It has been almost 12 years in the making, and this week parliament will start implementing the legislation which gives it the power to amend the national budget proposed by the finance minister.
The Money Bills Amendment Procedure & Related Matters Act was signed into law last year, and Pravin Gordhan confirmed his budget would be the first to be processed under it.
The act gives parliament the power to make changes to fiscal policy, the division of revenue between spheres of government, tax policy and individual allocations, says Len Verwey, head of the budget unit at think-tank Idasa. "It sets the scene for an assertive legislature in the budget and 2010 will be its test case." Any bills that raise revenue or allocate funds could be affected, including allocations to state departments and the medium-term expenditure framework.
Gordhan said the act obliges MPs to consider the implications of any proposed changes to the economy and the delivery of public services.
First time - Parliament can amend Pravin Gordhan's maiden budget
"It will require close co-operation between the executive and the legislature and we look forward to both learning during the implementation process and to working with the responsible committees to meet this important legislative mandate," he said.The establishment of a parliamentary budget office is key and is the responsibility of the new standing committee on appropriations, chaired by ANC MP Elliot Sogoni. The core functions of the parliamentary budget office include:
- Annual reviews and analysis of all relevant documents;
- Advice and analysis on proposed amendments to the fiscal framework, the Division of Revenue Bill and money bills on policy proposals with budgetary implications;
- Monitoring and synthesising matters and relevant reports tabled and adopted in the national assembly;
- Keeping abreast of policy debates, expenditure and revenue; and
- Undertaking research on request by both houses of parliament.
The office will be headed by a director who is "at the same level of the top rank of the public service". It will be funded from parliament's annual budget and the director is expected to submit a three-year budget before allocations are made.
Trevor Manuel, now national planning minister, has warned that the new office would need to hire people who are not just technically competent, but also attuned to government policy. Economic specialists with a close understanding of the core areas of health, education, defence and welfare are required.
One risk, says Verwey, is that parliament will be unwilling or unable to impose budget constraints on itself. And the poor management of the amendment process could undermine the credibility of SA's budget process. In the worst case, he says, a poorly capacitated parliament may choose to flex its fiscal muscles and amend the budget in a way which jeopardises stability and the impact of allocations, and does so through a poorly managed process. But this is unlikely while treasury's role in setting the parameters of fiscal debate remains strong. The new economic development ministry is also expected to be influential.
"Also, SA's party list system rewards loyalty and discourages back-bench legislators, which will reduce serious conflict over the budget," says Verwey.
The new budgeting role could be an opportunity for parliament to foster real policy debate and call errant departments to account more vigorously. "Real debate could enrich one's understanding of the budgeting trade-offs that need to be made, and could do a great deal for social ownership of the budget as well as for its impact on wellbeing," he adds.
A wider range of views and expertise will help parliament to provide effective budget oversight - "not because amendment will inevitably be required, but because the ability to harness such power when needed underpins real oversight authority."
