ATC130522: Report of the Portfolio Committee on Defence and Military Veterans on Budget Vote 22: Department of Defence and Military Veterans, dated 22 May 2013

Defence and Military Veterans



The Portfolio Committee on Defence and Military Veterans, having considered Budget Vote 22: Defence and Military Veterans, reports as follows:


1.1 The Portfolio Committee on Defence and Military Veterans considered the 2013/14

budget of the Department of Defence and Military Veterans on 8 May 2013, as part of its oversight function. Alongside the Defence Budget allocation, the Committee also considered the 2013 Annual Performance Plans of the Defence Secretariat, the South African National Defence Force (SANDF) and the Department of Military Veterans. In addition to this, 2013/14 2015/16 Annual Performance Plan of the Castle Control Board as well as Armscor’s 2013/14-2015/16 Corporate Plan were also considered.

1.2 The report comprises a programme-by-programme summary of key aspects of the

Defence budget allocation and strategic objectives, as well as the Committee’s

observations and recommendations. Observations made in this report should not be

separated from those made in previous committee reports. The documents should

thus be read along with previous reports, including the Committee’s 2012 Budgetary

Review and Recommendation (BRR) report.

1.3 The Money Bills Amendment Procedure and Related Matters Act (2009) provides for,

amongst others, a parliamentary procedure to amend Money Bills, thus granting parliamentary committees greater opportunity to influence the allocation of funds to the departments they oversee. Section 5 compels the National Assembly, through its Committees to submit Budgetary Review and Recommendation (BRR) reports on the financial performance of departments accountable to them on an annual basis. The BRR report must be informed by a Committee’s interrogation of, amongst others, each national department’s medium-term estimates of national expenditure, strategic priorities and measurable objectives, National Treasury-published expenditure reports, annual reports and financial statements, as well as observations made during oversight visits. Essentially the BRR report is a committee’s assessment of a departments’ service delivery performance given its available resources, as well as the effectiveness and efficiency with which its programmes are implemented. Although BRR reports must be published at a specific time in the budget cycle, it is clear that the work that informs the report must be ongoing. The Committee regrets to report that, despite the significance of this process, it is yet be schedule a briefing on the progress made with the implementation of the Committee’s recommendations.



The following strategic priorities underpin the 2013/14 activities of the Defence Secretariat and the South African National Defence Force (SANDF): For the 2013/14 financial year, the Department of Defence, will be guided by the following priorities:

2.1.1 The modernisation of the Landward Defence capabilities remains a priority, particularly the recruitment and retention of appropriately skilled personnel, the upgrade of SA Army facilities and the development (and acquisition) of technologically competitive prime mission equipment (PME). The success of such modernisation should be based on a confirmed force design and capability needs, and thus the finalisation of the Defence Review is considered a priority.

2.1.2 A balanced maritime capability will be developed to effectively respond to regional and continental maritime security threats. The South African Maritime Strategy has been finalised and will form part of the broader Southern African Development Community Maritime Security Strategies. The SANDF will continue its counter-piracy operations in the Mozambican Channel, assisting the s of the Mozambican Defence Force (MDF).

2.1.3 Job creation remains a key goal and efforts will be made to create more employment opportunities within the Defence Industry. The finalisation of the White Paper on the Defence Industry, including the Defence Industry Strategy is critical to ensuring that opportunities created are sustainable and in line with the needs of the SANDF and Department of Defence. The Committee believes the Department of Defence should again manage Denel. Such a repositioning would improve defence acquisition and manufacturing processes.

2.1.4 The SANDF’s peacekeeping capability requires improvement, to efficiently support South Africa ’s role in the realization of regional and continental peace and security. Greater focus will be made to ensure that the deployed soldiers are fully prepared and supported. The capabilities and quality of support by the South African Military Health Services (SAMHS) provided during peacekeeping operations, is of particular concern and will be improved.

2.1.5 The successful execution of the National Youth Service programme remains a priority. The National Youth Service Policy will be finalised and implemented in this financial year and initial training of selected youth, prior to employment in national departments, is set to continue.

2.1.6 The South African Reserve Force will continue to be revitalised in order for it to effectively supplement the conventional landward capability and peace support operations conducted within the regular force. This is in line with the envisaged one-force concept.

2.1.7 The domestic defence industry is should be restructured in order for it to effectively support and provide requirements in support of the SANDF’s mandate. This is largely too dependent on the confirmation of the final Defence Review. The capacity of the Defence Industry Council to perform its functions will also be improved.

2.1.8 The capacity and support to the newly established Defence Works Formation will be strengthened. Currently this formation manages certain repair and maintenance projects in co-operation with the Department of Public Works (DPW). However, in order to ensure the successful migration of repair and maintenance functions from DPW to the DOD, a Joint Interim Operations Centre (developed with the assistance of the CSIR), will be established. The migration will be done within a period agreed to by both Departments.

2.1.9 Current human resource challenges will be addressed through the annual recruitment of 2000 MSDS (Military Skills Development System) recruits; a unique incentive scheme will be developed to attract and retain scarce skilled personnel, further training opportunities will be created through closer cooperation between the SANDF and higher education and research facilities. Security cluster departments will endeavor to absorb MSDS recruits.

2.1.10 The finalisation of the Defence Review will be prioritised given the implication it holds on the long-term planning and resourcing of the SANDF.

2.1.11 Slow progress made with achieving gender parity in the command structures of the SANDF is a source of concern and targets have been set for the 2013/14 financial year that would ensure more equitable representation.

2.1.12 Confidence in the fairness and effectiveness of DOD grievance system will be restored, through ensuring that procedures are effectively implemented, and that this system both effectively protects aggrieved and that those found guilty of any misdemeanor are held accountable. Commanders, who fail to ensure that grievance process is objectively followed, would also be held accountable.

2.1.13 The maintenance and enforcement of discipline will be prioritised through ensuring effective leadership by heads of services, division and unit commanders, who are ultimately responsible for discipline. Strict action should be taken when dealing with ill-discipline, including the abuse of power by commanders. The DOD legal system will be strengthened to attend to ill-discipline in the SANDF

2.1.14 The DOD will continue to resolve audit outcomes an will continue to refine its mechanisms of accounting and use of resources (including personnel, finance, information and materiel).

2.1.15 The quality of internal planning will be improved to ensure that compliance with National Treasury guidelines as well as Government’s outcomes orientated strategic planning, risk management, as well as monitoring and evaluation processes.

2.1.16 The Department will not tolerate corrupt practices and conduct by employees and internal capacity to combat fraud and corruption will be improved.


3.1 For the 2013/14 financial year, the Department of Defence received a total budget allocation of R 40.24 billion.

3.2 Significant increases in the budget allocation over the next three financial years (Medium Term Expenditure Framework period) are not expected according to the 2013/14 Estimates of National Expenditure. By 2015/16, the defence budget allocation is expected to amount to R45.12 billion.

3.3 Spending will mainly focus on border safeguarding, anti-piracy measures as well as increased deployments in foreign countries. Thus an increase in the budget allocation (and expenditure) to the Landward Defence, Maritime Defence and Force Employment programmes should be expected. The Administration programme will also receive more funding over the medium term, mainly due to spending on office accommodation, spending on military veterans’ benefits and the establishment of operational law structures.

3.4 Expenditure on outside service providers/contractors will decrease, particularly the use of contractors by the Force Employment, Landward Defence, Air Defence, as well as the Military Health Support and General Support programmes. Greater focus will be on developing internal capacity in order to reduce reliance on contractors

3.5 Funds originally intended for the payment of contractors will be redirected to fund peacekeeping commitments in the Central African Republic (CAR) – R200 million will be spent on this purpose for the 2013/14 financial year, increasing to R215 million in 2014/15. However, given the recent cancellation of the CAR deployment, the Committee anticipates that the abovementioned funds will now be utilised to fund the cost of SANDF’s peacekeeping commitments.


(Performance information of certain programmes has not been disclosed and is listed as confidential in the tabled annual performance plans. The Portfolio Committee will therefore consider this information at a later stage.)

4.1 The Administration programme develops policy as well as manages and administers the Department of Defence. This programme also provides for military veterans benefits through the Department of Military Veterans. The R4.4 billion allocation for the current financial year is mainly due to the spending on office accommodation and the execution of the department’s human resource and financial management functions. Over the medium term, up to R1.3 billion will be spent on military veterans benefits. Unfortunately, the annual performance targets for this programme are not included in the annual performance plan and service delivery targets cannot be measured.

4.2 The Force Employment programme received a total allocation of R3.28 billion and spending will mainly be on conducting foreign peacekeeping operations, border safeguarding operations and other contingency based deployments operations as well as anti-piracy operations. Spending on peacekeeping operations in CAR, assistance to Mozambican Defence Force in combatting piracy in the Mozambique Channel , and increased deployments in foreign countries, will see the allocation rocketing from R80 million for the 2013/14, to R90 million in 2014/15 financial year. Targets for the Support to the People subprogramme relating to boarder safeguarding has been adjusted, and the number of units required to effectively patrol our borderline has been reduced from 15 to 13 unit s over the next three year period. This is disconcerting since the number of units necessary for the effective patrol of borders is 19. This effectively meant that this strategic priority will not be achieved.

4.3 The Landward Defence programme received the largest share of the budget (34.4 percent) and amounts to R13.9 billion. The Strategic Direction subprogramme received the largest increase in funding (from R264.2 million to R389.9 million), mainly due to the improved salary dispensation for warrant officers. Expenditure in the infantry capability sub-programme is also expected to increase to fund the production of new generation infantry combat vehicles, and expenditure on property payments. The completion of the ground based defence systems explains the reduction of funding to the A ir Defence Artillery subprogramme. While previously fully disclosed, performance indicators for this programme been reduced to 4 of which three are listed, in the 2013 APP, as confidential. The Committee notes that the targeted number of learners on planned courses had increased; the allocation to the General support sub-programme had been reduced. The Department therefore runs the risk of not meeting said target.

4.4 While Air Defence constitutes the second largest in the defence budget, for the 2013/14 financial year, the R6.25 billion allocation is significantly less than allocated in the previous. The Air Force has reduced expenditure on contractors from a whopping R1.3 billion in 2012/13 financial year to only R661.2 million for the current financial year. Spending during the next three financial years will focus on restoring the capacity and capability to supply and support and prepare forces, integrating new electronic warfare, navigation, and air missile systems on the Hawk and Gripen fighter jets and ensuring sustainability, development and retention of human resources.

While a total of 14 performance indicators had been provided in the 2012 APP, for 2013, this number has been reduced to four. As with the Landward Defence and Maritime Defence Programme, three of the four performance indicators are listed as confidential. While the SAAF has increased the number of learners in planned courses (2786 learners) , this target may not be achieved due budgetary constraints. The reasons for the reduced allocation available for training of personnel are unclear. And the Committee cautions that this may impact on the SAAF’s ability to maintain its capabilities.

4.5 For this financial year, The Maritime Defence programme received R3.17 billion and this figure is likely to increase to R3.72 billion in 2015/16. The Maritime Combat capability subprogramme received the biggest increase in funding due to the planned acquisition of harbour tug-boats in 2014/15, payments for replacement of offshore vessels, the upgrading of Durban Harbour and anti-piracy operations. The Committee awaits a status report on negotiations between the National Ports Authority and the Department of Defence regarding the management of the Durban Harbour . The allocation to the maritime human resources training capability was increased mainly to fund the anti-piracy operations requirements. Spending, over the next three financial years, will be mainly on preparing and maintaining approved vessels and the recruitment of appropriately skilled necessary to achieve the required readiness levels. Sending will The South African Navy aims to integrate strategically procured frigates, helicopters and submarines, and the maritime security strategy, approved by Cabinet will also be implemented. Funding for the Maritime Logistics Support capability has decreased and the Committee is concerned that this may impact negatively on the SA Navy’s ability to sustain operations, notably the long term deployment operations such as anti-piracy missions,

The Committee notes that performance indicators in the 2013 APP have been reduced to four items, of which 3 are listed as confidential. While the funding allocation to the Maritime human resources and training capability subprogramme has increased, the number of learners to be enrolled on courses during the current financial year, is reduced to 2984 learners.

4.6 The Military Health Support received R 3.64 billion for the 2013/14 financial year, and this allocation is likely to increase to R3.9 billion by 2015/16. While the Strategic Direction and the Mobile Military Health Support sub programmes share of the budget allocation decreased, but more funding will be allocated in 2014/15 to fund the delivery of chemical and biological defence projects. The Area Military Health Service and the Military Health Product Support subprogrammes received the biggest share of the allocation, the former due to the procurement of additional medicine and the maintenance of equipment. Spending over the next three years is aimed at improving the provision of operational, tertiary and specialist health support and the maintenance of health facilities. Given that 3 of the performance indicators in the APP are listed as confidential, the Committee cannot assess whether expenditure is aligned to clearly defined objectives. Furthermore, in contrast to performance indicators submitted last year, only one indicator is submitted for a whole range of health care activities. It is therefore not possible to monitoring and track detailed achievements of specific health care activities within this programme. While increased number of health care activities is expected for the 2013/14 financial year, the limited budget may curtail any achievements of targets set.

4.7 The Defence Intelligence programme is responsible for the defence intelligence and counter-intelligence capability and received R762 million – 7 percent more than allocated in the previous financial year. The Operations sub-programme’s funding increased to fund the development of strategic information capability and the impact of the new salary dispensation for military personnel. Expenditure on services to contracted service providers is expected to decrease – contractors are utilised for maintenance projects at the Defence Intelligence Headquarters and the Defence Intelligence Headquarters. It should be noted that performance targets are not fully disclosed due to the classification of certain information. A significant decrease in the planned number of vetting decisions to be taken in this financial year is noted.

4.8 The General Support programme provides general support capabilities and services through three sub programmes: Joint Logistical Services Command and Management Information Services and Military Police. This is the largest programme in the defence budget and constitutes 12.04 percent thereof. Funds for the departmental support programme and command and management information systems were significantly reduced. Funds allocated for the use of contractors have also decreased to R119 million (compared to the R855 million in previous financial year). Property payments are expected to increase, as well as the number of employees. The information

regarding the outputs and performance indicators of the joint logistic sub programme

and military police are confidential. The Committee is concerned over the lack of

clarity regarding certain performance indicators and targets, given this programme’s

underperformance against targets set in the last financial year. This poor

performance particularly relates to compliance with DOD ICT portfolios of the

Defence Enterprise Information System Master Plans. Moreover, given the reduction

in funding for this financial year, the Committee is doubtful whether targets set will be

fully achieved.



The following priorities inform the expenditure and annual performance plan of the Department of Military Veterans:

5.1.1 The establishment of a fully functional Department of Military Veterans with an independent budget vote and systems;

5.1.2 The provision of immediate social relief to the most vulnerable of military veterans;

5.1.3 The provision of comprehensive support services within the availability of resources for both military veterans and where applicable, their dependents;

5.1.4 The promotion of military veterans heritage and memorialising and honouring military veterans;

5.1.5 The promotion of empowerment programmes for and of the military veterans aimed at ensuring economic participation by military veterans;

5.1.6 The maintenance of a secure and national military veterans’ database; and

5.1.7 The implementation of a high impact communication and marketing strategy


6.1 Although not a separate vote, the Department will receive R351 million for the current financial year. This allocation is likely to increase to R606 million by 2015/16. Spending, over the next three years is likely to focus on filling of critical posts and supporting the delivery of benefits to military veterans.

6.2 Since the Department is building its capacity to deliver on its mandate as defined in the Military Veterans Act (No. 18 of 2011), the Administration programme consumes the biggest portion of the budget, and the main sources of expenditure for this programme over the medium term are the development and implementation of the required ICT and security services, policies and procedures, communication and marketing of the military veterans programmes, the funding and provisions of infrastructure projects and the establishment of internal audit function.

6.3 The 2013/14 allocation to the Socio Economic Support Services programme will be used to provide housing to 1 500 military veterans, dedicated health counseling and treatment to 1 000 military veterans and to provide access to health care services for 10 000 veterans. Since 2012/13 financial year spending by the empowerment and stakeholder management programme focussed on the provision of 3 honouring functions and the erection of 7 memorials .During thee 2013/14 financial year , diagnostic studies and organisational reviews will be conducted in order to better align capabilities to the Department’s mandate. These will mainly focus on improving the monitoring and evaluation as well as communication capabilities.


7.1 The Administration programme consists of four sub-programmes and constitutes 39 percent of the total budget allocation to the Department. Most of the funds allocated to this programme will be spent on office accommodations, due to the need for office space for newly appointed personnel. Over the next three years, allocations to this programme are likely to increase due to the required establishment of provincial offices, wellness and health centres and other infrastructure programmes. Spending on personnel is set to increase to R42 million. Funds allocated of training and development of personnel in those functions currently outsourced will increase to R3.4 million. Machinery and equipment will cost the Department an estimated R 10 million. An additional 10 performance indicators had been developed, but cannot be measured since targets had not been provided for in the APP. It is therefore unclear how the establishment of the anti-corruption hotline, the success in implementing the DMV Service Delivery and Improvement Plan, and how compliance with budget prescripts will be improved.

7.2 The Socio Economic Support Services programme consists of four sub-programmes and constitutes 38.56 per cent – the largest portion - of the total budget. The 72 million will be spent on providing services to military veterans, including greater spending on healthcare and wellness services. R60 million has been dedicated to the provision of housing. The Annual Performance Plan lists 11 performance indicators and targets: for the 2013/14 financial year, the Department aims to provide 1000 military veterans with access to counselling services; 1000 military veterans should have access to military healthcare facilities, 8000 veterans should receive pensions, 1500 decent housing, and 100 mainly NSF members will be compensated for any physical and mental injuries.

7.3 The Empowerment and Stakeholder Relations programme consists of three sub programmes and received R 76 million for the current financial year and expenditure is likely to increase to R 170 million by 2015/16. The filling of critical posts, providing benefits and services to military veterans in terms of Section 5 of the Military Veterans Act, the establishment of 2 military veterans’ governance structures, erecting 7 memorial sites and investment in heritage preservation, are likely to be prioritised over the next three financial years. For 2013/14 financial year, spending on military veterans skills development programmes, including the recapitalisation of the Defence Centre for Advanced Training will be prioritised. The annual performance plan lists 18 performance indicators. The Department aims to host 3 events honouring Non-statutory Force military veterans, finalise agreements with three institutions of higher learning, and provide burial support to families of military veterans, as the need arises. The Military Skills Development Policy is still being conceptualised and thus targets for implementation is not provided.


8.1 ARMSCOR (Armament Corporation of South Africa )

8.1.1 Armscor receives an annual transfer payment from the Department of Defence. For the 2013/14 financial year, Armscor will receive R1.98 billion and this will grow to R2.18 billion in the 2015/16 financial year. This transfer together with revenue from the sale of goods, services and redundant equipment fund operational expenses.

8.1.2 It should be noted that, Armscor has proposed a new funding model to ensure effective execution of its mandate and to maintain its capabilities in the long run. This new funding model proposes that Armscor is rewarded or penalised for the quality of and how efficiently it delivers services to the Department of Defence.

8.1.3 Over the next three years, the Department of Defence is expected to increase spending on capital acquisitions, mainly for the re-establishment of capabilities of the Simonstown Dockyard.


8.2.1 The Castle Control Board mainly funds its operations from ticket sales to visitors to the Castle, rental income and fees from hosting events. It does not receive any transfer from Government.

8.2.2 Strides have been made to ensure compliance with National Treasury performance standards, and improving internal control deficiencies. Over the MTEF period, the Board will increase expenditure on improving administration through the corporate governance programme, as well as the preservation, interpretation and showcasing of history of the Castle. These programmes have a direct impact on the Board’s goals which are to maximise the tourism potential of the Castle ad to increase its public profile and positive perception across all sectors.



9.1.1 Defence Budget

Since 2009, the Portfolio Committee has persistently cautioned that a shrinking defence budget could weaken the SANDF’s ability to fulfill its mandate. While 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. The resolution of challenges identified by the Auditor-General of South Africa, particularly challenges relating to the establishment of an internal audit function, asset management, and supply chain management, would improve the efficient management and use of a limited budget.

9.1.2 The finalisation of the Defence Review

While the Committee believes that the developmentment of performance information could be improved, effective planning can only be done once budgetary plans and expenditure are aligned to an updated defence policy. The current Defence Review should be finalised as a matter of urgency, as this is required since it would guide the medium and long term planning of the defence needs (budget and capabilities). The delays in both the finalisation and implementation mean that effective monitoring of defence activities is limited.

9.1.3 Border safeguarding

The SANDF cannot, with the limited funding available, deploy the appropriate number of soldiers to the borders, required for the effective monitoring and patrolling of the borderline. We re-iterated that in order to fully secure our borderlines, a sufficient number of soldiers should be deployed to conduct foot, air and vehicle patrols. The SANDF’s readiness to patrol the border largely depends on the rejuvenation of the defence force to ensure that appropriately skilled and young soldiers are trained and ready for deployment. Attention should be given on how the Reserve Force will be utlised to strengthen presence along borderlines. Detailed information regarding the implementation of Operation Corona remains outstanding.

Border fences are in a visible state of neglect and the SANDF have limited expertise available to effectively repair and maintain these border fences. Service Level Agreements (SLA) with appropriate specialist service providers should be promptly finalised

9.1.4 Facilities

The deteriorating conditions of facilities remains a cause for concern and the Committee welcomes the progress made with the establishment of the Defence Works Formation. Poor state of facilities impact on the morale of the SANDF, but could also threaten health and safety of our soldiers. Greater interaction between the Committee and Departments of Defence and Public Works is regarding the specific repair and maintenance challenges, the planned management plans, as well as the budgetary implications are required.

9.1.5 The status of Denel

An effectively regulated domestic defence industry is crucial in maintaining the SANDF’s necessary state of readiness. In this vein, the Committee urges that Defence Review clarify whether Denel and Armscor are sufficiently supporting the SANDF in maintaining its capabilities; and whether it is feasible for the Department of Defence to again manage this entity (currently managed by the Department of Public Enterprises).


9.2.1 Reliability of performance information

The Committee, during its interaction with the Department of Military Veterans, identified certain inaccuracies and inconsistencies in performance information contained the 2013 Annual Performance Plan. This means that the Committee will not be able to measure the DMV’s success in achieving objectives and targets, and for which they should properly be held accountable.

9.2.2 The integrity of the military veterans database

The Department should ensure that measures are in place to detect errors on their database,

and to verify information supplied by those wanting to register as a military veteran.

9.2.3 Regulations to the Military Veterans Act

Said regulations were tabled on 9 May 2013, and the referral to the appropriate Parliamentary Committee is still outstanding. These regulations are essential in ensuring that the required processes determining who qualifies for certain benefits and services are clarified and that the Military Veterans Act is successfully implemented to ensure that military veterans’ quality of life is greatly improved.


9.3.1 Appointment of a Chief Executive Officer

The three-year delay in the appointment of a Chief Executive Officer is a cause of concern and the Committee urges that this critical vacancy is filled as a matter of urgency.

9.3.2 Review of Armscor’s security arrangements

The Committee believes that current security arrangements provided for Armscor are inadequate, and that such arrangements should be on par with security provided to buildings and facilities classified as National Key Points (NKP).

9.3.3 Acquisition programme

During it’s interaction with the Committee, the Defence Secretariat undertook to submit to Parliament, a comprehensive report on Armscor’s acquisition’s policy. Such a briefing will be scheduled for the third quarter of the Parliamentary calendar year.


The Committee commends the Castle Control Board for their efforts in addressing the numerous management challenges identified by the Auditor-General of South Africa (AGSA). We welcome the appointment of the Executive Director – a position that was vacant for an extended period of time.

9.3.1 Comprehensive marketing strategy

The Committee remains concerned that little is done to raise awareness of the historical significance of the Castle remains. Current marketing and awareness campaigns require review to ensure their national and international reach.


10.1 The Committee acknowledges that greater synergy is needed in the manner in which the DoD budget is allocated across programmes and the better alignment of performance targets to strategic objectives remains work in progress. The Committee urges that priority should be given to this challenge and that steady improvements be made to move towards such a balance.

10.2 While mindful of the challenges faced by the SANDF and the Departments of Defence and Military Veterans, the Committee recommends that the 2013/14 budget is approved. While the current Defence budget is inadequate to meet the needs of the SANDF, the Committee will monitor improved alignment of the limited defence budget to strategic priorities. To this end, the finalisation of the current Defence Review is critical in order to provide proper and effective policy guidance to defence spending.


11.1 The Committee thanks all those who appeared before it for their input and co-operation, and looks forward to fruitful interactions with all stakeholders as it performs its oversight of the Department of Defence and the Department of Military Veterans.

Report to be considered.


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