1. Financial Management of Parliament Bill
Presentation to the Portfolio Committee on Finance
National Treasury – 30 May 2008

2. Background
Parliament is currently subject to the Public Finance Management Act
In keeping with Constitution’s requirement for uniform treasury norms and standards
Core objective of the Bill appears to be to provide for independent financial management of Parliament
In Treasury’s view, this can fully be provided for in the PFMA
National Treasury

3. General comments
Structure of Bill is sound and main public finance requirements are covered
Clear roles of executive authority and accounting officer
Planning, Budgeting and Reporting
Financial management and audit requirements
Special provisions for support for political parties & members
Bill draws extensively on PFMA and MFMA provisions
Bill is well-drafted
National Treasury

4. Underlying principles
Separation of powers:
Legislature, Executive, Judiciary
Independence of Parliament
Need to ensure adequate resources for Parliament’s legislative and oversight responsibilities
Avoidance of “treasury oversight” of Parliament’s budget
National Treasury

5. Concerns
Bill appears to be founded on a misunderstanding of the PFMA –
Independence of the legislature is not compromised by common financial norms and standards
Constitution requires a single national Revenue Fund and an integrated treasury
Separate legislation cannot sidestep the requirement for agreement between Presiding Officers and Minister of Finance over budget allocation
National Treasury

6. Practical difficulties
Unnecessary duplication of the PFMA:
Complications will arise over time as PFMA is amended
National norms & standards will be subject to separate interpretations
Implications for provinces are unclear:
fragmentation of public finance practice is likely to arise
Problematic precedent:
Will separate legislation for judiciary, constitutional entities come under consideration?
National Treasury

7. Alternative approach
Provide for independent status of legislatures in PFMA
Presiding Officers as executive authorities
Planning & budgeting not subject to treasury procedures and guidelines
Retention of revenue and self-contained financial management
Detail planning, budgeting and accountability procedures in Rules
National Treasury

8. Specific concerns
Sect 16-18: Amount to be appropriated for Parliament has to be agreed between Executive Authority and Minister of Finance – Bill provides for consultation but not for agreement or resolution of disputes
Sect 16ff: Bill attempts to preserve identity of “appropriated” funds and own revenue: monies are fungible
Sect 19: Unsatisfactory PFMA provisions on expenditure before appropriation is passed are reproduced
Sect 28: Restrictions on borrowing will effectively cut Parliament off from debt or PPP funding for major projects
Sect 35: Provisions relating to entities reporting to Parliament are incomplete
Sect 43: “other than the one recommended as best value for money” (as provided in schedule 3 (h))
Sects 44,46: Exclusion of MPs from tender committees and bans on contracts may be impractical as worded
Sect 50, 56: Inappropriate for EA to prescribe internal audit standards; financial reporting formats
No provision is made for regulation & alignment of remuneration and other benefits
No provision is made for financial management arrangements relating to other organs of State: Public Works; Safety and Security; NIA; Presidency; research councils
Financial implications of international agreements are inadequately covered
National Treasury

9. Conclusion
Bill is subject to Constitutional challenge as chapter 13 envisages a single treasury
Practical difficulties will arise in respect of alignment with PFMA
Fragmentation of the regulation of public finances sets up an unfortunate precedent, eg in respect of provinces, judiciary
Determination of amount to be appropriated for Parliament will remain potential source of conflict
Separate legislation will effectively exclude Parliament from wider provisions of PFMA, such as borrowing, PPPs, guarantees, public entity oversight
National Treasury