Political Party Funding VII - The Treasury Bombshell

This brief outlines the presentation by the National Treasury on 1 September 2017 to the Parliamentary Ad Hoc Committee on the Funding of Political Parties and considers its implications.

Introduction

In some debates, a contribution is made which, if attended to carefully, fundamentally changes the understanding of the issues. The National Treasury’s submission to the Parliamentary Ad Hoc Committee on the Funding of Political Parties is just such a contribution, and the record of the meeting indicates that it has not yet been attended to carefully enough.

The facts

The Treasury provided information on three financial flows:

1. Funds which flow to the Independent Electoral Commission as administrator of the Represented Political Parties Fund (RPPF). The most recent audited expenditure through this channel was R 127.4 million in 2015/16. These funds are channelled through Vote 5 (Home Affairs) Programme 2.

1. Funds which are allocated by Parliament to political party support (R94.8 million), to constituency support (R267.4 million) and to party leadership support (R8.8 million), making a total of R 371.0 million in 2015/16. These amounts are channelled through Vote 2 (Parliament) whose purpose is described as follows:

Provide the support services required by Parliament to fulfil its constitutional functions, assist political parties represented in Parliament to secure administrative support and service constituents, and provide members of Parliament with the necessary facilities.

1. Funds allocated to political parties by the provinces, amounting to R549.0 million in 2015/16.

Together, these flows added up to R 1047.4 million in 2015/16, with the projection for 2017/18 being R 1097.1 million. 

The Treasury also pointed out RPPF funding has been increasing by 5% per annum, while funding through Parliament has been increasing at 12% per annum. The jump in the allocation to Parliament seems to have been particularly big between 2004/06 and 2007/08.

The time interval over which these growth rates were calculated is not stated.

The questions

1. How comes it that funds allocated by the provinces to political parties by provinces are more than four times the funds allocated through the RPPF?

1. We know that there are funds flowing to parties at the national and provincial level. Are they flowing at the local government level as well?

Here’s what Michael Sachs, the Deputy Director General in charge of the Budget Office had to say:

We rely on the annual financial statements of provinces, and there are various channels and accounting conventions about how these funds are accounted for. But if a province doesn’t publish information in its annual financial statements about which party got what, we are unable to publish that information…In the case of provinces [allocations are] being funded from the equitable share.

We haven’t even touched on local government: how much is going from local government to political parties, for what purposes, and to local public representatives. The answer to that is that we really don’t have a clue.

And in the record of the Committee’s meeting we read:

[The Chairperson’s] second point was about the provinces. Should they not say to provinces they had to adhere to Section 116? He suggested that the Committee could include a statement in the Bill stipulating that all political parties in legislatures had to adhere to Section 116 of the Constitution and then the Committee could find a way to regulate Section 116.

Mr Lees (DA) suggested that the way that provinces were distributing funds was outside the ambit of Section 116. The constituency allowances would probably fall within the ambit of Section 116 but he thought that the money paid directly to political parties was unconstitutional. Could they get senior counsel opinion on the matter? The matter had been bouncing around for a few years and they needed at least a parliamentary legal team opinion on the way that provinces paid political parties.

The Chairperson thought that there had been a court ruling in Limpopo striking down the way in which Limpopo was providing funds to political parties. If that were the case, a clause stating that a provincial legislature should follow Section 116 would suffice.

Mr Singh asked for a copy of the judgement. He thought that since the legislation had been outlawed, the legislatures were using policy as a basis for making the funding distributions.

Mr Lees asked whether parliamentary legal services could find the provincial legislation.

The Chairperson explained that there was no legislation[1] but all legislatures used policy to distribute funds since the court finding on the Limpopo Legislature. The Speaker at each legislature determined how much would be allocated, which was why the Committee had to consult the Speakers Forum. What the Committee needed was to find a common way to manage all provinces.

Ms Mathys said that she understood that the mandate did not include local government but felt strongly that the Committee should make a note in its Committee Report when presenting to the National Assembly about the problem of the lack of legislation at local government level.

So much for the Ad Hoc Committee splashing around in the shallow end. But was Lees right in saying the matter had been bouncing around for a number of years?

The answer is yes. As long ago as 8 March 2013, the Mail and Guardian[2] reported that:

1. Section 236 of the Constitution states that: "To enhance multiparty democracy, national legislation must provide for the funding of political parties participating in national and provincial legislatures on an equitable and proportional basis." Constitutional experts argue that this means party funding — nationally and provincially — may be legislated by Parliament only.

2. Former finance minister Trevor Manuel also reportedly warned provinces in 2009 not to fund political parties from provincial budgets after his department had obtained legal advice.

In summary, the position is this. Provinces passed legislation authorising funding of political parties. Warned that they had probably acted illegally and alarmed by the ‘Limpopo case’[3], provinces are now justifying the payments as a matter of ‘policy’. We shall analyse the legality of all this in a later brief. For now, it suffices to say that well over half a billion rand – and we don’t know how much over because no one has a clue about what local government as a whole is doing – is being allocated in a highly questionable way. Certainly, it will not suffice to remind provincial and local government about Section 116 of the Constitution. The Ad Hoc Committee needs to do a lot more work on this one.

Physician, heal thyself.

Rafael Friedman is a Researcher and Charles Simkins, Head of Research, at the Helen Suzman Foundation.

This article first appeared as an HSF Brief.