The budgeting of a future Parliament suspended when the rubber…

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The image of the National Assembly hall burning down earlier this year is probably a stark metaphor in the minds of many. For me, this has highlighted an important and underestimated gap in the performance of our democratic state, namely the capacity of our national parliament.

While the executive and the judiciary enjoy significant media coverage and are often seen as the most important branches of government, the central role of parliament is, I fear, misunderstood. The legislature might in fact play the most important role affecting the functioning of every sphere of government, namely determining our government’s budget.

It is to some extent understandable that the dynamic role of Parliament has disappeared from our lexicon, given the presence of a single-party majority. This was the case not only during the last 28 years of the democratic era, but also during the previous 41 years of the apartheid period.

The impression may have been created that Parliament’s role is simply to ratify and approve decisions that have already been made, or to act as an oversight body.

Given the results of the 2021 local elections, this default assumption can now be questioned. If the 2024 national elections were to yield similar results, the National Council of Provinces would likely still be governed by a single-party majority, but the National Assembly (where seats are allocated per capita) would be suspended for the first time from our democratic history.

It is in this context that Professor Patrick Bond, during a research seminar, recently rearticulated a question that has haunted the National Assembly since its creation: what would the budget look like if it were truly a democratic decision?

How is the government budget determined?

When the Minister of Finance presents the propose Budget during his speech on February 23, 2022, he will not determine the national budget, but rather introduce a bill. The most important of these laws is called “appropriation”. This special law is the vehicle through which the National Assembly will decide both how much money the government will spend in the coming fiscal year and where that money will go.

While the minister’s speech is presented as the final act determining the budget, this is in fact not true. An appropriation, like any law, once presented to the legislature is then in the hands of parliamentarians.

In the context of scrutiny of the budget in Parliament, there is a persistent misconception as to whether it is a democratic decision regarding the mobilization of public resources or whether it is simply a step an accountant. The common understanding is that parliament must first wait to collect taxes or the national treasury first issues bonds before deciding on the total amount to be spent.

This is a creative, but factually inaccurate narrative.

Public money pushes neither on taxpayers nor on bondholders. Money from collecting taxes and issuing bonds is not the source of government expenditure. In fact, it would be more accurate to understand these subsequent legal steps as the collection of money already spent by the government.

Our money comes from one place – the government itself, through the Reserve Bank. This is easy to verify because the Governor of the Reserve Bank, a civil servant, literally puts his signature on every rand-denominated note.

Parliament, when considering the national budget, makes the law and determining the total amount to be spent by the government is a democratic decision concerning the mobilization of public resources. This decision requires meaningful public participation, open debate in Parliament and is always open to amendment by our public representatives.

It is also important to understand that this decision by Parliament is an open discretionary power – there is no prescribed legal or accounting maximum amount that the government could spend in its own currency. There is however minimum spending restrictions which may become increasingly relevant in the event of any future legal challenges.

In practice, however, the budget process has consistently fallen short of what is constitutionally mandated, both procedurally and substantively.

As Judge Sandile Ngcobo said in the Judgment of the Constitutional Court of Doctors for Lifethe duty of Parliament is both “offer meaningful opportunities for public participation”‘ and to “take steps to ensure that people… [can] take advantage of these opportunities”. The current approach of giving a small group of organizations a short period to make minor submissions would, in my view, fall short of the threshold for meaningful public participation.

Likewise, the irrational absence of any significant amendment to the appropriations proposed by Parliament will continue to expose the legislature to potential legal challenges, given the detrimental impact that austerity policy has had on compliance constitutional government.

In almost every corner of government, there are clear examples of resources being allocated less than those needed to meet the obligations of the competent organs of the state.

If, in the context of a future hung National Assembly, Parliament were to engage in meaningful public participation and begin the resource-intensive process of applying its spirit to substantive amendments to the proposed budget, then a greater institutional capacity.

How are our laws made?

It is a running joke in the legal profession that when interpreting a law, we seek to guess the intent of the legislator, who supposedly wrote our laws. In truth, most laws passed by the legislature are drafted by officials working in departments with the political objectives of the members of the executive in mind.

This is in no way offensive to the legislative process since our Constitution provides that ministers, deputies and parliamentary committees submit bills for the consideration of the legislature. Moreover, given the cumulative complexity of our written laws, there is great merit in entrusting the actual drafting to permanent civil servants who have both the institutional memory and the ability to draft the political intentions of our elected officials in a consistent legislation.

The problem is that parliament does not have the same scale of resources as the executive under the current institutional arrangement. This is not to say that Parliament does not have several qualified researchers, economists, lawyers and, in fact, a dedicated independent budget office. The problem is that it does not have enough of these specialized resources and that many of its most qualified staff are on temporary contracts, which obviously means high turnover.

If the National Assembly applied itself substantially to amending the budget, one of the first things it should do would be to assign a greater number of permanent staff to its own operations. Even outside the context of the budget, the broader picture of law-making in South Africa tells the story of the general decline of the legislature and the growing role of fiduciary law-making by the national executive.

If we compare the productivity of, say, the second legislature between 1999 and 2004 — which had an average of 63 laws per year — and the current administration which has an average of 27 laws per year, it is easy to notice the slowdown of the parliamentary process.

During this period, when the courts struck down legislation, the custom of giving the legislature 12 months to amend wrongful legislation was gradually extended to 24 months and is now often accompanied by replacement legislation which must take effect if the legislature fails to meet these deadlines.

To be fair to our legislators, early democratic parliaments faced the gargantuan task of repealing or replacing apartheid legislation, and the current administration has endured two years of Covid-19 crisis. That said, the Covid period, like the recent fire that ravaged the hemicycle of the National Assembly, has highlighted the significant retreat of Parliament vis-à-vis the drafting of laws.

Thanks to the Disaster Management Regulations 2020 and subsequent “Directions” issued by National Ministers, law-making across the spectrum of our society – from education to transport – has moved from the legislative to the executive . This is in many ways a concentrated example of a growing phenomenon that is quite pronounced in the context of public finances.

Just last week, the Constitutional Court ruled that the Preferential Procurement Regulations 2017 issued by the Minister of Finance were an unlawful attempt to legislate. In the judgment of Minister of Finance v Afribusiness NCP CCT279/20the Constitutional Court ruled thatthe Minister cannot… arrogate… himself a power…» to make secondary laws or regulations beyond the limits of the law voted by Parliament.

Unfortunately, this is just one example of the general trend towards the development of national ministerial rules.

The Specter of Missed Constitutional Obligations

The reason why laws should be made in Parliament and not by the executive is not simply because the legislature is larger, but rather because Parliament was designed for large-scale public engagement to ensure maximum democratic participation.

It’s a slower and more complicated road to take, but democratic participation is essential to the legitimacy of our laws and, indeed, to the intrinsic value of our public purse.

Our public finance model only works if everyone can access our currency and use it in their daily transactions.

The current contraction in government spending is actually undermining the credibility of our currency, as less and less money is circulating and fewer and fewer South Africans are formally employed using this currency.

Let us hope that our National Assembly will soon rise from its ashes and embark on the difficult task of mobilizing all available resources for our democratic state.

If they looked up, our parliamentarians would see the specter of unfulfilled constitutional obligations hovering over their heads. DM

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