This is why SA needs a Parliamentary Budget Office
Research shows that meaningful public participation and parliamentary oversight over budget processes lifts social ownership of the budget and effective allocation of funds, and cuts waste, writes Mohammed Jahed
"Follow the money, always follow the money," is a catchphrase from the 1970s movie All The President’s Men, which focused on the Watergate scandal, which brought down US President Richard Nixon.
Since then it has come to be associated with high-office corruption, but it is also relevant in terms of the need for close public scrutiny of government revenue collection, budget allocation and spending. It is key to parliament’s fulfilling its constitutional mandate of exercising oversight over the executive’s management of public finances.
Parliament’s Parliamentary Budget Office (PBO) set up in 2013, supports parliament’s oversight. The Money Bills Amendment Procedure and Related Matters Act of 2009, provided for the establishment of the PBO and the standing and select committees on finance and appropriations in parliament.
The act has its origins in the constitution’s provision that: "An act of parliament must provide for a procedure to amend money bills before parliament". It has empowered parliament to make adjustments to the budget as a whole, as well as to the budgets of specific national government departments and entities.
The act sets out a procedure to amend the fiscal framework, money bills, including taxation and revenue laws, and the Division of Revenue Bill. Before the act, parliament could approve or reject the budget, but not make amendments to it.
The act places greater responsibility on parliament. It is a responsibility that has begun to reframe the nature of the relationship between parliament, as the legislative authority, and the national executive, as the custodians of service delivery. Parliamentary oversight over the budget has become a continuous exercise and has been enhanced — and so has public participation in the budget process.
This is in keeping with recognition in the constitution that it is necessary for parliament to engage actively in the budget process, in the interests of good governance, financial stability and transparency.
The finance issues, which MPs must interrogate, are complex and the PBO has ... levelled the playing field between MPs and the executive with its significantly more staff and resources
However, several technical challenges hindering the full realisation of the act’s intention became apparent, and in 2016, the National Assembly instructed the standing committee on finance to review the act.
After a lengthy and thorough public consultation process, the national assembly was considering the bill at a plenary sitting of the assembly on August 28.
One of the practical challenges the standing committee on finance identified is the short timeframes within which parliament must consider and approve different financial instruments and bills related to the budget and adjustments budget. As stated in its report of June 7 on the proposed amendments to the act, the timeframes are very difficult to implement and reduce the prospects of meaningful public engagement on very important bills.
Another challenge the committee identified is that the PBO’s planning, budgeting, financial management and reporting proceeds through the administration of parliament. The committee’s amendment on this, therefore, seeks to follow international best practice by proposing the PBO be established as a juristic person.
Despite these challenges, the PBO has provided independent, objective and professional research, advice and analysis to parliament’s standing and select committees on finance and appropriations and to other committees of parliament on specific issues.
The finance issues, which MPs must interrogate, are complex and the PBO has, to an extent, levelled the playing field between MPs and the executive with its significantly more staff and resources.
The PBO has, for instance, provided analysis and advice to parliament during the Budget and Medium Term Budget Policy Statement through briefings on these to joint meetings of the Finance and Appropriations Committees, reports on key macroeconomic factors affecting the economy, assessments of revenue and expenditure patterns and contingent liabilities and potential fiscal risks.
The PBO also analyses the government’s proposals on spending, revenue collection (such as, changes to taxes), the fiscal policy framework, the size of the deficit and the borrowing requirements. The division of revenue across spheres of government and government departments is assessed as well — as is the expenditure performance of departments.
The PBO has also provided analysis about implementation of the National Development Plan — whether the government’s performance plans, budgets and outcomes are in keeping with the plan.
Specific issues have also come under scrutiny. In 2016, for instance, the PBO provided a report and analysis on the sustainability of the current social grant system outlining several scenarios and identifying key areas for monitoring risk. The PBO has produced analyses of choices for new electricity generation, the costs and outcomes of industrial policy, the state of Eskom’s finances, and on university funding and fees.
Feedback from MPs has been positive: the reports have helped them to make policy and legislative recommendations, and to enrich their oversight of executive action. Policy imperatives, after all, should be reflected in the budget as a whole and the budgets of national of government departments and entities.
Research has shown that meaningful public participation and parliamentary oversight over budget processes increases social ownership of the budget and effective allocation of funds, while reducing waste. There is also wide agreement that the specialist, independent, objective and technical research and analysis available from PBOs is useful and helps to enhance transparency in how public funds are managed.
The environments in which PBOs operate are not, however, simple or always easy. The US congressional budget office, established more than 40 years ago to provide independent technical advice to reduce Congress’s reliance on analyses from the president’s office of budget management, came under fire in 2017.
This related to the repeal of the Patient Protection and Affordable Care Act by the Republican Party and US President Donald Trump. The congressional budget office reports estimated that changing the law to repeal the act could cause millions of Americans to lose health cover or significantly increase costs to those who had cover.
Last week, parliament hosted the third annual conference of the African Network of Parliamentary Budget Offices. The network is a platform for African PBOs and similar institutions to share ideas and experiences about strengthening support for parliamentary fiscal oversight. The inaugural conference, held in August 2016, established the network and laid the foundation to build this platform for information sharing among African countries that have PBOs and those considering establishing them.
Delegates attending the third conference on August 22-23 came from countries in Africa and across the world — from PBOs and international organisations supporting legislatures’ oversight of public funds. MPs, members of provincial legislatures and institutions supporting democracy also participated.
A key message from the conference was that PBOs should play a supportive role also in enhancing public participation in budget processes. This is because these offices, by enhancing the capacity of MPs to engage more fully with budget processes, are also serving the people who those MPs represent.
Another was that clearly defined governance structures, preferably grounded in legislation, ensured that PBOs were protected from undue political and administrative influence. The independence of PBOs was seen as a key factor to their success, delegates agreed.
Correction: August 28 2018
An earlier version of this story has been corrected to reflect that the national assembly was considering the bill at a plenary sitting on August 28.
• Jahed is the director of parliament’s Parliamentary Budget Office