African Network of Parliamentary Budget

Offices Conference 17-19 August 2016

Professor M Jahed Director: Parliamentary Budget Office Republic

of South Africa1

Outline

1. Overview: Evolution of the PBO RSA

2. Pre-establishment Phase

3. Establishment Phase

4. Post-establishment Phase 2

1. Overview Evolution of the PBO RSA

Pre-establishment

phase

1. Broader Political Consultative process

2. Development of Legislative

Framework: Money Bills Act

3. Secondment

4. Bench-marking & International Study

Tours

5. Establishment of a Political Oversight

Authority

Establishment Phase

Post-establishment

phase

1. Capacitation of the PBO

2. Analysis: linkage between budget and government

policy(s)

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1. Pre-establishment Phase

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1. Pre-establishment Phase• 1.1 Broader Political Consultative Process • The establishment of the Republic of South Africa Parliamentary Budget

Office was preceded by a broader political consultative process involvingall sectors of society.

– Key stakeholders/players• National Parliament & the Executive (President and Cabinet)

• Political Parties

• NEDLAC: National Economic Development & Labour Council

• National Treasury: funding requirements

• Various Interest Groups

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Pre-establishment Phase (cont)• 2. Legislative Framework• The broader political consultative process led to the passing of the Money Bills

Amendment Procedure and Related Matters Act, no 109 of 2009, “Money Bills Act”. The Act gives effect to sections 42(3) and 77 of the Constitution

• The Act gives Parliament legislative powers to amend the budget and other money Bills before it

• To assist in this regard, section 15 of the Act established a Parliamentary Budget Office to provide independent, objective and professional advice and analysis to Parliament on matters related to the budget and other money Bills.

• Legislative functions of the PBO RSA are prescribed in section 15(2) of the Act to support the core or legislated clients/Parliamentary Committees of the PBO, which are,

– The Standing and Select Committees on Finance: National Assembly (NA) & National Council of Provinces (NCOP)

– The Standing and Select Committees on Appropriations: NA & NCOP

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Section 15: Money Bills Act

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Pre-establishment Phase (cont)Benchmarking & International Study Tours Various activities were undertaken to implement section 15 of the Money Bills Amendment Procedure and Related Matters Act. These included:

i. Development Bank of South Africa (DBSA) Research

ii. Study tours

International best practices and lessons of experience

Models of PBOs

Consideration of the South African context (socio-economic and political)

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Pre-establishment Phase (cont)• 5. Establishment of a Political Oversight

Authority– A political overseeing authority comprising of the House Chairpersons of the

NA and NCOP including the four Chairpersons of the Finance &Appropriations Committees in both Houses, was appointed by the ExecutiveAuthority of Parliament to oversee the project relating to the establishmentof the PBO RSA in Parliament.

– The overseeing authority was mandated with ensuring that the PBO RSA iscapacitated in terms

• Funding and other resources requirements for the PBO

• Office Space: securing suitable office space for the PBO

• Recruitment of new personnel: the PBO is institutionally assisted in this regard.

– The political overseeing authority acts as the defacto advisoryboard/advisory panel for the PBO RSA.

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2. Establishment Phase

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2. Establishment Phase 1. Overview PBO RSA

2. Organisational Structure

3. Functional configuration

4. Strategic Focus Areas

5. PBO RSA Functions defined

6. Sample of products produced: 2015/16 FY

7. Legislated/Primary Clients

8. Workflow & Work-method

9. PBO RSA Accountability Lines

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1. Overview of PBO RSA

• Establishment of Office

– PBO RSA was officially established in June 2013 with the appointment of the founding Director.

• Leadership

– Director

– PBO Top Management Structure

• Director

• Deputy Directors/Senior Analysts x 3

• Office Manager x 1

• Resources

1. Staff Complement: 11

• Director

• 3 x Deputy Directors for Policy, Public Finance and Economics

• 4 x Analysts/Specialists

• 3 x Corporate Services staff: Office Manager, Personal Assistant to the Director, Office Coordinator

2. Budget: 2016/17 FY

• Annual operating budget (personnel & OPEX & CAPEX) of about $1 million Dollars, about R14 million at an assumed exchange rate of $1/R14.

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2. Organisational Structure

Director:

Prof. MIGM Jahed

Deputy Director Fiscal Policy

Ms N Orlandi

Policy Analyst

Dr M Sekatane

Policy Analyst

Vacant

Deputy Director Public Finance:

Dr D Jantjies

Intern

Vacant

Finance Analyst

Mr B Ellse

Finance Analyst

Ms G Mnguni

Deputy Director:

Economics

Dr S Mohamed

Economic Analyst

Vacant

Economic Analyst

Mr R Amra

Office Manager

Mr A Monnakgotla

Office Coordinator

Mr A van Zuydam-Reynolds

Executive Assistant:

Ms L Mangwani

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3. Functional Configuration

Director PBOStrategic Leadership: Technical & Administrative

Fiscal Policy

Analysis

Public Finance

Economic Analysis

Corporate Services

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4. Strategic Focus Areas

• During the next five years, the Parliamentary BudgetOffice will provide:

1. Reports on the national Budget and Medium Term BudgetPolicy Statement

2. Economic, policy and fiscal briefs

3. Research reports on request by Parliament

4. Forecast robustness reports

5. Technical capacitation of MP’s1. Formal: Partnership with academic institutions to develop a formal programme

for MP’s on fiscal and monetary matters, focus on oversight

2. In-house capacitation of MP’s through the production of informative products,including presentations of technical work to Committees during seatings.

3. Dedicated technical support to Parliamentary Committees during the oversightvisits of Committees.

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5. PBO RSA Functions definedEconomics Analysis Public Finance Fiscal Policy Analysis

Macroeconomic evaluation

Economic projections

Tax review and analysis

Fiscal Framework review and

analysis

Provide advice of proposed

amendments to the Fiscal

Framework

Fiscal projections

Revenue studies

Microeconomic evaluations

Spending trends review and

analysis

Spending projections

Baseline studies

Provide advice and analysis on

proposed amendments to the

Division of Revenue Bill (DOR)

and the Appropriation Bill

DOR Bill review and analysis

Appropriation Bill review and

analysis

Monitor legislative proposals

with financial implications -

Bill costing

Monitor reports adopted by

the Houses with financial

implications

Monitor committee reports

adopted by a House with

financial implications

Policy analysis

Policy implementation analysis

Outcomes analysis vs

spending trends

Monitor policy proposals with

financial implications

Monitor policy debates and

development in key

expenditure and revenue

areas

Policy Evaluation

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6. Sample of Outputs produced: 2015/16 Financial Year

BUDGET ANALYSIS REPORTS

NATIONAL DEVELOPMENT PLAN ANALYTICAL REPORTS

Quarterly Economic Briefs (QEB)

Other Analytical Reports

Two Main Reports • Medium term Budget

Policy Statement (MTBPS)• Main Budget Analysis=======================1. Analysis of the 2015 Medium term Budget Policy Statement (MTBPS)a. Pre and Post Analysis

2. 2016 MAIN Budgeta. Pre and post analysis of the 2016 Main Budget3. BUDGET REVIEW RECOMMENDATION REPORTS (BRRR)a. BRRR: Landbankb. BRRR: South African Revenue Services (SARS)c. BRRR: Accounting Standard Board-ASB1

(a) The National Development Plan Outcome1: Quality Basic Education Alignment and Progress

(b) (b) The National Development Plan Outcome 2: A Long and Healthy Life for All South Africans: Alignment and Progress

(c) The National Development Plan Outcome 5: NDP Alignment and Progress - A skilled and capable workforce

(d) The National Development Plan Outcome 6: An efficient, competitive and responsive economic infrastructure network

(e) The National Development Plan Outcome 7: NDP alignment and progress Rural Development

(f) The National Development Plan Outcome 8: Human Settlements Alignment and Progress

(g) The National Development Plan Outcome 10: Protect and Enhance Our Environmental Assets and Natural Resources

1st Quarter QEB: April-June

2nd Quarter QEB: July-September

3rd Quarter QEB: October-December

4th Quarter QEB

1. ESKOM Appropriations Bill2. Briefing Note on withdrawal

of UIF reduction (2015/16)3. Input on Rates and Monetary

Amounts Amendment Bill (2015/16)

4. Analysis of State Owned Enterprises

5. Base Erosion, Profit Shifting and Transfer Mispricing (BEPS)

6. Report on the Sustainability of South Africa’s Social Grants System

8. The involvement of Public Accounts Committees (PAC’s) in the budget process

9. Department of Police Budget Analysis

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7. Legislated/Primary Clients

Standing Committee on Appropriations:

National Assembly (NA)

Select Committee on Appropriations: National Council of Provinces (NCOP)

Standing Committee on Finance: National Assembly (NA)

Select Committee on Finance: National Council of Provinces (NCOP)

PBO RSA Primary Clients as per Money

Bills Act

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8. PBO RSA Workflow & Work-method employed in support of Parliamentary

Committees

• Consideration of money Bills

• Multi-party Committee identify specific analysis and research required for decision making

NA and NCOP Finance and Appropriations

Committees

• Submit formal written request to the Director of the PBO RSA

Committee Chairpersons

• Director PBO considers specific requests from Committees

• Formal written acknowledgement letter transmitted by Director to Committee Chair

Director PBO

Parliamentary Budget Office

• Formulate Terms of Reference

• Research & Analyse

• Submit findings to Committee (electronically &/or presentations)

• Build capacity

• Facilitate discussions

Parliamentary Budget Office

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9. PBO RSA Accountability Lines

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3. Post-establishment Phase

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1. Capacitation of the PBO• An expansion of the current staff complement of the PBO

has been considered.

• The capacitation of the PBO will enable the Office todeliver enhanced and sharper technical support toParliamentary Committees to enable Parliament to fulfilits legislative mandate as per the Money Bills Act.

• PBO to monitor performance (NDP)

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2. Technical projects

• During the current financial year and the outeryears, the PBO will focus on analysing the linkagebetween the allocated budget and governmentpolicy(s)

• The PBO expand technical support toParliamentary Committees

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Questions

• Questions & Answers

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Thank you

Professor MIGM Jahed: Director

LOCATION:

103-107 Plein Street

Parliament Towers

4th Floor

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