Department of Defence Budgetary Review and Recommendations Report

Meeting report

Department of Defence 2012/13 Budgetary Review and Recommendations Report (BRRR) briefing
Mr Peter Daniels, Content Adviser to the Committee, tabled the draft Budgetary Review and Recommendations Report (BRRR or the Report) on the Department of Defence (DOD or the Department).

At the outset, he indicated that the BRRR for this year had been changed in format because the reporting template had been altered and this was a very substantive report, using various input from the Department. The report covered more issues.

He indicated that the first part of the Report defined the mandate of the committee as well as the core function of the Department of Defence, The South African National Defence Force (SANDF), Armscor and other entities. The Report also outlined the method used and here he highlighted that regard had been had of the budget reports, oversight reports and other sources.

The next section highlighted the focus of the Department. The President, in the State of the Nation Address, had emphasised the importance of strengthening the defence, border control, security of national parks, the National Youth Service, peace keeping, and the fight against corruption. The Report also set out the development indicators such as the military performance monitoring evaluation, national disaster and peace keeping. Whilst the National Development Plan (NDP) made no specific mention of the Defence Force, he noted that the Department overall had the responsibility of ensuring a stable environment and taking part on the achievement of the Millennium Development Goals.

Mr Daniels noted that there was little mention of the gains made by the Department. Funds had been reprioritised to the Department of Military Veterans. The BRRR touched on the issue of utilisation of Reservists, the National Youth Service and the fight against piracy.

The BRRR also included a statement of the targets under-achieved, and those over-achieved. 79% of the targets were achieved. Targets which were over-achieved were listed (see attached document)  and these included  some compliance, the number of external and internal operations per year, number of flying hours in support of operations, number of members and those used in internal operations. Targets which were under achieved included level of morale, and household compliance. Some targets were changed and some were increased due to budgetary constraints.

Mr Daniels also discussed the previous recommendations and the steps which had been taken to implement them. The first recommendation was around the issue of the Department being under-funded. The second recommendation was that deployment of SANDF should be refunded with money intended for other activities. It was recommended that the Department investigate the possibility of establishing a budget intended for SANDF specifically, and this matter was also communicated to the Minister of Finance, whose response was that the Department must look at the White Paper on SA Participation in National Regions. This contained specific recommendations in section 17.4. However, the DOD had wondered whether those departments using this procedure were in fact refunded, and in what space of time.

The third recommendation was that there must be a comprehensive briefing regarding the operational elements of border control. The fourth recommendation was that there should be a conducive facility. The fifth recommendation was that there should be a development of defence work capability by moving the responsibility for repairs and maintenance from the Department of Public Works to the Department of Defence. Another recommendation was to the effect that the DOD must strive for an unqualified audit opinion and part of this was the establishment of an Internal Audit Committee.

Mr Daniels also raised a concern that a shrinking defence budget would weaken the Department’s ability to fulfill its mandate. He added that a maximization of limited resources was also essential.

Mr Daniels then highlighted that during the oversight visits, there were many facilities found to be in poor condition and therefore this strengthened the need, as previously highlighted, to shift maintenance responsibilities from the Department of Public Works to the Department of Defence.

The BRRR noted the increased allocations in the adjustment period; this was for personnel remuneration and for unforeseeable expenditure.

Last year, the Department received an unqualified audit report, but the audit report in this year was qualified for reasons of the Auditor-General’s concerns around intangible and tangible assets. The Department also appeared before the Standing Committee on Appropriations because it was one of the departments which showed very little improvement with regard to the issuing and paying of invoices. The Committee had not, however, asked the Department to report back on this issue. The BRRR now contained a recommendation that the Department should report on a quarterly basis. The non-payment of invoices, particularly for small enterprises, affected them badly, as they ended up having to close down for lack of cash flow.

Another issue highlighted was this Department’s excessive use of consultants.

The remainder of the Recommendations were summarised. In relation to the recognition that the Department was under-funded, the BRRR said that prioritisation of those limited resources was needed. The Department was to be asked to brief the Committee on virements. It was recommended that the National Treasury should increase budget of the Department. The Department was to issue invoices within 30 days. The Department should report to the Committee about the deployment of soldiers in Central African Republic and the subsequent cancellations. The Department and the Minister should see to it that investigations were done on the financial misconduct within the Department.

Discussion
Ms NP Daniels (ANC) proposed that Committee go through the BRRR report page by page.

Mr D Maynier (DA) responded that the Committee really did not have time to do that

The Chairperson overruled him and approved the proposal of Ms Daniels.

Ms Daniels note that the Report failed to state what had happened on the oversight.

Mr E Mlambo (ANC) noted that the wording on section 2.1.4 was incorrectly put. The bullet point spoke to issues of maladministration relating to the DOD, yet said that the Department of Military Veterans (DMV) was attempting to eradicate corruption, and this needed to be changed.

Mr S Esau (DA) thought that Mr Mlambo’s point had been dealt with. There was a meeting which dealt with maladministration issues were discussed. Perhaps the corruption was another issue.

Ms Daniels asked the Content Adviser to clarify whether the Department was suggesting that the plans it had carried out had impacted on the budget, or whether it was claimed that limited funding prevented the Department from carrying out its plans. The BRRR suggested that the Committee was looking at what the Department had not done.

Ms N Mabedla (ANC) asked Mr Daniels to clarify issues around job creation, and if the Department stood to gain anything from its job creation attempts. She advised the Committee Researchers to look at what the Department could possibly gain; projects aimed at creating jobs had been approved already.

Ms N Daniels (ANC) asked how the Department set targets that it knew it could not meet, because of the budgetary constraints. When asked by the Chairperson to elaborate more, she said it was necessary to know the reasons for the reductions made in the targets.

The Chairperson asked Ms Daniels if she was asking why the numbers were reduced.

Ms Daniels said that this was what the Department would have to answer.

Mr Mlambo reminded the Committee that when reviewing the budget and targets, the Department should clearly be aiming to reach its targets. However, because of budgetary constraints, there had to be a reduction in the targets.

Mr Esau said that in that case the Department should then explain to the Committee why the targets were reduced; it was not for the Committee to assume that this was the case, nor explain this to the Department.

The Chairperson said that the Committee must understand that the purpose of the BRRR exercise has nothing to do with administration, but that it was a political process during which Members should provide opinions and suggestions.

Mr Mlambo (DA) assured Mr Esau that he was not trying to answer for the Department. He remembered, however, that the DA had not supported the increase of the budget to the DOD.

Mr Maynier responded by saying that his party indeed did not support the budget, because for years back the Department had been under-funded, on the operational side, but it was still not clear to him whether that under-funding related to the DOD as a whole. The solution, he thought, to the under-funding was simply to re-allocate funds to where they were most needed. His position was at least consistent. The position of the ANC was not.

Mr Esau clarified that if Ms Daniels was suggesting that the Department must set targets that were attainable within its current budget, then the Secretary of Defence should be asked why the Department continued to over-plan whilst it knew that there were budget limitations. The Department should be planning properly.

Ms Daniels (ANC) wanted to check if operational matters were included in the report.

Mr Daniels responded that it was difficult to change and there was a problem with the date

The Chairperson said the Department should find a way of capturing the matter which relates to understanding in terms of funding rather than operational.

Mr Esau asked if he could be excused, and indicated that he was prepared to support the BRRR.

Ms Daniels suggested that the Committee should not in fact support the report as yet, because there were several issues needing to be dealt with.

Mr Daniels said that it was a draft. In regard to the points made by Mr Mlambo, this was really a question of the wording. The fight against corruption must increase, and the Department supported the President on that. He emphasised that he had had to compress the report, for space considerations.

The Chairperson reminded the meeting that the purpose of the BRRR was to support requests for funding. The issues should be reflected chronologically. The purpose of the Military Skills Development and National Youth Service systems should be reflected.

Ms Daniels asked why certain things cannot be done. She believed that the report was too generic. She also pointed out that the Defence Review was not included in the report.

Ms N Mabedla (ANC) said that not all facilities were in poor condition.

The Chairperson said more funding was needed, because there were poor facilities, although he agreed that not all the facilities were in poor condition. However, funding was needed to fix those in poor condition.

Mr Maynier asked to be excused and said that he would submit comments in writing.

Mr Daniels said that there would be a change in the wording of page 10.

Ms Daniels asked about the annual expenditure trends and asked if expenditure on the programmes was checked quarterly.

The Chairperson proposed that all Members submit further comments in writing so that the Committee could, when next meeting, finalise the adoption of a revised BRRR.

The meeting was adjourned.