There is no doubt that Biti tried his level best under very difficult circumstances to come up with a budget that strikes a good balance between the key budget strategic objectives of stabilisation, equitable growth and reconstruction.
The 2010 Budget has been presented against the background of a major review of the legal and policy framework governing public finance management. The Public Finance Management Bill (PFMB) and the Audit Office Bill currently before parliament are important instruments to strengthen the use of public resources and accountability.
Parliament has a major role to play in ensuring that the resources approved are used productively and that set objectives and targets are realised.
There are provisions in the PFMB that will empower parliament and its portfolio committees to meaningfully participate in the budget process provided that those powers are exercised and legislators demonstrate commitment to their core legislative functions of law-making, executive oversight and representation.
The Minister of Finance is quoted in the Hansard of December 1 as saying “the other thing which we have had is the process that there is no obligation on the executive to consult formally this august House on the formulation of the Budget. In the amendments that we propose, we are making it obligatory and imperative for the executive to consult and discuss with relevant committees on the formulation of the Budget”.
This is certainly a revolutionary approach to Budget crafting. For a long time, parliament has been a spectator when it comes to budget formulation. While it is accepted that formulation of the Budget is largely a preserve of the executive, it is important that the representative body of the people is fully consulted during the process.
Unfortunately, past ministers of Finance and their bureaucrats paid lip service to consultation because there was nothing that compelled them to do so. Any consultation carried out was cosmetic in nature. Now that it is going to be a legal requirement to consult, we hope that the legislature will fully exercise its mandate in that regard.
What is also important to note is that the new law requires that for each vote of expenditure laid before parliament, a statement of the outputs expected and the performance criteria to be met in providing those outputs has also to be laid before the House.
All this is part of efforts to make the Budget results-based. Spelling out expected outputs for each vote will enable parliament and its portfolio committees to closely monitor the performance of the budget and ask the right questions when targets are missed.
Monitoring budget implementation is an important function for parliament because this is when legislators determine to what extent the budget is realising set objectives and that there are tangible benefits accruing to the populace.
Sections 33 and 34 of the PFMB deal with reporting requirements to parliament. Section 33 (2) says “every accounting officer shall submit quarterly financial statements and reports to his/her minister for his/her submission to the appropriate parliamentary portfolio committee, within 60 days of the respective quarter”.
Section 34 (2) says “every accounting officer shall submit monthly financial statements and reports to his/her minister for his/her submission to the appropriate parliamentary portfolio committee within 30 days of the respective month”.
This again is a major development that should be celebrated by all keen to see a greater role for the legislature in the Budget process. These provisions are in line with best practice, and the Minister of Finance must be commended for taking heed of what parliament has been advocating over the years.
One of the main reasons why parliament has poorly participated in the Budget process in the past is lack of detailed, timely and relevant information on Budget performance made available to portfolio committees.
The quarterly and monthly financial reports will certainly bridge that information gap, with the onus left to the various committees to organise themselves properly and scrutinise these reports and engage ministries on any issues that may arise.
We should not forget however that a law on its own is not sufficient to promote a greater role for parliament in the Budget process. We have numerous examples of laws that are in place but not enforced. In some instances, the laws have been abused to satisfy other narrow interests.
The other major determinant for the effective participation by legislators in this whole public finance management framework is institutional capacity within parliament to scrutinise the various monthly and quarterly reports and raise issues with ministries.
Though parliament may wield measurable legal powers and the political space to shape budgets, analytical capacity remains critical to making sound budgetary choices. Parliament therefore needs to have access to independent information and analysis on the budget, through its own research services, complemented by independent think tanks, the private sector and academia.
Participation in formulation and implementation will require that MPs have basic exposure to public finance.
Many parliaments have set up parliamentary budget offices to address the question of capacity.
Such offices have been set up by an Act of parliament in order to give them enough teeth and ensure their operational independence.
The major objective of parliamentary budget offices is to supply the legislature with simplified expert analysis and impact assessment of budget proposals. Such an analytic unit can simplify complexity for members, promote transparency, enhance budget credibility and promote accountability.
The parliamentary budget office, staffed by highly experienced and qualified personnel in economics and public finance, can produce the following outputs for MPs:
- Regular parliamentary appropriations series and government budgetary decision-making series;
- Timely assessments of budget versus actual performance;
- Assessments of the business case for large projects, programmes and the capital votes;
- Regular weekly and quarterly economic and fiscal updates to parliament;
- Research papers on budget transparency, expenditure management and government operations; and
- In-depth or brief analysis as requested by committees and/or parliamentarians.
Some of the robust debates witnessed so far on the Reserve Bank Amendment Bill and the excellent work done by the Budget, Finance and Investment Promotion and Public Accounts committees on the PFMB and Audit Office Bill, are encouraging signs that the seventh parliament is not prepared to be used to rubber-stamp executive decisions.
Legislators must maintain this momentum to the budget process. The effectiveness of this parliament will be judged on the degree to which it is able to take advantage of the new legal regime and cement its role in the formulation and implementation of the national budget.
Parliament must therefore use the National Budget as a powerful instrument to debate and establish political priorities and resource allocations that directly enhance people’s lives.
John Makamure is the Executive Director of the Southern African Parliamentary Support Trust.
By John Makamure