National Treasury 28 January 2009

1. Presentation on the Money Bills Amendment Procedure and Related Matters Bill, 2008 to the Select Committee on Finance National Treasury 28 January 2009

2. General Comments • Very tight timeframes - especially for comment to be provided by the Minister; • A productive and co-ordinated relationship between the National Treasury and the Budget Office in Parliament will need to be developed; • It is not clear when it is intended that the Bill will come into effect, which is very important for Parliamentary and National Treasury officials to be able to prepare for.

3. Comments regarding specific provisions • Section 5 - Section 5(1)(d) refers to the annual reports: It is unclear if this is the previous year's annual report or the one that is tabled within the current financial year referring to the previous financial year. • If it refers to the most recent annual report, then the reports in section 5(2) will only be tabled after 30 September and may have a limited effect on the MTBPS. • These reports should inform the budgeting process and therefore limit the need to make actual amendments, but it is unclear why these must be tabled prior to the tabling of the MTBPS report. • It is possible that these reports should inform the MTBPS reports as well but this is not clear in the legislation. After clause 5, no mention is made of the draft budget allocations in the bill.

4. Comments regarding specific provisions • Section 6- It is not clear if the process in the two Houses run concurrently. • Section 7- There is an inconsistency between sections 6 and 7, because the Minister tables the MTBPS in Parliament (both Houses) but only tables the Budget Statement, Appropriation Bill and Division of Revenue Bill in the National Assembly.

5. Comments regarding specific provisions • Section 8- The legislation does not explain what the process is if the Minister disagrees with the amendments made by the committee. • The hearing process to adopt the fiscal framework is held jointly between the two Houses but they table separate reports. • Section 8(4) gives the committee the power to amend the fiscal framework and revenue proposals constrained by the conditions of 8(5)&(6), but still does not explain sections 6(6)&(11).

6. Comments regarding specific provisions • Section 10- Section 10(1)(b) refers to the ENE, which is usually tabled with the budget, but this suggests that it must be tabled 16 days later, when the fiscal framework has been adopted. • This is inconsistent with section 7(1)&(2) which includes section 27(4) of the PFMA. • Section 10(1)(c) will require a change in treasury regulations. Currently, strategic plans are tabled 10 days before the discussion in the relevant portfolio committee.

7. Norms and Standards for Provincial Legislation • National Treasury supports the proposal that the Bill set out some norms and standards in respect of Provincial Legislation to amend money bills; • Could adopt a similar approach to that in the Financial Management of Parliament Bill- have a section in the Bill referring to provincial norms and standards, and a Schedule containing the norms and standards.

8. Norms and Standards for Provincial Legislation Legislation enacted by a provincial legislature to provide for the amendment of money bills must provide for and elaborate on procedures in connection with the following: • the establishment of a committee on finance for the consideration of money bills and appropriations; • the proposal of amendments to money bills to the house by this committee only • the introduction of the annual budget and the appropriation bill, and information which must be provided in connection therewith; • the submission by the Member of the Executive Council for Finance of a multi-year provincial fiscal framework and revenue proposals; the multi-year spending priorities of the province and a review of actual spending by each provincial department and the province as a whole; • the requirement that a provincial fiscal framework, including own revenue estimates and expenditure ceilings, is adopted first by the legislature before the commencement of a process to consider amendments to expenditure proposals

9. Norms and Standards for Provincial Legislation • the submission by the Member of the Executive Council for Finance of proposals setting out the strategic priorities, measurable objectives and other performance information for each department, public entity or institution against its expected revenue and proposed expenditure by programme, sub-programme and economic items of expenditure; • the Legislature, through its committees, to annually assess the performance of Provincial Government Departments by adopting budgetary review and recommendation reports and amendments to expenditure proposals to be motivated in terms of these reports; • a requirement that the designated committee must submit a report to the house with proposed amendments that for each amendment considers its effect on the provincial finances and service delivery and illustrates how the amendment relates to key departmental budget and spending documentation; • a requirement that the MEC for Finance or any other affected MEC must be provided with a fair chance to comment on proposed amendments before their consideration in the house and that their comments are tabled with the proposed amendments;

10. Norms and Standards for Provincial Legislation • the consideration and passage, with or without amendments─ • the Appropriation Bill; • the adjustments Appropriation Bill; and • other money bills; • amendments to money Bills proposed by the Member of the Executive Committee for Finance, in order make technical corrections to money Bills, to be considered by the legislature; • the development of other institutions to enhance the capacity of Legislatures and promote the above processes.

11. Norms and Standards for Provincial Legislation • It is recommended that a mechanism be developed to establish how the NCOP committees specified in the Money Bills Amendment Procedure and Related Matters Bill link with the provincial committee and processes provided in the provincial legislation. In particular, it is important to provide for the coordination of oversight in the areas of joint competences. • There should be sufficient space provided for provinces to develop their own institutions, while establishing a common minimum standard of oversight. • Appropriate provisions must be included in the Rules of the Legislature in order to facilitate the implementation of the above.

12. Norms and Standards for Provincial Legislation It is important that the following basic safeguards which are contained in the national bill should also be set for provincial processes: (i) a centralised process to force consideration of all amendments together and trade-offs; (ii) the adoption of an expenditure ceiling that cannot be breached through amendments; (iii) limits to amendments by requiring amendments to relate to performance and spending issues of the department and not allowing the introduction of new spending items by the legislature; (iv) the requirement for all amendments to be accompanied by a motivation, a consideration of the impact on the budget and service delivery, a demonstration of its relation to strategic priorities and key budget documentation; (v) the requirement that MECs should be given a fair chance to respond and that their responses should be tabled with proposed amendments.