FINANCIAL MANAGEMENT OF PARLIAMENT BILL Presentation to: Portfolio Committee on Finance; and Joint Budget Committee 18 March 2008

OPTIONS FOR PROCESSING THE BILL Consider the published version (28 October 2005); or Consider the version of the Bill that served before the Committee (2 August 2006)

DIFFERENCES BETWEEN THE TWO VERSIONS Comparative analysis of the two versions: Minor amendments (e.g. long title, preamble inserted, separate clause for provincial legislatures, expenditure before the budget is passed, transfers, executive directive with financial implications, procurement, composition of audit committee, preparation of financial statements, a schedule for transitional arrangements) Oversight of annual budget of Parliament Annual budget and the PFMA Support for members and political parties Norms and standards for provincial legislatures

ROLE FOR COMITTEES IN LEGISLATION Oversight of annual budget of Parliament Published version provides for oversight through joint committees and Committee on Public Accounts (clauses 15, 53, 59, 69. Committee version maintains the oversight mechanisms, but changes the structure of the Bill to consolidate establishment and powers of joint committee (clauses 4, 17, 54, 60). More appropriately, the Committee’s version provides that the strategic plan, annual performance plan and budget is approved by the Houses instead of the joint committee (clause 11 compared to clause 13; see also clause 15). Principle issue 1: Whether the Bill should be specific to define and establish a joint committee and the Committee on Public Accounts, and if so, to what extent? Principle issue 2: Committee on Public Accounts, as presently constituted, excludes the NCOP from participating and, therefore, limits the authority of the NCOP to determine and control its internal arrangements proceedings and procedures Consideration could be given to whether the Bill should refer an oversight mechanism (borrowing from the Public Audit Act) or to an appropriate joint committee instead of Committee on Public Accounts. Alternatively, consideration should be given to include the NCOP in the definition of Committee on Public Accounts.

PRINCIPLE OF SEPARATION OF POWERS Minor amendments effected to published version in Committee’s version (compare clause 14 with clause 16), and provision made for reference to adjustments budget (clause 17). Committee’s version defines and uses “approved budget” instead of “vote” to make the provisions relating to “unauthorised expenditure” applicable to funds from own revenue excluding donor funds (see clause 20). The Committee’s version provides for recovering unauthorised expenditure (clause 20(5)) and provides for a separate procedure in respect of approving or recovering unauthorised expenditure of donor funds (clause 21). Budget process is central to giving effect to principle of separation of powers. Clauses referring to the PFMA (clause 14(2)(g) / 16(2)(h(1); and 55(1) / 56(1)) and clauses that require joint decision making with the executive (clause 15(2)(a) / 17(2)(a)) should be considered with caution. It is useful to remember that Parliament may amend the PFMA only after consultation with the Minister of Finance (section 4). Clause 71(b) of the published version repeals the provision in the PFMA that refers to Parliament. However, the Committee’s version omits this clause (compare clause 73) and explicitly makes the PFMA applicable again (see clause 72). Certain textual amendment effected to treatment of unspent funds (clause 23) Annual budget of Parliament and application of the PFMA

SUPPORT FOR MEMEBRS AND POLITICAL PARTIES The Published version distinguishes between support for political parties and constituency funds (clauses 32 & 33), whilst the Committee’s version consolidate these in one clause (clause 34). The Committee’s version changes the provisions of the published version substantially by providing in detail for regulations to be made pertaining to the disbursement, purpose, accountability, and auditing of these funds. Whereas the published version requires forfeiture of constituency funds in response to a party’s failure to submit its financial statements to the accounting officer, the Committee’s version requires regulations to authorise the accounting officer to withhold funds. Principle issue: Should the accounts of political parties be audited by the Auditor- General, and if so, does the Auditor-general have capacity for this? Constitution refers specifically to support for political parties and its leader in the National Assembly

PROVINCIAL LEGISLATURES Both versions provide 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 if it is legislation envisaged in Chapter 13 and includes any provision affecting the financial interest of the provincial sphere of government. Provision should be made for the financial management of provincial legislatures in a separate Bill considered in accordance with the section 76 procedure (compare the procedure of the PFMA) Norms and standards for provincial legislatures

CONCLUSION Practical considerations appears to dictate that the Committee’s version would be the easier one to proceed with. If this is the case, attention should be given to embolden the principle of separation of powers and clarify the participation of the NCOP in scrutinising the audited financial statements of Parliament