Gauteng legislature’s draft money bills act is riddled with flaws

Decision-making over public finance in SA’s most economically important province could be hit if ANC loses majority

Will the ANC lose its majority in Gauteng? This is a key question going into the 2019 elections. What is underappreciated is how the ANC’s loss of a majority might affect decision-making in the country’s economically most important province. If no party has a majority the role of the provincial legislature could become much more important, especially regarding public finances.

The constitution promulgated in 1996 gives significant power to legislatures at all levels concerning public finances. And it requires parliament and the provincial legislatures to pass legislation that guides how legislatures make changes to key public finance legislation (“money bills”) that raise revenue and determine government spending. Such legislation was only passed at the national level in 2009 — an amended version of the Money Bills Amendment Procedure and Related Matters Act was signed by the president a few months ago.

But parliament itself has not put its amendment powers to much use, partly because the ANC has the majority in parliament and is the governing party: in the SA political system it is generally unlikely that a party will materially amend budget and other proposals by its finance minister. (An interesting exception could arise if there were major rifts in the majority party.)

There is thus little public awareness of these powers held by parliament. There is even less awareness that there is an identical constitutional clause for provincial legislatures. Thus far, a remarkable 22 years later, no province has passed the legislation required by section 120(3) of the constitution. Furthermore, it has recently been clarified that parliament cannot impose processes on provincial legislatures — as it attempted to do through the Money Bills Act of 2009.

The looming problem is that a province such as Gauteng could find itself facing a divided legislature, with unstable coalitions leading to situations where the legislature takes a substantively different view on public finance decisions to the provincial government. Yet no legislation is in place to provide a structured process for how the MEC for finance’s proposals can be amended in an orderly, consistent fashion that complies with the principles of the constitution and other legislation such as the Public Finance Management Act.

Rushed process

In this context, the Gauteng provincial legislature’s move to draft such legislation is welcome. Public hearings on the draft version of a Gauteng “money bills act” were held in the last few weeks. There are, however, a number of serious concerns. 

The process has been extremely rushed. The draft was only circulated in early March but the chair of the ad hoc committee has indicated that the legislature wants to pass the legislation by end-March before the legislature rises. Such haste, after 22 years of inaction, dramatically limits any substantial public participation, or even proper drafting, and could well be argued to be unconstitutional. 

The proposed bill is flawed in certain key respects, as is common for a first draft. Having flawed legislation may cause even more problems than not having any legislation at all. And it may embed practices and institutional structures that later have to be undone.

The largest flaws in the bill relate to its intention to establish a provincial “parliamentary budget office” that would provide technical capacity that supports the provincial legislature’s oversight of public finances. Such an office exists for the national parliament, though it has not substantively fulfilled its mandate and has been beset by operational and governance problems. In this regard, the Gauteng bill is significantly worse than even the original 2009 national legislation.

It is widely agreed that the two most important characteristics of budget offices are independence and technical credibility. Such institutions must be independent from the government and from political interference, including through the legislature itself. The Gauteng bill contains no meaningful provisions to safeguard the proposed office’s independence or allocate it powers (such as information access), rendering the idea pointless and any resources allocated to it wasteful.

There is no excuse for this, because all the necessary lessons can be learnt not just from international examples and guidelines, but from the experience of the national parliament.

The bill lacks a clear vision of the structure and timing of the provincial oversight process. This is partly because it appears to selectively imitate aspects of the national legislation rather than crafting a meaningful provincial version from its own foundations. Yet despite the imitative element, in key areas it fails to engage clearly with existing pieces of relevant legislation, including the national Money Bills Act and the Public Finance Management Act.

While passing the legislation required by the constitution is imperative, the current Gauteng bill is too flawed to serve its purpose and should be substantively revised. That cannot happen by end-March.

Muller is a senior lecturer in economics at the University of Johannesburg and a research associate at the Public and Environmental Economics Research Centre. In partnership with other organisations, he receives funding from an EU-funded project, Putting People Back in Parliament. He previously worked at the SA Parliamentary Budget Office.

Original article here.


This project is supported by the European Union and the Heinrich Boell Foundation

   

  

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