Disappearance of Arms; Defence Strategic Packages; Budget Cycle

2: Budget Cycle and Financial Planning Process

The meeting started with a discussion on the loss of weapons at the military base at Tembe near Bloemfontein. Mr Mashimbye (ANC) suggested that the commanding authority of the base should be suspended and an investigation launched.

The Chairperson, Mr Yengeni (ANC) said that the Committee had drafted a statement the day before (Monday, 1 June) but did not release it because he had received notice that no weapons were missing. Weapons had been taken out for training and were found again in the store after stocktaking. However, the door and the burglar bars to the store were cut with a blow torch. This was the second attempt at burglary. Thereafter ammunition was transported from Tembe to Ladybrand. The next morning the truck transporting the ammunition was found empty next to the road.

Mr Marais (NP) responded that it seemed that those who are involved in stealing the weapons have a plan in mind. He shares concern over the incidents and wishes to see a speedy solution.

Mr Selfe (DP) said that the incidents give rise to rumours that damage the morale of the society and stability of the democracy. He said that a security problem is evident when one comes into a base. There is a need to find out what is going wrong and those responsible should be disciplined.

Mr Ferreira (IFP) suggested that there is no need to go as far as arresting and jailing personnel as there are already so many people in jail but something needs to be done.

Mr Steenkamp (NP) said that there are no proper internal controls.

A member of the ANC suggested that the incidents were very serious and the Committee needs to have a look at the base (Tembe).

Mrs Modise (ANC) suggested that the problem is laxity. The Committee needs to look at the management of the base, why it is weak and where the weapons are going to. She does not agree with Mr Ferreira.

A member of the ANC interjected that in the old South Africa personnel would have been jailed for sabotage under the same circumstances.

Mr Yengeni (ANC) said that firm measures should be in place for the perpetrators. He felt that it is unfortunate that there is no consensus in this Committee on the arrest and suspension of the commander and personnel in charge at the base. He asked what would happen if the weapons were used the next day in a massacre. But he did not wish to push for consensus. The disappearance of arms is a national crisis and the Committee needs to do something. The Committee will not issue a statement but the Committee would visit the base.

Briefing on Defence Strategic Packages

Mr Yengeni (ANC) informed the Committee that he had received a memorandum from Mr S Shaikh (Secretary for Defence: Director General) and read it out:

Briefing on Defence Strategic Packages

1. It is regretted that the Department of Defence and Armscor are not able to present to the Committee the progress made thus far regarding the Defence Strategic Packages.

The Minister of defence has undertaken together with the Ministers of Trade and Industry and Public Enterprises to steer the Defence Strategic Packages at a Cabinet Committee Level.

3. All political and national considerations will therefore be addressed by the Minister of Defence and his Cabinet colleagues.

4. The Minister humbly requests that your committee redirects their requirements for a briefing on the Defence Strategic Package to the Defence Strategic Package to his office.

Mr Marais (NP) asked what the consequences of this would be. Would there be a presentation at a later stage or would the Committee not be further involved.

Mr Koornhof (NP) commented that the Committee is marginalised by this. The Committee is part and parcel of the process and must be informed. This is particularly so in this case as the acquisition of equipment if very important.

Mr Mashimbye (ANC) said that information is needed and this must be communicated to Armscor.

Mrs Modise (ANC) said that there is a pattern developing to keep the Committee out of matters. Mr Kader Asmal's committee is also keeping the Committee out. Information is withheld from the public. The Committee needs to be firm about this.

Mr Yengeni (ANC) said the memorandum from Mr Shaikh is out of sync with the Committee. He will convey the sentiments of the Committee to the Minister of Defence. This is not the way the Committee deals with the Department on matters. The Committee needed an explanation from the Minister.

Mr Koornhof (NP) said that Parliament will go into recess at the end of next week and reconvene on 20 July. By then the result of the package will be known. Therefore the Committee has a problem with time.

Mr Yengeni (ANC) responded that the Committee needs to meet next week or have a special meeting thereafter either in Cape Town or Pretoria.

Budget Cycle:

Mr April, Mr Fourie, Mr Bude and Mr Barry of the Department of Defence were present. Mr April gave a short introduction and Mr Fourie gave the presentation.

Budgeting starts at unit level and is consolidated at several senior levels and is therefore a lengthy process. At senior level it can be amended and given back to lower level for replanning. The present budget is R9.7 billion of which 6 billion are non-discretionary funds for salaries, uniforms etc and 3.5 billion discretionary funds for the Defence Force to do their job. The budget does not make provision for inflation, such provision is made by the Department of Finance, and does not make provision for changes in the exchange rate. The Department of Finance adjusts the figures according to their expectations on the change of the exchange rate. When there is a budget cut, then replanning has to take place at unit level. The same computer programme is used for the budget, budget control and appropriation.

The budgeting process takes three years.

It starts in January in the financial Year -3 (financial year is April to March) until September in the Year -2 with provisional planning by Budgeting Authorities (commanding officers) to develop and provide own guidelines and direction (for outputs from their units). From October in the Year -2 to July in the Year -1 the FMS cycle is open for inputs and from August in the Year -1 to March in the Year -1 the FMS is finalised.

From October Year -2 to November Year -2 environmental analysis and strategy formulation take place. In December strategy and guidelines are issued. From January Year -2 to March Year -2 preparation and submission of Estimates of Expenditure by Budgeting Authorities are undertaken. From April Year -1 to May in Year -1 consolidation and submission of Estimates of Expenditure by C Fin are undertaken as well as approval by DSC and CoD. From June to July Blue Books and ten year plans are finalised. From August to December approval of Budget by Department of State Expenditure, Budget Committee, Minister of Finance and Cabinet. Final allocation and provisional expenditure guidelines for Years 1 and 2. In January printers proofs are prepared and submitted. In February an explanatory memorandum is prepared and submitted. In March approval by Parliament. From April to September inYear 0 first financial control report and from October to December the second financial control report.

The budget cycle starts mid May. The budget approved by the Minister of Finance is then submitted to the Department of State Expenditure. The budget cycle lasts until mid March the following year.

The latest redesign of the budget due to budget cuts was taken at corporate level, not unit level. This is not the ideal situation.

Members of the Committee could then ask questions and make suggestions.

Mr Koornhof (NP) asked how the Medium Term Expenditure Framework affects the budget and that the Committee needed that information.

Mr Fourie answered that the MTEF is provisional and the budget will be allocated according to affordability.

Mr Selfe (DP) asked about flexibility the Department of Defence has within its budget.

Mr Fourie answered that 57% of the budget was earmarked for salaries and that severance packages were needed for flexibility.

Mr Marais (NP) asked who decided where to cut the defence budget when it is necessary and whether the Department of Defence had the personnel to communicate the concerns of the Department of Defence appropriately to the personnel of the Department of Finance, in the light that the budget was cut by 3/4 billion Rand.

Mr Fourie answered that recommendations are made by the personnel of the Department on budget reallocations and that that the Department of Defence tries to obtain the best budget possible.

Mr Radue (NP) suggested that the Committee should make input into the budget in May.

Mr Fourie answered that this is done best in August of that year.

Mr Yengeni (ANC) requested that the Committee be briefed in May with a report with recommendations.

Mr Selfe (DP) said that the Committee needed the operational budget and the information Mr Koornhof asked for (effect of the MTEF on the budget).

The meeting was then closed by Mr Yengeni at 12h30.

Present:

Mr HM Fazzie (ANC), Mr TM Goniwe (ANC), Mrs ZA Kota (ANC), Mr SP Makwetla (ANC), Mr JM Mahimbye (ANC), Mrs TR Modise (ANC), Mr RS Molekane (ANC), Mr TS Yengeni (ANC, Chair), Mr RP Zondo (ANC), Mr DV Bloem (ANC), Mrs JE Sojibu (ANC), Mr NL Diale (ANC), Mr JA Marais (NP), Col NG Ramaremisa (NP), Dr PJ Steenkamp (NP), Mr ET Ferreira (IFP), Mr MA Mncwango (IFP), Dr GW Koornhof (NP, NCOP), Mr RJ Radue (NP, NCOP), Mr J Selfe (DP)