The process of establishing a parliamentary budget office (PBO) to assist Parliament’s oversight of the budgeting process and enable it to amend the budget remains in limbo after almost two years.
Institutional inertia, uncertainty over how the budget office would work, where it would be situated, the question of who would head the office and the impact it could have on the relationship between the executive and the legislature appear to be among the reasons this crucial entity is not yet up and running.
The promulgation of the long-awaited Money Bills Amendment Procedure and Related Matters Act in April 2009 allows Parliament to make amendments to the fiscal framework and the division of revenue between the various arms of government.
These powers had long been envisaged by the Constitution but the legislation to outline how the process would work took more than a decade to draw up.
And, without the establishment of the PBO, also provided for under the Act, Parliament’s ability to interrogate budgetary allocations properly or make any real amendments to government’s most detailed planning tool remains weak.
This week’s budget pointed to increased interaction between Parliament and the national treasury during the budget process.
In line with a request from Parliament Finance Minister Pravin Gordhan announced plans for a set of fiscal framework guidelines to be put forward that are informed by three principles: a counter-cyclical stance on spending, long-term debt sustainability and inter-generational equity, echoing some of the principles already outlined in the Act. However, treasury officials pointed out that a PBO was necessary for Parliament to fully implement the powers the Act provides.
Independent oversight for parliamentary budget
The body as envisaged under the Act is intended to “provide independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills”.
It requires that Parliament appoint a director to head the PBO — a role equivalent to that of a top-ranking public servant — who will, in turn, establish the PBO, appointing the necessary staff.
The emphasis in the Act is on the creation of a totally independent and non-partisan entity, to the point that the director is required to report to Parliament any “inappropriate political or executive interference to prevent the office from providing independent objective and professional advice on matters related to the budget and other money Bills”.
The Act itself, however, includes fiscal policy considerations that have to be taken into account before any amendments to the budget can be made.
Such considerations include ensuring that any additional spending is not deferred to future generations and the examination of the short, medium and long-term implications of the fiscal framework, division of revenue and national budget on the long-term growth potential of the economy and the development of the country.
Mismatch between research capacity and technical skill
Thaba Mufamadi, the chairperson of the standing committee on finance, told the Mail & Guardian that the PBO would address the well-known “mismatch” between Parliament’s research capacity and technical skill and that of government departments.
He emphasised that the safeguards built into the Act ensured that the inputs remained within the fiscal framework adopted by Parliament and that they remained focused on the priorities set out by government.
He pointed out that much of the Act was already in practice, with the adoption of the fiscal framework by Parliament, as well as reporting processes through the portfolio committee, including the standing committee on appropriations.
Opposition MPs have, however, criticised the delay in getting the PBO functioning.
The African Christian Democratic Party’s Steve Swart said the blame “lies squarely with Parliament and its administration”. It was crucial that the PBO be set up to assist MPs in analysing departmental votes and to give thorough and objective advice on economic policy issues, argued Swart.
Need for independence paramount
Dion George, the Democratic Alliance’s spokesperson on finance, said the need for an independent PBO was paramount. In addition, depending on how vigorous Parliament and the budget office became in critiquing the budget, it raised the question of who would drive government policy, the legislature or the executive, said George.
The location of the office and its reporting structures is another contested area, but Mufamadi argued that although the Act was not clear on the matter, the office should be housed under the speaker as the presiding officer in Parliament.
The question of who should fill the position of director, potentially a very powerful figure within Parliament, is also understood to be a concern. But Len Verwey, budget unit manager at the Institute for Democracy in Africa, said the Act’s implications for the relationship between the executive and Parliament could not be guarded against by the location of the PBO. “The Act requires a non-partisan budget office,” he said.
There has been some movement this year on the establishment of the PBO. At the end of last year as well as in January this year study tours were conducted by Parliament to examine international best practice for similar budget offices, according to the office of the speaker.
The National Assembly and the National Council of Provinces conducted separate tours to learn about budget offices in Japan, Korea, Kenya, Germany and Sweden. “A consolidated report with recommendations will be tabled with both houses in due course,” a spokesperson for the speaker said.
“The report will clarify the delays and include recommendations going forward.”
Parliament’s budget vote also stated that the establishment of the PBO would be funded by its retained earnings in the first two years of the Medium Term Expenditure Framework — currently a savings pool of just more than R185-million.