ATC100503: Report on Budget Vote 21
REPORT OF THE PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS ON BUDGET VOTE 21: DEPARTMENT OF DEFENCE, DATED 3 MAY 2010
The Portfolio Committee on Defence and Military Veterans, having considered Budget Vote 21: Department of Defence and Military Veterans, reports as follows:
1.1 The Portfolio Committee on Defence and Military Veterans considered the 20010/11 Budget of the Department of Defence and Military Veterans (DODMV) as part of its oversight function over the Department.
1.2 Those appearing before the Committee included Mr T E Motumi (Acting Secretary for Defence and current Director general of Military Veterans), Mr T Matanzima (Acting Secretary for Defence) Ms C D M Mutloane (Acting Chief Financial Officer), Rear Admiral AG Green (Director : Military Strategy: SANDF), Brigadier General B Leslie (Director: Planning: SANDF), Col S Palmer (Senior Staff Officer: Strategic Planning: SANDF), S Pillay (Director: Maritime Plans, SA Navy), G I Janse Van Rensburg (Senior Staff Officer: Strategic Plan: Defence Reserves), Mr P Ramsing (Deputy Director: Defence Strategy), Mr A Visser (Chief of Defence Acquisition), Mr V Sindani (Acting Chief of Corporate Staff: Department of Defence), Dr M L Ledwaba (Chief Director: Human Resource Strategy and Policy), Ms M Kibushi ( Chief Director: Legal Services), Adv N Ntsaluba (Director: Defence Strategy), Dr T Gamede (Chief of Defence Policy Strategy and Planning) Brigadier General C H Roux (Director: Army Acquisition: SANDF), Colonel E van der Post (Acting Director of Planning: SANDF), Mr S D Dladla (Chief Director: Strategic Management), Mr T Ratsomo (Chief Director: Ministerial Services). Representatives from the Office of the Auditor-General and National Treasury also attended the meeting.
1.3 Information contained in the report is based on the Department’s presentation, the 2010 Estimates of National Expenditure (ENE) as well as the Strategic Business Plan FY 2010 for 20010/11-2012/113. The report also draws on the departmental briefings held on 3 and 24 March, as well as meetings held with the Minister of Defence and Military Veterans on 13 and 22 April 2010.
1.4 The report presents a programme by programme summary of the DODMV budget and strategic objectives, an overview of the key observations made by the portfolio committee as well as recommendations.
2. OVERVIEW OF POLICY PRIORITIES FOR 2010/11 FINANCIAL YEAR
2.1 The readiness of the South African National Defence Force in supporting a developmental state and contributing to the socio-economic development of South Africa, informs the Department’s policy priorities for both current the financial year as well as the Medium Term Expenditure Framework (MTEF) period.
2.2 For the 2010/11 financial year, the Department outlined 14 priorities as set out by the Minister of Defence and Military Veterans:
· The establishment of the Department of Defence and Military Veterans
· The rejuvenation and upgrade of the Landward programme
· Upgrade and maintenance of infrastructure
· Improving the capacity of the Defence Works Regiment
· Aligning the Defence Secretariat with its constitutional and legislative mandate
· The establishment of the National Defence Force Service Commission and its supporting structures
· The transformation of Armscor
· The incremental refocusing of Denel to support defence strategic objectives
· The promotion of a culture of good governance
· The improvement of information technology with specific focus on the roll-out of the Integrated Financial Management System (IFMS) and using technology to improve administration and accountability
· The redevelopment of a defence strategy that is aligned to the defence current and emerging needs
· The revitalisation of the Reserves
· The optimal utilisation of the collateral value of defence capabilities in responding to the socio-economic needs
· The development and implementation of the Community service programme
2.3 Alignment with Government priorities is reflected in the Department’s involvement in the following Government clusters:
(a) Justice Crime Prevention and Security Cluster:
· Through its focus on border management, the SANDF will contribute to the safety of all South Africans, which is in line with its mandate to defend and protect the Republic, its sovereignty, territorial integrity and national interests and people.
· The SANDF would structure, budget for and develop capabilities to execute all responsibilities related to border security. Military Strategy and force employment would accordingly be adjusted.
(b) International Relations, Trade and Security Cluster
· In terms of the priority to create a better South Africa and contribute to a safer continent and a better world, Africa and a better world, the Department and SANDF will focus on those priorities aimed at advancing regional and global peace, security and sustainability;
· South Africa’s presentation on multilateral peace and security forums will also be supported. and South African representation un multilateral peace and security forums
· The SANDF will measure its deployments and participation in peacekeeping missions in terms of its mandate to deploy forces, whether it is mission ready and trained as well as whether its is supported and protected by the legal instruments
· Active steps would be taken to ensure that regional and continental and international peace and security structures are capacitated and strengthened by the appropriate deployments of South Africans into these structures.
2.4 In response to the State of the Nation Address (SONA) and the ten priorities outlined, the Department committed itself to the following:
· In line with building economic and social infrastructure, the Department will promote partnerships with other organs of state at local and municipal level to accelerate the delivery of socio economic need
· The establishment of the Works regiment would improve the Department’s capacity to maintain defence infrastructure, contribute to youth development and will empower underutilised defence personnel.
· The strengthening of its skills base remains a priority. The Department intends restructuring its training capacity will provide greater support to the Military Skills Development System (MSDS), promote access to [post-secondary funding as well as access to NQF-linked training opportunities.
· The Department of Military Veterans will also be established in the current financial year
· The departmental civic education programmes will be intensified, as part of its contribution to a cohesive, caring an sustainable communities
· In pursuit of African advancement and enhanced international co-peration, the Department refers to the promotion of national indentified outputs that relate to advancement of regional and global security, peace and sustainability, and will ensure that regional, continental peace and security structures are capacitated to support the requisite deployments in peace missions and general military assistance missions. Improved governance of the SADC’s Specific Defence Security Sector Reform programmes and implementation of the India-Brazil-South Africa (IBSA ) defence agreements.
· In terms of building a developmental state, the DODMV will review the Defence Secretariat and will continue to project patriotism, understanding of the Code of Conduct.
3. OVERVIEW OF 2010/11 BUDGET AND ALIGNMENT TO STRATEGIC OBJECTIVES
3.1 Expenditure trends
3.1.1 The Department received a total budgetary allocation of R30.7 billion for the 2010/2011 financial year and it is expected to increase to R36.3 billion in the 2012/13 financial year. The allocated R30.7 billion is significantly less than the previous year’s allocation and represents a -10.11 percent decrease in real terms. [Note: The real increase takes into consideration the inflation target rate of 6.7 percent]
3.1.2 While the defence budget presents 1.14 percent of the gross domestic product (GDP) and is well within the 2 percent norm as set by the International Monetary Fund (IMF), a decreasing defence budget could hamper both the SANDF’s ability to meet its obligations
3.1.3 Trends in the allocations to departmental programmes indicate that the Landward Defence programme has been allocated the largest portion of the defence budget (32.5 percent), while the Air Defence programme account for the second largest share of the budget (19.7 percent). The General Support programme received 12.8 percent of the budget which will be spent on renovation, repair and maintenance of facilities and infrastructure.
3.1.4 Funding allocated for compensation of personnel, goods and services costs of contractors have increased significantly since the 2009/2010 financial year, while funding for transfers and subsidies to defence agencies decreased. Compensation for personnel has increased from R12.2 billion in FY 2009/10 to R13.4 billion in 2010/2011 and is mainly attributed to the increasing number of MSDS members, the upgrading of the Landward Defence programme as well as improved remuneration of defence personnel. Allocation for goods and services also increased from R5 billion to R9.6 billion due to the requirements of the SA Army to acquire mortars, operational earthmoving capabilities, night visions and anti-tank capabilities. Contractors will be utilised to assist the Department in resolving audit qualifications as well as completing the Defence Update and Defence Strategy, hence the increased allocation of R3.8 billion for the current financial year compared to the R3.1 billion allocated to it in FY2009/10. For the same period, transfers and subsidies to defence entities decreased from R8.07 billion to R5.9 billion and is mainly due to the cancellation of the A400M Airbus Strategic Airlift Capability contract and the finalisation of the frigate and submarine projects.
3.2 Allocation per programme
3.2.1 The Administration programme, according to the Department, facilitates the overall management of the Department and is responsible for policy development, management and administration and received R3.2 billion for FY 2010/11. Representing an increase of 6.38 percent from previous allocation, the budget is expected to increase to R3.9 billion in FY 2012/13. The Human Resource sub-programme received the second largest portion of the allocation due to the funding required for the establishment of a “management capability” for military veterans (R20 million), funding for the interim national defence force service commission and funding for the training of MSDS recruits. Increases in the budgets of the legal services sub programmes will be utilised for the implementation of the occupation specific dispensation for legal practitioners. Limited available funding for the filling of vacancies means that only 40379 positions out of 51 409 could be filled. The vacancy rate in the Department will thus be 22 percent.
3.2.2 The Force Employment programme provides and employs defence capabilities (including operational capability) to successfully conduct operations as well as joint, multinational and interdepartmental exercises. Receiving an allocation of R1.9 billion, the Department aims to provide and employ special operations capability in accordance with national requirements, conduct at least 12 external peace missions per year in accordance with the requirements to promote peace and stability, 21 joint interdepartmental and multinational force preparation exercises over the MTEF period as well as to conduct 4 operations per year in support of other government departments and in compliance with international obligations. The largest allocation has been given to the regional security sub-programme (R1.billion) and represents a 339.69 percent increase.
3.2.3 Landward Defence provides for prepared and supported landward defence capabilities for the defence and protection of South Africa received R9.9 billion - the largest portion of the total defence budget. These include infantry capability, armoured capability, artillery capability, air defence artillery capability, engineer capability as well as signal capability. Funding will be utilised mostly for the modernisation of landward defence capabilities.
3.2.4 With a total budget allocation of R6.05 billion, Air Defence is responsible for providing prepared and supported air defence capabilities for the defence and protection of South Africa. The total allocation decreased by 44 percent from the previous financial year partially due to the cancellation of the A400M Airbus Strategic Airlift capability. Air Combat Capability sub programme received the largest allocation followed by base support capability sub-programmes.
3.2.5 The Maritime Defence programme provides combat-ready and supported maritime defence capabilities for the defence and protection of South Africa. Funding for its programme reflects a 3.79 percent real increase, from R1.96 billion in FY 2009/10 to R2.1 billion for FY 2010/12. This is partially due to the finalisation of the frigates and submarine projects. The increased budget will provide a sub-surface combat capability of three submarines in each annual operational cycle, two mine countermeasures systems in each operational cycle as well as to finance its ongoing hydrographic survey capability.
3.2.6 Military Health Support provides medical combat support elements and services and constitutes 9.01 percent of the Defence budget. With the R2.77 billion allocated to it, a roll-out of a comprehensive multidisciplinary military health service to approximately 230 000 members annually are expected. It also intends providing health support for five medical battalion groups, including specialist medical battalions for deployed and contingency forces.
3.2.7 Defence Intelligence provides defence intelligence and counter -intelligence capability and consumes the smallest portion of the budget, i.e 2.1 percent.
3.2.8 General Support provides general support capabilities and services to the Department and is the third largest programme in the Department comprising 12.8 percent of the total expenditure. This is in line with the Departmental priority to address the issues relating to the conditions of defence facilities. Due to the maintenance and upgrade of defence facilities and the upgrade of runways ad hardstands at Air force Base Waterkloof, it is budgeted at R1.1 billion. The repair and maintenance of defence infrastructure is crucial issue as the Department declares continued funding constraints has given rise to maintenance backlogs and impact on the operational readiness of the SANDF and its ability to provide, deploy ad support forces.
4. COMMITTEE OBSERVATIONS
4.1. Military Veterans
4.1.1 The Committee notes that while the establishment of a dedicated department for military veterans has been promulgated, the formation and operationalisation of the most appropriate departmental structures remain outstanding. Effective service delivery to military veterans cannot be realised in the absence of a fully operational department dedicated to the administration and well-being of military veterans. In this vein the purpose of the R20 million allocations, timeframes and structure are still unknown.
4.1.2 Improving access to basic services, pension and employment opportunities are vital to assist military veterans in improving harsh socio-economic realities. Careful planning and co-ordination of both the activities of the new Department and utilisation of its budget is essential. The Committee thus urgently awaits the Strategic Plan of the new department.
4.2.1 The Department has repeatedly raised concerns over its current budgetary challenges and the impact this may have on the ability of the SANDF to fulfil its mandate. We re-iterate that whilst an increase in the funding for the Department should be considered, maximum efficiency and accountability in the planning and use of limited resources are essential. Vigilant monitoring of the effectiveness of internal controls and accountability must be prioritised.
4.2.2 Effective planning can only be done once budgetary plans and expenditure are aligned to an updated defence policy. We remain concerned that an updated defence policy/strategy is yet to be finalised. Since this document provides a long term indication of the defence needs, the delays in both finalisation and implementation mean that effective monitoring of defence activities is limited.
4.2.3 The Department reports that it will use consultants to finalise the Defence Update and Defence Strategy as well as to assist with resolving audit qualifications. However, while wide public/stakeholder consultation in important processes should be encouraged, greater self-sufficiency and less reliance on consultants are required in areas that are core to the Department’s mandate.
4.3 Defence Procurement
4.3.1 The Committee remains concerned over the potential irregularities in the procurement of defence equipment and services. While strategies are needed to ensure maximum transparency in and integrity of procurement processes, a clearly defined departmental policy which govern all these processes is critical.
4.4 Border security
4.4.1 Effective border control is essential to ensure the safety and security of all South Africans and the Committee is pleased that borderline security will soon be returned to the SANDF. However more information and interaction with the Department is needed to assess whether the allocated budget for this purpose is sufficient. Furthermore, greater clarity is needed on whether the necessary equipment and infrastructure is available to ensure that the SANDF fulfils its mandate at South African borders.
4.5. Skills development and retention
4.5.1 The Military Skills Development System (MSDS) is a means to rejuvenate and transform the SANDF into a fit, appropriately skilled and representative defence force. However, little information is known on the actual impact the MSDS has on employment creation and skills development and thus greater monitoring is essential.
4.5.2 The Committee supports the modernisation of the landward defence, but recognises that greater investment in appropriate training programmes is needed to ensure that the SANDF is capable of maintaining and operating new equipment.
4.5.3 Given the 22 percent vacancy rate projected for the 2010/2011 financial year, it is clear that the Department is struggling to maintain and attract critical skills. While the Department has developed retention and recruitment strategies, their effectiveness is doubtful given the continued loss of skills.
4.6 Operational readiness of the SANDF
4.6.1 The extent to which the SANDF can maintain and sustain its core capabilities to fulfil its mandate is unclear, and the Committee will schedule interactions regarding the combat readiness of the SANDF as a matter of urgency.
4.6.2 The existence of ageing, obsolete equipment and ammunition in the SANDF is a grave concern. This not only impacts on the combat readiness of the defence force, but also means that the safety of soldiers is not guaranteed.
4.6.3 The outflow of scarce skills from the SANDF is a grave concern especially given the reported vacancy rate of 22 percent, the South African Air Force’s reduction of flying hours due to the resignation of ground air crew, as well as the reported underachievement of sea hours by the South African Navy.
4.7.1 The Department struggles with maintaining its facilities many of which may no longer conform to the minimum requirements of the Occupational Health and Safety Act. The Committee remains concerned over the backlog in the maintenance and repair of defence facilities and this impacts on the operational readiness of the SANDF.
4.7.2 The Committee supports the intention to strengthen the capacity of the Works Regiment and its potentially positive impact the ability of the defence force to maintain its own facilities. However, the often strained working relationship between the Department of Public Works (DPW) and Defence is a grave concern and greater information is needed regarding the reported transfer of delegations from DPW to DODMV.
4.8. South African Defence Industry
4.8.1 A sophisticated local defence industry is crucial in order for the SANDF to maintain the necessary state of readiness in the most cost effective manner. It is therefore crucial that the policy on the defence industry should be finalised as a mater of urgency.
4.8.2 Little information is known regarding the transformation of Armscor and the refocusing of Denel. Greater interaction regarding these matters is thus needed.
5.1.1 The Portfolio Committee recommends that DODMV budget be approved. Serious challenges identified by the Committee impact on planning and management of the limited budget allocated to the Department. The Committee will increase its oversight and monitoring of the DODMV to ensure greater compliance and improved management.
6.1 The Committee extends its appreciation for all inputs made by all who appeared before it.
Report to be considered.
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