1. Parliament and the National Budget Process
2 JULY 2014
Peter Daniels

2. Role Players in Budget Cycle Budget Cycle Role of Parliament
Presentation Outline
Overview
Legal Framework
Role Players in Budget Cycle
Budget Cycle
Role of Parliament
Supporting Documents

3. Overview
The budget
The process of how revenue raised by national government will be allocated to national, provincial and local governments.
The budget is a process through which choices have to be made about competing priorities
A planning tool that translates policy into service delivery through the allocation of scarce resources
The budget can potentially act as a powerful tool for redistribution and development in society and can enhance the stability of the country’s economy.
To briefly recap, section 5 asks that Committees produce a report that assesses both past and current performance and spending and may make recommendations on future funding needs. But it gives very little detail beyond that.

4. LEGAL FRAMEWORK - Oversight
Overview
Oversight is a Constitutional mandated function of the legislative organs of state, to scrutinize and oversee Executive action and any organ of state.
Section 92 provides that
(2) Members of the Cabinet are accountable collectively and individually to Parliament for the exercise of their powers and the performance of their functions.
(3) Members of Cabinet must … act in accordance with the Constitution; and provide Parliament with full and regular reports concerning matters under their control.
Section 55 (2) provides as follows: The National Assembly must provide for mechanisms - (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of- (i) the exercise of national executive authority, including the implementation of legislation; and (ii) any organ of state.’

5. LEGAL FRAMEWORK – Budgets 1
Overview
The Constitution Section 215 provides that
National, provincial and municipal budgets and budgetary processes must promote transparency, accountability and the effective financial management of the economy, debt and the public sector.
The Public Finance Management Act (No. 1 of 1999) was passed to regulate the financial management of both the national and provincial spheres of government. The main objective of this Act is to ensure transparency, accountability, and sound management of the revenue, expenditure, assets and liabilities of all public institutions.
PFMA Section 27 states that The Minister must table the annual budget for a financial year in the national Assembly before the start of that financial year provides that the annual budget must contain at least estimates of current and capital expenditure per vote that when the annual budget is introduced in the National Assembly, the accounting officer must submit measurable objectives for each main division within the departmental vote.
Just to emphasise further, Treasury regulations (TR 6.2 and 5.2) provide that budget documentation must as per prescribed formats (see ENE) the budget submission must contains appropriate supporting information for institutions receiving transfers from that vote ....in order to facilitate the discussion of individual votes, the approved strategic plan must be tabled in Parliament or the relevant legislature at least 7 days prior to the discussion of the department’s budget vote.
The PFMA was passed to regulate the financial management of both the national and provincial spheres of government. The main objective of this Act is to ensure transparency, accountability, and sound management of the revenue, expenditure, assets and liabilities of all public institutions.
Section 27 provides that the annual budget must contain at least estimates of current and capital expenditure per vote that when the annual budget is introduced in the National Assembly, the accounting officer must submit measurable objectives for each main division within the departmental
states that (b) the Minister must table proposals setting out the strategic priorities, measurable objectives and other performance information for each department, public entity or institution against its expected revenue and proposed expenditure by programme, sub-programme and economic items of expenditures (ENE) (c) relevant members of Cabinet must table the updated strategic plans for each department, public entity or institution, which must be referred to the relevant Committee for consideration and report. vote

6. LEGAL FRAMEWORK – Budgets 2
The Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) provides for a procedure to amend money bills before parliament.
Prior to 2009, Parliament could not amend Money Bills
Section 77 (3) of the Constitution:
“All money Bills must be considered in accordance with the procedure established by section 75. An Act of Parliament must provide for a procedure to amend money Bills before Parliament”.
The Money Bills Act - gives Parliament powers to enable it to change aspects related to tabled Money Bills.
The Budget takes the form of a package of money bills considered and passed by Parliament before being signed by the President into law.
Division of Revenue Bill – provides for distribution of revenue between three spheres of government (vertical division) and across nine provinces and municipalities
The Appropriation Bill –prescribes conditions for spending of funds withdrawn from National Revenue Fund. This Bill consists of a Schedule containing Votes.
Just to emphasise further, Treasury regulations (TR 6.2 and 5.2) provide that budget documentation must as per prescribed formats (see ENE) the budget submission must contains appropriate supporting information for institutions receiving transfers from that vote ....in order to facilitate the discussion of individual votes, the approved strategic plan must be tabled in Parliament or the relevant legislature at least 7 days prior to the discussion of the department’s budget vote.
The PFMA was passed to regulate the financial management of both the national and provincial spheres of government. The main objective of this Act is to ensure transparency, accountability, and sound management of the revenue, expenditure, assets and liabilities of all public institutions.
Section 27 provides that the annual budget must contain at least estimates of current and capital expenditure per vote that when the annual budget is introduced in the National Assembly, the accounting officer must submit measurable objectives for each main division within the departmental
states that (b) the Minister must table proposals setting out the strategic priorities, measurable objectives and other performance information for each department, public entity or institution against its expected revenue and proposed expenditure by programme, sub-programme and economic items of expenditures (ENE) (c) relevant members of Cabinet must table the updated strategic plans for each department, public entity or institution, which must be referred to the relevant Committee for consideration and report. vote

7. ROLE PLAYERS IN THE BUDGET CYCLE
Legislatures (Portfolio Committees, Finance and Appropriations Committees, SCOPA)
Executive (National and Provincial Departments, National Treasury)
Auditor-General.
Public Entities.
Financial and Fiscal Commission (FFC)
Civil Society
Parliamentary Budget Office
To briefly recap, section 5 asks that Committees produce a report that assesses both past and current performance and spending and may make recommendations on future funding needs. But it gives very little detail beyond that.

8. BUDGET PLANNING TOOLS
Strategic Plan sets out departmental policy priorities, projects and programmes over a 5 year period.
Annual Performance Plan sets out what the Department is going to do over the upcoming financial year and during the MTEF to implement its Strategic Plan.
Budget sets out what funds are allocated to deliver projects and programs and are linked to the strategic plan and annual performance plans

9. Strategic Planning and APP Process

10. tHE BUDGET CYCLE SONA, National Budget Annual Reports MTBPS Adjustment
Estimates of National Expenditure
Budget Review
Division of Revenue Bill
Appropriation Bill February - July
Mid-year continuous monitoring
Section 32 reports, Quarterly Expenditure and Performance Reports
Annual Reports MTBPS Adjustment
Budget, BRRR Reports September - November
To briefly recap, section 5 asks that Committees produce a report that assesses both past and current performance and spending and may make recommendations on future funding needs. But it gives very little detail beyond that.

11. THE BUDGET CYCLE
South Africa uses a three-year rolling budget, the Medium Term Expenditure Framework (MTEF) system that is informed by key government priorities, strategic plans of departments and the fiscal stance.
In January, Cabinet Lekgotla discusses the government priorities for the next financial year.
In February, the President presents the State of the Nation Address (SONA), the Minister of Finance introduces the National Budget.
Between March and June, Parliament passes the Division of Revenue Bill and Appropriation Bill. These confirm the allocation of funds to each vote.
In September to November, the National Assembly submits BRRR reports, adopts the fiscal framework and passes money bills.
The MTBPS sets out the budget policy framework proposals for the outer three year years (MTEF)
BRRR – provides an assessment of the Department’s service delivery performance given available resources, must provide an assessment on the effectiveness and efficiency of the Department’s use and forward allocation of available resources and may include recommendations on the forward use of resources.

12. ROLE OF PARLIAMENT Parliament:
Ensures that the Budget matches the nation’s needs with the resources that are available.
Parliamentary committees consider and report on their respective budget vote
Money Bills provides tabling of updated strategic plans for each department, public entity or institution, which must be referred to the relevant Committee for consideration and report
Approves or amends the Budget (as per the Money Bills Act)
In the next few months:
Quarterly Expenditure and Performance Reports
Annual Reports tabling in September 2014
BRRR in September-October 2014
MTBPS in October 2014

13. DOCUMENTS FOR BUDGET OVERSIGHT
Key Government policy documents that are relevant:
SONA
Sector Relevant Documents
National Budget Documents
Division of Revenue Act of 2014
Budget Review,
Estimates of National Expenditure (ENE),
Appropriation Bill
Updated Strategic Plans
Annual Performance Plans
Auditor General and SCOPA
Reports of other relevant institutions (FFC, DPME)

14. THANK YOU