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Budgeting for a future hung Parliament when the rubber stamp becomes contested terrain

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Ben Cronin is an advocate of the high court and a state law adviser. He writes in his personal capacity and his views do not represent those of any other party.

The budgetary process has, in practice, regularly fallen short of what is envisaged by the Constitution, in both procedure and substance.

The image of the National Assembly chamber burning down at the beginning of the year likely stands as a stark metaphor in the minds of many. For me, it brought into sharp relief an important and underappreciated deficiency in the performance of our democratic state, namely the capacity of our national Parliament.

While the executive and judiciary enjoy significant media coverage and are often perceived to be the more important branches of government, the pivotal role of Parliament is, I fear, misunderstood. The legislature might in fact play the most significant role affecting the functioning of every sphere of government, namely determining our government’s budget.

It is to some degree understandable that the dynamic role of Parliament disappeared from our lexicon, given the presence of a single party majority. This has been the case not only in the past 28 years of the democratic era, but also in the preceding 41 years of the apartheid period. 

The impression has perhaps been created that Parliament’s role is to merely rubber stamp and approve decisions that have already been taken, or to act as an oversight body.

Given the results in the local government elections in 2021, this default assumption may now be open to question. If the national elections in 2024 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 the seats are allocated per capita) would be hung for the first time in our democratic history.

It is in this context that Prof Patrick Bond at a research seminar recently re-articulated a question that has haunted the National Assembly since its inception: what would the budget look like if it were truly a democratic decision?

How is the government’s budget determined?

When the minister of finance presents the proposed Budget during his speech on 23 February 2022, he will not be determining the national Budget, but rather introducing a proposed set of laws. The most important of these laws is termed an “appropriation”. This special statute is the vehicle by which the National Assembly will decide both how much money the government will spend in the forthcoming financial year and the allocation of this money.

While the minister’s speech is portrayed as the final act determining the Budget, this is not in fact true. An appropriation, just like any statute, once introduced to the legislature is then in the hands of parliamentarians.

In the context of considering the Budget in Parliament, there is a persisting misconception about whether this is a democratic decision about the mobilisation of public resources or whether it is merely an accounting step. The common understanding is that Parliament must first wait to collect taxes or for National Treasury to first issue bonds before deciding on the total amount to be spent.

This is a creative narrative, but factually inaccurate.

Public money neither grows on taxpayers nor on bond holders. Money collected from levying taxes and issuing bonds is not the source of government spending. In fact, it would be more accurate to understand these subsequent legal steps as the collection of money already spent into existence by the government. 

Our money comes from one place — the government itself, via the Reserve Bank. This is easy to verify because the governor of the Reserve Bank, a civil servant, quite literally places his or her signature on every single rand-denominated note.

Parliament, when considering the national Budget, is making law and the determination of the total amount to be spent by the government is a democratic decision about the mobilisation of public resources. This decision requires meaningful public participation, open discussion 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 discretion — there is no legal or accounting maximum amount prescribed that government could spend in its own currency. There are, however, minimum spending restrictions that may become increasingly relevant in the event of potential future legal challenges.

In practice, the budgetary process has, however, regularly fallen short of what is envisaged by the Constitution, both in procedure and substance.

As Justice Sandile Ngcobo articulated in the Constitutional Court judgment of Doctors for Life, the duty of Parliament is to both “provide meaningful opportunities for public participation”’ and to “take measures to ensure that people… [can] take advantage of those opportunities”. The current approach of affording a small group of organisations a short period for making minor submissions would, I submit, not meet the threshold of meaningful public participation.

Similarly, the irrational absence of any meaningful amendments to proposed appropriations by Parliament will continue to expose the legislature to potential legal challenges, given the detrimental impact the policy of austerity has had for the fulfilment of the government’s constitutional obligations. 

In nearly every corner of government there are clear examples of fewer resources being allocated than are required to meet the obligations of the relevant organs of state.

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

How are our laws made?

It is a running inside joke in the legal profession that, when interpreting a statute, we seek to divine the intention of the legislature, which is assumed to have drafted our laws. In truth, most laws passed by the legislature are drafted by civil servants working in departments with the policy objectives of members of the Executive in mind.

This is in no way offensive to the legislative process as our Constitution envisages ministers, members and parliamentary committees submitting bills for consideration by the legislature. What’s more, given the cumulative complexity of our written laws, there is great merit in entrusting the actual drafting to permanent civil servants with both the institutional memory and skill to draft the policy intentions of our elected representatives in coherent legislation.

The problem is that Parliament does not have the same scale of resources available to it as the executive under the current institutional arrangement. This is not to say that Parliament does not have several skilled researchers, economists, lawyers and indeed a dedicated independent Budget Office. The problem is that it does not have enough of these specialist resources and many of its most skilled personnel are on temporary contracts, with the obvious implication of high turnover.

If the National Assembly were to substantively apply its mind to amending the Budget, one of the first things it will need to do is allocate a greater number of permanent staff to its own operations. Even outside the context of the Budget, the larger picture of lawmaking in South Africa tells a story of the general decline of the legislature and the growing role of fiat law-making by the national executive.

If one compares the productivity of, say, the second Parliament, between 1999 and 2004 — which averaged 63 statutes a year — and the current administration which averages 27 statutes a year, it is easy to notice the slowing of parliamentary process. 

During this time, when courts have struck down legislation, the custom of affording the legislature 12 months to amend an offending statute was steadily expanded to 24 months and is now often accompanied by substitute text which is to take effect if the legislature fails to meet these deadlines.

To be fair to our law-makers, the earlier democratic Parliaments were confronted by the gargantuan task of repealing or replacing apartheid legislation, and the current administration has lived through two years of the Covid-19 crisis. That being said, the Covid period, like the recent fire that gutted the National Assembly chamber, has brought into sharp relief Parliament’s significant retreat from law-making.

Through the Disaster Management Regulations of 2020 and the subsequent “directions” issued by national ministers, law-making across the spectrum of our society — from education to transport — shifted from the legislature 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 of 2017 issued by the minister of finance were an unlawful attempt to make law. In the judgment of Minister of Finance v Afribusiness NCP CCT279/20, the Constitutional Court held that “the Minister cannot… arrogate to… himself a power…” to make secondary law or regulations beyond the confines of the statute passed by Parliament. 

Unfortunately, this is but one example of the general shift towards national ministerial rule-making.

The spectre of failed constitutional obligations

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

This is a slower and messier route to take, but democratic participation is critical to the legitimacy of our laws and indeed to the intrinsic value of our public money.

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

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

Hopefully, our National Assembly will soon rise from the ashes and engage in the hard job of mobilising the full resources available to our democratic state.

If they would only look up, our parliamentarians would see the spectre of unfulfilled constitutional obligations hanging over their heads. DM

 

 

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