DRAFT REPORT OF THE JOINT BUDGET COMMITTEE ON THE WORKSHOP HELD IN
STELLENBOSCH ON 02 AND 03 JUNE 2006
(i) Purpose of Workshop
1. Introduction
The purpose of the workshop that was held from 2 to 3 June 2006 was to clarify
the working relationship of the Joint Budget Committee with relevant
stakeholders, as well as to clarify its internal mechanisms and its approach to
oversight work. The first day of the workshop consisted of presentations from
the main organisations working closely with the Joint Budget Committee. The
presentations included:
1.
National Treasury: Improving the oversight role of Parliament.
2.
Auditor General: Budget-monitoring principles that could be utilized to
enhance Parliament's oversight function.
3.
Financial and Fiscal Commission (FFC): The budget process and the FFC.
2. Strategic Plan of the JBC
The 2005 strategic plan of the Joint Budget Committee sets out the Committee's
strategy for developing its role in the budget process in practice, and for
engagement in the current Medium Term Expenditure Framework (MTEF) and budget
cycle. The document aims to address when and how the Committee could engage
with the budget process in order to fulfill its mandates 1. The most important
objective of the strategic plan is to guide the Joint Budget Committee in
influencing the budget as effectively as possible.
The main priority of the Committee is to impact on the efficiency of
expenditure and planning in national and provincial government. In achieving
this, the Committee should aim to influence the process through:
1)
Increased interaction with the executive, particularly the National
Treasury.
2)
Interaction with Portfolio and Select Committees. In doing this, it is
important for the Committee to clarify its role in relation to Portfolio and
Select Committees. The Joint Budget Committee's role should be seen as mainly
that of coordination in fiscal and expenditure activities.
3)
'Strengthen the Committee's
capacity.
4)
Interaction with other monitoring and oversight organisations such as the
Financial and Fiscal Commission (FFC) and the Auditor General (AG).
useful for effective in year monitoring of departments.
1 .2.2. The Joint Budget Committee will interact with sector Committees
to alert them on irregular spending patterns identified in Section 32 reports.
1.2.3. It is important for Committees to focus on the outer years of
departmental budgets.
1.2.4 The Joint Budget Committee must submit a pre-budget report to the
executive before Min-ComBud.
·
1.2.5. It is important for Ministers, MECs or Accounting Officers to
accompany departments appearing before the Joint Budget Committee.
2. Auditor General
The Auditor General's presentation incorporated the following:
2.1. Budget monitoring principles that could be performed on financial
data
It is important for the Joint Budget Committee to review spending trends.
The Committee should evaluate past spending trends of departments to ascertain
whether they have demonstrated poor planning and organization of functions. For
example if a department has continuously demonstrated significant
"savings" at year-end, this could be attributed to the lack of
service delivery and rollout of project initiatives. On the other hand if a
department has continuously demonstrated significant deficits at year-end, this
could be attributed to poor planning and possible inefficiencies in the
department
The Committee should also evaluate the current spending of the department for
the year under review to assess their progress against planned activities. If a
department demonstrates "savings" for a significant portion of the
year, the Committee should raise the concern with them to evaluate whether the
department would be able to deliver on the planned initiatives for the year. On
the other hand if a department demonstrates deficits for a significant portion
of the year, the Committee should raise a concern with them to evaluate the
risk of incurring unauthorised expenditure.
Departments are required to report to National treasury on a monthly basis
regarding their actual spending incurred and projected spending for a
particular financial year. The Committee should evaluate the projections being
reported to identify whether the departments are constantly revising
projections. The constant revision of projections could be attributed to lack
of planning and the delayed initiation of projects within a particular
department.
During the transition from cash basis of accounting to accrual basis of
accounting, departments are required to quantify their future obligations in
terms of contracts entered into, unpaid invoices and future liability in terms
of employee benefits. The Committee should evaluate whether departments have
considered these future liabilities and that they have been provided for in the
budget exercise.
evaluations and considerations by the Portfolio Committee could assist in
understanding why a department might be under spending or overspending.
The Standing Committee on Public Accounts (SCOPA) evaluates departments'
financial management. The Joint Budget Committee could consider obtaining the
resolutions passed by SCOP A, which could assist in the budget monitoring role
when evaluating actual spending against budgets.
2.4. The utilization of audit products that will be useful for the
committee's oversight purposes.
In interrogating Annual Reports, the Committee will have to thoroughly
evaluate the following:
2.4.1. Technical Qualitv of the Annual Report.
The aim of evaluating technical quality is to ensure that it complies
with the legal and policy framework for the structuring, compilation and
tabling of such reports.
2.4.2. Performance information as presented in the Annual Report.
The aim of this aspect of the oversight process is to test whether the
Annual Report is an accurate record of Departments performance and to evaluate
whether the Annual Report is in line with the Departments Strategic Plans,
budgets and the operating environment.
3. Financial and Fiscal Commission (FFC)
The presentation focused on the role of the FFC in the budget process and how
its work could contribute to the oversight work of the Joint Budget Committee.
3.1. The budget process and the FFC
The FFC was established in terms of Section 220 of the Constitution of
the Republic of South Africa (Act 108 of 1996, as amended), and of the
Financial and Fiscal Commission Act (99 of 1997) as an advisory body with a
mandate to make recommendations on financial and fiscal matters to Parliament,
the Provincial Legislatures, and other institutions of government when
necessary. The FFC is independent from government and can therefore perform
impartial checks and balances between the three levels of government. It
facilitates co-operative government on intergovernmental fiscal matters.
Section 214 (1) of the Constitution provides for an Act of Parliament to
provide for:
·
The annual division of revenue between national, provincial and Local
Government.
·
The division of revenue between the nine provinces of South Africa.
National Revenue fund, and any conditions on which those allocations should be
made.
3.2 The FFC and the Joint Budget Committee interactions regarding the FFC’s
recommendations
The FFC mentioned a number of ways their work could contribute to the work of
the Joint Satnding Committee. These include:
·
Comments on the outer years of the Medium Term Expenditure Framework in
line with item 2 of the Joint Budget Committee's terms of reference.
·
Comments on the development of budgets and allocations in accordance with
Constitutional requirements in line with item 3 of the Joint Budget Committees
terms of reference
·
Assessments on expenditure performance of government Departments against
governmental projections of Intergovernmental Fiscal Relations systems
(JBC-T.O.R (4)).
·
FFC comments on the Medium Term Budget Policy Statement (MTBPS) with
respect to expenditure and revenue policy issues. (JBC-T.O.R(5)).
·
FFC comments during the hearing process(JBC-T.O.R (6))
·
The possible incorporation of FFC comments/assessments into the Joint
Budget Report.
·
The FFC facilitate matters of interest pertaining to other committees for
their attention.
·
FFC interaction on the MTBPS, MTEF, Budget Policy Review.
A number of important points were raised after the presentation,
including the following:
·
Protocol needs to be developed on how the FFC recommendations on the
Division of Revenue should be dealt with after tabling in Parliament. For
example, what would be the focus of each committee? Le. Portfolio and Select
Committee on Finance and the Joint Budget Committees.
·
Performance reports for all spheres of government produced by the FFC on
a quarterly or half yearly basis will be forwarded to the Joint Budget
Committee.
·
The FFC to provide feedback and comments on the Joint Budget Committee's
reports if required to do so.
·
The FFC will provide training to the Joint Budget Committee on how to
make use of their research reports.
·
The FFC will provide research to the benefit of the Joint Budget
Committee if the matter to be researched falls within its mandate.
(iii) Work Method, Division Of Labour and Oversight
Committees.
2.4. The Committee should also include Development Nodes when going on such
visits.
2.5. The Committee should identify an area of focus for the year.
2.6 International study tours should also be undertaken.