Minister & Department of Defence & Military Veterans on costing of Military Veterans Bill [B1-2011]

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Defence and Military Veterans

07 March 2011
Chairperson: Mr M Motimele (ANC)
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Meeting Summary

The Deputy Minister of Defence and Military Veterans and the Director-General of the Department of Military Veterans briefed the Committee on the cost of implementing the Military Veterans’ Bill.  The Bill would replace the Military Veterans’ Affairs Act, which would be repealed.

The Bill made provision for certain benefits to be made available to qualifying military veterans, including pensions, housing, healthcare, transport, education, employment and honouring and memorialisation.  Certain benefits incurred a once-off cost whilst others were of a recurring nature.  Veterans would be subjected to a means test in order to qualify for the benefits. Consideration had to be given to other existing legislation that made provision for benefits to military veterans as well as the provision of general social services and benefits already provided by the State.

The firm of Alexander Forbes was appointed to assist with determining the estimated cost for each of the benefits over a five year period.  The Department was still in the process of determining the exact number of veterans and the number of their dependents.  The number of veterans was estimated at 56,000 and the total estimated cost of the benefits was R19.623 billion over a five-year period.

The Minister had applied for the requirement that the Bill was costed before it was adopted by Parliament to be waived as the number of qualifying veterans had not yet been established and the benefits provided by the Bill could change during the processing of the legislation.

Members unanimously acknowledged the need to take care of military veterans but expressed concern over the availability of funds to deliver the proposed benefits.  Members stressed the need to ascertain the exact number of veterans and dependents that were qualified to receive the benefits.  Members pointed out that many veterans qualified for and received general social security benefits, such as grants, pensions, housing and healthcare.  The National Treasury had made additional funds available for the non-statutory force pension dispensation intended to augment the pensions of former members of the liberation forces.  Certain veterans had chosen to receive the financial compensation offered when the former liberation forces were integrated into the SANDF during the 1990’s.  Members queried the absence of a formal Government policy on military veterans and requested further details of the proposed pension, housing, healthcare and employment benefits.

The Committee conceded that more time was required to determine the cost of the Bill and that the provisions of the proposed legislation would be discussed in more detail during future deliberations.


Meeting report

The briefing was attended by the Honourable Lindiwe Sisulu, Minister of Defence and Military Veterans, Mr Thabang Makwetla, Deputy Minister, Mr Tsepe Motumi, Director-General of the Department of Military Veterans, Major-General E.M. Mashoala, Member of the Ministerial Task Team on Military Veterans and Mr J Maake (ANC), Chairperson of the Joint Standing Committee on Defence.

Mr Makwetla explained the context of the information that would be provided during the briefing.  The financial implications of the implementation of the Military Veterans’ Bill could only be determined after the Bill was approved by the Cabinet.  The Minister had requested that the requirement for the costing of the Bill to be included in the memorandum was waived because (a) the costs could not be determined as the number of veterans had not yet been established and (b) the list of proposed benefits had not been approved.  The briefing provided indicative figures and the final costs could only be determined once the public hearings had been held and the Committee deliberated on the Bill.

Briefing by the Department of Military Veterans (DMV)
Mr Motumi reported that the process to determine the cost of implementation of the Bill was speeded up after the previous engagement with the Committee.  The Department had held wide-ranging consultations with the National Treasury and other affected Departments.  Alexander Forbes was appointed to assist with preparing the estimated costs.  The DMV continued to capture the data of military veterans on the database.  Not all veterans would be entitled to receive all the benefits as a means test would be applicable.

Mr Motumi proceeded to give an outline of the assumptions made for each of the proposed benefit categories.

Pensions:
Certain veterans already received Government pension benefits.  The Special Pensions Act specified that beneficiaries had to have been bona fide participants of the liberation struggle for at least five years or were imprisoned, banished or exiled.  The Act prescribed the process that had to be followed to determine if applicants were qualified to receive the special pension.  Many veterans were ineligible and the DMV was considering amendments to the Act that would allow more veterans to qualify.

The Military Pensions Act, 1976 included criteria for eligibility to receive a military pension.  Relatively few veterans received military pensions and the DMV suggested that the Act was reviewed.  The Act was administered by the National Treasury and the Government Pension Office.

The Social Assistance Act made provision for veterans of World War I, World War II and the Korean War.  Very few veterans of these wars were still alive.

Most military veterans did not benefit from the above three Acts.  The DMV estimated that there were approximately 56,000 military veterans from both the statutory and non-statutory forces.  The estimate was arrived at by extrapolating the data captured on the database.

Healthcare:
The key priority was to provide access to healthcare by military veterans.  Many veterans suffered from disabilities and post-traumatic stress.  Most of the veterans on the database had no access to military health care facilities.  Recently, the Minister made healthcare available to veterans over the age of 60 and to veterans suffering from chronic illness and disease.  Approximately 2,000 veterans qualified for these benefits but the Department continued to receive more applications on a daily basis. Applications were verified before the beneficiaries of military healthcare benefits were placed on the database.

Transport:
The Bill provided for access to public transport, either on a subsidised or free basis.

Housing:
The Department of Human Settlements (DHS) already provided housing to certain veterans.  A means test was applicable for housing benefits.  The projected cost was based on the minimum approved cost per unit but veterans had indicated at the Housing Summit held in 2008 that the minimum standards were not acceptable and needed to be revised.  The housing benefit was a once-off cost.

Honouring and memorialisation:
The proposed benefits included provision for the erection of memorials, burial assistance and the repatriation of veterans buried in other countries (mainly neighbouring southern African countries.)

Education:
Educational benefits included basic education, higher education and training at Further Education and Training (FET) colleges.

Employment:
The Bill included provisions intended to provide employment opportunities for the dependants of military veterans.  The benefit would be on a once-off basis.

The total estimated cost of implementation of the Bill was R19.623 billion over a five-year period (see page 9 of the attached document).  The Department expected the actual cost to be reduced as the number of beneficiaries was confirmed and the process of determining the cost was refined.  The Department anticipated that the costs incurred would reduce over time as the number of veterans declined.

Discussion
The Chairperson appreciated the effort made by the DMV to present credible cost estimates to the Committee.

Mr D Maynier (DA) acknowledged that many military veterans were destitute and living in desperate circumstances.  It was the duty of Members to ensure that veterans were taken care of and that the legislation was well-thought out and affordable.  The Military Veterans’ Bill was before Parliament but there was no Government policy on military veterans in place.  The DMV estimated that there were 56,000 military veterans but he wondered what the total estimated number of beneficiaries as defined in the Bill would be.  He asked for a breakdown of the number of veterans per force (i.e. members of the SANDF, APLA, MK, etc.)  He noted that 22% of veterans were currently age 32, which would have made them only age 15 or 16 in 1994.  He asked if the estimated costs to provide pension benefits included the new non-statutory force pension dispensation, estimated at a cost of R5 billion.  He asked for clarity on the policy on the provision of healthcare benefits.  The cost estimates were based on providing healthcare benefits to all veterans but the current policy was to provide healthcare to veterans on the basis of age and state of health.  If healthcare was provided by the national health care system, the cost would be zero but the liability for providing healthcare for all veterans at military facilities would be R13 billion.  He understood that the current minimum cost of a housing unit was R84,000 and not R120,000 as assumed in the cost projections.

Mr P Groenewald (FF+) agreed that military veterans had to be taken care of but questioned if the country could afford to provide the proposed benefits. The budget of the Defence Force was already inadequate and there were currently problems with paying adequate salaries to its members.  The process of integrating the former liberation forces into the South African National Defence Force (SANDF) during the 1990’s allowed members of the non-statutory forces the choice to remain in the SANDF or to receive financial compensation.  The means test was a critical element as it determined the number of qualifying beneficiaries.  There was existing legal provision for three types of pensions, veterans already had access to the national health services and a number of social grants were available.  Government social services were already providing benefits but the Bill proposed the provision of additional benefits to military veterans.  This would not be a problem if the fiscus could provide the necessary funding.  He wondered why the Bill was introduced almost 17 years after liberation and why veterans were not provided for by the Defence Force.  The DMV had stated during previous briefings to the Committee that the means test would be the same as that applicable for social service grants but the Bill specified that the means test would be determined by the Minister.  It was not acceptable that the Minister was given a blank cheque and the provision allowing her to make regulations was too vague.  He asked what the consequences would be if the Bill was approved at an estimated annual cost of R4 billion.  The Department of Defence had requested a budget increase of R4 billion but was only granted an amount of R1 billion.  He asked where the additional funding would come from.

Mr J Masango (DA) asked for clarity on whether or not the projected costs would be on an ongoing or a once-off basis.  He questioned if a once-off benefit of R4,000 was sufficient for a veteran to benefit from a business opportunity..  He asked for more clarity on the funding provided to create employment.  He wanted to know when the final number of veterans would be known.  He asked how many veterans already had access to healthcare and housing benefits.  The Committee had to be provided with accurate data.

Mr Maake noted that the cost of implementing the Bill would only be available after public hearings had been held and the legislative process had been finalised.  The benefits provided in the Bill might change in the interim and he asked how the costing process would be affected.  He acknowledged that veterans had made sacrifices and needed further support from Government regardless of any previous payouts.  Money was not the only issue and the members of the non-statutory forces should receive the same benefits as the members of the SANDF.  He noted that the assumption was made that each veteran would have one wife and two children on average and asked what benefits were available to any additional children.

Ms P Daniels (ANC) agreed with the comments made by Mr Maake.  The figures presented were indicative costs, the DMV were still formulating the assumptions and it would take time to establish the final costs.  The repatriation of veterans buried in other countries was a rime-consuming process.  Government was responsible for taking care of veterans and their families, regardless of their political affiliation.  She acknowledged that the budget of the SANDF was inadequate but warned against the consequences if veterans were marginalised.  She pointed out that the Bill had been under discussion since 1999.

Mr A Maziya (ANC) said that it was premature to deliberate on the Bill.  He was critical of recent reports in the print media that created a false impression.  The Bill amended the legislation passed in 1999 but it was necessary to determine the number of veterans and their dependents who would qualify for benefits and what benefits were already being provided by the State.  He said that the cost of the benefits was not necessarily a new cost and it would be necessary to reallocate the budgets of other entities.  He said that many veterans had not returned to South Africa and were still living in other countries.  These veterans were reluctant to return because of uncertainty that they would be adequately taken care of by the South African Government.  He suggested that the issues that were raised by the Members of the Committee and the cost of providing the proposed benefits were discussed during the deliberations on the Bill.

Mr N Diale (ANC) agreed that the Bill was not a new matter.  He pointed out that the members of the statutory forces had contributed to pension funds but the members of the liberation forces had not.  The focus of the Bill was to consolidate the benefits available to military veterans.

Mr M Nhanha (COPE) was pleased that the Bill was finally introduced.  He was concerned over the vulnerability of the legislative process and the opportunity for persons who had made no contribution to the liberation struggle to claim benefits they were not entitled to.  He urged the DMV to tighten the vetting process to eliminate the potential for fraudulent claims.

Mr Makwetla responded that the provision of benefits to military veterans was necessary and posed a challenge to the legislature and the public on whether or not the country could afford it.  He agreed that funding could be a problem and referred t research conducted by the Institute for Security Studies (ISS) on the re-integration of demobilised soldiers into society.  Governments ignored the demands of veterans at their peril.  The situation in Zimbabwe was a case in point.  The World Bank was assisting seven countries with providing benefits for veterans as part of the Great Lakes Nations Integration Programme.  The programme was aimed at ensuring stability in the countries concerned.  There was a great deal of documentation and research available on the subject.

Mr Makwetla said that it was necessary to prioritise the many problems faced by the country and allocate funding support accordingly.  The recent reports in the media had demonised the Bill, which was not helpful.  He acknowledged that certain members of the liberation forces had accepted compensation instead of integration into the SANDF but certain members were not willingly demobilised.  The amount of compensation was calculated according to the number of years served.  He had served for 14 years and received R23,000.  The compensation payouts were not sufficient to sustain veterans for any length of time.  The Bill made provision for extra benefits to military veterans, over and above the social security benefits provided by the State in terms of Government’s anti-poverty policy.  Many benefits did not have the skills to earn a living and their dependants suffered as well.

Mr Makwetla said that the Military Veterans Task Team was appointed by the Minister in May 2009 and was required to report by October 2009.  The available time was not sufficient to formulate detailed recommendations. The Bill was based on the recommendations of the Task Team but was well thought-out in his opinion. Cognisance was taken of international best practice and consideration was given to what was appropriate in South Africa.  The means test was a matter of policy.  Different work streams were engaged in ascertaining the extent and cost of the proposed benefits.  He acknowledged that the exact numbers of veterans and their dependents were not yet known.  Members of certain liberation forces (for example AZANLA) were excluded from the CODESA settlement for political reasons.  He was unable to comment on the age categories of veterans.  The non-statutory force pension dispensation was included in the budget of the Department of Defence and was excluded from the Bill.

Mr Makwetla explained that the Minister’s intervention in December 2010 was intended to immediately provide healthcare to the neediest veterans.  The intention of the Bill was to provide healthcare benefits to all military veterans who met the means test at all State facilities.  The mechanism for funding the provision was under discussion.  He was unable to comment on the minimum cost of a housing unit determined by the DHS.  The questions and comments of the Members have been noted.

Mr Groenewald agreed that more thorough discussions would have to be held and that an affordable solution would have to be found.  He warned that more instability could be expected from any unfulfilled promises made to veterans.

Mr Motumi advised that the non-statutory force pension dispensation applied to those members of the former liberation forces that had chosen to be integrated into the SANDF.

Maj Gen Mashoala added that many veterans were excluded from the non-statutory force pension dispensation.  The pensions paid to members of the former liberation forces were far less than that paid to members of the SANDF and the National Treasury had made additional funds available to augment the pensions.  He provided a breakdown of the number of veterans from each force, i.e. SANDF: 31,110; Venda Defence Force: 970; Transkei Defence Force: 553; Bophuthatswana Defence Force: 450; MK: 15,000 and APLA: 6,000.  The intention of the Bill was to level the playing fields, to ensure the equitable provision of benefits to all veterans and to address the historical disparities.

Mr Motumi explained that the minimum housing unit cost was R84,000 but the veterans had requested houses of a higher standard, at a unit cost of R120,000.  The indicative figures provided were for a period of five years.  The cost of the benefits was a mixture of existing and new costs.  The DMV was engaged in determining which benefits had already been provided to which veterans.  Provision was made for a once-off employment benefit of R4,000 but it must be noted that the Sector Education and Training Authorities (SETA’s) also had funds available and that there were other Government agencies providing assistance as well.  The DHS had received some data from the DHS on the housing already provided to veterans.

Mr Motumi explained that the policy on the dependents of veterans needed to be refined.  The estimates were based on an average of one spouse and two children per veteran.  The Bill would replace the Military Veterans Affairs Act of 1999, which would be repealed.  Certain benefits provided by the Act were retained and others were expanded.  The DMV was not in control of the provision of all the proposed benefits.  The DMV had verifying processes in place to ensure that all persons entered on the database were bona fide military veterans.

Mr Maynier said that the Bill was based on an interim policy framework that was submitted by the Task Team to the Minister in November 2009.  He asked why the Minister had not finalised the policy and published a White Paper on military veterans to date.  The cost of the benefits recommended by the Task Team could have been determined during 2010.  In his opinion, the Department had not adequately prepared for the Bill and the process of introducing the Bill was fundamentally flawed.  He asked for an explanation of the Task Team recommendation concerning the provision of a ‘statutory business vehicle’ to provide assistance to veterans.  It was not clear if the estimated cost of pension benefits included the additional R5 billion already made available for the non-statutory force pension dispensation.

Mr Makwetla confirmed that the Bill was based on the interim policy framework.  The Task Team had a tight deadline as the Minister did not think it necessary to wait while a lengthy process to develop the policy was followed.  Although the Minister received the Task Team report in November 2009, the report was only adopted by the Cabinet in June 2010.  He suggested that the provisions of the Bill were discussed in more depth at a later stage.  The intention of the ‘special business vehicle’ recommendation was to provide assistance to veterans to benefit from business opportunities.  The veterans would need the required skills and capital to start business ventures and the intention was to work with other Government agencies already providing such assistance.

Mr Maynier asked if it was correct to assume that the cost of providing pensions to members of the non-statutory forces was R5 billion.

Maj Gen Mashoala replied that the question should be referred to the Department of Defence.

The Chairperson thanked the Members and delegates for their participation and suggested that the Committee allowed the DMV to continue with the process of determining the cost of implementing the Bill.

The meeting was adjourned.



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