Phephelaphi Dube: Director,
Centre for Constitutional Rights
16 November 2017
The recently released Fees Commission Report, in due cognisance of South Africa’s stark reality of shrunken revenue flows, concluded that “free education is not possible”. This conclusion is in line with that of the Davis Tax Committee, also recently released. The Presidency, upon release of the Fees Commission Report, stated that Ministers were still processing the Fees Commission Report to allow the President to announce his own plan for free education.
Enter then the Presidential Fiscal Committee (PFC), a newly-created body, just one month old, and reporting to the President. News reports mentioned that the Presidency, through the PFC, has taken control of National Treasury’s budget process in order to eventually announce a R40 billion free tuition plan. This would mean that the President may reject the recommendations of the Fees Commission Report and instead, advance the plans of the PFC.
The PFC has immense powers and can even override the decisions taken during the budgeting process. This means that National Treasury has in effect taken a back seat, with the parallel structure created by the President, more so, outside of any recognised constitutional structure. One would not be amiss in concluding that the PFC will serve to undermine and possibly subvert the work of National Treasury.
National Treasury, in terms of the Constitution, is tasked with ensuring transparency and keeping a tight rein on the State’s expenditure. Section 216 of the Constitution, as read with the Public Finance Management Act, as well as its Amendment Act, establishes checks and balances to ensure oversight over the various national and provincial revenue funds. Ultimately these measures are meant to hold the State accountable and to ensure the optimal usage of public assets without corruption, wastefulness or irregular expenditure. These measures reinforce the nation’s foundational values of accountability, responsiveness and accountability.
Precious little is known about the PFC. Speaking recently before the National Council of Provinces (NCOP), the President remarked that “The Presidential Fiscal Committee established in October was working with the Ministry of Finance to help prepare for the 2018 budget and in particular‚ to help us find ways of meeting our fiscal targets in a difficult economic climate‚ with high debt levels and lower revenue.” The PFC is thus fully embedded in South Africa’s future financial planning, despite falling outside of the constitutionally-recognised fiscal structures. The PFC as such lacks the transparency and administrative justice inherent to other legally-recognised bodies, including the Financial and Fiscal Commission (FFC). The FFC, an independent body, is established in terms of the Constitution to ensure fiscal policies. Importantly, the FFC has no political head and reports to Parliament, in line with Parliament’s oversight function over State-aligned institutions. The PFC in comparison, appears to be reporting directly to the President, without any public participation requirements. Public participation demands that the nation be afforded a real opportunity to weigh in and meaningfully influence decisions.
Clearly, the FFC can very well do the work of the PFC. As such, there appears to be no logical reason as to why a parallel body has been established. At best the PFC creates policy uncertainty and at worst, speaks to a sinister move meant to consolidate what is fast becoming a kleptocratic State.
While it has been said that the President wields tremendous powers, it is important to underline that the President can only exercise such powers as are given in terms of the Constitution. It is doubtful whether even the most generous reading of the Constitution would allow for parallel, unaccountable State structures whose very existence undermines key foundational values. Crucially, this is yet again President Zuma’s challenge to the desirability of a constitutional state. When and how will this resistance to the constitutional state end?
Government clarifies role of Presidential Fiscal Committee
Issued by Phumla Williams, Acting Director-General
GCIS, 14 November 2017
Government wishes to clarify the role of the Presidential Fiscal Committee (PFC) which has been mentioned in the public discourse.
The decision to establish the Presidential Fiscal Committee was taken in September 2017 at the meeting of the Extended Cabinet attended by Ministers, Premiers and Finance MECs, an annual meeting that the President convenes to discuss the Budget ahead of the Medium Term Budget Policy Statement. (MTBPS). The committee was mandated to work with the National Treasury and other stakeholders to help find creative ways of meeting the country’s fiscal targets and resolving competing priorities.
In particular, the PFC has been tasked with considering the proposals prepared by the National Treasury to bring the public finances back onto a sustainable path. It is mandated to make recommendations and to provide advice on spending priorities which may be considered. The Minister of Finance is the lead Minister in the PFC. The committee is accountable to the Cabinet.
The allocation of resources to the country’s priorities is limited by a constrained fiscal space taking into account the difficult economic climate, with high debt levels and lower revenue. The budget is a key statement of policy of the government which is underpinned by an open and accountable process through which choices have to be made about competing priorities.
The Minister of Communications, Mmamoloko Kubayi-Ngubane said: “The advisory role of the Presidential Fiscal Committee does not in any way interfere with the institutional arrangements of the budget cycle, which is the strength of our democracy. Various intergovernmental forums exist at both the executive and official level to give effect to this constitutional imperative.
The budget process allows for stakeholder participation and coordination with the various spheres of Government. The majority of South Africans rely on the services provided by government in order to live a dignified life. These services are sustained by the greater part of government expenditure which goes to social services, on education, healthcare, water, housing, public transport and social protection.”
Government is committed to managing the economy in a balanced and responsible manner. Investors are reassured of the macroeconomic certainty and stability that they have become accustomed too. Spending has been reprioritised to reduce immediate pressure, and to create the time required to build capacity to boost investment spending. Government has taken decisive steps to stabilise SOE’s so that they contribute more meaningfully towards growing our economy.
“Government is working closely with various stakeholders to address regulatory challenges, build an inclusive economy and improve business confidence. We are implementing the Medium-term Strategic Framework 2014-2019 which outlines the country’s priorities and has detailed implementation plans towards the National Development Plan (NDP), Vision 2030. Actions including addressing infrastructure bottlenecks, improve policy coordination, making it easier to do business, improving labour relations and encouraging private investment,” added Kubayi-Ngubane.
Government remains committed to a measured path of fiscal consolidation that contains the budget deficit and stabilises public debt.