By Joan Fubbs
The author is a member of the Provincial Executive Committees of the ANC and ANCWL in Gauteng, as well as the Chairperson of the ANC Finance Study Group, Gauteng Provincial Legislature
If the budget is an implementation instrument of policy then how can we bring the budget closer to the people it is intended to serve? This is an exploratory article that seeks to chart a way forward through the ensuing debate it hopes to generate. Democracy means and communicates different ideas. The neo-liberal framework includes democratic market reforms while for most western states the idea of democracy is that of a multi-party state.
Within the framework of the National Democratic Revolution the concept of democracy seeks to resolve the deep contradictions in South African society: monopoly capital (mainly white) and the majority of the population (large majority black). The Bill of Rights within the South African Constitution is the "cornerstone of democracy" in South Africa and it enshrines non-racialism, non-sexism, equality, socio-economic rights, human dignity and freedom It also shifts second-degree freedoms such as health and education to first degree freedoms. The constitution also confirms the participatory principle to broaden the base of democracy and introduces the concept of co-operative governance. The search for sustainable solutions that lead to a progressive realisation of the NDR requires an appreciation of the internal and external contradictions in South African society, which can only be resolved through radical transformation of social relationships and organisation. The motive forces that drive the NDR are mainly black working people including the unemployed. It also includes the rural masses, the middle strata in general including professionals as well as small and medium business people. The challenge of high unemployment and the growing gap between the small percentage of wealthy and the large percentage of impoverished continues to confront South Africa. Re-emphasizing the ANCs leaning towards the poor, President Mbeki called on the ANC and the nation this year to "push back the frontiers of poverty". The question then is: How can this call be translated into effective delivery of services through the budget and good governance? This paper argues that the challenge for those concerned with promoting participatory democracy and participatory forms of development is not simply to oppose the liberal paradigm and to promote a more radical, leftist or rightwing approach. Instead in line with the NDR there is a need to transform the very basis of state/society relations by conceptualizing new forms of political organization that confronts the contradictions in South African society, encourages active and informed participation, decentralised decision-making within the NDR strategic objectives and within the centrality principle of democracy. There is a close conceptual relationship between the concept of a unitary state with a fiscal federal structure and the concept of co-operative governance with this understanding of participatory democracy. New contexts new challenges
Bridging the gap between party and government and government and people poses fresh challenges. We need to move beyond a mechanical conceptualisation to one that recognises the relationship between policy, planning and implementation within a realistic functional framework. We need to avoid the alienation that can develop with the growing gap between government and the people it serves. Two ways to bridge this gap is to strengthen the relationship and two-way communication with civil society and to develop processes that will enable party political structures of the ANC Alliance to directly, and strategically contribute to the development of the budget.
Rhetoric cannot replace reform. Processes must be institutionalised to ensure such engagements achieve their goals. This is already reflected in ANC policy which calls for fresh forms of inclusion, consultation and mobilisation which could effectively inform and influence institutions and policies including the budget which concretizes policy for planned implementation.
The Stellenbosch Conference (2002) resolution on the Transformation of the State and Governance underlines the NDR imperatives of the consolidation of the democratic order. It notes that this requires the transformation of institutions of governance to ensure that they are capable of facilitating the pursuit of the goal of creating a better life for all, the promotion of a culture of democracy and human rights, non-racism and a new patriotism and African unity for reconstruction and development.
Corruption, which can also lead to a reduction in the available financial resources, poses a "major challenge within the public, private and civil sectors" and "undermines the values and objectives of the NDR."
This is also translated into good governance through the policy and process of deepening participatory democracy. Principles of transparency, accountability and responsiveness have driven a number of policy changes in institutional design and the development of enabling structures for good governance, which is reflected in the South African Constitution.
The range of institutions supporting democracy introduced by the ANC reflects the movement's commitment to "an active democratic transparent and development State. These institutions include the Public Protector, the Human rights Commission, the Commission for Gender Equality, the Auditor General, the Financial and Fiscal Commission and the Reserve Bank among others. This recognises that there is a need to increase the management capacity of the public service to a meet the needs of a developmental State.
Contradictions and balancing strategies
At the ANC's 50th Conference in Mafikeng (1997) the resolution on participatory democracy Governance noted that "the collective, democratic management of our people's lives extends beyond government; and that good governance requires the involvement of civil society including labour and business in the decision-making and development of society". It was resolved that "government (should) take steps to promote participatory democracy and the culture of liberation in all institutions of governance, and it was further resolved that: mechanisms and strategies for determining a clear role for appropriate organs of civil society in promoting participatory democracy be devised."
As recently as the Stellenbosch Conference the ANC reiterated the importance of balancing strategies: On one hand it is imperative that ANC membership is consulted in a number of ways that reinforces inclusivity in the translation of policies into implementation strategies. On the other hand, it is also important for government to be able to govern with checks and balances of legislation such as the Public Finance Management Act as well as the overarching oversight that legislatures can exercise to ensure accountability and responsiveness.
Each perspective often perceives the other as inadequate with one warning that consultation without attention to power and politics will lead to "voice without influence" and the other arguing that reform of political institutions without attention to inclusion and consultation will only reinforce the status quo. However it is more apparent than ever before that the principle of "either/or" is conflictual compared to "and/but" which seeks to harmonise the natural tensions that exist in reality. Thus in the North and in the South there is agreement that an active and engaged civil society is as necessary as a responsive government. South Africa has been the first country to entrench the principle of participatory democracy in its constitution.
Political space and party participation in the budget How do we address the challenges arising from a non-homogeneous civil society which exists in South Africa so that we can close the gap between those resources and capacity and those without these benefits so that the substantive weight of the views is not distorted and/or diluted?
The Stellenbosch resolution on Transformation of the State and governance notes that: "Where people are not involved in decisions that affect their lives, social policies and political interventions are less likely to succeed. Participatory democracy should therefore complement and enhance representative democracy."
In the context of participatory democracy, political space created by this convergence of ideas creates a natural opportunity for greater participation in the development of the budget. The ruling party in the government is elected on a mandate which has its genesis in the prioritised policies of the ANC. "Over the years" the ANC "has defined the strategic objective of the National Democratic Revolution (NDR) as the creation of a united, non-racial, non-sexist democratic and prosperous South Africa" the Secretary General reported at the Stellenbosch Conference.
The dynamic nature of policy enables it to remain contextualised. However if technocrats craft the budget without being influenced by a political policy process, then the tyranny of bureaucracy reigns. ANC policy is overturned as technocrats seek to give it a fresh spin. Given the manner in which ANC policy, as resolved in the Mafikeng conference is developed, a technically sound budget uninformed by ANC policy loses touch with reality. It becomes an efficient rather than an effective instrument of policy, which is in turn stunted by its inability to be shaped by its beneficiaries. There is a direct correlation between this perspective and that which recognizes the developmental character of the State.
The Gauteng Provincial Government has developed measures to bring government closer to the people through restructuring the Office of the Premier to focus on good governance, ensure closer co-operation between departments and foster integrated delivery. Inevitably this has opened the space for greater engagement with the people but now needs also to actively promote fiscal policy engagement within the party right down to branch level which is now ward based.
The question is how can we strengthen the capacity of all legislatures including both Houses of Parliament to examine and assess the linkages between the performance of government and the allocation of resources to achieve the stated targeted results?
"Fiscal policy must support growth, employment creation and development by ensuring that government expenditure continues to grow in a robust but sustainable fashion. Like all policies it must be subject to regular review in terms of its impact on our overall objectives," fiscal policy resolution adopted at the Stellenbosch Conference.
Historically, budgets in South Africa were driven by technicians and the administration with little if any political intervention and an implicit policy to produce documentation that made it impossible for the public to appreciate the purpose of expenditure and the achievements of objectives. Budget reform over the last six years has striven to ensure greater political intervention with Ministers and MECs now responsible for the outcomes. However this process needs to move beyond the executive to ensure the budget remains relevant.
The question is how branches can effectively participate in the development of the budget in terms of prioritised policies for implementation and alert government to new developments, which can be incorporated into the MTEF three-year budget cycle. In this way the outcomes of implementation impact strategically on the dynamic nature of policy, which in turn requires a review of strategic plans.
The first question is how can we increase public and party structure awareness and understanding of both the current and long-term implications of the fiscal situation? The second question is how can we create enhanced opportunities for party public and parliamentary input to budgetary decisions?
Convergence of two participatory streams Budgeting is at the heart of good governance. The journey to fiscal good governance in South Africa has its seeds in a commitment to deliver more social services while reducing the debt incurred prior to 1994. Thus the budget is not simply a technical instrument but also a political instrument to transform our socio-economic environment.
The programme of the NDR identifies broad challenges in the critical spheres of social transformation, informed in the main by the RDP. This covers issues of democracy and governance, meeting social needs, economic transformation and safety and security matters.
The 51st Conference further notes "the reforms introduced by the ANC to transform management in all spheres government to meet the needs of a developmental state and to improve its capacity to delivery including the introduction of financial management legislation like the Public finance Management Act and public service reforms such as the establishment of Senior Management Services."
But what is a developmental state? It is a system of good governance and not a government. It is a state that moves away from authoritarianism and acts as a catalyst, which seeks to unlock the resources of the state and to use its capacity to develop an enabling environment to improve the quality of life of its people.
Budget reform measures have shifted the purpose of the budget from its narrow focus on prudent stewardship to embrace the development of sustainable programmes to deliver quality services that will "push back the frontiers of poverty" grow the economy, develop skills and create an enabling environment for employment.
"To realise these transformation objectives, the ANC must proceed to further deepen the mass character and capacity of the movement to provide leadership to society as a whole. This requires a strong, capable, focused and conscious cadreship, as well as branches that serve as catalysts for community development," President Mbeki 91st ANC Anniversary.
Taking the budget direct to the community without also engaging the party reinforces the gap between government and the party. However this necessary engagement without a corresponding branch process will lead to a government dependent on the whims of a fickle electorate rather than the support of informed and disciplined cadres and ANC branches. However once again it is not an "either/or" challenge rather it is an "and/but". A politically naïve civil society is as dangerous to progress as is a dogmatic party. One of the central organizational challenges is how the ANC should relate to other organs of civil society, and how we characterize the latter as our emerging democracy matures.
However this raises the question of party accountability within and between ANC structures and between ANC structures and structures of governance.
Co-operative governance and Intergovernmental Fiscal Relations Good governance and fiscal decentralization are attuned in our country through co-operative governance. The unitary state with its system of fiscal decentralization has been institutionalized in the Intergovernmental Fiscal Relations Act. A fiscal decentralized framework addresses the question of the appropriate level of centralization by assigning competency to tax, spending and regulatory responsibility to the various spheres of government and the interface with the private sector and civil society. This framework assigns responsibility to that sphere of government at the coalface of delivery. However fiscal decentralization is not automatically better than fiscal centralization.
Sub-national governments often pursue "self-interest " policies and strategies seeking a "free-ride with no accountability and undermining national unity". The principle of co-operative governance is an essential catalyst to overcoming this problem. This principle is informed by the collective principle which characterizes the ANC and acts as a countervailing weight to the "beggar-thy-neighbour" policies practiced by governments characterized by fiscal centralization.
However the accessibility of information, which is related to the principle of transparency, is not only necessary but also an essential requirement for effective oversight by the legislatures. If branches, civil society and labour are to effectively contribute to the development of the policy priorities in the budget then access to relevant information is an imperative.
The Intergovernmental Fiscal Relations (IGFR) system underpins this principle because it facilitates fiscal harmonization and stabilization and stability checks. The advantages of a unitary state are successfully merged with the advantages of fiscal decentralization in an effective Intergovernmental Fiscal system. One of the effects of globalization is the impact on the design of a fiscal system in a borderless world economy.
The IGFR complements the budget review which provides consolidated MTEF figures but not detailed provincial and local budgets. Considering the critical role of provinces and local government in delivery of social and basic service the consolidated information provided by the IGFR facilitates a better understanding of the issues by these two spheres of government. The IGFR also focuses on the performance based outputs. Gauteng believes that the reliable provision of data is directly related to improving quality service delivery.
The integrity of data of is not simply a technical exercise. The selection, collection and classification of data is determined by the objective reality which is why what was presented as statistics under an apartheid era hardly took account of the existence of black people. Clearly raw data is of no use until it has been transformed into relevant information which is vital for the evaluation of the achievement of strategic objectives.
Of course any system of good governance requires not only political will and well-functioning accounting and financial management systems but also information systems of integrity and accessibility. An information system is a set of people, procedures and resources that collects, transforms and disseminates information in an organization.
Comparative challenges in the shift from the twentieth to the twenty-first Century What are the comparative challenges of transfers as we shift from the twentieth to the twenty-first century? A series of shifts, informed by a phalanx of policy leading to legislation has paved the way for a new fiscal management paradigm within the NDR framework. At least eight such shifts within this paradigm can be identified.
First, there is the shift from a unitary or centralized fiscal system to a federal or decentralized fiscal system. Second, borderless economies is breaking down the centralized national silos and replacing them with positions and decisions that are both globalized and localized. Third, the centre which was managed within a framework of rules to a centre that leads and encourages discretionary decentralized management. Fourth we have moved from a rigid fiscal bureaucracy towards participatory fiscal democracy.
Fifth the command and control character that flourished prior to 1994 has buckled under the pressure of a democratic constitution and shifted towards transparency and accountability. Sixth the internally dependent public service with its focus on administration and not management has moved towards the capacity to initiate, act and compete. Seventh the inward thinking that fostered the sluggish performance of the public service is beginning to shift towards a more outward thinking attitude that encourages people to be swift and smart. Eight the public service mandarins whose intolerance of risk leading to a psychosis of fear and failure which crippled the performance of the public service has with the move to a more horizontal management structure liberated the public service and given people the freedom to fail and/or succeed.
The operational decisions arising out of the PFMA have underpinned the difference between the decisions concerning the desired outcomes of government action and the decisions about the outputs of government that are undertaken in pursuit of the outcomes. This distinction further emphasizes the critical policy decision enacted in the PFMA to ensure clear delegations of competence and responsibility and leads to more creative and productive management. Managers now have discretion to make decisions, but must also take responsibility for these decisions. Linked to this is the performance contracts. However, we now need to focus on political accountability but this requires careful understanding of the role and function of politicians in the executive in relation to outcomes.
The question this raises is how do we retain a balance between the managerial requirements of politicians in government and the need to improve systems of political accountability within all ANC structures and spheres of governance?
ANC constitutional structures and institutions of governance Again the seminal policy direction provided for by the Mafikeng Conference recognized the need to build and strengthen the relationship between ANC constitutional structures and institutions of governance. The portfolio study groups of Caucus can play a pivotal role in ANC policy implementation as Ministers and MECs are an integral part of these groups which are chaired by chairpersons of legislature. The Mafikeng Conference also clearly recognized the "necessity for the ANC to provide political direction to the institutions of governance without undermining their integrity." It did so while "acknowledging that there is only one ANC irrespective of areas of operation (and further) that the ANC and its structures are central to the management and co-ordination of all processes of governance and that the ANC needs to be transformed to enable it to meet the demands of governance."
This resolution on the relationship between constitutional structures and institutions of governance goes on to highlight the important role of the caucus structures, in particular the study groups, which would drive the decisions and positions of the policy committees into the executive and legislature through the caucus.
The Stellenbosch Conference re-emphasized the role of ANC branches in informing policy and legislation. The budget is indeed a piece of legislation. The Stellenbosch Conference also resolved in respect of institutions enhancing democracy and transformation to "accelerate the pace of implementing the accountability system for better performance on service delivery and financial management, by fully and properly implementing the management and performance reforms like the PFMA and Senior Management Service."
How can provincial MTEF budgets remain politically informed by branches? The resolution on the relationship between ANC constitutional structures and institutions of governance underpins the principle of accountability to constituencies. The ANC ward based branches provide a sound starting point for reviewing budget policy priorities and ensuring this engagement with the region and the province becomes a political policy highway and not a one way street of instruction. There is an element of political arrogance in the position that refuses to recognize the understanding of membership at grassroots about critical socio-economic issues within their personal and public environment that can be improved.
Already the policy structures with their involvement of the executive, legislators councilors and ANC constitutional structures are in place provincially and regionally but may require certain modifications in the clustering. The intention has always been to establish and develop similar structures at the branch or zonal level. The three-year medium term framework budget offers greater opportunity for the party political structures of the ANC to directly contribute to the development of the budget.
The Mafikeng Conference in its resolution on the ANC policy process also notes that "policy development appears to have shifted to government and away from ANC constitutional structures". The revitalization of the policy conferences at provincial and national level in 1997, which was successfully taken down to branch level in 2001 and 2002 in preparation for the 51st ANC National Conference at Stellenbosch has positively arrested this shift.
The resolution lays the foundation for strengthening the policy structures in a way that will "sustain an on-going cycle of policy development, implementation and monitoring". These policy structures provide the political platform for the policy involvement and development of the budget. The heads of the working groups of the respective sectors eg health, education, social development, housing and transport could be clustered along the lines of the Economic Transformation Committee. Within the policy working group the engagement on micro-prioritization issues and their translation into the budget would begin.
This process could be consolidated by the respective policy committee cluster before going to the provincial executive committee. At the PEC political engagement would continue within the macro level as it assimilates the micro-prioritization within the macro framework. Budget policy conferences at regional and then provincial level could take place where issues can be prioritized and the resolutions taken forward by the chairperson of the ANC Province Executive Committee to the Executive Council of provincial government.
During this phase the executive working with the administration of the respective portfolio departments and indeed provincial treasury which has the technical competence to lead this process would work towards indicative budget. The relationship between the MEC of Finance and the ANC provincial budget policy structure would ensure that the political direction of the ANC Provincial Executive Committee arrived at through the process of engagement with branches is fully incorporated into the MTEF budget.
If this process is properly institutionalized then perhaps the amendment of the budget becomes a far less important consideration and instrument for retaining the budget on course. The Medium Term Budget Policy Statement of National provides a process framework, with early information to the public, of budget policy intentions and provides scope for legislatures to contribute to budget decisions which are firm but not set in stone.
However the question is whether if early input into the medium term budget process is effected would it be necessary to introduce legislation to amend budgets? Secondly do legislatures have the resource capacity to amend the budget?
BUDGET REFORM TRANSPARENCY AND ACCOUNTABILITY
The key question that informs the process of prioritising and re-prioritising is the purpose of the budget. This is the challenge for the executive and the question that the oversight structures of the legislature must grapple with as it evaluates the effective relationship between policy priorities and the budget. In this respect the budget must be unpacked as a political tool, economic tool, legal tool, planning tool; a tool for allocation, reallocation and re-distribution and an accountability mechanism.
The question is how can the budget as a political tool effectively reflect government policy within the framework of the NDR. How do we address the fundamental contradictions of South African society?
The Gauteng legislature has developed an oversight tool called PEBA to promote executive accountability. It does this by tracking the implementation of provincial policies through the implementation of resolutions adopted in the House, the budget, the quarterly and annual reports and through oversight visits and monitoring of statements by the respective MECs.
In the last six years there has not simply been a change in the instruments of public management but also a change in the style and mode of governance. Budget reforms like the MTEF constitute a set of institutional interventions. These reforms have led to budget integrity, greater transparency and increasing accessibility through changes in the format of budget statements. Budget reforms have been described as rules of procedure and position that are introduced to transform the behaviour of those involved in the budget process. However budget reform is also informed by the need to strengthen the redistributive thrust of expenditure which is one of the core elements of the Reconstruction and Development Programme (RDP) which remains the fundamental policy of the African National Congress and its Alliance partners and which was adopted by Parliament.
Institutionalising instruments and processes is a key plank in budget reform exemplified by the MTEF. The implementation at national and provincial level - certainly in Gauteng's case - provides argument and evidence that well-constructed budgetary processes influence behaviour. A paradigm shift requires a consequent shift in behaviour, which is necessary to overcome the challenges of fiscal illusion, information revelation and asymmetric information as well as to facilitate optimal social outcomes.
"Branches shall be the place where members exercise their basic democratic rights to discuss and formulate policy" ANC Constitution.
Thus strengthening the capacity of branches to participate in policy formulations and in turn to the translation of these policy priorities in the medium term three-year expenditure framework budget, is essential to effective participatory democracy and the full realization of the NDR.
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