THE role of independent public institutions is in the spotlight like never before. As Thuli Madonsela’s term comes to an end, there is intense scrutiny of the process to appoint a new public protector. Unfortunately, such awareness sometimes comes quite late, once things have gone awry, and is limited to a small number of institutions. If closer attention was paid to appointments and actions across all public institutions, we might avoid some of these crises and have strong independent institutions when we need them most.
In the context of what may be reasonably described as an assault on public finances by vested interests, it is useful to consider the status of a recently established independent institution: the Parliamentary Budget Office (PBO). The office was established by the Money Bills Amendment Procedure and Related Matters Act (2009) to provide Parliament with independent technical advice and analysis on issues related to the national budget and money bills. Money bills typically take money from the national revenue fund or change the way revenue is raised, and the Constitution requires a process by which Parliament may amend them.
The finance minister presents the national budget to Parliament, which then must approve all aspects of it. The primary burden of this work falls on the finance and appropriations committees in the National Assembly and National Council of Provinces. The finance committees must approve or amend the overall "fiscal framework" and revenue proposals (including changes to tax rates), while the appropriation committees must approve or amend the distribution of revenue across spheres of government and the distribution of expenditure across national departments.
The Money Bills Act envisions the PBO providing crucial technical support beyond the day-to-day work done by committee secretaries, researchers and content advisers.
However, despite being established in 2009, having a director appointed in 2012 and operating since 2014, most South Africans do not know the office exists. Even public finance experts and economists fail to understand its potential importance.
In Canada, Kenya and Australia, PBOs have an effect on debates and decisions relating to public finances. Canada is perhaps the most famous example: the head of the PBO was almost removed from his post by the conservative government that had appointed him when his office produced cost estimates of military involvement in Afghanistan and procurement of fighter jets that exceeded the government’s published estimates. Right now, Justin Trudeau’s Liberal Party is under pressure to act on its electoral commitment to strengthen the independence of the Canadian PBO.
The Canadian case illustrates why it is widely recognised that for a PBO to help MPs hold the executive to account, it needs to establish a reputation for producing relevant, technically credible, politically independent analysis without fear or favour.
SA’s PBO got off to a rocky start with the director’s appointment process being in stark contrast to the one being followed for the public protector. It was not open to other candidates, did not involve external experts and failed to facilitate public submissions. Yet the post is remunerated at the level of a director-general, despite an approved staff complement of only 13 and the director not being involved in technical work.
Subsequently, the office has struggled to get off the ground, failed to focus its resources on critical public finance issues, and the quality of its advice and analysis to parliamentary committees has been inconsistent at best. For example, in its preparatory advice before the 2016 national budget, the PBO’s preferred "scenario" predicted an R80bn revenue shortfall. In other countries, this would be frontpage news, but fortunately nobody, (including MPs) noticed.
Without a credible model, the PBO had assumed that revenue collection in the final quarter would be the same as the average of the preceding three quarters. But a glance at historical data shows that in the preceding five years, the last quarter’s collection was always higher. This rookie error meant that the PBO’s "prediction" was wrong: actual revenue collection was only R11bn lower than Treasury’s 2015 budget forecasts.
Equally concerning is the diversion of the office’s limited capacity to largely irrelevant work on the National Development Plan (NDP). In her 2015 budget vote speech, Speaker of Parliament Baleka Mbete stated: "The executive authority of Parliament has since instructed the PBO to assume a central role in oversight of the NDP." Subsequently, the office has dutifully presented analysis to committees on "NDP alignment".
Leave aside the fact that virtually identical analysis appears on the public website of the Department of Performance Monitoring and Evaluation: the PBO’s core mandate is about public finances, not policy implementation.
The PBO has failed to provide substantive analysis of the annual Appropriations Bill, Division of Revenue Bill, Adjustments Budget and unfunded mandates, all of which are explicitly in its core, legislated mandate. The first determines the distribution of money across government departments, the second the distribution across spheres of government (local, provincial and national), the third makes mid-year changes to the budget originally approved by Parliament and the last concerns policy responsibilities at local and provincial level not matched by sufficient funds.
Why is the PBO doing work on the NDP? Mbete has no authority to order it to do so; the instruction contradicts the Money Bills Act. One possible explanation emerged after the replacement of the finance minister: some commentators noted a political strategy to undermine the Treasury by making the claim that the budget was not aligned to the NDP. To the extent that the institutional orientation shifts with the prevailing political winds, this could explain the enthusiasm for doing such work.
The stakes are higher than one may think. If the Treasury were "captured" again, the PBO should be the first source of technical advice MPs turn to to constrain any abuse of power. Moreover, in a committee meeting on October 28 2015, the PBO was asked by Paul Mashatile, then chairman of the standing committee on appropriations, to produce independent analysis of the feasibility of fee-free higher education and the proposed nuclear energy procurement programme. Neither report has yet appeared publicly, but any PBO committed to fulfilling its public interest mandate should relish the opportunity. Time will tell whether the office will produce a credible analysis without regard to the views of powerful political factions.
It is not promising that despite its limited capacity, the office has chosen this critical moment to organise a conference to launch an "African PBO network". Combining the legislature’s role with an AU theme may play nicely to the interests of two possible future presidential candidates, but it does little to fulfil the office’s critical public interest role. Fiddling while Rome burns is presumably the thing to do when the outcome of the current political standoff in the majority party remains hard to read.
• Muller recently resigned from the Parliamentary Budget Office and is a senior lecturer in economics at the University of Johannesburg. The views expressed are his own.
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