Parliament: 57 channels and nothing on – Budget oversight sans annual reports and audited finances

Between February’s Budget and the adoption of October’s Medium-Term Budget Policy Statement (MTBPS), South Africa’s parliamentary committees go through a crucial financial and service delivery oversight process – the Budget review and recommendation reports (BRRRs).

Central are annual reports that, with audited financial statements, must be tabled in Parliament before end-September. Alongside strategic and performance plans, these annual reports allow scrutiny of departmental spending and what departments actually delivered – alongside other important governance details from executives’ salaries and board meetings to disciplinary cases.

But not in 2020.

If one were to play the blame game, simply put, Finance Minister Tito Mboweni would have to carry the can.

Four days into South Africa’s hard Covid-19 lockdown, on 31 March 2020, Mboweni gazetted nine exemptions from the Public Finance Management Act (PFMA) to give departments and entities an extra two months — until the end of November 2020 — to table their annual reports in Parliament.

And while “57 committee meetings will kick off Parliament’s fourth term programme” this week, as an official statement put it, on the BRRRs front that plays out, for the most part, without the 2019/20 annual reports and audited financials.

National Assembly Speaker Thandi Modise has managed to claw back two weeks for Parliament.

“The Speaker of the National Assembly has, however, advised that this extension (for annual report tabling) will have significant implications for Parliament’s oversight work and annual programming…

“(T)he Executive is thus requested to prioritise the tabling of annual reports and financial statements as soon as possible, preferably before 16 November 2020,” wrote Deputy President David “DD” Mabuza in his capacity as leader of government business, or the liaison between Cabinet and Parliament, in a letter dated 3 September 2020 and seen by Daily Maverick.

While the South African Reserve Bank long ago tabled its 2019/20 annual report — along with the Auditor-General and National Prosecuting Authority (NPA) among a handful to meet the normal end-September tabling deadline – few, if any, other departments are expected to submit theirs before the mid-November deadline.

The BBBRs oversight process concludes with adoption of reports before the House adopts the MTBPS, which in turn must happen before the end of November to clear the path for February’s Budget.

It’s a massive time squeeze in the parliamentary calendar — cleared from late June 2020 to accommodate a second, Covid-19 emergency Budget, and still chock-a-block with legislation, statutory appointments like the Auditor-General, Parliamentary Budget Office and SABC board members, alongside question sessions and other business.

The word in parliamentary corridors is a concern for the quality, or lack, of oversight. That could set up a ripple-effect into the future, at a time when public finances in South Africa’s faltering, recessionist, political economy are constrained at best.

Parliament spokesperson Moloto Mothapo on Wednesday said it was “not a preferable situation, given the implication on the programme of Parliament and its oversight functions”.

“However, under the circumstances we arrived at a mutually agreeable and workable approach, which would still enable Parliament to fulfill its constitutional obligations and hold the department to account,” he said in a text message.

“Of course, the importance of annual reports to the oversight role of Parliament can not be emphasised enough, and this is a matter the Speaker conveyed.”

What emerged this week is a plan to do BRRRs on the back of quarterly reports that come to MPs as part of their regular oversight work, and then to extrapolate for the 2019/20 financial year from there. The process would be finalised once the annual reports are tabled in Parliament.

With well-prepped MPs willing to question officials and ministers beyond the narrow PowerPoint presentations, financial and service delivery oversight might yet be feasible, if not exactly exemplary. But, often, lawmakers’ questions fall short or miss the point.

Parliament’s Z-list, as the committee schedule is called, is replete with briefings on the first quarter, or Q1, of the 2020/21 financial year, but also on the last quarter of the 2019/20 financial year. For example, on Thursday, the health committee got a three-and-a-half-hour briefing on the whole financial year, quarter by quarter.

But those departmental quarterly reports simply tally what’s spent and how much that represents in the overall Budget allocation, alongside a reflection of targets met or missed. Nothing is told of the other governance yardsticks, like litigation costs and cases, executive salaries, promotions, board meetings or legislative compliance. Or a whole year’s overview on crime statistics, which traditionally are tabled with the SAPS annual report.

Concern in the national legislature also is rife that some departments want to talk annual reports without having a finalised and approved product.

For example, on Tuesday, the Department of Trade and Industry briefed MPs on the basis of a PowerPoint presentation headed “Department of Trade, Industry (the dti) & Economic Development Department (EDD), Annual Report 2019/20, Presentation to the Portfolio Committee (PC) on Trade and Industry”. The presentation included its stated purpose as “Note and discuss the dti and EDD annual reports”.

But the 2019/20 DTI annual report is not tabled; the departmental website only has the 2018/19 annual report.

Ditto the National Treasury and South African Revenue Services (SARS) briefings to the Standing Committee on Finance that were described in Tuesday’s Z-list as “Briefing by National Treasury on their annual report (BRRR); Briefing by SARS on their annual report (BRRR), Virtual Meeting Platform, 09:00-13:00”. Neither annual report is available in the parliamentary system, or on the respective websites.

That meeting ended some 20 minutes early as MPs seemed to have run out of questions.

There are further similar examples.

The Covid-19 hard lockdown undoubtedly will be invoked to explain, as the cliché goes, “the new normal”. In many ways, the impact on governance of South Africa’s continuing lockdown, one of the harshest and longest in the world, cannot be gauged. Questions remain about the role of Cabinet, the constitutional decision-making authority, as it seems to be second-guessed by the National Coronavirus Command Council (NCCC) (https://www.dailymaverick.co.za/article/2020-06-10-who-is-in-charge-the-nccc-or-the-cabinet-ramaphosa-unveils-the-blurring-of-democratic-practice-at-the-highest-level/).

And questions must be asked why the PFMA exemptions Mboweni gazetted on 31 March 2020 were not updated as and when the Covid-19 lockdown eased. Of particular concern is the exemption, which effectively means ministers do not have to explain to Parliament why a departmental or entity fails to submit annual reports with audited financial statements.

Those ministerial explanatory letters are published in the Announcements, Tablings and Committee Reports (ATC), or Parliament’s record of work, are usually a firm indication of troubles – and key accountability tools.

What may have made good sense from an executive and ministerial perspective, particularly in the context of a growing tendency to centralise presidential power, has left Parliament scampering with crucial oversight systems under pressure.

While ministers and officials may want to make it difficult, Parliament’s Budget and service delivery oversight role can’t just be written off.

The BRRRs oversight process relates to Parliament’s power and right to amend, or even refuse to accept, any executive funding plan. The 2009 Money Bills Amendment Procedure and Related Matters Act, which makes this possible, was a hard-won right that saw Parliament and National Treasury face off over several years.

These Budget review and recommendation reports, or BRRRs, to assess departmental performance, usually come with concrete proposals on how to improve — and are responded to by the Finance Minister, traditionally in the Budget Review.

In the wake of the ministerial gazetted extra two months for departments and entities to table annual reports, Parliament has found itself with its back to the wall.

With the political will to ask hard questions of officials and ministers, lawmakers will rise to their constitutional oversight responsibilities. Despite difficult times.

Plans can be made, and are being made, for parliamentary Budget and service delivery oversight, even though missing are many of the documents, like annual reports, central to interrogating and following money and service (or non) delivery trails.

If that quality oversight doesn’t happen, consequences may come back to haunt Parliament. DM