Premier: Limpopo Province v Speaker: Limpopo Provincial Legislature and Others

The Limpopo Provincial Legislature passed the Financial Management of the Limpopo Provincial Legislature Bill, 2009. The Bill sought to regulate the financial management of the provincial legislature, dealing with oversight, budgeting, asset and liability management, supply chain management, and internal auditing. The Premier of Limpopo had reservations about the constitutionality of the Bill, questioning whether the provincial legislature had the authority to pass legislation on financial management. He refused to assent and referred it back to the legislature for reconsideration as required by section 121 of the Constitution. The legislature reconsidered and returned the Bill unchanged. The Premier then referred it to the Constitutional Court for a decision on constitutionality. The Premier's reservations were that: (1) financial management of legislatures is not listed in Schedules 4 or 5 of the Constitution; (2) the Financial Management of Parliament Act, 2009 does not expressly assign this power to provinces; and (3) Chapter 13 of the Constitution envisages national legislation to ensure transparency and expenditure control, not provincial legislation. Five other provincial legislatures had enacted substantially similar legislation.

• Whether provincial legislatures have the authority to enact legislation regulating their own financial management
• Whether financial management of provincial legislatures falls within the functional areas listed in Schedules 4 and 5 of the Constitution
• Whether sections 2(e) and 3 of the Financial Management of Parliament Act, 2009, read with Schedule 1, expressly assign to provincial legislatures the power to regulate their own financial management (section 104(1)(b)(iii))
• Whether financial management of provincial legislatures is a matter for which the Constitution envisages the enactment of provincial legislation (section 104(1)(b)(iv))
• The proper interpretation of 'expressly assigned' in section 104(1)(b)(iii) of the Constitution
• The proper interpretation of 'envisages' in section 104(1)(b)(iv) of the Constitution
• Whether the Bill conflicts with the Public Finance Management Act, 1999

The Court declared the Financial Management of the Limpopo Provincial Legislature Bill, 2009 unconstitutional. The Court set the matter down for further hearing on 8 November 2011 regarding the constitutional validity of similar provincial statutes enacted by Eastern Cape, Free State, Gauteng, Mpumalanga, and North West provincial legislatures. The Speakers of those provincial legislatures and the MECs for Finance in those provinces were joined as respondents. Directions were issued for filing of affidavits and written arguments. No order for costs was made.

The binding legal principles are: 1. Provincial legislative authority under section 104(1) of the Constitution is limited to: (a) matters within functional areas listed in Schedules 4 and 5; (b) matters expressly assigned by national legislation; and (c) matters for which a provision of the Constitution envisages provincial legislation. Any matter outside these categories falls within Parliament's exclusive legislative competence. 2. The phrase 'expressly assigned' in section 104(1)(b)(iii) requires that national legislation convey, in clear and certain terms, that a power with regard to a specified matter is being assigned to provinces. The assignment must be apparent from the empowering legislation itself. The act of assignment and the nature and scope of powers assigned must leave no doubt. An assignment that can only be determined by way of implication does not meet the requirements of section 104(1)(b)(iii). 3. When the Constitution 'envisages' provincial legislation under section 104(1)(b)(iv), this means something different from 'expressly assigned', but the difference is not substantial. Only provisions that, in clear terms, provide for the enactment of provincial legislation can be said to 'envisage' such legislation. Provisions that envisage provincial legislation only by implication do not meet the requirements of section 104(1)(b)(iv). 4. The requirement that provincial legislative powers be clearly conveyed flows from: (a) the constitutional scheme that enumerates provincial powers while granting plenary power to Parliament; (b) the rule of law, which requires certainty about which sphere of government has legislative competence; and (c) section 41(1)(f) and (g) of the Constitution, which require institutions not to assume powers except those conferred by the Constitution and not to encroach on the integrity of government in another sphere. 5. Sections 2(e) and 3 of the Financial Management of Parliament Act, 2009, read with Schedule 1 thereto, do not expressly assign to provincial legislatures the power to regulate their own financial management within the meaning of section 104(1)(b)(iii). 6. Sections 195, 215, and 216 of the Constitution do not envisage the enactment of provincial legislation to regulate the financial management of provincial legislatures within the meaning of section 104(1)(b)(iv). These provisions expressly envisage national legislation, not provincial legislation. 7. Provincial legislatures do not have constitutional authority to enact legislation regulating their own financial management. Legislation purporting to do so is unconstitutional.

Obiter dicta and non-binding observations: 1. The main judgment noted that the ideal way to achieve express assignment is to declare in the preamble of legislation that its purpose is to make an assignment, or to state so in provisions setting out the objects of the legislation. This provides guidance for future legislative drafting. (Paragraph 38) 2. The main judgment observed that when the Constitution uses the qualifier 'expressly' in section 104(1)(b)(iii), this stands in stark contrast to section 156(1)(b), which refers to matters assigned to municipalities 'by national or provincial legislation' without the qualifier 'expressly'. The deliberate choice of language must be given appropriate weight. (Paragraphs 40-41) 3. The main judgment noted that the provisions of Schedule 1 to the FMPA appear 'disjointed' from the overall scheme of the statute when the opening phrase suddenly refers to 'legislation enacted by a provincial legislature to regulate its financial management' without any prior reference to the power of provinces to enact such legislation. (Paragraph 44) 4. The main judgment characterized the opening phrase of Schedule 1 as 'not free from ambiguity' and suggested three possible constructions, none of which conveys an express assignment: (a) legislating in anticipation of a power yet to be assigned; (b) assuming that provincial legislatures already enjoy the power; or (c) intending to assign the power by implication. (Paragraph 46) 5. The main judgment stated that it would be 'odd' to convey assignment for the first time in a Schedule, without any prior reference in the preamble or objects clause. This represents a 'marked departure from the legislative practice' of stating the purpose of legislation in the preamble or objects provisions. (Paragraph 48) 6. The main judgment noted that section 195 sets out democratic values and principles that should govern public administration in all spheres of government, and significantly, subsection (3) requires national legislation to be enacted to ensure promotion of these values and principles. Nothing in the provision indicates that it envisages provincial legislation. (Paragraph 55) 7. The main judgment noted that if legislative powers of provincial legislatures could be implied beyond those expressly set out in the Constitution, this would diminish, through an expansive reading of the Constitution, the residual legislative powers of Parliament. This would be inconsistent with the constitutional scheme by which provinces are given specific powers and Parliament is assigned the rest. (Paragraph 58) 8. The main judgment emphasized the importance of affording affected parties the opportunity to be heard, even where provincial legislatures that had enacted similar legislation chose not to respond to an invitation to join the proceedings. These statutes regulate rights and obligations that stand to be affected by the Court's order. (Paragraph 65) 9. The dissenting judgment (Yacoob J) criticized the approach of creating a 'functional area' called 'financial management of legislatures' and then comparing this to Schedules 4 and 5. The correct approach is to look at the matters the Bill deals with and see whether the provincial legislature has the power to legislate on those matters, without engaging in functional area comparison. (Paragraphs 77-80) 10. The dissenting judgment observed that the Bill has no external effect and is concerned only with the provincial legislature's own internal business, dealing with matters such as oversight committees, accounting officers' responsibilities, budgeting, asset management, supply chain management, and financial misconduct of employees. (Paragraph 81) 11. The dissenting judgment emphasized that the Public Finance Management Act does not include provincial legislatures within the definitions of 'departments', 'constitutional institutions', 'public entities', or 'executive authorities'. The Act places only limited obligations on provincial legislatures concerning consolidated financial statements and provincial budgets. (Paragraphs 104-107) 12. The dissenting judgment noted that the Bill and the PFMA 'coalesce' rather than conflict. The Bill ensures compliance with obligations necessarily implied by the PFMA. The PFMA requires financial statements of the provincial legislature to be included in provincial consolidated statements, but says nothing about who prepares them. The only inference is that the provincial legislature is obliged to prepare its own statements. (Paragraphs 110-112) 13. Cameron J's concurring judgment (with the dissent) observed that the goal of complete clarity in power allocation may be a 'chimera', as judgments on scheduled powers demonstrate. The supposition that complete clarity can be attained should not dominate the approach to interpreting section 104. (Paragraph 121) 14. Cameron J noted that it would be 'surprising' if the Constitution did not envisage that provinces may legislate for the financial management of their own legislatures, as a matter of fundamental outlook. (Paragraph 124) 15. Froneman J agreed with Yacoob J that chapter 13 envisages provincial budgetary processes, but expressed doubt about whether section 116 envisages that this must be done by legislation rather than rules. Once section 116 expressly allows these processes by means other than legislation, it is not a necessary consequence that provinces may also pass legislation for that purpose. (Paragraph 128)

This is a landmark judgment on the scope of provincial legislative competence in South Africa, particularly in relation to matters not listed in Schedules 4 and 5 of the Constitution. Key significance: 1. Strict interpretation of provincial powers: The judgment confirms that provincial legislative authority is strictly circumscribed and must be clearly identifiable. This reinforces the fundamental principle that provinces have enumerated powers while Parliament has plenary (residual) power. 2. High threshold for 'express assignment': The Court set a high bar for what constitutes 'express assignment' under section 104(1)(b)(iii). The assignment must be apparent from the legislation itself, ideally stated in the preamble or objects clause. Implied assignments are insufficient. This provides clear guidance for Parliament when it wishes to assign powers to provinces. 3. Narrow interpretation of 'envisages': The majority adopted a narrow interpretation of when the Constitution 'envisages' provincial legislation under section 104(1)(b)(iv), requiring provisions that clearly and unambiguously provide for provincial legislation. This limits the scope for provinces to claim legislative authority based on implied constitutional provisions. 4. Rule of law and certainty: The judgment emphasizes that clarity in the allocation of legislative powers is a requirement of the rule of law. The public must know which sphere of government has competence over particular matters. 5. Separation of powers implications: The case raised important questions about separation of powers between the legislative and executive branches at provincial level, particularly regarding which body should control the financial management of the provincial legislature. 6. Federal balance: The judgment reflects a particular understanding of South Africa's cooperative governance model, favoring national control over provincial autonomy in matters of financial management and standardization. 7. Practical implications: The judgment left five other provinces with similar legislation in constitutional limbo, necessitating further proceedings. It highlighted the need for Parliament to clarify whether it intends to assign these powers to provinces. 8. Dissenting perspective: The substantial dissent (Yacoob and Cameron JJ) offers an alternative interpretive approach that gives greater weight to provincial autonomy and functional considerations. This may influence future cases and potential constitutional amendments. The case remains controversial and has implications for the balance of power in South Africa's system of cooperative governance.