A ‘credible threat’
Can balance between Parliamentary interference in the Budget and sound fiscal policy be found?
FINANCE MINISTER Trevor Manuel and his team at the Treasury stand to have their wings rigorously clipped. A new Bill – which ANC Members of Parliament want passed in the next few weeks – will tighten the noose on Treasury’s virtual monopoly of Budgeting powers by handing MPs the power to change the Budget.
Essentially, the power over South Africa’s fiscal resources that the Draft Money Bill Amendment Procedure and Related Matters Bill will bestow on MPs enables them to change fiscal policy – for example, by increasing the deficit or changing tax rates.
While Manuel is apprehensive about MPs relying heavily on research and analysis from officials in a budget office – and therefore allowing people who aren’t members of the ruling party to change the Budget – the anticipation among ruling party MPs is palpable. ANC MP and joint Budget committee chair Louisa Mabe says Parliament must pass the Bill this year so it can assert greater influence over next year’s Budget.
But the jury is still out on whether the Bill restricts MPs sufficiently. While Manuel says he has “no difficulties with the Bill” he warns implementing it carries some “big” risks. Although he’s satisfied the legislation itself does require Parliament to act responsibly as well as explain the consequences of any amendments, he adds: “I don’t know if Parliament has the capacity. The Bill is fine. But there’s a caveat: be careful what you wish for.”
Currently, MPs are nothing more than rubber stamps with only two choices: accept the Budget as presented or reject it. The latter would obviously have disastrous consequences for the public service and hasn’t yet been used.
On one level, it makes sense the Constitution demands Parliament has influence over the national Budget so that it’s not insulated from the democratic process. A study by the London School of Economics scores SA the lowest on a global directory measuring parliamentary power to influence budgets. The United States, where politicians can haggle and pork barrel over every budget line
item, scores the highest.
But on another level disquiet about the consequences of the legislation SA wants to introduce hinges on the dearth of skills and capacity in the legislature’s hallowed hallways. The question is simple: Do we trust our MPs – many of whom require State officials to dispense a crash course in Economics 101 before proceeding with the substance of a briefing – to make the kind of choices that have (to date) been left to competent officials in National Treasury?
The fact is that MPs are already not doing a sufficient oversight job when it comes to holding ministers and officials to account, especially in respect of departments that typically fail annual audit tests.
Another potential problem is the vast web of business interests MPs have. Those are often undeclared and not properly monitored. While MPs aren’t directly accountable to voters and aren’t likely to pork-barrel by passing a Bill on condition that a school or factory is built in a certain constituency, the question is what other pressures – business or otherwise – could end up influencing a Budget?
There’s genuine concern among analysts such as Raenette Taljaard, of the Helen Suzman Foundation, that more power to Parliament at a time when the ANC’s labour alliance partners are ascendant could directly influence macro-economic policy. “The absence of any clear fiscal restrictive rules (in the Bill) is alarming,” she says.
Indeed, the post-Polokwane political climate has certainly reinvigorated the legislature to assert more authority over the executive, raising more questions about the timing of the Bill. For good reason, then, Taljaard questions the haste with which this legislation is being passed and warns it may surprise an already very skittish international investment community.
Ultimately, the question is whether red rhetoric and reality will strike a balance to reach what Manuel believes is a common goal of making sure democracy touches more lives. Tania Ajam, an economist at the UCT research consultancy Applied Fiscal Research Centre, says a happy medium will be found. She’s confident that rhetoric is usually brought down to reality when someone is actually in power and having to make and justify choices. The incentive for MPs to contradict and question the executive (which gathered momentum after the Polokwane conference) has already started dissipating.
For that reason, Ajam says the Money Bill is likely to be more of a “credible threat” – a signal that Parliament must be taken more seriously and possibly a reason for the executive to workshop the Budget more thoroughly before presenting it.