Money Bills Amendment Procedure and Related Matters Act: Summary by: Mkhethwa MKHIZE Committee Section

2 Business of Workshop  Background  Main objectives of the Act  Establishment of Committees  Establishment of PBO  Important Milestones  Important Sections  Conclusions  Comments, & Question-Answer Dialogue

3 Background  The Constitution of RSA, 1996  Section 77(3) of the Constitution: “All money Bills must be considered in accordance with the procedure established by section 75. An Act of Parliament must provide for a procedure to amend money Bills before Parliament”. “All money Bills must be considered in accordance with the procedure established by section 75. An Act of Parliament must provide for a procedure to amend money Bills before Parliament”.  The Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009: 13 years overdue.

4 Background… Background…  The Constitution of RSA,  Section 77(1) of the Constitution: A money Bill is defined as “a Bill that  appropriates money;  imposes, abolishes, or grants exemptions from national taxes, levies, duties or surcharges; or  authorises direct charges against the National Revenue Fund”

5 Main Objectives of the Act  To provide for a procedure to amend money Bills before Parliament and related matters;  (In other words, to provide Parliament with powers to enable it to change aspects related to tabled money Bills); and  To provide for the establishment of Parliamentary Budget Office (PBO) and committees for consideration of money Bills.

6 Establishment of Committees  National Assembly:  Committee on Finance, and  Committee on Appropriations.  National Council of Provinces:  Committee on Finance, and  Committee on Appropriation.

7 Chart PARLIAMENT NATIONAL ASSEMBLY Establish a Committee on Finance & a Committee on Appropriations NATIONAL COUNCIL OF PROVINCES Establish a Committee on Finance & a Committee on Appropriations

8 Powers & Functions of Committees Committee on Finance: To consider and report on-  macro-economic and fiscal policy;  amendments to-  Fiscal framework, and  Revenue proposals and Bills; and  actual revenue published by NT.

9 Macro-economic Policy  The outlook for growth (7 years) - Macroeconomic projections i.e. gross domestic product (nominal and real), inflation, etc;  Prospects and risk in the global and national recovery; and  Tools to support recovery and achieve more rapid growth.

10 Fiscal Policy Fiscal policy guides govt.’s decisions about revenue, spending and borrowing. South Africa’s fiscal policy should enable govt. to deliver on its developmental mandate by providing resources in a manner that is sustainable and that reinforces the stability of the economy.

11 Fiscal Policy… Contributing to economic stability:  Expenditure trends;  Revenue trends; and  Borrowing trends. Contributing to development:  Govt.’s expenditure incl. capex; and  Govt.’s consumption. Fiscal sustainability: a core principle of fiscal policy:  National revenue versus Govt. expenditure.

12 Fiscal Framework Fiscal framework = Macroeconomic policy + fiscal policy for a specific financial year. Fiscal framework is defined on page 3 of the Act.

13 Powers & Functions of Committees Committee on Appropriations: To consider and report on-  Spending issues;  Amendments to-  Division of Revenue Bill, and  The Appropriation Bill.  Recommendations of FFC; and  Actual expenditure published by NT.

14 Medium Term Expenditure Framework MTEF is the three-year spending plans of national and provincial governments:  Policy priorities over the medium term – (1) jobs, (2) health, (3) education, (4) rural development and (5) fighting crime; - (6) finding savings and increasing efficiency; - (6) finding savings and increasing efficiency;  Last year and this year expenditure outcomes or estimates.

15 MTEF…  Medium term spending priorities: - (1) Expanding employment and safeguarding social security; - (2) Improving the quality of education and skills development; - (3) Enhancing the quality of health care; - (4) Rolling out a comprehensive rural development strategy; and - (5) A broad-based approach to fighting crime.

16 Establishment of Parliamentary Budget Office (PBO) Money Bills Act provides:  For establishment of PBO;  Functions of PBO;  Composition and budget of PBO Core function is to: Provide independent, objective and professional analysis and advice to Parliament on matters related to the budget and other money Bills.

17 Important Milestones  Budget Review and Recommendations Reports (BRRR)- Early October 2010;  Medium Term Budget Policy Statement – Late October 2010;  National Annual Budget – February 2011;  Fiscal Framework and Revenue Proposals;  Division of Revenue Bill – February 2011; and  Appropriation Bill – February 2011.

18 BRRR… NA’s committees to assess performance of national departments –Section 5(1). Silence on NCOP. Budgetary Review and Recommendation Reports (BRRR) must be based on:  Medium Term Estimates of Expenditure;  Strategic plans, including strategic priorities and measurable objectives;  Section 32 of PFMA’s expenditure reports (page 41);  Financial statements and annual reports;  Reports of SCOPA, AG, FFC, etc. BRRR submitted to the Minister of Finance and Cabinet member responsible for the vote -Section 5(5).

19 BRRR… Outcomes:  An assessment of service delivery performance -a must;  An assessment on the effectiveness and efficiency (use and forward allocation of resources) –a must;  Recommendations on the forward use of resources –a maybe.

20 MTBPS Section 6(1): Medium Term Budget Policy Statement (MTBPS)  MTBPS is a Cabinet policy statement tabled in Parliament. It sets out the economic context and assumptions that inform the following year’s budget, as well as the framework in which the budget is prepared.

21 Important Sections Section 7 of the Act and Section 27 of PFMA: National Annual Budget National Annual Budget includes:  Fiscal Framework and Revenue Proposals (section 7(2));  Division of Revenue Bill (section 7(3)); and  Appropriation Bill (section 7(1));  Responses to BRRR and MTBPS reports (section 7(4)).

22 Fiscal Framework Section 8: Consideration and reporting on the Fiscal Framework and Revenue Proposals.  By Committees on Finance section 8(1).  Silence on the role of other committees.  Provides for public hearings.

23 DORB… Section 7(3): Division of revenue (DOR)– at the same time as Bills in Section 7(1)  Purpose: To provide for the equitable division of revenue raised nationally among the National, Provincial and Local spheres of government.  Accompanied by schedules and appendices that provide detailed information.  The standing rules must provide for the participation of chairpersons of other committees -section 9(5)(a).

24 DORB… Division of Revenue’s (DOR) schedules: Schedule 1: Spheres of government, Schedule 2: Provinces, and Schedule 3: Municipalities. Division of Revenue’s (DOR) appendices:  From appendix W1 to W13, and  Provides detailed information on every ‘named’ funds (grants).

25 Appropriation Bill Purpose: To provide for the appropriation of money from the National Revenue Fund for the requirements of the State in the relevant financial year. Accompanied by a schedule which informs us about appropriation per line function of a national department. Can amend after adoption of DOR Bill.

26 Appropriation Bill Section 10(1)(c): After Fiscal Framework,  The relevant members of cabinet must table updated strategic plans for each department, public entity or institution, which must be referred to the relevant committee for consideration and report.

27 Appropriation Bill Another committee may advise a Committee on Appropriations:  that a sub-division of a main division within a vote be appropriated conditionally to ensure that the money requested for the main division will be spent effectively, efficiently and economically (section 10(5)); and  that an amount must be appropriated specifically and exclusively for a purpose mentioned under a main division within a vote (section 10(6)).

28 Conclusion Conclusion  Parliament has powers to:  accept, or  amend money Bills.  Greater oversight powers.  Good co-operative governance.  PBO is key to successfully implement Money Bills…Act.

29 End of Presentation. Ngiyabonga