FINANCIAL MANAGEMENT OF PARLIAMENT BILL Presentation to: Portfolio Committee on Finance 7 August 2008 FINANCIAL MANAGEMENT OF PARLIAMENT BILL

Consultation in terms of the PFMA PFMA requires consultation with the Minister of Finance before introducing a Bill amending the PFMA (section 4). Clause 72 of the Bill amends sections 3(1)(d) and 3(2)(a) of the PFMA. PFMA requires that before introducing a Bill that excludes money from payment into the National Revenue Fund (NRF), the Minister of Finance must be consulted on the reasonableness of the exclusion, and the Minister must consent to the exclusion. Clause 23 of the Bill provides that Parliament is not required to return unspent funds appropriated for a particular year to the NRF. The Minister of Finance responded with no objections to the clauses 23 and 72 of the draft Bill. Minister made further recommendations to amend the PFMA with the draft Bill to ensure clarity that Parliament is not required to pay into the NRF unspent appropriated funds, or unspent funds from other sources.

Treatment of unspent funds of Parliament Section 31(7) of the Powers and Privileges of Parliament Act, 1963, kept in operation by section 31, read with the Schedule, of the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act, 2004 – provides that “[a]t the end of the financial year the Secretary shall surrender to the Treasury for redepositing in the Exchequer Account, any unexpended balance of moneys received from the Treasury.” Section 13(1)(a) of the PFMA provides that “[a]ny money received by the national government must be paid into the National Revenue Fund, except money received by Parliament.” Senior Counsel’s legal opinion indicated that the two provisions can be read together, if the PFMA is interpreted as referring to money received by Parliament from other sources than the Treasury. If Parliament intended to repeal section 31(7) of the 1963 Act, it could have done so with the 2004 Act. Instead the 2004 Act maintains the position explicitly. Treasury disagrees with the interpretation of Senior Counsel. Parliament does not return any unspent funds.

Recommendations of the Minister Clause 23 of the draft Bill should include money received from other sources; i.e. any money received by Parliament that is not spent in a financial year. Repeal section 13(1)(a) of the PFMA as this would be tautologous Effect of recommendations is to clarify the treatment of unspent funds of Parliament and consolidate the such provisions in the draft Bill Minister further recommends that the Bill repeals section 13(5) of the PFMA as far as it relates to Parliament as clause 25(1) of the Bill provides the same.

Opinion on response from Minister Effecting changes to the Bill in accordance with the comments from the Minister would clarify the treatment of unspent funds of Parliament, amongst others, and constitute good drafting practice.

Tagging / classification of the Bill The draft Bill provides for norms and standards for provincial legislatures in a Schedule to the Bill. Section 76(4)(b) of the Constitution requires legislation to be considered in accordance with the procedure established in section 76(1) if it is legislation envisaged in Chapter 13 and includes any provision affecting the financial interest of the provincial sphere of government. As the Bill emanates from section 216 of the Constitution (part of Ch 13), it should be considered in accordance with the procedure established by section 76(1). The removal of all references to norms and standards for the financial management of provincial legislatures in the Bill would cause the classification to change to a section 75 Bill Provision could be made for the financial management of provincial legislatures in a separate Bill considered in accordance with the section 76(1) procedure (compare the procedure of the PFMA).