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2012 budget highlights and getting money bills through Parliament
- Bill Watch 53/2011
Veritas
November 29, 2011
Cases
in the Supreme Court
The
2012 Budget
Note:
Budget for Constitutional and Referendum but No Budget for Elections
The Minister
of Finance, Hon Tendai Biti, presented the 2012
Budget Statement in the House
of Assembly on 24th November, taking just over two hours to
deliver his speech, at the end of which he tabled the Estimates
of Expenditure for 2012. [See Budget Highlights below.]
The Minister
of Constitutional and Parliamentary Affairs, Hon Eric Matinenga,
then moved the adjournment of the debate, explaining that members
and especially portfolio committees needed time to look into the
Budget Statement and analyse the Estimates. The House of Assembly
accordingly adjourned until Thursday 1st December, when debate will
continue. From Monday 28th November to Thursday 1st December portfolio
committees will conduct their post-Budget analysis and prepare reports
to be presented to the House when debate resumes.
Budget
Highlights
No funds for
elections: The Minister has not allocated any funds for the holding
of the next general election – an indication that at this
stage a general election in 2012 is considered highly unlikely by
all sides [this is in fact a Government-approved Budget, not just
the Minister of Finance’s budget]. Addressing a Confederation
of Zimbabwe Industries post-budget meeting on 25th November the
Minister said it would be almost impossible to hold an election
next year because of the political situation. The issue was political
than budgetary; if an election was called resources for it would
have to be found. [Note: When listing the themes on which the Budget
would focus, the Minister mentioned support to “election preparedness,
including the Voters Roll” as a component of “monetizing
the GPA
provisions”.]
Budget for Constitution-Making
Process and Referendum: The Minister said that “to facilitate
adoption and approval of the new Constitution, which is currently
at its finalisation stage” he proposed allocating $30 million
towards “completion of the constitution-making process and
the Referendum”.
A pro-Poor Budget:
The Minister emphasised that the intention of the Budget is to focus
on “attaining both growth that is pro-poor, broad based across
all sectors, and a pattern of growth that moves us towards structural
transformation”. There will be a $20 million Jobs Fund aimed
at reducing unemployment.
Cash budgeting
to continue: The watchword will continue to be that the government
can only spend what it earns.
Revenue projection
boosted by expected diamond revenues: The Budget
Strategy Paper framed in August estimated revenue of $3.4 billion
for 2012. But the decision by the Kimberley Process on 1st November
to approve sales of Marange
diamonds resulted in an upward adjustment of projected revenue
by $600 million to $4 billion, with a corresponding expansion of
estimated expenditure. The Minister said half the additional $600
million would go to infrastructure development, and half to recurrent
expenditure, including paying Government arrears to service providers
[$17 million], student grants [$25 million] and the constitution-making
process and referendum [$30 million].
State wages
bill still disproportionate: The Minister bemoaned the fact that
a high and disproportionate share of Budget expenditures has to
go to wages [57%]
Expenditure
- Selected Figures
[All figures
to nearest million]
Total projected
expenditure: This is $4 billion, made up of:
- Constitutional
and statutory appropriations: $352 million [see below for details]
- Vote appropriations:
$3.648 billion [see below for selected individual votes]
Constitutional
and statutory appropriations [“cons and stats”]
These amounts
must be paid out of the Consolidated Revenue Fund [CRF] by virtue
of appropriations already made by the Constitution
and Acts of Parliament mandating payments from the CRF for specific
purposes. As such they do not have to be approved by Parliament
again during the current Budget exercise, but they must be covered
by revenue. Examples of cons and stats are: the salaries and allowances
of the President, the Speaker of the House of Assembly and the President
of the Senate, the judges and other constitutional appointees such
as the Public Protector and Comptroller and Auditor-General; State
service pensions; and war veterans and ex-political prisoners pensions.
Pension-related payments account for the bulk of cons and stats.
Amounts listed under this heading include:
President’s
salary and allowances: $97 000
Speaker’s
and Senate President’s salary and allowances: $150 000
State service
pensions: $178 million
Commutation
of State service pensions: $$51 million
War veterans
and ex-political prisoners pensions: $91 million
Allocations
[These and all
the other “vote appropriations” in the Estimates of
Expenditure require the approval of the House of Assembly and enactment
into law by the Appropriation Bill. They include the majority of
State employment costs.]
President and
Cabinet Office: $172 million, including:
- Foreign travel
expenses: $25 million
- State residences:
$14 million
- Prime Minister’s
Office: $19 million, including:
- Foreign
travel expenses: $7 million
- Education
and Higher and Tertiary Education: $1.15 billion all told, covering:
- Education:
$707 million
- Higher
and Tertiary Education: $296 million
- Health: $346
million
- Defence:
$318 million
- Home Affairs
[including Police]: $308 million
- Registrar-General:
$18 million
- Agriculture:
$227 million
- Public Service:
$126 million [mainly employment costs]
- Justice and
Legal Affairs: $111 million
This includes
the Prison Service [$83 million] and the Attorney-General’s
Office [$4 million], but not the Judicial Service, which comes under
the separate vote for the Judicial Service Commission.
- Youth Development,
Indigenisation and Empowerment: $48 million, of which
- Employment
costs account for $30 million
- Judicial
Service Commission: $23 million [including $9 million for employment
costs – salaries and allowances of magistrates and supporting
staff]
- Parliament:
$18 million
- Constitutional
and Parliamentary Affairs: $10 million
The amount allocated
for constituency development funds remains the same as for 2011:
$800 000.
Taxation
Proposals
Income tax-free
threshold: This is to be increased from $225 to $250 per month,
effective 1st January 2012.
Income tax bands:
Tax bands will be widened, starting at $250 and going up to $10
000, above which income will be taxed at the highest rate of 45%,
effective 1st January 2012.
Bonus tax exempt
threshold: This is to be raised from $500 to $700 with effect from
1st November 2011, i.e., it will be applicable to 2011 end-of-year
bonuses.
Civil service
allowances to be tax-free: Civil service incentives not already
tax-free will be tax exempt, effective 1st November 2011 [allowances
constitute nearly half of civil service incomes].
Customs and
excise duties: Various adjustments to duties are proposed, both
up [e.g., excise duty on cigarettes and customs duty on some imported
finished products, such as selected motor vehicles and electrical
goods, and fruit and vegetables in season] and down [e.g. customs
duties on some imported raw materials]. There will be a rebate of
customs duty on sporting kit and equipment donated to registered
sports associations.
Royalties on
precious metals: There will be an increase in gold [4.5% to 7%]
and platinum [5% to 10%] royalties.
Cooperating
Partner/Donor Assistance
The Minister
estimated that for 2012 cooperating partner/donor assistance would
be about $500 million. [In 2011 they pledged $618 million for 2011,
of which $371 million had been disbursed by September, outside the
Budget framework, mainly in humanitarian assistance rather than
development assistance.] He said that the Government would continue
to engage cooperating partners to increase and broaden support,
“preferably by gradually shifting from humanitarian to development
assistance” and “on the need to graduate from off-Budget
support”. Like the 2011 Budget, this Budget does not list
donor funding in the Ministry of Finance’s Vote of Credit
[this was last done in the 2010 Budget].
Getting
the Budget through Parliament
When it resumes
on 1st December the House of Assembly will debate the Minister’s
Budget Statement before considering the Estimates of Expenditure.
The Estimates will be dealt with in a special committee of the whole
House called the Committee of Supply. The Estimates are divided
into parts called “Votes”. Each Vote lists the funds
to be allocated to a particular Ministry or other accounting entity
[e.g. the Judicial Service Commission or the Audit Office], giving
a breakdown of the different classes of expenditure authorised.
The House will consider each of the 38 Votes separately.
If the House
approves both Budget and Estimates, it will then move on to consider
the two Bills that give effect to the Budget: the Appropriation
Bill, which will authorise Government expenditure for 2012 in
accordance with the approved Estimates, and the Finance Bill, to
give effect to those aspects of the Minister’s taxation proposals
which cannot be implemented by statutory instrument.
Motion passed
to “fast-track” Estimates and Bills: Immediately before
the Budget presentation last Thursday afternoon the House approved
a Government motion, proposed by Constitutional and Parliamentary
Affairs Minister Eric Matinenga, suspending various certain Standing
Orders to enable the House to fast track the consideration and approval
of the Estimates, and the two Budget-related Bills. [This means
the House’s ordinary rules about taking only one stage of
a Bill on the same day, adjourning at 7 pm, not ordinarily sitting
on Friday, adjourning at 1 pm on a Friday and allowing the Parliamentary
Legal Committee 26 days to report on a Bill, will not apply.] It
remains to be seen whether allowing fast-tracking will enable Parliament
to get through everything that needs to be done on Thursday 1st
and Friday 2nd December. If it does not, there will have to be a
break of at least a week to allow ZANU-PF MPs to attend the ZANU-PF
conference in Bulawayo from 6th to 9th December. Depending on progress,
therefore, one or both of the Houses may have to sit during the
week commencing Tuesday 13th December. [Note: The fast-tracking
resolution does not apply to any other Bills, so there is no prospect
of any other Bills, such as the lapsed and controversial Human
Rights Commission Bill and Electoral
Amendment Bill, being rushed through before the end of the year.]
Possible Resistance
from MPs: MPs have become increasingly discontented about Parliament
being treated as a rubber-stamp institution by the Executive. What
can they do if not happy with aspects of the Budget? According to
Standing Orders MPs cannot vote to increase allocations proposed
by the Minister, but they are allowed to show their disapproval
by reducing or omitting allocations for purposes not acceptable
to them. Or they could refuse to approve the Estimates and the Bills,
thereby forcing a re-think of the Budget. That would be unusual,
but would not necessarily bring the business of government to a
grinding halt at the end of the year. In accordance with the Constitution,
there is provision in the Public Finance Management Act for limited
temporary financing of government activities for the first four
months of 2012 if the Appropriation Bill is not passed. There are
indications from yesterday’s post-Budget workshop that although
a motion was passed to fast-track the Budget bills the MP’s
will refuse to do so and will want to take their time.
Role of the
Senate: If passed by the House of Assembly, the two Budget Bills
will be transmitted to the Senate. If the Senate does not want any
amendments to the Bill and the Bill is passed as it comes from the
House, it will go straight to the President to sign. If the Senate
want to amend the Bill, according to the Constitution, as both Bills
are “money bills” it cannot do so directly. It has to
recommend its amendments to the House and the House must consider
them, but is not obliged to accept them. If the House accepts the
Senate’s suggested amendments, they will be incorporated before
the Bill is then submitted to the President for assent.
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