ATC150514: Report of the Portfolio Committee on Defence and Military Veterans on Budget Vote 19: Department of Defence and Military Veterans, dated 13 May 2015
REPORT OF THE PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS ON BUDGET VOTE 19: DEPARTMENT OF DEFENCE AND MILITARY VETERANS, dated 13 May 2015
1.1 The Portfolio Committee on Defence and Military Veterans considered the 2015/16 Defence and Military Veterans budget (Budget Vote 19), the strategic and annual performance plans of the Department of Defence (DOD), the Department of Military Veterans (DMV), the Military Ombud, Armscor and Castle Control Board (CCB) between 15 and 29 April 2015.
1.2 This Report comprises a summary of the budget analyses provided in preparation of the Committee’s interrogation of the Defence and Military Veterans’ budget, a summary of selected issues relating to the DOD and DMV budget allocations and strategic and annual performance plans, and draws on information contained in the 2015 Estimates of National Expenditure (ENE), as well as additional information presented to the Committee. The Report also lists the Committee’s observations and recommendations.
PART A: DEPARTMENT OF DEFENCE
1. STRATEGIC OVERVIEW OF PRIORITIES AND POLICIES
1.1 NATIONAL POLICY AND NATIONAL STRATEGIC DIRECTION
1.1.1 The Department’s planning incorporates initiatives that will assist in the implementation of the National Development Plan (NDP). Focussed on decreasing poverty and inequality, the DOD has planned for defence-specific interventions that include the National Youth Service (NYS) and the Military Skills Development System (MSDS); the South African National Defence Force’s (SANDF) role in disaster aid and disaster relief, combatting maritime piracy on the continent along the east coast; establishing a strong national research and development capacity, contributing to building safer communities; building a capable developmental state; and combatting fraud and corruption.
1.1.2 The SANDF will mainly focus on two outcomes as defined in the Medium Term Strategic Framework (2014 – 2019): Outcome 3 (All people in South Africa are and feel safe) and Outcome 11 (Creating a better South Africa and contributing to a better and safer Africa in a better world). It will contribute to the success of these outcomes through activities relating to borderline security, cyberspace security, reducing corruption in the public sector, as well as peacekeeping and post-conflict reconstruction.
1.1.3 Through specific interventions relating to the creation of entry-level employment opportunities, the development of a National Youth Policy, and the creation of employment through expanding the Defence Industry, the DOD will contribute to the successful implementation of the National Growth Plan.
1.1.4 Specific interventions are to be implemented to improve corporate governance and the Forum for South African Director-Generals (FOSAD) targets. These include establishing a service delivery standard; reducing the time to fill vacancies, paying suppliers within a 30-day period; the finalisation of disciplinary cases within 90 days; improve feedback to the public on the anti-corruption hotline; the reduction in audit findings; the submission of annual reports to Parliament within the prescribed period; and ensuring that Chapter 9 and 10 institutions are responded to within the set period. The Department-specific interventions include ethics awareness training, strengthening the audit committee, improved risk management through the DOD Strategic Risk Management Committee; strengthening the Information technology governance; compliance with human resources, financial and procurement policies and enhancing stakeholder relations.
2. MINISTERIAL PRIORITIES
2.1 The strategic leadership required for the long term implementation of the South African Defence Review 2014, will be purposefully developed and strengthened. A comprehensive communication strategy will also be implemented to assist in forging stronger relationships with both stakeholders and the public.
2.2 A Defence funding model, designed to realise the 40/30/30 expenditure ratio where 40% is towards personnel, 30% each towards operations and capital expenditures, will be pursued. This will assist in ensuring that the SANDF is properly resourced.
2.3 The renewal of the DOD human resource base remains a core strategic priority. The recommendations of the Defence Review 2014 will be utilised to right-size the Human Resource component and supernumerary positions will be restricted to not more than 2 per cent of the total structure. Recruitment will be devolved to Services and Divisions, and military professional education, training and development will be provided by a Defence Academy.
2.4 Through the repositioning of the Defence Secretariat and the establishment of the Defence accountability concept, the DOD’s organisational structure will be renewed. This will result in the establishment of a delegation regime through which powers and duties are delegated down the command line; the establishment of an integrated defence enterprise information system; the revitalisation of the defence acquisition system; a restructured SANDF; a decentralised procurement system; the disposal of redundant equipment and ammunition; the establishment of a facilities master plan which will include the further development of the Defence Works Formation to repair and maintain defence facilities.
2.5 The defence capability strategy will be reviewed to ensure that the Defence acquisition policy are in line with the four Defence Review milestones. Capability renewal plans will include restoring effective intelligence capability; expanding and enhancing the Special Forces; establishing a permanent Forward Base; strengthening the tactical airfield unit and naval port operating capabilities; improving Defence stock levels; and enhancing defence diplomacy.
2.6 A defence industry and technology agenda will be set aimed at supporting the defence development programme, and integrating the defence industry into the mainstream Industrial Policy Action Plan.
2.7 Defence commitments which includes improving the SANDF’s border safeguarding capacity through the acquisition of appropriate equipment and weapons systems; and supporting the SANDF’s internal and intervention operations, peace missions and regional assistance operations; will be strictly pursued.
3. OVERVIEW OF 2015/16 BUDGET
The Department received R44 579.4 million for the 2015/16 financial year, which is slightly lower than the previous years’ allocation. Spending on the maintenance of defence capabilities, border safeguarding and the development of a Cyber Security capability, will be prioritised.
3.1 ALLOCATION PER PROGRAMME
3.1.1 Programme 1: Administration
18.104.22.168 The programme provides strategic leadership, management and support services to the Department of Defence. It consists of 15 sub-programmes (including Military Veterans) and consumes 10.83 per cent of the total budget. The Acquisition Services sub-programmes received the highest real percentage increase. Key targets set in Programme 1 include compliance with the submission dates for accountability documents, compliance to the various promulgation schedules, as well as focussing on the various aspects of the Human Resource Support Services, Legal Services, Inspection Services and Defence International Affairs.
3.1.2 Programme 2: Force Employment
22.214.171.124This programme provides and employs defence capabilities in order to conduct defence operations. These include joint, inter-departmental, interagency, and multinational military exercises.
126.96.36.199 Programme 2 constitutes 8.08 per cent of the total budgetary allocation which funds, among other, the SANDF’s participation in major peace missions such as those in the Democratic Republic of the Congo and Sudan, as well as borderline security. The regional security sub-programme allocation has been notably reduced in real terms, although the SANDF’s role in regional security has not been reduced. The Special Operations sub-programme is expected to increase its spending in line with the requirements of the 2014 Defence Review. Training and Development, as well as Machinery and Equipment spending is set to decrease significantly. This is of great concern given the impact this may have on training for primary missions of the SANDF and the availability of defence equipment for defence operations.
188.8.131.52Between 2015/16 and 2017/18, the Department aims to provide successful joint force employment through the provision and employment of a special operations capability, full participation in all peace missions in terms of Presidential instructions, as well as conducting 15 joint, inter-departmental, interagency and multi-national military force preparation exercises. The last target has been missed on several occasions in the past due to other countries cancelling their participation and is an issue that needs to be considered when determining this performance target.
3.1.3 Programme 3: Landward Defence
184.108.40.206Through its eleven sub-programmes, the Landward Defence Programme provides prepared and supported landward defence capabilities for the defence and protection of South Africa. Programme 3 consumes the largest proportion of the total defence budget namely 32.2 per cent. The Infantry capability and support capability sub-programmes received the largest portions of the Landward Defence programme’s allocation. Significant real percentage increases were allocated to the general training capability, artillery capability and air defence capability sub-programmes, while the strategic direction and support sub-programmes’ allocation were significantly reduced. Given the current emphasis on regional and internal deployments, the reduction in terms of the support capability is of specific concern as it could affect related deployments.
220.127.116.11 The Defence Review 2014 aims to reverse the decline in defence capabilities and this programme will feature prominently in this regard. The South African Army will continue to provide and exercise those capabilities that are required for internal and external deployment. Of concern is the stated requirements for adequate transport and infantry-related vehicles, which often has long acquisition timelines. This programme will also be significantly affected by the planned alterations to the Human Resources component of the SANDF as posited in the Defence Review. It will be important to ensure that critical skills are not lost in the process and that capabilities are maintained and enhanced.
3.1.4 Programme 4: Air Defence
18.104.22.168This programme provides prepared and supported air defence capabilities for the defence and protection of South African and aims to, over the medium term, defend and protect South Africa’s air space by providing per year: four helicopter squadrons, one combat support squadron, three medium transport squadrons which will include one VIP squadron, one maritime and transport squadron, one air combat squadron and a 24 hour air command and control capability.
22.214.171.124 For the 2015/16 financial year, the air defence programme received the second largest portion (15.8 per cent) of the defence allocation. Sub-programmes consuming the largest share of the allocation include transport and maritime capability and base support capability sub-programmes. The Command and Control Capability sub-programme received the largest real percentage increase (94.4 per cent), while the Operational Direction sub-programme received a 23.5 per cent increase. The Technical support services sub-programme also received a real percentage increase of 22.24 per cent. Of concern is the significant decrease in the Transport and Maritime Capability sub-programme as this may impact on the operational capability of the SANDF and the maritime patrol capability. Also concerning is that the allocation to the training capability sub-programme was also decreased. Moreover, the significant decrease in funding allocated for fuel, oil and gas is likely to hamper the performance against targets set.
3.1.5 Programme 5: Maritime Defence
126.96.36.199Comprising five sub-programmes, the maritime defence programme aims to provide prepared and supported maritime defence capabilities for the protection and defence of the country. These sub-programmes include Maritime Direction, Maritime Combat Capability, Maritime Logistics Support Capability, Maritime Human Resources and Training Capability, and Base Support Capability.
188.8.131.52In the next three financial years, the Department aims to improve security of maritime zones by providing a surface combat and patrol capability (3 frigates, 1 combat support vessel, 3 offshore patrol vessels, and 3 inshore patrol vessels per operational cycle); a sub-surface combat capability (2 submarines per operational cycle); a mine warfare capability (2 vessels per operational cycle); a maritime reaction squadron capability (an operational boat division, a naval reaction division per operational cycle); and a hydrographic survey capability.
184.108.40.206Constituting 8.39 per cent of the total budgetary allocation of the Department, the bulk of the funding has been allocated to the Maritime Combat Capability and the Maritime Logistics Support Capability. The latter received a decrease of more than 17 per cent in real terms for the financial year 2015/16.
3.1.6 Programme 6: Military Health Support
220.127.116.11Responsible for providing prepared and supported health capabilities, the programme received an allocation of R 3.93 billion - a 2.5 per cent decrease from the previous financial year in real terms. Military Health Support comprises seven sub-programmes including Strategic Direction, Mobile Military Health Support, Area Military Health Service, Specialist/Tertiary Health Service, Military Health Product Support Capability, Military Health Maintenance Capability, and Military Health Training Capability.
18.104.22.168Over the next three financial years this programme aims to provide a health support capability of 5 medical battalion groups (comprising field hospitals and a specialist medical battalion group) for deployed and contingency forces, as well as a ‘comprehensive, multi-disciplinary health service’ to a targeted annual 302 000 members.
22.214.171.124 A significant reduction in funding to the Military Health Product Support Capability, the Strategic Direction Capability, and the Mobile Military Health Support Capability is noted. Spending on contractors (service providers) and the medical supplies inventory have been reduced. However, spending on employee compensation will increase to R2 978 million in 2015/16 (compared to R2 670.8 million in 2014/15). The Department indicated in its presentation to the Committee, that only 272 additional employees are expected to be appointed.
3.1.7 Defence Intelligence
126.96.36.199Comprising three sub-programmes (Strategic Direction, Operations, and Defence Intelligence Support Services) the programme provides defence intelligence and counterintelligence capabilities. This programme will focus on the development and implementing of a cyber-security capability which is also emphasised in the Defence Review 2014. No significant trends have been noted by the Committee in the budgetary allocation to this programme.
3.1.8 Programme 8: General Support
188.8.131.52This programme provides general support capabilities and support to the Department and constitutes the third largest programme in the defence budget. It comprises five sub-programmes including Joint Logistics Services, Command and Management Information Systems, Military Police, Technology Development and Departmental Support.
184.108.40.206 Key programme objectives over the medium term include 16 infrastructure projects, 36 maintenance and repair projects, strengthening the Defence Works Formation, establishing effective information and communications infrastructure, provide information and solutions in terms of the defence enterprise information systems master plan, conducting 248 annual crime prevention operations, annually investigate 80 fraud and corruption cases, sustaining 2 military correctional facilities for detention and rehabilitation, as well as sustaining 4 regional provost headquarters for operational deployment.
220.127.116.11 The Joint Logistics Services sub-programme’s allocation has increased and this may relate to the strengthening of the Defence Works capability. However, allocations to the departmental support capability, the technology development capability and the military police capability have decreased in real terms. No funds were allocated for specialised military equipment and the Department intends spending significantly less on service providers (contractors).
PART B: DEPARTMENT OF MILITARY VETERANS
1. POLICY PRIORITIES
- The Military Veterans Act (No. 18 of 2011) sets out this Department’s mandate. It is responsible for setting a national policy and standards on socio-economic support to military veterans and their dependants, and these include benefits and services aimed at enhancing the quality of life of military veterans.
- The Department will contribute to national priorities particularly Outcome 14 of the MTSF (nation building and social cohesion), and Outcome 5 (a skilled and capable work force) through its programmes. The Department will facilitate the restoration of the dignity of military veterans through redressing inequalities and memorialisation and heritage initiatives. This will promote social cohesion while also contributing to the development of skills and capabilities through focussing on education opportunities for veterans and their dependants.
Efforts will also be made to ensure a fully functional Department with an independent budget vote and systems.
1.3 The Department will also ensure the establishment of appropriate and effective governance and oversight systems which are critical to ensure the effective implementation of the Military Veterans Act.
1.4 Priorities and departmental expenditure are expected to centre around the provision of immediate relief to military veterans; the provision of comprehensive military veterans’ support services; military veterans heritage, memorialisation and honouring; the maintenance of a credible and secure military veterans database; and operationalising the high impact communication and marketing strategy and plan.
2. BUDGETARY ALLOCATION AND PROGRAMMES
2.1 Programme 1: Administration
2.1.1 Consisting of six sub-programmes (management, corporate services, financial administration, internal audit, strategic planning, policy development, monitoring and evaluation, as well as office accommodation), this programme provides management and strategic administrative support to the Ministry, and overall management of the Department.
2.1.2 For the 2015 - 2019 period, the Department will focus on improving inter-departmental co-ordination by establishing effective ‘structures, systems, processes and procedures’ for the management of its human resources, ICT services, financial management, and legal services. This should lead to an effectively functioning risk management framework, including a fully functioning and independent internal audit function.
2.1.3 R 157.5 million has been allocated to fund all activities and represents 27.05 per cent of the total budget allocated to the Department. The Travel and subsistence allocation remains considerably high – R 7 million for a total of 97 funded posts. The Communications sub-programme received R9.3 million and it is unclear on what this allocation will be spent.
2.2 Programme 2: Socio economic support
2.2.1 This programme develops and monitors the implementation of legislation, policy frameworks and service delivery cooperation agreements on compensation for injury in military service, counselling, education, healthcare, public transport, pension and housing benefits to military veterans eligible for such support. Activities are administered through three sub-programmes – database and benefits management, healthcare and wellbeing support, and socio economic support management.
2.2.2 Over the medium term, focus will be on establishing and maintaining a credible and secure military database and the Department aims to have verified and captured 100% military veterans by the 2019/20 financial year. The roll-out of benefits as prescribed in Section 5 of the Military Veterans Act will increase during the 2016/17 financial year; 12 000 military veterans to have decent housing, 27 000 military veterans to have access to health care services by 2017/18; 2 100 military veterans and dependants to be provided with educational opportunities by 2017/18, and by 2017/18 targets agreed on with service delivery agencies will be achieved and comprehensively reported on. Research studies on matters affecting military veterans and the development of requisite policies, norms and standards, by 2017/2018 would enable the Department to provide strategic leadership to the socio-economic sector.
2.2.3 The allocated R215.6 million to the Socio-economic Support Management sub-programme, will be used to provide access to healthcare services and the provision of housing and bursaries. The Department has also set aside R17.3 million to contractors and it is noted that no funds were allocated for this item in previous years.
2.3 Programme 3: Empowerment and stakeholder relations
2.3.1 Through the provincial offices and stakeholder relations sub-programme, the empowerment and skills development sub-programme, and the heritage memorials burials and honours sub-programme, this programme manages and facilitates the implementation of military veterans’ empowerment and stakeholder management programmes.
2.3.2 Strategically, the Department aims to contribute to nation-building and reconciliation through the creation of 30 partnerships with private sector companies and other organs of the state. It will establish 10 strategic initiatives at national, continental and international level to ensure the empowerment of military veterans. It aims to improve military veterans and dependants’ quality of life through ensuring that 10 500 military veterans have access to relevant training and skills development opportunities offered by accredited service providers. It will also aim to establish 200 cooperatives by 2019/20. Military veterans will be recognised and appreciated through the erection of 12 memorial sites.
In terms of the medium term priorities set, programme activities will focus on the development and implementation of a ‘fully functional purpose vehicle that will facilitate business opportunities by (2015/16)’; forming partnerships with 30 private sector companies and other state organs through service level agreements; monitor and evaluate the implementation of agreements and memoranda of understanding; facilitate the association of military veterans with the international community through the establishment of exchange programmes, as well as integrating military veterans in the national workforce on an ongoing basis.
2.3.3 The programme received R158.4 million of which R43.3 million will be spent on the provincial offices and stakeholder relations sub-programme, R100.5 million on empowerment and skills development sub-programme, and R14.6 million will be spent on the heritage, memorials, burials and honours sub-programme. Over the next three financial years the Department aims to train 15 000 people at a costs of R306.7 million. For 2015/16, R71.3 million has been allocated for training and development.
PART C: ENTITIES REPORTING TO THE DEPARTMENT OF DEFENCE
1. ARMAMENTS CORPORATION OF SOUTH AFRICA
- STRATEGIC PRIORITIES
- The Corporation’s main purpose is to meet the acquisition, maintenance and disposal needs of the Department of Defence. It ought to ensure that the SANDF receives quality equipment to carry out its mandate, and it must therefore maintain strategic capabilities and technologies while promoting the local defence industry. Its focus areas include the management of the Armscor’s Dockyard – which is responsible to ensure the operational ability of the SA Navy’s vessels; and conducting research and development, test and evaluation support.
- Although Armscor contributes to the national MTSF outcomes through its service level agreement with the Department of Defence, its need for increasingly specialised services and the requirements of the South African Defence Review may have a significant impact on its strategic direction. Consequently, much focus will be given to reviewing its human resource needs and capabilities in order for it to have the most appropriately skilled and required personnel in its maintenance, upgrade and innovation programmes.
- In terms of the 2015 Corporate Plan, the successful implementation of core objectives such as acquisition excellence, technology advancement, resourcing capabilities, industry sustainability and stakeholder engagement, may be hampered by funding constraints, although it can maintain its currently operations for now. The introduction of the South African Defence Review and in particular Milestone 1 – especially as it relates to the role given to Armscor in terms of meeting SANDF requirements and implementation of this policy, will affect Armscor activities. The adaptation of its acquisition processes, review of contract and acquisition processes, review of its skills base, adherence to the National Development Plan, and compliance with the Minister of Finance cost containment measures, will influence Armscor’s activities and focus.
2. ARMSCOR BUDGETARY ALLOCATION
2.1 For the 2015/16 period, Armscor’s received R 1 636 million, compared to the R 1 561.0 million for the 2014/15 financial year. Armscor’s funding are from transfer payments, investment income generated from research and development, as well as revenue from the Armscor Dockyard. Revenue is also generated through commission received for the selling and buying of equipment. Funds are used to finance its operational expenditure, pay for administration, maintenance of buildings, as well as training.
2.2 Personnel costs remain the primary source of expenditure and according to the ENE accounts for 60 per cent of total spending over the medium term. This is due to the filling of critical vacancies (including that of the chief executive officer) and the development of Dockyard capabilities.
2.3 While the cost of Armscor’s activities have increased, the reduced transfer payment received is expected to negatively impact on its ability to meet its mandate. Armscor projects a negative financial position performance over the next three years. The Armscor Board indicated that it will be able to meet its expenditure in the medium term, but if transfers from the fiscus is not increased, it would run out of cash reserves by 2018. As a result, alternative avenues to fund operations are being explored.
3. CASTLE CONTROL BOARD
3.1 STRATEGIC OVERVIEW
3.1.1 The Castle Control Board’s mandate is derived from the Castle Management Act (No. 207 of 1993). Its purpose is to preserve and protect the Castle of Good Hope’s military history and cultural heritage. It must also ensure maximum public accessibility, and exploit its tourism potential.
3.1.2 The strategic and annual performance plans show that all activities for the medium term will focus on promoting, developing and interpreting the Castle as a place of education and learning; ensuring that the Castle plays a key role in the promoting reconciliation and nation-building; and to improve its ability to manage the heritage site as an endowment property. These key objectives are also in line with the goals of the National Development Plan (NDP), the Medium Term Strategic Framework (2014 – 2019) Outcomes and the New Growth Path. Improving the Castle’s administration and management will also contribute to achieving the purpose of national cost containment measures and combatting fraud and corruption.
3.2 BUDGETARY ALLOCATION
3.2.1 Programme 1: Administration
18.104.22.168 Activities of this programme will focus on improving administration and achieving good corporate governance. Money will mostly be spent on salaries due to planned appointments namely a full time heritage officer, a precinct co-ordinator and a limited number of maintenance personnel. The programme is allocated budget of R 5, 091 million.
3.2.2 Programme 2: Conservation
22.214.171.124 This programme aims to maintain, preserve, interpret and show case the Castle’s history. However, funding for particularly conservation purposes has significantly decreased over time and has for the 2015/16 financial year received only R1, 95 million. Most of the allocation will be on used for hosting innovative public events.
3.2.3 Programme 3: Tourism
126.96.36.199 The CCB must maximise the Castle’s tourism potential and it intends to expand its tour options and tourism products. Improvements in signage, displays and marketing programmes are also planned. This will hopefully lead to increased tourism and thus also revenue collection through entrance fees and venue hire. R130 000 has been allocated to this programme, compared to R75 000 in the last financial year.
3.2.4 Programme 4: Public Access
188.8.131.52 Programme activities are aimed at growing the Castle’s public profile. A total budget of R330 000 has been allocated for this purpose, and will mostly be spent on funding community workshops, outreach programmes, hosting special needs groups, internships and youth programmes.
4. OFFICE OF THE MILITARY OMBUD
4.1 STRATEGIC OVERVIEW
4.1.1 In line with Ministerial priorities, the Military Ombud will over the next five years improve its strategic leadership capacity and succession planning, develop an appropriate funding mechanism in order for it to be adequately resourced, managing human resources and directing the organisation towards greater efficiency, and reviewing the Office’s capability strategy.
4.1.2 Established in terms of the Military Ombud Act (No. 4 of 2012) to investigate and facilitate the ‘fair, economic and expeditious’ resolution of complaints, this office has identified critical changes required to ensure that the Office serves its intended purpose. These include the reclassification of the Office as a Schedule 3 Public Entity in order to ensure more independence; the revision of the accountability and governance provisions in the Military Ombud Act, and that interventions are developed to improve its internal operations, including effective business systems and the recruitment of capable and disciplined personnel.
4.2 BUDGETARY ALLOCATION
4.2.1 The Military Ombud received a total budgetary allocation of R41.8 million and funds are administered through the three sub-sub-programmes in the Ministry sub-programme of Programme 1: Administration. These sub-sub-programmes are strategic direction, corporate operations and corporate support. The budget presentation presented to the Committee indicated that although funds allocated to the Office was expected to increase over the next three financial years, it will not adequately address all operating expenses. This is because the allocated funds are inconsistent with full costs for example where R46.8 million is required for 2015/16, only R41.8 million has been allocated. The Office has put in place certain actions to ensure that it will continue to realise the strategic outputs.
PART D: COMMITTEE OBSERVATIONS
1. DEPARTMENT OF DEFENCE
- Programme 1: Administration
- According to performance information tabled in Parliament and presented to the Committee, the Department of Defence (DOD) remains committed to the rejuvenation of the SANDF. However, the following contradictions identified in performance information, may negatively impact on attaining this goal:
- The Military Skills Development System (MSDS) targeted intake for the 2015/16 period remains relatively low and its impact on the positive transformation of the SANDF, may be negligible.
- Related to the above, the re-skilling of personnel and the application of appropriate mobility exit mechanisms are key ingredients for ensuring the SANDF’s vitality. However, the low target set for the reskilling of personnel as well as the lack of information on the implementation of the revised mobility exit mechanisms, makes it difficult for the Committee to evaluate how these interventions contribute to the rejuvenation goal. This is of particular importance given the Defence Review’s guidelines on force rejuvenation.
1.1.2 The Committee notes the Department’s intention to decentralise recruitment, and that services and divisions will play a greater role in the appointment of personnel. This will decrease the time to fill vacancies and also ensure that more appropriate personnel is employed.
1.2 Programme 2: Force Employment
1.2.1 Despite South Africa’s increasing role in regional and continental peacekeeping, funding allocated to particularly the Regional Security sub-programme, and the Training and Development sub-programme is a concern.. These reductions, coupled with noticeable decreased expenditure on machinery and equipment, may impact negatively on the SANDF’s ability to effectively execute its peacekeeping responsibilities, deployments and the required equipment for especially peace keeping missions.
- Unlike previous years, performance targets and information relating to UN/AU reimbursements have been classified. Moreover, challenges relating to the collection of reimbursements from the UN/AU persist.
- Programme 3: Landward Defence
1.3.1 The Committee notes that funds allocated to this programme have been reduced. This is of particular concern given the Defence Review’s objective of restoring defence capabilities, and that the majority of soldiers involved in operations are sourced from this programme.
- Programme 4: Air Defence
1.4.1 The Department has adjusted its targeted flying hours and has also reduced funding for fuel, gas and oil. The Committee appreciates that given the budgetary constraints, meeting all responsibilities has become an increasingly difficult task. However, the Committee is concerned that reductions in critical areas may not only lead to underperformance, but also impact on the morale and safety of air force personnel.
- Programme 5: Maritime Defence
1.5.1 The Annual Performance Plan indicates that the Department is investigating the establishment of a National Coast Guard. Since this establishment appears to involve other departments and agencies that play a role in border security, the Department could not provide comprehensive information during its appearance before the Committee.
1.5.1 The Department has not increased its sea hour targets for the 2015/16 to 2019/20 period. The Committee cautions that targets set should enable the Navy to meet its maritime responsibilities, as well as its support in anti-piracy operations on the east coast of Africa.
- Programme 6: Military Health Support
1.6.1 The provision of quality mobile health support during deployments, as well as medical services to military veterans are of primary concern to the Committee.
- Programme 7: Defence Intelligence
1.7.1 Defence Intelligence will play a key role in the establishment of the Department’s cyber warfare capability. The Committee will pay particular attention to this capability during a briefing on the Defence Review Implementation Plan (DRIP).
2. DEPARTMENT OF MILITARY VETERANS
2.1 Programme 1: Administration
2.1.1 Information relating to the number of positions the Department intends to fill, reported in the Estimates of National Expenditure, the strategic and annual performance plans, as well as presentation documents, are contradictory. This not only complicates the drawing of comparisons, but also hampers effective planning and oversight.
2.1.2 The Department received a disclaimer for its financial management and programme performance for the 2014/15 financial year. The establishment of a monitoring and evaluation capability is critical in determining Departmental performance. It will also identify challenges and where required, measures to improve the overall Departmental management and performance, as well as service delivery to military veterans.
2.2 Programme 2: Socio-economic support
2.2.1 The Department consistently underperforms against targets set for military veterans’ access to health care services, as well as provision of housing. Despite an increased allocation to ensure health care accessibility, the targets set in this regard have been reduced. Furthermore, while the 2014/15 targets set for housing had not been met, the Department has increased this target from 2 000 to 3 000 houses for the 2015/16 financial year. Given this historical background and challenges with other spheres of government responsible for housing, it is likely that these targets will again not be met.
2.3 Programme 3: Empowerment and stakeholder relations
2.3.1 The Department’s visibility and accessibility to military veterans remain a cause for concern. In this regard, the slow progress made with the establishment of provincial offices and appointment of provincial co-ordinators are critical.
2.3.2 The establishment of provincial offices has been problematic and this is a serious concern to the Committee, as the provincial proximity of these offices are supposed to assist in the facilitation of the accessibility and visibility of the Department by military veterans.
3.1.1 Armscor’s projected negative financial position reported in its Corporate Plan and further elaborated on during its appearance before the Committee; and the impact this may have on not only SANDF requirements but the realisation of the role Armscor is set to play in relation to the implementation of the 2014 South African Defence Review, is cause for concern.
3.1.2 Armscor’s strategic nature necessitates the attraction and retention of suitably qualified and skilled personnel. For this reason, the Committee notes with concern that Armscor’s Corporate Plan indicates that the loss of skilled personnel and expertise remains a challenge to the Corporation.
3.2 Simon’s Town Naval Dockyard
3.2.1 Related to the Corporation’s sustainability, the viability of the Dockyard remains a challenge, particularly in light of the loss of skilled personnel, the challenges relating to improving the facility’s profitability, as well the impact these may have on meeting the Navy’s requirements
3.3 Defence Industrial Participation
3.3.1 The Committee welcomes the intention to review the Defence Industrial Participation (DIP) policy. It was reported that such a review would be conducted to improve requirements and to ensure that service providers are bound by agreements and contractual obligations.
3.4 Intellectual Property
3.4.1 The Committee welcomes the planned establishment of an intellectual property system (database), and the intention to exploit current intellectual property. These plans are related to advancing research and development capabilities, the recruitment of competitively skilled personnel, and the availability of the required funds to finance such plans.
4. CASTLE CONTROL BOARD
4.1 The Committee commends the Castle Control Board for the strides made in establishing the required internal controls and establishing systems that will ensure that the entity complies with national norms and standards. However, it recognises that greater creativity is required to ensure that the Castle further enhances its self-sufficiency in terms of funding.
4.2 The Committee is concerned about vagrancy and crime around the Castle, the impact of renovations on daily operations, as well as the ability of the CCB to substantially increase its revenue to ensure its financial sustainability.
5. MILITARY OMBUD
5.1 During its two appearances before the Committee, the Office of the Military Ombud proposed the repositioning of the Office to a Schedule 3 Public Entity; a review of the Military Ombud Act to improve accountability and governance measures to ensure its institutional dependence; provisions to ensure that the Office conducts its own investigations; and that its recommendations or findings are enforceable.
PART E: RECOMMENDATIONS
Having considered the 2015/16 Defence and Military Veterans budgetary allocation, the DOD and DMV strategic and annual performance plans, as well as those of defence-related bodies and entities, the Committee recommends as follows:
- DEPARTMENT OF DEFENCE
1.1 The Committee urges the Department to complete its Defence Review Implementation Plan (DRIP) and to brief the Committee on it as soon as possible in order to position the Committee to assist the Department in sourcing an appropriately sized budget which is critically required for the successful implementation of the South African Defence Review 2014, especially as it relates to Planning Milestone 1: Arrest the decline in critical capabilities through immediate, directed interventions.
- The rejuvenation of the Defence Force is crucial to meets its constitutional mandate and the Department should reconsider the number of MSDS and NYS members who can assist to address this challenge. It should also enhance its efforts to reskill personnel and apply appropriate exit mechanisms to ensure a seamless transition of those identified to exit the system.
- The decentralisation of recruitment to Services and Divisions is welcomed, but the Department is encouraged to ensure that the necessary structures and personnel are in place before implementing this intervention. This is not only to ensure an effective system and the proximity of recruitment versus the eventual employment, but also to address possible cases of nepotism and corruption.
- The increasing role of our country in peacekeeping necessitates that the Department reconsiders its funding which has decreased in this financial year. The Department is reminded that these deployments are not only in terms of international obligations, but also to facilitate especially increased economic activity between South Africa and the rest of the Continent.
- The reimbursements from the UN/AU for peacekeeping missions should be prioritised to ensure that the country is compensated properly and timeously in terms of the related concluded agreements.
- The reduced landward defence funding is a concern especially since it has not been a recipient of the Strategic Defence Package. The Department is therefore encouraged to specifically prioritise this programme in Milestone 1 and ensure that these capabilities are restored, maintained and enhanced. It is also stressed that regardless of budgetary constraints, the allocation of funds should at all times be based on the mandate and needs of the Defence Force.
- The reduction of flying hours as well as reduced funds for oil, gas and fuel, is a concern and the Committee therefore proposes that the Department reviews this decision to ensure that reduced funding does not impact on the safety and morale of soldiers. The reduction in training funding is also a concern and the Department should clearly indicate how it intends to mitigate the impact of reduced training opportunities.
- The Committee supports the continued role the Department plays in anti-piracy operations. The Department is urged to ensure that this commitment is prioritised and funded appropriately, especially in light of the implementation of Planning Milestone 1. Sufficient sea hours should also be allocated to ensure adequate force preparation to facilitate well-prepared maritime forces for operational purposes.
1.9 The Department should provide Parliament with a status report on the proposed National Coast Guard within six months of the National Assembly’s adoption of this report, and thereafter on a quarterly basis.
- The increase in compensation to military health personnel is noted against the background of the exit of many such personnel in the recent past. The Department should appraise the Committee of its retention and succession planning strategies for this sector, including their effectiveness.
1.11. The Department should brief the Committee on its Cyber Warfare Strategy as soon as it is completed. Such a report should include an evaluation of whether the Department has the necessary capacity, funds and personnel to implement, maintain and manage such a strategy.
- The increasing role that the Reserves play in operations is noted and the Department is requested to indicate how this role can be further enhanced since Reserves are less expensive.
- The Committee will on a quarterly basis, request information on the impact of mobile health support during deployments, as well as medical services to military veterans as these may impact on the performance against targets.
- DEPARTMENT OF MILITARY VETERANS
- The Committee is concerned about the inconsistencies and inaccuracies in performance information contained in tabled reports. It therefore recommends that the Department liaise with National Treasury, the Department of Public Service and Administration, the Department of Performance, Monitoring and Evaluation as well as the Auditor-General, to ensure that these issues are addressed.
- The Department should report to the Committee on the progress and success of its action plans to address the disclaimer audit opinion during its quarterly interactions with the Committee.
- One of the challenges identified was the leadership component and as such the Department undertook to intervene to address this issue. The Department is therefore requested to report to the Committee on the roll–out and success of this intervention to ensure that this challenge is addressed. While it is encouraging that funds have been set aside for training and development, further information should be supplied on the type and duration of such training.
- The Department has been rated very low on the MPAT tool administered by the DPME and indicated that it is addressing this issue. The Department should therefore not only report on the progress, but also on plans to ensure that it does not relapse again in this regard.
- Costs associated with activities such as travel and subsistence communication and marketing, and entertainment versus the number of personnel in the Department, have drawn the attention of the Committee on several occasions. The Department is requested to specifically report on these issues to the Committee during its engagement on quarterly and annual reports.
- As the Department aims to have verified and captured 100% military veterans by the 2019/20 financial year, it is incumbent that it reports to the Committee on a regular basis on progress made in this regard. This is especially important since an incomplete database complicates planning and may even make the Department vulnerable to possible litigation.
- The Department must take care to ensure that senior managers complete the required financial disclosures and that decisive action is taken against individuals who fail to comply.
- With regards to the challenges faced by the Department to deliver services through other agencies, the Committee advises that a more vigorous compliance system should be developed to ensure that these stakeholders adhere to concluded agreements.
- The Department should report on the progress made in establishing provincial offices as well as how it interacts and liaises with provincial and municipal authorities to source appropriate offices to minimise costs in this regard.
3.1 It is recommended that Armscor explores alternative and innovative avenues to increase its revenue to address the projected negative financial position over the MTSF period. In particular, the expected depletion of cash reserves by 2018 and the concomitant implications indicated by the Corporation and plans to address these, should be shared with the Committee timeously.
3.2 The Corporation should inform the Committee on the filling of critical posts, the success of their succession and retention plans as well as the fast tracking the appointment of people with the required skills.
3.3 Armscor should report on the progress made in addressing the leakage of information as well as how it plans to deal with cyber security threats.
3.4 The Committee urges the approval and implementation of the turn-around strategy, which includes targeted interventions for the resolution of existing challenges. Parliament should, within six months of such approval, receive an implementation progress report.
3.5 The challenges facing the Dockyard include capacity, personnel and especially financial constraints, and as such the Corporation should keep the Committee abreast of progress made with its “Armscor on-time Strategy” to address these issues as the Dockyard is vital to keep the vessels of the Navy afloat.
3.6 The identification and generation of revenue from the Intellectual Property Rights of Armscor should be fully explored and the Corporation should finalise its policy in this regard as a matter of urgency.
3.7 The Committee will monitor the review of the Defence Industrial Participation (DIP) policy which should ensure that service providers are bound by agreements and contractual obligations.
- CASTLE CONTROL BOARD
4.1 The Castle Control Board should keep the Committee abreast of their success in addressing vagrancy and crime around the Castle, the impact of restorations on the daily activities of the Castle, as well as progress towards having the Castle recognised as a UNESCO World Heritage Site. It should also inform the Committee on progress made by the CCB towards ensuring that one authority manages the Castle.
4.2 It is further recommended that the utilisation of consultants should be accompanied by a commitment to transfer skills to staff employed by the CCB. Feedback should also be given to the Committee on the involvement of military veterans at the Castle, as instructed by the Deputy Minister.
- MILITARY OMBUD
5.1 With regard to the Military Ombud, the Committee supports the Office in its quest for greater independence through the registration as a Schedule 3 Public Entity. As such, the Office should keep the Committee abreast of developments in this regard timeously, especially since it is expected that the Military Ombud Act will have to be amended to effect this change.
5.2 The Military Ombud should inform the Committee of how it is dealing with the funding deficit of R5 million for the 2015/16 financial year, progress made to fill the additional posts, progress made to have an automated case and matter management system as well as addressing the security breaches reported.
- APPROVAL OF BUDGET VOTE 19
6.1 Having considered the 2015/16 Defence and Military Veterans budgetary allocation, and having evaluated the associated strategic and performance plans, the Committee is of the opinion that the Defence portfolio remains severely underfunded, and the allocation is thus insufficient to address the challenges and needs of the South African National Defence Force (SANDF). We believe that the South African Defence Review 2014 correctly emphasizes the restoration of defence capabilities, and urge that the Defence portfolio is adequately resourced to support the defence policy’s successful implementation.
6.2 Mindful of the above challenges, the Committee recommends that the 2015/16 budget be approved. Service delivery, programme performance and associated challenges will be monitored on a quarterly basis.
PART F: APPRECIATION
The Committee extends its appreciation to all who have contributed during its consideration of Budget Vote 19: Defence and Military Veterans.
Report to be considered.
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