The Secretary for Defence presented the first quarter performance report which captured both financial and non-financial performance for the financial year of 2018/2019. The briefing addressed performance in the fourth quarter of the previous financial year, legislative requirements, framework for annual strategic plans and performance indicators. The presentation also looked at indicators for the first term of the current financial year, progress in specific performance areas, challenges and financial planning/expenditure.
The Committee questioned targets which were not achieved, the IT system and its maintenance, health services and licences required by the Department. There were questions on expenditure, in-house capabilities, defence review and maintenance of equipment. Members were concerned by budget cuts and its effect on national security and the laying off of 5 000 soldiers and the effect this would have on critical skills. It was said this was matter of urgency and that careful, informed decisions should be made in order to prevent immobilization of the defence force. The Committee should intervene regarding budget cuts proposed by National Treasury in order to save the defence force and ensure that national security is maintained.
First Quarter Performance Report
The Secretary for Defence, Dr S M Gulube, presented the First Quarter Performance report which captured both financial and non-financial performance for the financial year of 2018/2019. Starting off with an account of legislative requirements, the framework for annual strategic plans are monitored mostly by National Treasury. This report must allow for the accounting officer to take measures ensuring implementation of Annual Performance Plans remains on track. As per guidelines, this First Quarter report has been presented within 30 days after the end of each quarter.
Dr Gulube continued with the presentation by stating that in terms of performance indicators regarding the fourth quarter of the previous financial year, there were three areas which indicated failure. These were
- number of force deployment hours and in particular, number of hours at sea
- number of skills development hours
- implementation of the cyber warfare defence plan and number of deployment of companies along the borders of SA
In the fourth quarter of the previous financial year, 64% of targets overall were achieved and work is being done to meet the remaining 36% of targets.
Moving on to the first quarter report of this financial year, Dr Gulube said that when one looks at the indicators for this financial year under review, there is approximately 97 performance indicators as opposed to last year which had over 100 indicators. This financial year 49 indicators are directly linked to the mandate of the Department of Defence.
Dr Gulube proceeded to focus the discussion on progress within specific areas. The first of these was providing defence direction. Dr Gulube indicated that he was satisfied with progress made in this area however the challenge was that the South African National Defence Force (SANDF) is still working on a force structure in order to keep in line with the defence review and this is why the military strategy and structure is still under the process of being concluded. In terms of financial disclosures, although it is quite significant that 98% of senior managers of the Department of Defence have disclosed their financials, there were 2% who have not - these are mainly those who have been deployed and those who are seconded to other departments.
In the area of performance agreements, certain targets have not been met. Work is currently being done on completing the performance assessment for the previous financial year. Areas such as compliance with dates of submissions for accountability documents, compliance with Annual Reports and other documents which need to be submitted, the progress made was all satisfactory.
The performance in areas which are related to compliance with the regulatory framework was satisfactory overall, except in those areas related to performance of recommendations made by management. There were challenges in the area of internal audit but that these challenges have been dealt with. The only administrative area where targets have not been met was the percentage of disciplinary case to be dealt with and finalised by the Department within 90 days. Another area in which targets were not achieved was the number of health care facilities per year, specifically those allocated to this quarter.
In terms of the performance indicators regarding skills development systems, the Department is currently looking at the target of the fourth quarter of the previous financial year and targets have been met in the first quarter.
Performance indicators related to border safe guarding showed much success. There were plans to fly at least 25% of the planned hours but only 16% of the hours were flown. In terms of hours at sea, only 3% of the 25% hours planned were spent at sea – this was attributed to budget constraints experienced by the navy, which prevented sending out of the necessary ships.
Dr Gulube went on to discuss the financial plan and expenditures and said that in terms of progressive expenditure, the aim was to see at least 25% of the expenditure get used each quarter -this quarter the target has been met. In terms of an analysis of expenditure, over expenditure was a result of payment of licences and up keeping of equipment. Other factors include foreign exchange and theft losses.
The Chairperson pointed out the Committee was not given copies of the 1st quarter performance report which was being presented and requested that these be made available at first convenience.
Ms B Dambuza (ANC) commented on the fourth quarter report and sought insight regarding 64% of targets which were achieved and the impact of this. She also wanted to know more about the targets regarding the IT system and its maintenance issues and if money was set aside in order to fix this continuing matter in the first quarter of 2018 as well as the matter of health services. What was the reason for spending funds on the general support programme? Why was it not budgeted? She wanted to know which licences the Department needed and requested more insight on its implementation.
Ms N Mnisi (ANC) questioned the matter of consultants. She noted there was a risk of possible over spending by the end of this financial year since 36.6% has already been spent within the first quarter. Was the high spending on military health related to medical outsourcing?
Mr D Gamede (ANC) mentioned the Department’s oversight when it engaged with soldiers in the Democratic Republic of Congo and mentioned the matter of maintenance of the Rooivalk Helicopter and other equipment. He wanted to know if there was a contingency plan for cases where there is equipment failure due to lack of maintenance.
Dr Gulube apologised for not providing the Committee with the relevant documents which he presented. Responding to the question regarding the impact on the overall performance on the Department due to 64% achievement of targets, there are various factors on which achievement of targets are achieved. In certain areas one would say that a certain strategy is still being developed and this leads to a lack of implementation. In other areas lack of implementation would be chaotic e.g. disaster recovery. The Department does need to get to a point where the IT systems are upgraded and this requires a discussion around the budget as well.
On the matter of health care, there are a number of factors that lead to more expenditure in this area. The first is that the South African Military Health Services were really underfunded as a whole and so trying to get more funding for the has been a challenge. The main reason for this is that the Special Defence Account (SDA) is not meant to benefit the Military Health Services. The SDA is for equipment only and so the South African Military Health Services operates under goods and services, and the budget for this is limited. It still had to take care of everybody who has ever been in the military even after retirement. If one takes into account the process of conscription that is currently present, retired members of the military, as well as their families, are still entitled to these benefits. This puts cost pressures on the Military Health Services.
The Department is in constant conversation with National Treasury requesting it allocate additional resources towards implementation of the defence review. Treasury has told the Department there will be no additional funds granted for the next three years. It was also sent in writing that over the next three years the budget of the Department of Defence will be cut by R10 billion, starting this year, with cuts of R3 billion per year. As a result of this budget cut, 5 000 soldiers will have to be cut this year due to the limit placed on them on the amount used for the costs of employees - this is of concern. In essence, the Department does not have enough funds to fulfil all of its mandates.
Dr Gulube said the maintenance of equipment, such as the Rooivalk, is challenging due to a limited budget and because they have to work with and meet requirements set by the United Nations (UN), and wait for more funding to come in. The UN now wants South Africa to withdraw the Rooivalk in the deployed areas – this is of concern.
Maj. Gen. F.M Ramantswana, SANDF Chief: Military Policy, Strategy and Planning, addressed the impact of continued budget cuts on the defence force. These cuts are being made within the operating budget, as well as the SDA, and this is affecting the SANDF’s ability to improve its defence force for the future. The facilities of the defence force are being affected as well, combat vessels cannot be properly prepared, long range patrols are becoming harder to carry out and the defence force is at a critical point where it does not need funds to make upgrades but rather to maintain equipment it already has. He addressed the flaws in only training new recruits via simulation training and said no amount of simulation training can properly prepare new recruits for real battle and so more practical, real training needs to take place but this cannot happen due to the tight budget constraints. This is ultimately how the future of military is being negatively impacted by the budget cuts and lack of funding towards defence review.
Mr P Mhlongo (EFF) said that at the moment, the country is facing serious safety issues and a situation could not be allowed to worsen through cutting down on soldiers and military personnel. He made a plea for the matter of budget cuts and its effect to be brought up to the Minister, the Head of State, the Minister of Finance and National Treasury again as he believes there is enough money in the country and that wasteful expenditure is the main cause of the proposed budget cuts. The Member wanted to find out why the defence review has not been funded through Denel or Armscor as they have said they would put up funds. The national defence force needs to run efficiently and there are certain areas and services within the Department which should not be out sourced. The Department should have all its in-house capabilities in order to run smoothly and ensure the national security of our country. He questioned why these in-house services were not used to maintain military equipment.
Ms Dambuza sought clarification on the 5 000 soldiers having to be laid off - the Department should avoid losing critical skills
Dr Gulube responded that there is no plan to lay off members of the defence force - should the Department find ways to make up the R3 billion shortfall needed to cover employment costs, there will be no need to lay off any soldiers. There is a rejuvenation plan in place in order to employ the youth and create a younger defence force but unfortunately National Treasury is the Department substantially cut down on the size of the defence force and not just replace older soldiers with younger recruits. Hence, the Committee was requested to engage with the National Treasury on this.
Mr Mhlongo said that this is a matter of urgency and that careful, informed decisions should be made in order to prevent immobilization of the defence force. The Committee should intervene in order to save the defence force and ensure that national security is maintained.
The meeting was adjourned.
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