A ‘cred­i­ble threat’

Can bal­ance be­tween Par­lia­men­tary in­ter­fer­ence in the Bud­get and sound fis­cal pol­icy be found?

Finweek English Edition - - Openers -

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.

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