Financial Administration of Parliament and Provincial Legislatures Bill (FAPPL)

1
Financial Administration of Parliament and
Provincial Legislatures Bill (FAPPL)

• Ismail Momoniat
• National Treasury

2
Constitutional Principles

• Separation of Powers between Executive and
  Legislature
• Legislature oversees Executive
• Executive is accountable to its Legislature
• Legislature is NOT accountable to Executive
• Legislatures determine and control own internal
  arrangements and procedures
• Salaries, allowances and benefits of permanent
  members is a direct charge against relevant
  Revenue Fund

3
Informal Principles

• Legislatures need to be exemplary in their
  practices
• Need to be seen to be as good as, or better, than
  government depts and entities
• Legislature and Executive need to co-operate when
  determining budget, legislation, etc.

4
National Treasury Perspective on FAPPLB

• PFMA adequately covers Parliament/ Legislatures
• Small problems identified can be sorted out
  through coming amendments to PFMA
• Separate Act will set wrong precedent to other
  legislatures
• Legislatures and entities will all want own
  legislation
• Provincial legislatures and municipal councils
  not in the public eye as Parliament, less
  transparent
• Conventions of best practice better than
  legislation
• Should not legislate workings of Parliament
• BUT formalise as if it is legislation
• Objective of uniformity between legislatures

5
Clarifying/Correcting Governance Arrangements in
PFMA

• Secretary of Parliament is the Accounting Officer
  under PFMA, accountable to Exec Authority
• Executive Authority the 2 Presiding Officers
  (Speaker of NA and Chairperson of the NCOP acting
  jointly)
• 2 presiding officers acting jointly to also
  perform functions of treasury for Parliament
• Fix up PFMA to ensure treasury regulations do not
  apply to Parliament and legislatures
• Remuneration of members currently a direct charge

6
What are reasons for FAPPLB?

• FAPLL Bill appears driven by a narrow
  interpretation of separation of powers
• Assumes no engagement with Executive
• No engagement is a recipe for bigger problems
• Major issue appears to be about budgets
• Differentiate between internal process for
  budgeting in Parliament and what PFMA requires
• No clear motivation for why Parliament and
  legislatures need a separate Act rather than PFMA

7
Budgeting Issues

• There is ONE national revenue fund
• Divided between 3 spheres of govt, with
  provincial share and debt servicing direct
  charges
• Need for an agreement between Parliament/
  legislatures and Executive (thru Minister/MEC of
  Fin) on budget for Parliament/legislatures
• Two types of problems How much is enough?
• Executive cannot abuse its position and force a
  small budget on a legislature, so it cannot
  function properly
• Legislatures cannot ignore trade-off with service
  delivery, and needs to ensure its budget is not
  too generous

8
Budgeting Agreements

• First problem can be tackled thru implicit threat
  that the legislature refuse to pass the budget if
  Executive is unreasonable
• Second problem is dealt with in 2 ways
• Commission for Remuneration of PO deals
  substantially with minimum direct charge
  allocation
• Relevant treasury makes legislature aware of
  service delivery priorities
• Final budget of Parliament and legislatures
  should be agreed between Presiding Officers and
  Minister/MEC of Finance
• Develop mechanism for dealing with major
  disagreements

9
Current Budget Problems

• No amount of money is enough for any person,
  department or entity!
• How do Parliaments/Legislatures prioritise their
  budgets?
• Staff in Parliament and Provincial Legislatures
  more highly paid than equivalent members of
  public service
• What is trade-off btw funding researchers and
  support staff and other services (eg catering)?
• Why does Parliament set such rigid internal rules
  for determining its own budget?
• Practice seems to be too rules-driven and
  bureaucratic
• No need for each committee to be treated like a
  separate dept or vote

10
Comparing Parliament and provincial legislature
Budgets

• Total budget for Parliament and 9 provincial
  legislatures R1,46 billion in 2004/05
• Nine provincial legislatures with 344 members
  have a total budget of R677 mil, whilst
  Parliament with 490 members has budget of R785
  million
• Parliament spends less on its staff at R193 mil
  compared to R224 mil by 9 provinces
• Parliament spends more on non-personnel
  expenditure at R395 mil compared to R176 mil by
  provincial legislatures
• Total average cost per member and support staff
  is higher for Parliament at R340 735, compared to
  provinces (high R307 955 to low R165 019)

11
Problems with Bill

• Contains clauses that we want to amend in PFMA
  (eg irregular exp defn)
• Provisions on budget submission out of sync with
  budget process (eg s13(3))
• Are provisions like s14 relevant to a legislature
  (eg measurable objectives)?
• Repeats PFMA and MFMA provisions
• Bigger issues like conditions of service of
  employees not dealt with

12
Conclusions

• National Treasurys view is that no need for
  FAPPL
• PFMA already deals with Parliament/Legislatures
• Coming amendments to PFMA can fix up any current
  problems
• Internal rules in Parliament on determining its
  budget needs modernisation
• Parliament free to change its main divisions
  within its vote

13
Legislatures Exp Budgets
14
Legislatures Comp of employees
15
Number of Members
16
Average Annual Costs