedule.

In Chapter 7 the responsibilities of the Minister of Finance and the MECs were dealt with.

Chapter 8 focuses on guarantees, indemnities and securities. Chapter 9 highlights the issuing of uniform norms and standards and Chapter 11 deals with the establishment of the Accounting Standards Board - which is an independent board. Chapter 12 mentions the repealed Acts, once this legislation is passed as well as exemptions.

By this stage the committee consisted of ANC members only; the DP and IFP members had left the meeting.

After the general briefing of the Bill, Mr Momoniat said that the date for the implementation of the Bill was April 2000, but sections would be phased in over five years. He said that much preparation was required for the implementation of the Bill. The Internal Audits Committee would be phased in for departments over two years.

There was some discussion around the implementation of the Bill. The Chairperson wanted to know if any clauses could be implemented before April 2000. In reply it was said that Chapter 11 and section 93(4) would be implemented as soon as the Act was published. Mr Lebona (Free State, ANC) wanted to know how much interaction would occur between the Department and provincial officials regarding the phasing in of the Bill. Mr Momoniat said the message would have to sent across both national and provincial levels and a co-ordinated implementation plan was needed. Another ANC member suggested that intensive workshops occur for officials in every department as well as for the executive. The Chairperson added that every department should be visited as the Bill introduced a paradigm shift. Mr Momoniat responded that it was not possible to go to every province as several workshops were necessary in a province.

Mr Momoniat informed the members that the draft to the section 76 Bill would be available later in the day, with the final version obtainable the next day.

The Chairperson read the motion of desirability and the Bill was adopted, without amendments.