Finance Minister Godongwana tables draft law for extra billions from the national kitty

It’s newly appointed Finance Minister Enoch Godongwana’s first piece of legislation, and he’s invoking the exceptional circumstances provisions of Section 16 of the Public Finance Management Act (PFMA) “to address the impact of the recent unrest and the Covid-19 pandemic”, according to the bill’s memorandum.

That PFMA provision – Section 16 is headed “use of funds in emergencies” – allows the finance minister to authorise funds “to defray expenditure of an exceptional nature, which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds”.

This special appropriation draft law comes after one earlier in 2021 that allocated an additional R1.25-billion for Covid-19 vaccinations, and R2.82-billion for the R350 Covid-19 Social Relief of Distress Grant, and shifted monies to SAA. It was passed and signed into law on 24 June.

The Second Special Appropriation Bill is for the release of an additional R32.85-billion from the National Revenue Fund – largely made possible due to higher tax income from a mining windfall. Godongwana consulted with his fellow Cabinet ministers of defence, police, trade, industry and competition, National Treasury and social development.

Crucially, this special appropriation legislation makes available R26.5-billion to Social Development for the Social Relief of Distress Grant. This overall amount includes R500-million for the South African Social Security Agency (Sassa) for “system enhancements to improve application and payment processes, including the strengthened eligibility assessment system,” states the bill.

Dismay and concern over the failures of call centres and other contact methods are on public record, including in parliamentary committee meetings and sittings.

The South African Special Risk Insurance Association (Sasria) is getting R3.9-billion through what the bill calls “purchase of equity” via National Treasury in a move that’s been expected following July’s discussions in the National Economic Development and Labour Council.

The South African National Defence Force (SANDF) is receiving R700-million, which covers much, if not all, of its costs for deploying in the wake of the July public disorder and violence that hit KwaZulu-Natal and parts of Gauteng. The initial deployment from July to August was costed at R615-million, and the extension to 13 September would require an additional R254,914,500, according to the statutorily required deployment letter from President Cyril Ramaphosa to Parliament.

The police are also getting additional money: R250-million for visible policing to “enable police stations to institute and preserve safety and security”.

 And Trade, Industry and Competition gets R1.3-billion to pursue its relief measures.

The bill has come between Budget 2021 and the Medium-Term Budget Policy Statement (MTBPS), which traditionally adjusts any departmental allocations.

But it is all about the timing. 

By law, the finance minister has 120 days from deciding to allocate extra money to either reflect it in an adjustment, such as the February Budget and MTBPS, or bring a special request to Parliament for its approval. With the MTBPS moved to early November to accommodate the 27 October local government elections (a Constitutional Court decision was still pending on Tuesday), the MTBPS was just out of reach, hence the Second Special Appropriation Bill. 

Parliament must deal with all money bills. It can approve these, but has the right to refuse or amend these allocations.

The Standing Committee on Appropriation will now deal with the bill, including holding public hearings. Given the time pressure, it’s expected this process will wrap up by the end of September 2021 when Parliament is expected to rise for a short recess. DM