Hon House Chairperson, section 213(2) of the Constitution of South Africa provides that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by an Act of Parliament. Chair, there is a lot of noise around here.
Come here, come ...
Hon members, we are aware that it is the last day today, but let us not compromise the decorum. Let's sustain how we have started. Hon De Beer!
I will see you outside.
Hon Chair, the Public Audit Excess Fee Bill hereinafter referred as the Bill, sets out to provide that the specified excess of the audit fee of certain categories of organs of state payable to the Auditor- General, as envisaged in the Public Audit Act 25 of 2004, is,
if the stated conditions are complied with, a direct charge against the National Revenue Fund and to provide for matters connected therewith. The National Treasury reported that the proposed direct charge for the audit fees in excess of 1% against the National Revenue Fund, NRF, was a result of a joint proposal from the Auditor-General and the National Treasury to the Standing Committee on the Auditor-General during the liberations on the 2018 Public Audit Amendment Bill.
The audit fees are used to cover the Auditor-General's, AG, expenses, finance the fixed assets and generate a surplus which ranges from 1% to 4% for working capital and general reserve requirements. Unpaid fees therefore deprive the AG of the needed cash flow to support the execution of its constitutional mandate. However, the National Treasury reported that 10% of the AG's client base falls under the financially distressed category comprising a substantial amount of revenue. These auditees are predominantly low capacity municipalities and small auditees such as museums, trust and boards.
The Treasury further submitted the currently section 23(6) of the Public Audit Act provides that if the audit fees is in excess of 1% of the current and capital expenditure of the auditee, then the excess must be defrayed from the National Treasury's budget if it is of the view that the auditee has financial difficulty to pay the excess. It
was also reported that historically, the excess audit fees is to be paid from the National Treasury's Budget Vote, which was substantially higher than the amount appropriated and thus resulted in shortfalls.
What are the provisions in this amendment Bill? Clause 1 provides that the excess of any audit fee, envisaged in section 23(6) of the Public Audit Act of 2004, as amended by section 10 of the Public Audit Amendment Act of 2018, is a direct charge against the National Revenue Fund. Clause 2 contains the short title of the Bill and stipulates that it takes effect on a date to be determined by the Minister of Finance by notice in the Gazette. The Select Committee on Appropriations having considered the Public Audit Excess Fee Bill, B7-2019, as referred to it, and classified by the Joint Tagging Mechanism as section 77 Bill reports that it has agreed to be Bill without amendments. The DA objected to the Bill. I table this report for consideration by the House and this is my last report in the Fifth Parliament of South Africa. Thank you. [Applause.]
Debate concluded.
Declaration(s) of vote:
Hon House Chairperson and fellow South Africans, it is always a pleasure to serve my party and to work for South Africa as a
whole. Therefore, being my last declaration in the Fifth Parliament, please allow me some space, Chairperson. Hon South Africans, the office of the Auditor-General of South Africa has a long and proud history - chairperson, please. It has served this country with distinction through different administrations. The main reason why the AG's office has been so successful, it is because it has always maintained its independence.
The Democratic Alliance is opposed to this Bill because it places the Auditor-General in a more favourable position than any other auditor out in the market place. It is our position that the Auditor-General should be required to collect its fees in the same manner as any other auditor. In addition, the fact that the Auditor-General will be able to recover fees from a third party, who is also its main client, would then create a potential conflict of interests and create ideal conditions for manipulation as well as undue influence.
The Auditor-General, I repeat Chairperson, the Auditor-General is a Chapter 9 institution that has traditionally been self-funded through the levy of audit fees in respect of its services. The Bill, of course, attempts to altar the status quo with the result that the Auditor- General's office will now, to an extent, be funded directly from the national fiscus. At present, any unpaid fees are reflected by the AG as
an asset on its balance sheet, for those who ... [Inaudible.] ... might understand, which makes up then most of the report at surplus.
This is a very bad idea indeed and should be rejected out of hand by all members of this Council. The reason I say so is that if we pass this Bill, it will mean that the Auditor-General will have no responsibility to collect its own funds in difficult circumstances. What the AG's office fails then to collect will now be paid in preference to and at the collective expense of every other governmental department.
In conclusion, I will urge my colleagues here to all reject this Bill as it has then assist the AG to maintain his office's independence compete fairly in the market and then the Auditor-General's office is, of course, responsible for the collection of his own fees, just as every other professional in South Africa is then required to do. Therefore, the Democratic Alliance cannot support this Bill. I thank you, Chair. [Applause.]
Hon House Chairperson, the ANC declares publicly that we support for this Bill. Therefore, any attempt by the smaller-nyana party to think that they can influence the ANC will not be successful because we have policy conferences from which we get our directors. As
the Comrades Charel De Beer has referred to the 1%, we believe that this could come to a point where the financial viability of the AG will be at risk which could easily spill over to a threat to the constitutional independence of the AG. The ANC as a political party with the experience which has demonstrated its commitment to rooting out corruption in South Africa as championed the processing of the Public Audit Fees Bill, the direct charge in this instance will mean that the payment to the AG will not form part of the normal appropriation of parts to the National Treasury. The payment will be made directly from the National Revenue Fund to the Auditor-General by the office of the Accountant-General that is responsible for managing the National Revenue Funds.
The ANC supports a direct charge against instead of increasing the appropriation of excess audit fees in National Treasury's Vote because the annual amount varies every year and in current fiscal position of the country will require the National Treasury to cut from other items on its own budget and impact negatively on the National Treasury's ability to perform its own functions. A direct charge will mean that revenue in the National Revenue Fund contributes directly to those auditees unable to pay the excess audit fee. It limits disputes between the AG and the National Treasury and creates more certainty for the
Auditor-General of what they expected revenue should be. Such certainty is vital for accurate budgeting and prioritisation objectives.
Furthermore, the anticipated revenue is critical for the financial independence due to the crucial role of the AG in ensuring constitutional democracy through this Bill. The ANC is convinced to ensure that this situation ... [Inaudible.] ... financially independent. Thank you, Chairperson. [Applause.] [Time expired.]
Question put: That the Bill be agreed to.
Bill accordingly agreed to, in accordance with section 75 of the Constitution.
Motion agreed to in accordance with section 75 of the Constitution.