ATC070322: Report on Vote 20- Budget of the Department

Defence and Military Veterans


The Portfolio Committee on Defence, having conducted departmental hearings on Vote 20, Department of Defence Budget, 2007/08 and 2007/08 -2009/10 Strategic Plan on Tuesday, 22 March 2007, reports as follows:

1. Introduction

The Portfolio Committee on Defence considered the 2007/2008 Budget of the Department of Defence on 22 -23 March 2007, as part of its oversight function over the Department of Defence. The report is based on both the budget hearings held on 22 March 2007 as well as the committee deliberations on 23 March 2007. 

2. Briefing by the Department of Defence on Budget 2007/08 and 2007/08 -2009/10 Strategic Plan

The Secretary of Defence, Mr January Masilela gave an overview of the 2007/08 -2009/10 Strategic Plan as well as the 2007/2008 Budget as incorporated in the 2007-2010 Medium Term Expenditure Framework (MTEF) cycle.  

2.1 General Overview:

The Department’s 2007/08 -2009/10 Strategic Plan is aligned with key government priorities which includes: the consolidation of the African Agenda; halving unemployment and poverty by 2014; national human resource development as well as fighting crime and corruption.

Through specific cluster and programme interventions the Department would address the following key departmental strategic objectives: the creation of national and continental stability through increasing peace mission deployments; skills development through the Military Skills Development System [MSDS] and training to military personnel exiting the military; assistance to the South African police services in emergency cases and the development of scarce skills.

The annual budget for the current MTEF period reflects a growth from R20.5 billion in 2003/2004; to R25.9 billion in 2007/2008 and to R28.9 billion for 2009/2010 financial years.  

An additional R1.2 billion has been allocated to the department for the current financial year. The reasons for such additional funding were cited as follows:

·      The general modernisation of capabilities


·      For the strengthening of the Military Skills Development Strategy


·      Foreign exchange rate adjustments


·      Remuneration of health professionals


·      Funding of Strategic munitions


·      Salary adjustments


2.2 Overview of both strategic objectives and budget allocations per programme:

2.2.1 Programme 1 – Administration

The Strategic Business Plan identified the need for IT-based internal control systems for finance, human resources and procurement, as well as a time frame for the implementation of the integrated finance management system.  To date, IT systems have been slightly enhanced in line with the moratorium placed by the National Treasury on the replacement of the current system. The alignment would be addressed through projects such as Loquacious, Lekgadima and Balance Scorecard. 

A doubling of annual increases for this programme over the current MTEF cycle was reported, due to the devolution of funding from the Department of Public Works. 

R1.93billion had been allocated for the 2007/2008 financial year and represented a 9.9 percent budgetary increase. 

Allocations to sub programmes such as property management and departmental direction have increased by 12.3 and 27.8 percent respectively. This was mainly due to the relocation of the National Conventional Arms Control Committee (NCACC) inspectorate. An increased international representation accounted for the increased allocation to Defence Foreign Relations (DFR) 

2.2.2 Programme 2 – Landward Defence

While annual allocations to this programme would increase by 6.1 percent over the next three financial years, R4,21billion had been allocated for the current financial year. The total annual budget for the general training has increased by 41.6 percent to expand conventional reserves training and the intake into the Military Skills Development Strategy (MSDS). Since new generation art equipment had been commissioned, Artillery and Air Defence reflected a 12.6 and 11.4 percent increase in allocations respectively.

These budget allocations will be utilised to fund the interventions for the improvement of the rejuvenation of the MSDS, and the efficiency of the Military Exit Mechanism [MEM], as discussed in the Strategic Business Plan. Additional risks were also identified which included: the continued deterioration of facilities; the impact of insufficient funding and health of members of the SANDF and combat readiness,

2.2.3 Programme 3 – Air Defence

An amount of R2, 65billion has been allocated for this programme, an increase of 5, 86 percent from the last financial year.  Funding for the base support capability has increased by 6.5 percent in the current MTEF period for the integration of new trainer and fighter aircraft. The increase in Strategic and Operational Direction sub-programme is due to the acceptance and integration of light utility helicopters and Hawk training aircraft.

The re-prioritisation and implementation of the Transformation Plan, medium terms Strategy and Human resource short-term Plan, remained a key strategic priority.  This would assist in mitigating the key risks such as the deterioration of main equipment, weapons systems and ground support infrastructure; the retention of suitably qualified and experienced personnel, as well as the insufficient nature of the operating budget to meet the commitments and required maintenance. 

2.2.4 Programme 4 – Maritime Defence

The Department will, over the next three years, embark on a process of reprioritisation, as well as an introduction of the MSDS, to mitigate key problems the following key challenges, identified in the Strategic Buiness Plan: the deterioration of facilities and equipment due to under funding, and the availability and development of personnel for new equipment.  Certain stores and depots will be closed down and these functions be will be incorporated in exiting units.

Total budgetary allocations reflected a 5.24 percent increase for the 2007/2008 financial year. For specific sub programmes a decrease of 52.6 percent for Combat Capability and 118.8 percent increase in allocation for Logistic Capability were recorded. The increase of 52.6precent in the Base Support Capability is due to the M&R vehicles purchased and the use of contract workers in messes. The increase is due to the placement of all log correlation items under this sub programme.

2.2.5 Programme 5 – Military Health Support

Incentives and a reprioritisation programme were highlighted as key strategic objectives for this programme.  Hospitals, facilities and equipment are currently of poor quality, the health professionals suffer under heavy workloads and medical inflation has increased.

Increases in total budgetary allocations for Military Health Support are recorded at 10.6 percent over the current MTEF period. Allocations for Strategic Direction and Specialist/Tertiary and Training sub-programmes have increased by 14.3, 19.6 and 10.8 percent respectively. These increases were partially due to the growth in staff levels. 

2.2.6 Programme 6 - Defence Intelligence

A reprioritisation process for this programme is a key strategic objective for the current MTEF cycle and 2007/2008 financial year.  This will ensure the retention of experienced personnel, the improvement in the collection of digital information, and the improvement of Defence Intelligence headquarers.

Given the centralisation of personnel-related expenditure, the budgetary allocations reflected a significant growth. Given the relocation of certain commodities to the support services sub-programme, funding for operations had decreased by 22.7 percent. An increased emphasis on recruitment, training and infrastructure rejuvenation resulted in a 13.9 percent increase in the allocation to Support Services.

2.2.7 Programme 7 – Joint Support

Strategically, the Department has also embarked on a re-prioritisation process as well as allocation of limited additional funding to this programme.  This would result in improvements in the disposal of ammunition, the maintenance and repair of facilities, vehicles and equipment, the retention of skills and experience levels, as well as the introduction of a more suitable Enterprise Application System. The provision of ICT services has been scaled down. 

The Joint Support programme indicates a 12 percent in its budget over the next three years. Due to infrastructure development, logistics services have been allocated 21.3 percent more funding. Funding for joint training has increased by 17.3 percent, due to allocations to the South African War College, Warrant Officers Academy and MSDS training at the South African Military Academy.

2.2.8 Programme 8 – Force Employment

Strategically, the re-prioritisation process of this programme as well as an allocation of additional funding over the next three-year period would mitigate risks associated with capacity, budget and resources to meet the increasing commitments. The gradual withdrawal from routine internal deployment continues. 

The total allocation for special operations has been increased by 13.7 percent, due to the funding demands of an incentive scheme aimed at the retention of personnel, as well as the acquisition of specialised equipment. 

2.2.9 Programme 9 - Special Defence Account

Through a joint initiative with the Department of Defence, the policy to support the local defence related industry will be reviewed; a Defence industry sector strategy will also be developed. Increased investment in the retention and maintenance of strategic industrial technology will characterise the 2007 – 2010 MTEF cycle.

A growth of 21.1 percent in the funding of the procurement services sub programmes over the next three years was reported. This was mainly due to the imperatives of the strategic airlift capability, which will grow by 25.1 percent. 

2.3 Defence Industrial Participation (DIP)

Defence Industrial Participation (DIP) projects: Obligations versus Actual Programme Performance, 2006/2007:



























































2.4 Possible Changes to Defence Programmes:

A comprehensive review of defence programmes is currently underway as well as the consolidation of a research and development focus. Transfer payments would assist in the establishment of a Defence Evaluation and Research Institute [DERI] and the transfer of the naval dockyard to Armscor.


Following the outcomes of the Portfolio Committee on Defence’s interactions with the Department as well as careful consideration of information provided, the Committee submits the following recommendations for consideration by the Minister of Defence:

Modernization and renewal of Landward Defence: The implementation of plans for the modernisation and renewal of the landward defence is critical and this needs to commence as soon as possible;

Reduction of flying hours: The planned reduction in flying hours threatens the achievement of a 100 percent capability, and the quality of training of fighter pilots at the new air force base. And this needs to be corrected;

Skills development: Skills development remains a key concern. The Department needs to provide additional information on the exact skills shortages in the SANDF. An explanation on a possible retainer fee is needed.  This is especially relevant given the tendency of skilled professionals to join the private sector. Creative ways of retaining skills needs to be sought;

Works Regiment: The financial support for the Works regiment needs further clarification. Reasons for the lack of costing for public works regiment must be provided to the Committee. 

The impact of the use of different expenditure patterns to manage expansionary budget: An expansionary budget will enable the Department to achieve its objectives. The department is trying to scale down the budget, by using different expenditure patterns. This may be detrimental to the acquisition and development of professional skills. A comparison with other countries was necessary to assess whether the current budget was able to address the country’s needs. The current budget is not sufficient to address the objectives of the Department; and needs to be addressed urgently. 

Negotiations with National Treasury: The Department has to negotiate programme specific increases with National Treasury so that the budget could reflect a programme specific increase;

The state of existing military infrastructure: The deteriorating state of Departments’ buildings and facilities needs to be addressed as soon as possible; 

Transformation of the Reserve Forces: The transformation of the Reserve Forces is hampered by the limited available incentives and resources. Young people are often forced to join the SANDF due to unemployment and this impact on the demographic make-up of the force. MSDS needs to feed the Reserve Forces. Apart from the economic benefits of the CRF, allow for the prominent role for the CRF and address the problems faced by the CRF, including insufficient funding; complacent employers; and the allocation of lower priorities. Five proposals were suggested to establish a viable CFR:  a decentralised recruitment strategy; sufficient annual funding; encouragement of employers; a motivated core leadership group and the utilization of appropriate structures to operate in.

The quality of exiting military health services: Improvement in the quality of services at existing military health facilities is critical, rather than a mere increases in the number of existing health facilities. 

Increased expenditure on Legal Services: The Committee notes the R76 million spent on legal services. However, this increase in legal services could only be justified if the military justice system warranted such legal interventions.

Modernization of the South African Army: The modernisation of the South African Army merits urgent attention and be reprioritised. This is necessary to provide the South African Army with new Strategic Defence Packages especially as it relates to the modernisation of prime mission equipment.

The expansion and enhancement of the Conventional Reserve forces (CRF): This must be expanded and enhanced. Apart from the economic benefits of the CRF, allow for the prominent role for the CRF and address the problems faced by the CRF, including insufficient funding; complacent employers; and the allocation of lower priorities. Five proposals were suggested to establish a viable CFR:  a decentralised recruitment strategy; sufficient annual funding; encouragement of employers; a motivated core leadership group and the utilization of appropriate structures to operate in.

Operation clean audit: The objectives of this audit should be on the agenda of all Command management bodies of the DoD.

Suitability of the current budgeting system: Concern over the suitability of the current budgeting system to the new departmentalorganogram was raised. The new organogram needed to be properly budgeted for. 

Remuneration of deployed soldiers: The inefficiencies in the payment systems for soldiers participating in peace-keeping operations were highlighted. The lack of parity on the allowances formed part of the committee recommendations subsequent to oversight visits, and could be dealt with again at a later meeting. 

The retaining of staff:  Given the budget allocations, how would staff at the military training be retained? Were these funded for?  Further briefing with the Department would be followed up to provide action plans to tackle current skills shortages in the SANDF. 

Departmental organogram: The Committee will interact further with the Department to gain greater understanding of the roles of the Chief of the South African National Defence Force and the Secretary of Defence and the function of the new organogram. 

Maximising the African stand-by force:  The Committee noted with concern South Africa’s increasing contribution and participation in peacekeeping operations. However, the Committee recommends that efforts be made to ensure that the African Union takes responsibility for the bulk of peacekeeping missions on the continent while more funding be allocated to the Department for its involvement. 



1. Mr January Masilela  (Secretary for Defence and Director General of the Department)

2. Mr Tsepe Motumi (Deputy Director General and Chief Director Policy and Planning)

3. Lieutenant General Rinus van Rensburg (SANDF Chief: Corporate Staff)

4. Lieutenant General Mtanzima (Chief Human Resources)

5. Mr Anton Visser, (Chief Director Strategy)

6. Mr Rodney Rautenbach (Chief Director Budget)

7. Brigadier Fakir (Director Military Strategy)

8. Brigadier Meyer (Director Human Resources)

9. Mr Barney Engelbrecht (Director Budget) 

10. Ms Ntsaluba (Director Strategy)



African National Congress

Ms T V Tobias (Chairperson)

Mr M Booi

Mr Monareng 

Ms P Daniels 

Mr J Schippers

Mr Moatshe 

Mr Phungula 

Ms A van Wyk 

Dr G W Koornof 

Mr Diale

Mr S B Ntuli

Democratic Alliance

Adv H Schmidt 

Mr A Botha 

Inkhata Freedom Party

Mr V Ndlovu

Pan African Congress

Dr S Pheko


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