Lecturer in Commercial Law and Advocate of the High Court of South Africa, with experience as a State Law Advisor and in taxation law with Webber Wentzel. + Ben Cronin
Lecturer in Commercial Law and Advocate of the High Court of South Africa, with + experience as a State Law Advisor and in taxation law with Webber Wentzel.
In the previous review, conducted in 2019, serious questions were raised about the institutional capacity of Parliament to fulfil its mandate and perform the basic function of amending appropriations.1 This concern remains as does the possibility that Parliament will face legal challenges regarding the passing of fiscal statutes.
+In the previous review, conducted in 2019, serious questions were raised about the + institutional capacity of Parliament to fulfil its mandate and perform the basic function of amending + appropriations.1 This concern remains as does the possibility that Parliament will face + legal challenges regarding the passing of fiscal statutes.
-To get a sense of the quantum of ‘fiscal statutes’, including both money Bills and bills relating to tax administration, relative to the total number of Acts passed by Parliament the following graph illustrates the proportion during the period 2019 to 2023:
+To get a sense of the quantum of ‘fiscal statutes’, including both money Bills and bills relating to tax + administration, relative to the total number of Acts passed by Parliament the following graph illustrates the + proportion during the period 2019 to 2023:
- - -This graph should be understood as merely an indicative assessment of the scale of ‘fiscal statutes’ relative to other Acts passed by Parliament. The period reflected marginally overlaps with the Fifth Parliament and the graph does not consider the total number of bills being considered (including their size and complexity). It does, however, show the remarkable consistency of fiscal legislation across the five years and its disproportionate representation in the total output of Parliament. ‘Fiscal statutes’ accounted for between 30% and 56% of the total number of statutes depending on the year in question.
+ -In reviewing the budget process of the Sixth Parliament this article highlights four specific areas of concern for Parliamentarians: -
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- the need for meaningful public participation; -
- the role of the ‘Fiscal Framework’ and Parliament’s discretion to amend money Bills; -
- the capacity of the Parliamentary Budget Office (‘Budget Office’) and the review of tax legislation in Parliament; and -
- the statewide obligations being given effect to by Parliament when enacting fiscal statutes. -
This graph should be understood as merely an indicative assessment of the scale of ‘fiscal statutes’ relative to + other Acts passed by Parliament. The period reflected marginally overlaps with the Fifth Parliament and the + graph does not consider the total number of bills being considered (including their size and complexity). It + does, however, show the remarkable consistency of fiscal legislation across the five years and its + disproportionate representation in the total output of Parliament. ‘Fiscal statutes’ accounted for between 30% + and 56% of the total number of statutes depending on the year in question.
+ +In reviewing the budget process of the Sixth Parliament this article highlights four specific areas of concern + for Parliamentarians: +
-
+
- the need for meaningful public participation; +
- the role of the ‘Fiscal Framework’ and Parliament’s discretion to amend money Bills; +
- the capacity of the Parliamentary Budget Office (‘Budget Office’) and the review of tax legislation in + Parliament; and +
- the statewide obligations being given effect to by Parliament when enacting fiscal statutes. +
I The need for meaningful public participation
-As was indicated in the previous review2, the budget is at its centre lawmaking and like all legislative processes requires meaningful public participation.3 The joint committees responsible should be commended for genuine attempts to facilitate public participation across the range of fiscal statutes, but it should be noted that these efforts were heavily circumscribed by the extremely short time periods made available (particularly for appropriations and division of revenue bills) and by the limited capacity available to parliamentarians (see Part III below).
- -In addition to the persisting challenges, the Sixth Parliament also faced a number of unprecedented hurdles in performing its task of facilitating public participation. In this regard, the significant impacts of Covid-19 shutdowns and the fire that burned down Parliament’s main building, should be noted. On a more positive note, there is an increased opportunity to make online submissions, which mitigates the potential of regional exclusion for in-person oral submissions.
- -A key issue the Seventh Parliament should address is the period of time made available for public participation and to recognise that the current model exposes Parliament, particularly in relation to appropriations, to potentially successful challenges in court.
- -II The Role of the Fiscal Framework
- -The Money Bills Amendment Procedure and Related Matters Act4 (‘Amendment Act’) requires that Parliament first ‘adopt’ the ‘Fiscal Framework’ presented by National Treasury before considering amendments to appropriations and division of revenue bills. The nature of this ‘instrument’ is ambiguous in the context of parliamentary process and potentially exposes Parliament to legal challenges. This is particularly the case if, as the Amendment Act ostensibly requires, amendments are only made in conformity with the terms of the ‘Fiscal Framework’.5
- -Given the most generous interpretation of the Amendment Act the ‘Fiscal Framework’ is a benign but superfluous instrument for purposes of lawmaking, but at its least generous it is a contravention of a basic constitutional norm that Parliament should have a free and unfettered hand to legislate.
- -III The capacity of the Budget Office and the review of Tax Legislation
- -The Budget Office was established in terms of the Amendment Act with the mandate ‘to provide independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills’.6 The Sixth Parliament was the third to receive advice and support from the Budget Office.
+As was indicated in the previous review2, the budget is at its centre lawmaking and like + all legislative processes requires meaningful public participation.3 The joint committees + responsible should be commended for genuine attempts to facilitate public participation across the range of + fiscal statutes, but it should be noted that these efforts were heavily circumscribed by the extremely short + time periods made available (particularly for appropriations and division of revenue bills) and by the limited + capacity available to parliamentarians (see Part III below).
+ +In addition to the persisting challenges, the Sixth Parliament also faced a number of unprecedented hurdles in + performing its task of facilitating public participation. In this regard, the significant impacts of Covid-19 + shutdowns and the fire that burned down Parliament’s main building, should be noted. On a more positive note, + there is an increased opportunity to make online submissions, which mitigates the potential of regional + exclusion for in-person oral submissions.
+ +A key issue the Seventh Parliament should address is the period of time made available for public participation + and to recognise that the current model exposes Parliament, particularly in relation to appropriations, to + potentially successful challenges in court.
+ +II The Role of the Fiscal Framework
+ +The Money Bills Amendment Procedure and Related Matters Act4 (‘Amendment Act’) requires + that Parliament first ‘adopt’ the ‘Fiscal Framework’ presented by National Treasury before considering + amendments to appropriations and division of revenue bills. The nature of this ‘instrument’ is ambiguous in the + context of parliamentary process and potentially exposes Parliament to legal challenges. This is particularly + the case if, as the Amendment Act ostensibly requires, amendments are only made in conformity with the terms of + the ‘Fiscal Framework’.5
+ +Given the most generous interpretation of the Amendment Act the ‘Fiscal Framework’ is a benign but superfluous + instrument for purposes of lawmaking, but at its least generous it is a contravention of a basic constitutional + norm that Parliament should have a free and unfettered hand to legislate.
+ +III The capacity of the Budget Office and the review of Tax Legislation
+ +The Budget Office was established in terms of the Amendment Act with the mandate ‘to provide independent, + objective and professional advice and analysis to Parliament on matters related to the budget and other money + Bills’.6 The Sixth Parliament was the third to receive advice and support from the Budget + Office.
+ +The Budget Office has, like National Treasury, displayed high levels of professionalism during this period, but + unlike National Treasury, the Budget Office is severely under-resourced considering the scale of fiscal statutes + passing through the Parliament. The Seventh Parliament must consider appropriating a budget suitable to the + extent of assistance it will require from the Budget Office.
+ +A particular area that will require some thought is that of tax statutes. The evolution of a two-stage comment + process for taxing statutes, with the first held by National Treasury and the South African Revenue Service, has + masked the lack of technical input at Parliament. This is something that should be addressed by the new incoming + Parliament.
+ +IV Statewide obligations being given effect to by Parliament
+ +The Sixth Parliament operated during a period of significant austerity in which National Treasury prepared draft + budgets making deep cuts to public spending across the board. The continued inability, or reluctance, of + Parliament to amend appropriations and division of revenue bills exposed the legislature to not only potential + procedural challenges, but also substantive non-compliance with its own constitutional obligations.
+ +The Financial and Fiscal Commission raised this issue and drew specific attention to regressive cuts in health + care, which were likely unconstitutional.7 Professor Sandra Liebenberg in addressing the + shortfall in meeting constitutional obligations in the wake of the consistent adoption of fiscal consolidation + wrote:
+ +‘Developing a policy and legislative framework to guide and regulate human rights impact + assessments and meaningful public participation in budgetary decision-making will open spaces for civil society + organisations and social movements to engage with government on alternative policies that are aligned to + constitutional rights and values’.8
+ +It should also be noted that the Sixth Parliament narrowly escaped challenges to appropriations in matters such + as the National Education Health and Allied Workers Union v Minister of Public Service and Administration and + Others9 where an ostensibly lawful future financial commitment was not budgeted for in + the new financial year. It is unlikely that the Seventh Parliament would similarly escape such a challenge were + it not to amend fiscal statutes in line with the obligations imposed on the state.
-The Budget Office has, like National Treasury, displayed high levels of professionalism during this period, but unlike National Treasury, the Budget Office is severely under-resourced considering the scale of fiscal statutes passing through the Parliament. The Seventh Parliament must consider appropriating a budget suitable to the extent of assistance it will require from the Budget Office.
- -A particular area that will require some thought is that of tax statutes. The evolution of a two-stage comment process for taxing statutes, with the first held by National Treasury and the South African Revenue Service, has masked the lack of technical input at Parliament. This is something that should be addressed by the new incoming Parliament.
- -IV Statewide obligations being given effect to by Parliament
- -The Sixth Parliament operated during a period of significant austerity in which National Treasury prepared draft budgets making deep cuts to public spending across the board. The continued inability, or reluctance, of Parliament to amend appropriations and division of revenue bills exposed the legislature to not only potential procedural challenges, but also substantive non-compliance with its own constitutional obligations.
- -The Financial and Fiscal Commission raised this issue and drew specific attention to regressive cuts in health care, which were likely unconstitutional.7 Professor Sandra Liebenberg in addressing the shortfall in meeting constitutional obligations in the wake of the consistent adoption of fiscal consolidation wrote:
- -‘Developing a policy and legislative framework to guide and regulate human rights impact assessments and meaningful public participation in budgetary decision-making will open spaces for civil society organisations and social movements to engage with government on alternative policies that are aligned to constitutional rights and values’.8
- -It should also be noted that the Sixth Parliament narrowly escaped challenges to appropriations in matters such as the National Education Health and Allied Workers Union v Minister of Public Service and Administration and Others9 where an ostensibly lawful future financial commitment was not budgeted for in the new financial year. It is unlikely that the Seventh Parliament would similarly escape such a challenge were it not to amend fiscal statutes in line with the obligations imposed on the state.
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