1. Review of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009)

2. Background Background 16 April 2009 - Act came into operation.
24 May National Assembly, citing technical challenges that have become apparent with the implementation of certain provisions of the Act, by resolution instructed the Standing Committee on Finance to review the Act with a view to introducing amending legislation if necessary.
the Committee is required to evaluate the application of the legislation including, but not limited to:
time frames and sequencing associated with different financial instruments and Bills;
procedures to be developed in the rules; and
functions and management of the Parliamentary Budget Office (PBO)
Background
Background
Government Gazette No President had assented to the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009). The Act was published on 16 April 2009 and came into effect on this date.
Resolution: The Chief Whip of the Majority Party moved: That the House -
(1) notes that the Third Parliament initiated and passed the Money Bills Amendment Procedure and Related Matters Act in 2009 (Act 9 of 2009);
(2) further notes that a number of technical challenges have become apparent with the implementation of certain provisions of the Act;
(3) instructs the Standing Committee on Finance to review the Money Bills Amendment Procedure and Related Matters Act with a view to introducing amending legislation if necessary, the Committee to –
(a) evaluate the application of the legislation including, but not limited to, the time frames and sequencing associated with the different financial instruments and bills, the procedures to be developed in the rules, and the functions and management of the Parliamentary Budget Office;
(b) report on any other matter related to the implementation of the Act;
(c) confer with the Standing Committee on Appropriations; and
(d) report to the National Assembly by 21 September 2012 on the progress that has been made.
Agreed to.

3. Background Background (cont.)
The Standing Committee on Finance – in terms of the resolution – was mandated to:
report on any other matter related to the implementation of the Act; and
Required to confer with the Standing Committee on Appropriations; and
report to the National Assembly by 21 September 2012 on the progress that has been made.
20 September 2012 – Committee reports (ATC) on progress
Submission received from KZN Provincial Legislature
Background (cont.)
Background

4. Time frames & sequencing
Time frames and sequencing provided for in the Act:
BRRR – section 5(4) – after adoption of Appropriation Bill before adoption of reports on MTBPS
MTBPS – section 6 – 3 months before introduction of Budget – committees report 30 days after tabling – correction required
Fiscal Framework, DORB & Appropriation Bill – sections 7 to 10 – sequencing
Revenue Bills – section 11
Adjustments budget – section 12
Time frames & sequencing
The Act requires committees of the Assembly to submit annual budgetary review and recommendation reports (BRRR) after the adoption of the Appropriation Bill and prior to the adoption of the reports on the Medium Term Budget Policy Statement (MTBPS) [Section 5(4)]. This period is usually between June and November. The question is whether the BRRRs should not be submitted prior to the tabling of the MTBPS, which would benefit the committees on finance and appropriations who must report on the MTBPS? Input from Committee section necessary.
Subsections 6(5) & (10) provide that the reports on the MTBPS must be submitted to the NA 30 days after the tabling of the MTBPS, which means Parliament would routinely sit into December. This provision would make more sense if the “after” is substituted with “within”. This correction is already applied in practice.
The tabling of the National Budget includes the fiscal framework, tax and other revenue proposals, the Division of Revenue Bill and the Appropriation Bill. The Act requires that the Houses respond to the fiscal framework within 16 days, including public hearings, the reporting by the committees, response from the Minister of Finance (two days), and the consideration of the report by the House.
The requirement that the Division of Revenue Bill and the Appropriation Bill may only be referred to relevant committees after the fiscal framework is passed (sections 9(1) and 10(1)) ensure that the consideration of these Bills are consistent with the fiscal framework. However, the review process may consider whether allowing the referral of the Division of Revenue Bill and Appropriation Bill after tabling would allow more flexibility in parliament’s programme. The reporting can be sequenced instead of the referral. The sequencing also leads to the DORB to be passed after 1 April. The risk of this option is that committees will be operating without the guidance of the Fiscal Framework when considering the Bills as the Fiscal Framework is meant to provide overall direction relevant to any amendment. Similarly, section 10(3) provides that the Committee on Appropriations may only consider amendments to the Appropriation Bill once the Division of Revenue Bill is passed, can be reviewed to provide that the amendments to the Appropriation Bill may only be reported on once the Division of Revenue Bill is passed.
Section 11 deals with revenue Bills. There are no timeframes or sequencing provided in the Act for revenue Bills. The review process may look into this and propose such procedures.
The adjustments budget has the same constraints in respect of sequencing (section 12(6)) viz.; the Division of Revenue Amendment Bill and the Adjustments Appropriation Bill may only be referred after the Revised Fiscal Framework has been adopted by the Houses.

5. Procedures to be developed in the rules
The Act requires co-ordination between committees in fulfilling their mandates during the budget process in respect of the following:
BRRR (section 4(5))
Appropriation Bill (section 10(8))
Adjustments budget (section 12(16))
How can this process envisaged in the Act be regulated practically in the rules? The rules could follow the review process.
The Act requires that the Standing Rules (i.e. NA, NCOP and Joint Rules) to provide for consultation and co-ordination between committees in fulfilling their mandates during the budget process in respect of the following:
BRRR (section 4(5)) – consultation with respective committees on finance and appropriations of each House;
Passing of the Appropriation Bill (section 10(8)) – consultation between committees on appropriations and other committees in respect of proposed amendments or conditional appropriations, mediation, and recommendations; and
Passing of the adjustments budget – section 12(16) - consultation between committees on appropriations and other committees in respect of proposed amendments or conditional appropriations, mediation, and recommendations.
The Act had a profound inpact on the programme of Parliament when it came into operation. Some of the provisions affected the established procedures in Parliament and created a conflcit between the provisions of the Act and the established practice based on the Rules. One such example is the processing of the Division of Revenue Bill and the Division of Revenue Amendment Bill, both which require a consultative process with provincial legislatures and statutory mandates to pass these Bills.
The purpose of the reference in the Resolution of the Assembly on 24 May 2012 to “the procedures to be developed in the rules” is therefore to focus attention the effects on the parliamentary programme of any amendments to the Act. In this respect the Committee should request input from the Secreatries of the National Assembly and the National Council of Provinces.

6. Functions and management of the PBO
Section 15 of the Act establishes the PBO and sets out the following:
Functions (section 15(2));
Appointment and removal of director (sections 15(5) & ((8));
Reporting to Parliament (section 15(11)); and
Management of PBO (sections 15(12)-(15)).
How can the PBO be aligned to the FMPA?
Section 15 of the Act establishes the Parliamentary Budget Office (PBO) with a mandate “to provide independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills”. The Act provides further that the Director, as head of the PBO, must be appointed by the Houses on the recommendation of the finance and appropriations committees. These committees must also recommend the conditions of service, such as the salary and allowance for the candidate, which must be “substantially the same as those of the top rank of public service.”
In addition, the Act stipulates that the Director of the PBO must engage directly with the finance and appropriation committees on administrative matters including the structure of the Office and budget etc. The Act also states that Parliament must transfer funds to the PBO on an annual basis (in a similar way that a department would transfer funds to a state entity) and report directly to the Houses on the use of these funds.
In terms of the Financial Management of Parliament Act, 2009, (Act No 10 of 2009) (FMPA), the Speaker of the National Assembly and the Chairperson of the National Council of Provinces, acting jointly, constitute the Executive Authority of Parliament. The Executive Authority is accountable to the Houses for the financial management of Parliament. As such, the Executive Authority should have a relationship with the Director.
To overcome these difficulties, the Committee may consider alignment with the FMPA: for example; that the Director be appointed after the Executive Authority initiate the process by directing the relevant committees on finance and appropriation. Furthermore, that the Director reports to the Executive Authority and the latter submits the reports to Parliament. The structure and conditions of service of the staff of the PBO could be a function of a similar structure such as a board consisting of the relevant House Chairpersons and the chairpersons of the committees on finance and appropriations. Such proposals reflect the present situation.
The Executive Authority fulfilling the roile of appointing the acting Director.

7. Functions and management of the PBO
Aligned to the FMPA
Clarity on responsibility of Director for the financial management and human resource management
Role of the Executive Authority – initiate process of appointment and role in appointuing acting Director.
Reporting through the Presiding Officers, and included in Parliament’s annual report.
Presiding Officers submit reports to Houses
Chairpersons of finance and appropriations committees and relevant House Chairpersons act as board to consult about structure and conditions of service of PBO
Executive Authority to appoint person to act as Director when vacancy exist.

8. Other matters amendments
The language used in the Act can be improved to be consistent with language used in parliamentary processes (e.g. definitions).
Certain areas of the Act requires further consideration (e.g. Whether section 3 is necessary? Whether the review of actual spending section 6(2)(f) should be referred in terms of the Act?
Correction of section 11(4)(c), which incorrectly refers to subsection (7) instead of (6)).
Correction to section 12(6) to ensure constitutionality of legislative process.
Other corrections to the latest terminology used in performance reporting (section 5(1)) and typographical corrections (section 6(2)(d)).
Insertion of words to clarify meaning (e.g. definitions, sections 6 to 11).
Other matters amendments
Definitions required to be added: “Executive Authority”, “Financial Management of Parliament Act”, “MTEF” and “tax and revenue proposals”
Section 3 of the Act deals with the application of the Act. It provides that the Act applies to all proposed amendments to money Bills before Parliament. However, the Act provides a procedure to consider all money Bills before Parliament and not just amendments to these.
The Act does not provide for the referral of the review of actual spending (section 6(2)(f)). The proposal is to referrer this to the committees on appropriations and, in addition, to any other committee.
Correction of section 11(4)(c), which incorrectly refers to subsection (7) instead of (6)).
Adjustments budget envisages a joint sitting of Committees of Appropriations to consider Division of Revenue Amendment Bill (section 12(6)). As this is a section 76 Bill, the Committees cannot sit jointly and vote jointly, which impression is created by this provision. A correction is therefore required.
Other corrections are indicated on the draft working document.

9. Section 16 of the Act must be consistent with the Constitution.
Section 16, read with the Schedule to the Act provides for norms and standards for provincial legislatures.
Section 120(3) of the Constitution provides that provincial legislatures must pass provincial legislation to set out a procedure to amend provincial money Bills.
Section 116 (1) of the Constitution provides that a provincial legislature may control and determine its internal arrangements, proceedings and procedures.
Section 16 of the Act must be consistent with the Constitution.
Norms and standards for provincial legislatures
Submission from KZN Provincial Legislature.

10. Policy decisions for Committee
Process
Develop and consider a draft amendment Bill
Public hearings on draft amendment Bill
Report with an draft amendment Bill after public hearings for purpose of introducing a committee Bill
Way forward