Money Bills Amendment Money Bills Amendment Procedure and Related Procedure and Related

Matters Act: Matters Act: SummarySummary

by:by:Mkhethwa MKHIZEMkhethwa MKHIZE

Committee SectionCommittee Section

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Business of WorkshopBusiness of Workshop

Background Background Main objectives of the ActMain objectives of the Act Establishment of CommitteesEstablishment of Committees Establishment of PBOEstablishment of PBO Important MilestonesImportant Milestones Important SectionsImportant Sections ConclusionsConclusions Comments, & Question-Answer DialogueComments, & Question-Answer Dialogue

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BackgroundBackground

The Constitution of RSA, 1996The Constitution of RSA, 1996 Section 77(Section 77(33) of the Constitution:) of the Constitution: “ “All money Bills must be considered in All money Bills must be considered in

accordance with the accordance with the procedureprocedure established established by section 75. An Act of Parliament must by section 75. An Act of Parliament must provide for a procedure to provide for a procedure to amendamend money money Bills before Parliament”.Bills before Parliament”.

The Money Bills Amendment Procedure and The Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009: Related Matters Act, No 9 of 2009: 13 years 13 years overdueoverdue..

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Background…Background…

The Constitution of RSA, 1996.The Constitution of RSA, 1996. Section 77(Section 77(11) of the Constitution:) of the Constitution:A money Bill is defined as “a Bill thatA money Bill is defined as “a Bill that appropriates money; appropriates money; imposes, abolishes, or grants imposes, abolishes, or grants

exemptions from national taxes, levies, exemptions from national taxes, levies, duties or surcharges; or duties or surcharges; or

authorises direct charges against the authorises direct charges against the National Revenue Fund”National Revenue Fund”

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Main Objectives of the ActMain Objectives of the Act

To provide for a procedure to amend money To provide for a procedure to amend money Bills before Parliament and related matters;Bills before Parliament and related matters;

(In other words, to provide Parliament with (In other words, to provide Parliament with powers to enable it to change aspects powers to enable it to change aspects related to tabled money Bills); andrelated to tabled money Bills); and

To provide for the establishment of To provide for the establishment of Parliamentary Budget Office (PBO) and Parliamentary Budget Office (PBO) and committees for consideration of money committees for consideration of money Bills.Bills.

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Establishment of Establishment of Committees Committees

National Assembly:National Assembly: Committee on Finance, Committee on Finance, andand Committee on Appropriations.Committee on Appropriations.

National Council of Provinces:National Council of Provinces: Committee on Finance, Committee on Finance, andand Committee on Appropriation.Committee on Appropriation.

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ChartChart

PARLIAMENT

NATIONAL ASSEMBLYNATIONAL COUNCIL OF

PROVINCES

Establish a Committee on Finance

& a Committee on Appropriations

Establish a Committee on Finance

& a Committee on Appropriations

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Powers & Functions of Powers & Functions of CommitteesCommittees

Committee on Committee on FinanceFinance: To consider and : To consider and report on-report on-

macro-economic and fiscal policy;macro-economic and fiscal policy; amendments to-amendments to-

Fiscal framework, andFiscal framework, and Revenue proposals and Bills; andRevenue proposals and Bills; and

actual revenue published by NT.actual revenue published by NT.

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Macro-economic PolicyMacro-economic Policy

The outlook for growth (7 years) -The outlook for growth (7 years) -Macroeconomic projections i.e. gross Macroeconomic projections i.e. gross domestic product (nominal and real), domestic product (nominal and real), inflation, etc;inflation, etc;

Prospects and risk in the global and Prospects and risk in the global and national recovery; andnational recovery; and

Tools to support recovery and achieve Tools to support recovery and achieve more rapid growth.more rapid growth.

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Fiscal PolicyFiscal Policy

Fiscal policy Fiscal policy guidesguides govt.’s decisions govt.’s decisions about revenue, spending and about revenue, spending and borrowing.borrowing.

South Africa’s fiscal policy should enable South Africa’s fiscal policy should enable govt. to deliver on its developmental govt. to deliver on its developmental mandate by providing resources in a mandate by providing resources in a manner that is manner that is sustainablesustainable and that and that reinforces the reinforces the stabilitystability of the economy. of the economy.

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Fiscal Policy…Fiscal Policy…

Contributing to economic stability:Contributing to economic stability: Expenditure trends;Expenditure trends; Revenue trends; andRevenue trends; and Borrowing trends.Borrowing trends.Contributing to development:Contributing to development: Govt.’s expenditure incl. capex; andGovt.’s expenditure incl. capex; and Govt.’s consumption.Govt.’s consumption.Fiscal sustainability: a Fiscal sustainability: a corecore principle of fiscal principle of fiscal

policy:policy: National revenue versus Govt. expenditure.National revenue versus Govt. expenditure.

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Fiscal FrameworkFiscal Framework

Fiscal framework = Macroeconomic Fiscal framework = Macroeconomic policy + fiscal policy for a specific policy + fiscal policy for a specific financial year.financial year.

Fiscal framework is defined on page 3 Fiscal framework is defined on page 3 of the Act.of the Act.

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Powers & Functions of Powers & Functions of CommitteesCommittees

Committee on Committee on AppropriationsAppropriations: To consider : To consider and report on-and report on-

Spending issues;Spending issues; Amendments to-Amendments to-

Division of Revenue Bill, andDivision of Revenue Bill, and The Appropriation Bill.The Appropriation Bill.

Recommendations of FFC; andRecommendations of FFC; and Actual expenditure published by NT. Actual expenditure published by NT.

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Medium Term Expenditure Medium Term Expenditure FrameworkFramework

MTEF is the three-year spending plans of MTEF is the three-year spending plans of national and provincial governments:national and provincial governments:

Policy prioritiesPolicy priorities over the medium term – (1) over the medium term – (1) jobs, (2) health, (3) education, (4) rural jobs, (2) health, (3) education, (4) rural development and (5) fighting crime;development and (5) fighting crime;

- (6) finding savings and increasing - (6) finding savings and increasing efficiency;efficiency;

Last year and this year expenditure Last year and this year expenditure outcomes or estimates.outcomes or estimates.

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MTEF…MTEF…

Medium term Medium term spending prioritiesspending priorities::

- (1) Expanding employment and safeguarding - (1) Expanding employment and safeguarding social security;social security;

- (2) Improving the quality of education and - (2) Improving the quality of education and skills development;skills development;

- (3) Enhancing the quality of health care;- (3) Enhancing the quality of health care;

- (4) Rolling out a comprehensive rural - (4) Rolling out a comprehensive rural development strategy; anddevelopment strategy; and

- (5) A broad-based approach to fighting crime.- (5) A broad-based approach to fighting crime.

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Establishment of Parliamentary Establishment of Parliamentary Budget Office (PBO)Budget Office (PBO)

Money Bills Act provides:Money Bills Act provides: For establishment of PBO;For establishment of PBO; Functions of PBO;Functions of PBO; Composition and budget of PBOComposition and budget of PBO

Core function is to: Provide Core function is to: Provide independentindependent, , objective and professional analysis and objective and professional analysis and advice to Parliament on matters related to advice to Parliament on matters related to the budget and other money Bills.the budget and other money Bills.

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Important MilestonesImportant Milestones

Budget Review and Recommendations Budget Review and Recommendations Reports (Reports (BRRRBRRR)- Early October 2010;)- Early October 2010;

Medium Term Budget Policy Statement –Late Medium Term Budget Policy Statement –Late October 2010;October 2010;

National Annual Budget – February 2011;National Annual Budget – February 2011; Fiscal Framework and Revenue Proposals;Fiscal Framework and Revenue Proposals; Division of Revenue Bill – February 2011; Division of Revenue Bill – February 2011;

andand Appropriation Bill – February 2011.Appropriation Bill – February 2011.

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BRRR…BRRR…

NA’sNA’s committees to assess performance of national committees to assess performance of national departments departments –Section 5(1).–Section 5(1). Silence on NCOPSilence on NCOP..

Budgetary Review and Recommendation Reports Budgetary Review and Recommendation Reports (BRRR) must be based on:(BRRR) must be based on:

Medium Term Estimates of Expenditure;Medium Term Estimates of Expenditure; Strategic plans, including strategic priorities and Strategic plans, including strategic priorities and

measurable objectives;measurable objectives; Section 32 of PFMA’s expenditure reports (Section 32 of PFMA’s expenditure reports (page 41page 41);); Financial statements and annual reports;Financial statements and annual reports; Reports of SCOPA, AG, FFC, etc.Reports of SCOPA, AG, FFC, etc.BRRR submitted to the Minister of Finance and Cabinet BRRR submitted to the Minister of Finance and Cabinet

member responsible for the vote member responsible for the vote -Section 5(5).-Section 5(5).

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BRRR…BRRR…

OutcomesOutcomes:: An assessment of service delivery An assessment of service delivery

performance -performance -a musta must;; An assessment on the effectiveness An assessment on the effectiveness

and efficiency (use and forward and efficiency (use and forward allocation of resources) –allocation of resources) –a musta must;;

Recommendations on the forward use Recommendations on the forward use of resources –of resources –a maybea maybe..

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MTBPSMTBPS

Section 6(1): Medium Term Budget Section 6(1): Medium Term Budget Policy Statement (MTBPS)Policy Statement (MTBPS)

MTBPS is a Cabinet MTBPS is a Cabinet policypolicy statementstatement tabled in Parliament. It sets out the tabled in Parliament. It sets out the economic context and assumptions economic context and assumptions that inform the following year’s that inform the following year’s budget, as well as the framework in budget, as well as the framework in which the budget is prepared.which the budget is prepared.

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Important SectionsImportant Sections

Section 7 of the Act and Section 7 of the Act and Section 27 of PFMASection 27 of PFMA:: National Annual BudgetNational Annual Budget

National Annual Budget includes:National Annual Budget includes: Fiscal Framework and Revenue Proposals Fiscal Framework and Revenue Proposals

((section 7(2)section 7(2));); Division of Revenue Bill (Division of Revenue Bill (section 7(3)section 7(3)); and); and Appropriation Bill (Appropriation Bill (section 7(1)section 7(1));); Responses to BRRR and MTBPS reports Responses to BRRR and MTBPS reports

((section 7(4)section 7(4)).).

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Fiscal FrameworkFiscal Framework

Section 8Section 8: Consideration and reporting : Consideration and reporting on the Fiscal Framework and Revenue on the Fiscal Framework and Revenue Proposals.Proposals.

By Committees on Finance section By Committees on Finance section 8(1).8(1).

Silence on the role of other Silence on the role of other committeescommittees..

Provides for public hearings.Provides for public hearings.

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DORB…DORB…Section 7(3): Division of revenue (DOR)Section 7(3): Division of revenue (DOR)– at the – at the

same time as Bills in Section 7(1)same time as Bills in Section 7(1) PurposePurpose: To provide for the : To provide for the equitableequitable

division of revenue raised nationally among division of revenue raised nationally among the National, Provincial and Local spheres of the National, Provincial and Local spheres of government.government.

Accompanied by schedules and appendices Accompanied by schedules and appendices that provide detailed information.that provide detailed information.

The standing rules must provide for the The standing rules must provide for the participation of chairpersons of other participation of chairpersons of other committees committees -section 9(5)(a)-section 9(5)(a)..

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DORB…DORB…

Division of Revenue’s (DOR) Division of Revenue’s (DOR) schedulesschedules::Schedule 1: Spheres of government,Schedule 1: Spheres of government,Schedule 2: Provinces, andSchedule 2: Provinces, andSchedule 3: Municipalities.Schedule 3: Municipalities.

Division of Revenue’s (DOR) Division of Revenue’s (DOR) appendicesappendices:: From appendix W1 to W13, andFrom appendix W1 to W13, and Provides detailed information on every Provides detailed information on every

‘named’ funds (grants).‘named’ funds (grants).

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Appropriation BillAppropriation Bill

Purpose:Purpose: To provide for the To provide for the appropriation of money from the appropriation of money from the National Revenue Fund for the National Revenue Fund for the requirements of the State in the requirements of the State in the relevant financial year.relevant financial year.

Accompanied by a schedule which Accompanied by a schedule which informs us about appropriation per informs us about appropriation per line function of a national department.line function of a national department.

Can amend Can amend afterafter adoption of DOR Bill. adoption of DOR Bill.

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Appropriation BillAppropriation Bill

Section 10(1)(c)Section 10(1)(c): : After Fiscal FrameworkAfter Fiscal Framework,, The relevant members of cabinet must The relevant members of cabinet must

table updated strategic plans for each table updated strategic plans for each department, public entity or department, public entity or institution, which must be referred to institution, which must be referred to the relevant committee for the relevant committee for consideration and report.consideration and report.

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Appropriation BillAppropriation Bill

Another committeeAnother committee may advise a Committee may advise a Committee on Appropriations:on Appropriations:

that a sub-division of a main division within that a sub-division of a main division within a vote be appropriated conditionally to a vote be appropriated conditionally to ensure that the money requested for the ensure that the money requested for the main division will be spent effectively, main division will be spent effectively, efficiently and economically (efficiently and economically (section 10(5)section 10(5)); ); andand

that an amount must be appropriated that an amount must be appropriated specifically and exclusively for a purpose specifically and exclusively for a purpose mentioned under a main division within a mentioned under a main division within a vote (vote (section 10(6)section 10(6)).).

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ConclusionConclusion

Parliament has powers to:Parliament has powers to: accept, accept, oror amend money Bills.amend money Bills.

Greater oversight powers.Greater oversight powers. Good co-operative governanceGood co-operative governance.. PBO is key to successfully implement PBO is key to successfully implement

Money Bills…Act.Money Bills…Act.

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End of Presentation.End of Presentation.

NgiyabongaNgiyabonga