Removing yourself from the PFMA – is this possible?
During my extensive dealings with the application of the Public Finance Management Act (PFMA), it became clear that Government often misinterprets the legislation as a mechanism to regulate or exercise Government control. Instead, the PFMA is intended to inform financial management and reporting to those entities to which the Act applies.
All public entities in which Government has ownership control are listed in the Schedules to the PFMA, and the application of the PFMA to those entities are informed by their national or provincial status. Now this brings us to the question as to what happens to an entity that is listed in the PFMA when Government no longer holds ownership control?
Section 3(1)(b) of the PFMA states that the Act applies to all public entities, that are listed in Schedules 2 and 3 of the PFMA, with the process of listing being informed by Section 47(2) of the PFMA.
Section 47(1) allows the Minister, by notice in the Government Gazette to either amended Schedule 3 (to include all public entities that are not listed); or to make technical changes to the list.
There is no provision in the PFMA to enable the removal of a listed public entity, under circumstances where the Act no longer applies to such an entity. Can the absence of such a provision be construed as a tacit right/ or even obligation by the Minister to remove an entity from either Schedule 2 or 3?
The Constitutional Court held in Fedsure Life Assurance v Greater JHB TMC:
“It seems central to the conception of our constitutional order that the Legislature and Executive in every sphere are constrained by the principle that they may exercise no power and perform no function beyond that conferred upon them by law.”
The limited powers which the PFMA confers upon the Minister relevant to Schedules 2 and 3 are to be found in sections 47 and 48 of the PFMA. Save for section 47(1)(b), however, which allows for “technical changes to the list ”, sections 47 and 48 confer only limited powers upon the Minister and only insofar as the Schedule 3 list is concerned. No powers are conferred on the Minister insofar as the Schedule 2 list is concerned; in particular, he is not empowered to remove an entity from Schedule 2.
Although there are quite a few examples where the Minister promulgated Government Notices to remove entities from the PFMA, the manner in which the PFMA has been formulated makes it clear that the power to remove an entity from Schedule 2 has not been conferred upon the Minister and he therefore does not have the power to do so.
This, of course, leads to an intolerable result: a Public Entity may remain bound by the provisions of the PFMA, solely because of its listing, when properly it should not be so bound. How can this intolerable result be addressed?
The Minister may elect to introduce a Bill to Parliament in terms of which a public entity is delisted as a Schedule 2 or 3 entity, alternative amending Section 47 to enable such removal by Proclamation.
For further information regarding the PFMA, please contact RB Africa at firstname.lastname@example.org
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