What is the role of the Parliamentary Budget Office?
Careful scrutiny over government spending and revenue collection is key to Parliament fulfilling its constitutional mandate of maintaining oversight over executive action and policy implementation. The Parliamentary Budget Office (PBO) of the South African Parliament, established in 2013, supports Parliament’s oversight.
The PBO was set up as a result of the Money Bills Amendment Procedure and Related Matters Act of 2009. This Act also provided for establishment of Parliament’s Standing and Select Committees on Finance and Standing and Select Committees on Appropriations.
The Act has its origins in the South African 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. This is in keeping with the recognition in the Constitution that it is necessary for Parliament to engage actively with the budget process, in the interests of good governance, and financial transparency.
Before the Act, Parliament could approve or reject the budget – but not make amendments to it. The Act places great responsibility on Parliament and 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. Parliament’s oversight over the budget and public participation in the budget process has been enhanced. This is in line with the Constitution’s recognition that Parliament should engage actively with the budget process, in the interests of good governance and financial transparency.
However, it became apparent that there are several technical challenges hindering the full realisation of the original intentions of the Act. That is why the National Assembly, in 2016, instructed the Standing Committee on Finance to review the Act to further the realisation of the Act’s original vision. After lengthy and thorough public consultation, the committee is now scheduled – on 28 August – to seek the National Assembly’s approval to process amendments to the Act
One of the practical challenges, which the Standing Committee on Finance has identified, is the timeframes within which the budget and related legislation must be passed. The short timeframes within which parliament must consider and approve tabled legislation limit the extent to which parliament is able to sufficiently consider the merits of government’s proposals, their suitability for the country and meaningfully consult the public.
The committee has also agreed to follow international best practice by furthering the administrative independence of the PBO through establishing it as a juristic person, at arms-length from Parliament’s administration.
Despite these challenges, the South African Parliament’s 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 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. It has also provided analysis about whether government’s performance plans, budgets and outcomes are in keeping with implementation of the National Development Plan –the plan.
Specific issues also have been addressed. 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 reports and analyses of Eskom’s financial position, finances and energy choices for new generation as well as on university funding and fees.
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.
This month, the South African Parliament’s PBO 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 a platform for information sharing among African countries that have PBOs and those considering establishing them.
Delegates attending the third conference on 22 and 23 August 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 also play a supportive role 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 key message was that the independence of PBOs was seen as vital to their success. The conference concluded that clearly defined governance structures, preferably grounded in legislation, ensured that PBOs were protected from undue political and administrative influence.
Professor Mohammed Jahed is the Director of the Parliamentary Budget Office