File n° 36

Article 40 of the Constitution provides that “bills and amendments introduced by Members of the Houses of Parliament shall not be admissible where their adoption would have as a consequence either a diminution of public resources or the creation or increase of an item of public expenditure”.

This restriction on the right of parliamentarians to initiate financial measures, which is the result of a long tradition, is one of the constituent components of the “rationalized parliamentarianism” which characterizes the institutions of the Fifth Republic.  

I. – the procedure

1. – Amendments in plenary sitting

According to article 98, paragraph 6 of the Rules of Procedure of the National Assembly, the President of the National Assembly must refuse the tabling of an amendment during a sitting when it appears clear that it has the effect of decreasing public resources or creating or increasing an item of public expenditure. In the case of doubt, he takes his decision after having consulted with the Chairman of the Finance Committee.

In practice the Chairman of the Finance Committee has become the sole judge of financial admissibility and his opinions are always followed by the President of the National Assembly.

An amendment which is declared admissible is printed and distributed. An amendment declared inadmissible is neither printed nor distributed and may not be put to discussion.

In accordance with the jurisprudence of the Constitutional Council, such inadmissibility is of an absolute nature and must be monitored “effectively and systematically at the moment of tabling” (decision of December 14, 2006).

2. – Amendments in committee

Article 86, paragraph 4 of the Rules of Procedure of the National Assembly provides that inadmissibility in terms of the provisions of article 40 of the Constitution is judged, concerning amendments tabled in committee, by the chairman of the relevant committee. In practice, such inadmissibility is not always declared and it is not unusual to have the inadmissibility of an amendment, which has been passed by a committee, announced at the moment of its tabling in plenary sitting.   

3. – Members' bills

            In accordance with article 81, paragraph 3 of the Rules of Procedure of the National Assembly, the decision on the admissibility of Members' bills is entrusted to a delegation of the Bureau responsible for refusing the tabling of a Members' bill only if it is clearly “inadmissible by reason of Article 40 of the Constitution”. This delegation has always been quite indulgent in such matters and in particular regarding the notion of the balancing of expenditure, so as not to curb parliamentary initiative. This is because the tabling of a Members' bill is above all aimed at making a political point known more than at having a bill pass into statute law.

            In addition, in accordance with the jurisprudence of the Constitutional Council, the inadmissibility of a Members' bill which has been wrongly declared admissible at the moment of its tabling, may during the course of the legislative procedure be raised “at any moment” by the Government, an M.P. or by the Bureau of the Finance Committee (article 92, paragraph 1 of the Rules of Procedure of the National Assembly). In such a case, it is the responsibility of the Bureau of the Finance Committee to decide upon its admissibility. 

II. – general PRINCIPLES: field of application
and the reference base

1. – The field of application

Article 40 of the Constitution is aimed at public resources and expenditure. Its field of application covers State resources and expenditure, those of territorial units and authorities and the various health and social security systems (with the exception of complementary systems).

In addition, article 40 can be applied to public entities of an administrative nature and to most public industrial and commercial establishments. It does not, in theory, concern public companies and professional training or social housing organizations.

2. – The reference base

The reference base is the comparative term chosen to decide the “cost” of an amendment, i.e. the loss in revenue or the increase in expenditure it would generate.

The following are the possible reference bases :

―  Existing law (legislative and regulatory laws in force) ;

―  Proposed law (bill under discussion).

The choice between these two bases is always, in theory, made on the side of that which is most favourable to the parliamentary initiative.

III. – the relative outlawing of decreasing public resources

The use of the plural form of “resources” in the text of article 40 of the Constitution authorizes the balancing of the loss of one form of revenue by the increase in another form of revenue. However, a decrease in resources may not be balanced by a reduction in expenditure, i.e. a cost-cutting measure, as article 40 prohibits all decreases in public resources.

So that financial inadmissibility may be declared on an amendment, the loss in revenue must be certain and direct. When a provision leads to a loss in revenue, parliamentary practice refers to the balance which must be created so that an amendment proposing it be accepted, as the “gage” or “guarantee”. The balance or compensation must be to the benefit of the same authorities or bodies as those which are subjected to the decrease. It is thus not possible to balance a loss in resources for the State by an increase in taxes received by territorial units.

In theory, the guarantee must be real and the revenue which is generated by it must be received in real terms. In practice it is accepted that the guarantee may consist of the creation of a new tax or the increase in the rate of an existing tax “at the same level” as the loss of revenue thus balanced. This acceptance makes the work of amendment writers easier and the legal imprecision which results from it has no real consequences, as the Government has the habit of abolishing the guarantee before the passing of an amendment which it has decided to accept or not to oppose.

IV. – the absolute outlawing of increasing public expenditure

In order to be outlawed by article 40 of the Constitution, the creation or increase of an item of public expenditure must be a certain and direct consequence of the provision, even if it is only potential or if it generates, in the long run, revenue or savings.

This means that article 40 does not concern management expenditure as they are the indirect consequences of a provision whose effect is the growth in the working cost of a public entity. The same applies to non-prescriptive provisions, such as requests for reports, which are always financially admissible.

The forbidding of balancing in expenditure matters is general and absolute. Thus article 40 is extremely severe regarding expenditure matters whilst it is, in practice, much less restrictive concerning parliamentary initiative in the area of revenue.

V. – the application of article 40 to amendments
on finance bills

Since the introduction of the institutional law of August 1, 2001 concerning finance laws, the conditions governing the application of article 40 to amendments dealing with finance bills have become clearer and more flexible.

Article 47 of the institutional law draws the consequences of the new presentation of budgetary credits which are now grouped by missions with several programmes and provides that, for the application of article 40 of the Constitution, “expenditure is taken, in the context of amendments concerning credits, to mean the expenditure of the mission”. This thus provides parliamentarians with a new possibility in that they can propose the transfer of credits between the programmes of the same mission without increasing the overall amount of the expenditure of this mission.

This distinct relaxation only concerns amendments dealing directly with the credits whilst the other provisions of the finance bills must still follow the rules described above. Credit amendments must have precise motives, i.e. both the increase in the credits for one programme and the decrease in those for one or several other programmes must be justified and must be set out in a precise cost allocation calculation.

In addition, the last paragraph of article 47 of the law of August 1, 2001, which applies to all amendments no matter what texts they deal with, declares inadmissible all amendments which are not in conformity with the entire set of institutional rules concerning finance laws and in particular the exclusive competence of the finance law to govern certain matters only.

The institutional law of August 2, 2005 concerning the social security finance laws provides for a similar financial admissibility system for such bills. It states, in particular, that “expenditure is taken to mean, in the case of amendments to social security finance bills dealing with expenditure targets, that for each expenditure target per branch or for the national expenditure target for health insurance”. Parliamentarians may thus introduce amendments increasing the figure for one or several sub-targets in an expenditure target as long as the overall amount of this target is not increased.

This institutional law also declares inadmissible amendments which call into question the exclusive competence of the social security finance law to govern certain matters only.