Parliament, the Budget and Poverty in South Africa. A Shift in Power: A Shift in Power

Chapter Two. SOUTH AFRICA’S NEW PARLIAMENTARY BUDGET PROCESS: AN INITIAL ASSESSMENT

Chapter 2 South Africa’s new parliamentary budget process: an initial assessment Joachim Wehner 1. INTRODUCTION I n the wake of its transition to democracy, South Africa had an opportunity to reshape the role of its legislatures in a fundamental way. The apartheid-era Parliaments had been feeble and discredited rubber stamps (Kotzé 1996). In contrast , the country’s new constitutional framework promised “dynamic and pro-active legislatures” (Murray and Nijzink 2002: 1). The first democratic Parliament abolished apartheid-era legislation and processed the fast-evolving public policy agenda of the new government (Calland 1999). At the same time, Parliament itself was undergoing organisational change, including the creation of a system of legislative committees (Calland 1997) and the implementation of a new bicameral structure (Murray and Simeon 1999). One of the issues to be reconsidered by the democratic Parliament was its role in the budgetary process. Section 77 of the 1996 Constitution gave Parliament the power to amend money bills, but required enabling legislation to regulate the process . In the absence of this legislation, parliamentarians could only approve or reject budgets in their entirety, and they made not one amendment to money bills in more than a decade of democracy.35 There were two legislative initiatives to address the constitutional requirement of regulation of the amendment process, as well as a number of abortive attempts that never made it into the public domain. In this chapter, I provide a comparative overview of legislative budget institutions and assess the two major reform attempts – the 1997 draft Money Bills Amendment Procedure Bill and the 2009 Money Bills Amendment Procedure and Related Matters Act. In the conclusion, I consider to what extent the adopted framework facilitates an active parliamentary process while safeguarding fiscal prudence. 2. LEGISLATIVE BUDGETING IN COMPARATIVE PERSPECTIVE Two sets of literature provide useful frameworks for assessing the design of the legislative budget process in South Africa and possible options for its reform. The first is the literature on comparative legislatures, which in recent years has developed a more systematic approach to the study of cross-national differences. The second is the political economy literature on the common pool resource problem in budgeting, which discusses specific institutional features of the legislative process and how they affect fiscal performance. In this section, I provide a brief overview of these. There is a long tradition of mostly qualitative literature comprising case studies of legislative budgeting in a number of countries (for example, Coombes 1976, Oppenheimer 1983, Schick 2002). However, until very recently, there was no systematic comparison of the budgetary role of legislatures across a wider spread of countries. SOUTH AFRICA’S NEW PARLIAMENTARY BUDGET PROCESS: AN INITIAL ASSESSMENT|27| Partly, this was due to a lack of data. However, over the past ten years the Organisation for Economic Cooperation and Development (OECD) has conducted a number of surveys of budget institutions, which also cover the legislative phase of the budget process. Wehner (2006) uses the 2003 Survey of Budget Practices and Procedures, conducted by the OECD in co-operation with the World Bank, to carry out a comparative assessment of “the power of the purse” (see also Lienert 2005). Legislative budget capacity can be conceptualised in different ways (Meyers 2001). Wehner (2006) adopts an institutional perspective and surveys six key variables that affect legislative control of the budget process: amendment powers; reversionary budget provisions; executive flexibility during implementation; the timing of the budget; committee capacity; and legislative budget research capacity. Figure 1 on the following page summarises the resulting ranking of 36 countries (for full details, see Wehner 2006). Possible scores on the index range between zero (no legislative budget capacity) and 100 (full capacity). Of the 36 countries included in the analysis, South Africa’s Parliament obtained the lowest score, tied with the Irish Parliament. The scoring reflects the lack of amendment powers in the absence of constitutionally required enabling legislation; reversionary provisions that in practice allow the implementation of the government’s proposal when budget approval is delayed; substantial executive flexibility to divert from the approved budget during its execution; the late tabling of the budget shortly before the start of the fiscal year; and the absence of a legislative budget office.36 This analysis classified the South African Parliament as exceptionally weak in terms of its capacity for financial scrutiny. Authors such as Stourm (1917) and Einzig (1959) bemoan the decline of Parliaments , but a second set...