By John Makamure
The Public Finance Management Amendment Bill was last week introduced in Parliament and referred to the Parliamentary Legal Committee to examine if any of its provisions contravene the Constitution and the Bill of Rights. The Portfolio Committee on Finance and Economic Development is at the same time conducting public hearings on the Bill in fulfilment of section 141 that requires Parliament to ensure that interested parties are consulted on Bills before Parliament.
This legislation is of critical public interest because it governs how public resources are managed. It gives effect to constitutional provisions in chapter 17 that speak to principles of sound public finance management. These principles emphasise on transparency, accountability, prudence, efficiency and effectiveness in the manner in which public resources are managed. An analysis of the amendments must therefore assess to what extent they are able to fulfil these key principles.
First and foremost, I must say most practitioners in public finance management expected a much more comprehensive Bill that fully aligns the Act with the Constitution and that legislate for the entire budget cycle. However, the Minister of Finance chose to touch on a few areas, with focus mainly on corporate governance and conflict of interest issues in public entities. This followed widespread reporting by the Auditor General and the media of several cases of mismanagement and theft of public funds and assets by officials in public entities in collusion with ministry officials. Most of this mismanagement emanated from poor corporate governance systems that saw some officials of line ministries sitting on the boards of public enterprises and rewarding themselves with hefty packages. This compromised on their ability to play their supervisory and regulatory functions.
The minister has therefore come up with new provisions to try and address these corporate governance issues. It is now illegal for ministry officials to usurp the management functions of public enterprise officials. The proposed amendments bar ministry officials from accepting any monetary or other benefits inconsistent with the discharge of the ministry’s supervisory and regulatory functions. These include fuel coupons, travel allowances, holiday allowances, among others. It will also be illegal for ministry officials to approve remuneration of public entity employees without Treasury concurrence. There are provisions that criminalise public entity officials from colluding with ministry officials in condoning or concealing non-compliance with the Public Finance Management Act.
The Bill is proposing to amend sections 46 and 47 of the Public Finance Management Act in order to strengthen reporting by public entities, and ultimately their accountability to the public. Section 46 is amended to require the accounting authority for every public entity to submit to the accounting officer of the appropriate ministry and to the Accountant-General, at least sixty days (or such greater period agreed by the appropriate ministry with the Accountant-General) before the start of its financial year a projection of revenue, expenditure and borrowings for that financial year in the prescribed format. They are also required to submit an annual corporate plan in the prescribed format covering the affairs of that public entity, including its subsidiaries, for the following three financial years. Such plan shall include targets, outputs and outcomes.
The Minister has tried to address the non-implementation of recommendations from the Auditor General by making it a legal requirement for the recommendations to be complied with within time frames agreed with the Auditor General. However, I am not happy with the proviso which gives latitude to the public entity not to comply with the recommendations upon good cause shown to the Treasury. This is not a good provision as it is tantamount to Treasury overriding the decisions of the Auditor General. There is a danger of such provisions being abused to achieve certain objectives not necessarily in the interests of prudent public financial management. Every public entity and ministry must fully comply with the recommendations of the Auditor General and not be allowed to seek dispensation elsewhere. And this business of agreeing on time frames to implement the Auditor General’s recommendations is unacceptable. Recommendations must be complied with immediately.
These are public funds, and those entrusted with their management must account to citizens without being granted a legal right to manoeuvre out of this social accountability obligation. Policy makers must understand that social accountability entails the right of citizens to obtain justifications and explanations for the use of public resources from those entrusted with the responsibility for their management in order to progressively realise human rights. Officials and service providers have the corresponding duty not only to produce such justifications, but to take corrective action in instances where public resources are not effectively utilised. Citizens have the right to demand these justifications and explanations from the State when it fails to provide them adequately and corrective action where required.
Accountability in the management of public resources is only complete when corrective action has been undertaken. This is why we cannot have legal provisions that delay such corrective action. I urge the Minister to consider amending this proposed provision in order address the perennial non-implementation of the Auditor General recommendations. My conclusion therefore is that the amendments before Parliament fall short of fulfilling the constitutional principles of transparency, accountability, prudence, efficiency and effectiveness in the management of public funds and assets.
John Makamure is the Executive Director of the Southern African Parliamentary Support Trust. Feedback: email@example.com