REPORT OF
THE PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS ON BUDGET VOTE 21:
DEPARTMENT OF DEFENCE, DATED 3 MAY 2010
The Portfolio Committee on Defence and Military
Veterans, having considered Budget Vote 21: Department of Defence and Military
Veterans, reports as follows:
1. INTRODUCTION
1.1 The Portfolio Committee on Defence and Military Veterans
considered the 20010/11 Budget of the Department of Defence and Military
Veterans (DODMV) as part of its oversight function over the Department.
1.2 Those appearing before the Committee included Mr T E Motumi
(Acting Secretary for Defence and current Director general of Military Veterans),
Mr T Matanzima (Acting Secretary for Defence) Ms C D M Mutloane (Acting Chief
Financial Officer), Rear Admiral AG
Green (Director : Military Strategy: SANDF), Brigadier General B Leslie
(Director: Planning: SANDF), Col S Palmer (Senior Staff Officer: Strategic
Planning: SANDF), S Pillay (Director:
Maritime Plans, SA Navy), G I Janse Van Rensburg (Senior Staff Officer:
Strategic Plan: Defence Reserves), Mr P Ramsing (Deputy Director: Defence Strategy),
Mr A Visser (Chief of Defence Acquisition), Mr V Sindani (Acting Chief of
Corporate Staff: Department of Defence), Dr M L Ledwaba (Chief Director: Human
Resource Strategy and Policy), Ms M Kibushi ( Chief Director: Legal Services),
Adv N Ntsaluba (Director: Defence Strategy),
Dr T Gamede (Chief of Defence Policy Strategy and Planning) Brigadier
General C H Roux (Director: Army Acquisition: SANDF), Colonel E van der Post
(Acting Director of Planning: SANDF), Mr S D Dladla (Chief Director: Strategic
Management), Mr T Ratsomo (Chief Director: Ministerial Services).
Representatives from the Office of the Auditor-General and National Treasury
also attended the meeting.
1.3 Information contained in the report is based on the
Department’s presentation, the 2010 Estimates of National Expenditure (ENE) as
well as the Strategic Business Plan FY 2010 for 20010/11-2012/113. The report also draws on the departmental
briefings held on 3 and 24 March, as well as meetings held with the Minister of
Defence and Military Veterans on 13 and 22 April 2010.
1.4 The report presents a programme by programme summary of the
DODMV budget and strategic objectives, an overview of the key observations made
by the portfolio committee as well as recommendations.
2. OVERVIEW OF POLICY PRIORITIES FOR 2010/11
FINANCIAL YEAR
2.1 The readiness of the South African National Defence Force in
supporting a developmental state and contributing to the socio-economic development
of
2.2 For the 2010/11 financial year, the Department outlined 14 priorities
as set out by the Minister of Defence and Military Veterans:
·
The
establishment of the Department of Defence and Military Veterans
·
The
rejuvenation and upgrade of the Landward programme
·
Upgrade and
maintenance of infrastructure
·
Improving
the capacity of the Defence Works Regiment
·
Aligning the
Defence Secretariat with its constitutional and legislative mandate
·
The
establishment of the National Defence Force Service Commission and its
supporting structures
·
The
transformation of Armscor
·
The incremental
refocusing of Denel to support defence strategic objectives
·
The
promotion of a culture of good governance
·
The improvement
of information technology with specific focus on the roll-out of the Integrated
Financial Management System (IFMS) and using technology to improve
administration and accountability
·
The redevelopment
of a defence strategy that is aligned to the defence current and emerging needs
·
The
revitalisation of the Reserves
·
The optimal
utilisation of the collateral value of defence capabilities in responding to
the socio-economic needs
·
The
development and implementation of the Community service programme
2.3 Alignment with Government priorities is reflected in the
Department’s involvement in the following Government clusters:
(a)
Justice Crime Prevention and Security
Cluster:
·
Through its focus on border management, the
SANDF will contribute to the safety of all South Africans, which is in line
with its mandate to defend and protect the Republic, its sovereignty,
territorial integrity and national interests and people.
·
The SANDF would structure, budget for and
develop capabilities to execute all responsibilities related to border security.
Military Strategy and force employment would accordingly be adjusted.
(b)
International Relations, Trade and Security
Cluster
·
In terms of the priority to create a better
South Africa and contribute to a safer continent and a better world, Africa and a better world, the Department and
SANDF will focus on those priorities aimed at advancing regional and global
peace, security and sustainability;
·
·
The SANDF will measure its deployments and
participation in peacekeeping missions in terms of its mandate to deploy
forces, whether it is mission ready and trained as well as whether its is
supported and protected by the legal instruments
·
Active steps would be taken to ensure that
regional and continental and international peace and security structures are
capacitated and strengthened by the appropriate deployments of South Africans
into these structures.
2.4 In response
to the State of the Nation Address (SONA) and the ten priorities outlined, the
Department committed itself to the following:
·
In line with building economic and social
infrastructure, the Department will promote partnerships with other organs of state
at local and municipal level to accelerate the delivery of socio economic need
·
The establishment of the Works regiment
would improve the Department’s capacity to maintain defence infrastructure,
contribute to youth development and will empower underutilised defence
personnel.
·
The strengthening of its skills base
remains a priority. The Department intends
restructuring its training capacity will provide greater support to the
Military Skills Development System (MSDS), promote access to [post-secondary
funding as well as access to NQF-linked training opportunities.
·
The Department of Military Veterans will
also be established in the current financial year
·
The departmental civic education programmes
will be intensified, as part of its contribution to a cohesive, caring an
sustainable communities
·
In pursuit of African advancement and
enhanced international co-peration, the Department refers to the promotion of
national indentified outputs that relate to advancement of regional and global
security, peace and sustainability, and will ensure that regional, continental peace
and security structures are capacitated to support the requisite deployments in
peace missions and general military assistance missions. Improved governance of
the SADC’s Specific Defence Security Sector Reform programmes and implementation
of the India-Brazil-South Africa (IBSA ) defence agreements.
·
In terms of building a developmental state,
the DODMV will review the Defence Secretariat and will continue to project
patriotism, understanding of the Code of Conduct.
3. OVERVIEW OF 2010/11 BUDGET AND ALIGNMENT TO
STRATEGIC OBJECTIVES
3.1 Expenditure
trends
3.1.1
The Department received a total budgetary
allocation of R30.7 billion for the 2010/2011 financial year and it is expected
to increase to R36.3 billion in the 2012/13 financial year. The allocated R30.7 billion is significantly
less than the previous year’s allocation and represents a -10.11 percent
decrease in real terms. [Note: The real increase takes into consideration the
inflation target rate of 6.7 percent]
3.1.2
While the defence budget presents 1.14
percent of the gross domestic product (GDP) and is well within the 2 percent
norm as set by the International Monetary Fund (IMF), a decreasing defence
budget could hamper both the SANDF’s ability to meet its obligations
3.1.3 Trends
in the allocations to departmental programmes indicate that the Landward
Defence programme has been allocated the largest portion of the defence budget
(32.5 percent), while the Air Defence programme account for the second largest
share of the budget (19.7 percent). The General Support programme received 12.8
percent of the budget which will be spent on renovation, repair and maintenance
of facilities and infrastructure.
3.1.4 Funding
allocated for compensation of personnel, goods and services costs of
contractors have increased significantly since the 2009/2010 financial year,
while funding for transfers and subsidies to defence agencies decreased.
Compensation for personnel has increased from R12.2 billion in FY 2009/10 to
R13.4 billion in 2010/2011 and is mainly attributed to the increasing number of
MSDS members, the upgrading of the Landward Defence programme as well as
improved remuneration of defence personnel. Allocation for goods and services
also increased from R5 billion to R9.6 billion due to the requirements of the
SA Army to acquire mortars, operational earthmoving capabilities, night visions
and anti-tank capabilities. Contractors will be utilised to assist the
Department in resolving audit qualifications as well as completing the Defence
Update and Defence Strategy, hence the increased allocation of R3.8 billion for
the current financial year compared to the R3.1 billion allocated to it in
FY2009/10. For the same period, transfers and subsidies to defence entities
decreased from R8.07 billion to R5.9 billion and is mainly due to the
cancellation of the A400M Airbus Strategic Airlift Capability contract and the
finalisation of the frigate and submarine projects.
3.2 Allocation per programme
3.2.1 The Administration programme, according to
the Department, facilitates the overall management of the Department and is
responsible for policy development, management and administration and received
R3.2 billion for FY 2010/11. Representing an increase of 6.38 percent from
previous allocation, the budget is expected to increase to R3.9 billion in FY
2012/13. The Human Resource sub-programme received the second largest portion
of the allocation due to the funding required for the establishment of a “management
capability” for military veterans (R20 million), funding for the interim national
defence force service commission and funding for the training of MSDS recruits.
Increases in the budgets of the legal services sub programmes will be utilised
for the implementation of the occupation specific dispensation for legal
practitioners. Limited available funding
for the filling of vacancies means that only 40379 positions out of 51 409
could be filled. The vacancy rate in the Department will thus be 22 percent.
3.2.2 The Force Employment programme provides and
employs defence capabilities (including operational capability) to successfully
conduct operations as well as joint, multinational and interdepartmental
exercises. Receiving an allocation of R1.9 billion, the Department aims to
provide and employ special operations capability in accordance with national
requirements, conduct at least 12 external peace missions per year in
accordance with the requirements to
promote peace and stability, 21 joint interdepartmental and multinational force
preparation exercises over the MTEF period as well as to conduct 4 operations
per year in support of other government departments and in compliance with
international obligations. The largest allocation has been given to the
regional security sub-programme (R1.billion) and represents a 339.69 percent
increase.
3.2.3 Landward Defence provides for prepared
and supported landward defence capabilities for the defence and protection of
South Africa received R9.9 billion - the largest portion of the total defence
budget. These include infantry capability, armoured capability, artillery
capability, air defence artillery capability, engineer capability as well as
signal capability. Funding will be
utilised mostly for the modernisation of landward defence capabilities.
3.2.4 With a
total budget allocation of R6.05 billion, Air
Defence is responsible for providing prepared and supported air defence
capabilities for the defence and protection of South Africa. The total allocation decreased by 44 percent
from the previous financial year partially due to the cancellation of the A400M
Airbus Strategic Airlift capability. Air Combat Capability sub programme
received the largest allocation followed by base support capability
sub-programmes.
3.2.5 The Maritime Defence programme provides
combat-ready and supported maritime defence capabilities for the defence and
protection of South Africa. Funding for its programme reflects a 3.79 percent
real increase, from R1.96 billion in FY 2009/10 to R2.1 billion for FY 2010/12.
This is partially due to the finalisation of the frigates and submarine projects.
The increased budget will provide a sub-surface combat capability of three
submarines in each annual operational cycle, two mine countermeasures systems
in each operational cycle as well as to finance its ongoing hydrographic survey
capability.
3.2.6 Military Health Support provides medical
combat support elements and services and constitutes 9.01 percent of the
Defence budget. With the R2.77 billion allocated to it, a roll-out of a
comprehensive multidisciplinary military health service to approximately 230
000 members annually are expected. It also intends providing health support for
five medical battalion groups, including specialist medical battalions for
deployed and contingency forces.
3.2.7 Defence Intelligence provides defence
intelligence and counter -intelligence capability and consumes the smallest
portion of the budget, i.e 2.1 percent.
3.2.8 General Support provides general support
capabilities and services to the Department and is the third largest programme
in the Department comprising 12.8 percent of the total expenditure. This is in
line with the Departmental priority to address the issues relating to the
conditions of defence facilities. Due to the maintenance and upgrade of defence
facilities and the upgrade of runways ad hardstands at Air force Base
Waterkloof, it is budgeted at R1.1 billion. The repair and maintenance of
defence infrastructure is crucial issue as the Department declares continued
funding constraints has given rise to maintenance backlogs and impact on the operational
readiness of the SANDF and its ability to provide, deploy ad support forces.
4. COMMITTEE
OBSERVATIONS
4.1. Military
Veterans
4.1.1
The Committee notes that while the
establishment of a dedicated department for military veterans has been promulgated,
the formation and operationalisation of the most appropriate departmental
structures remain outstanding. Effective service delivery to military veterans
cannot be realised in the absence of a fully operational department dedicated
to the administration and well-being of military veterans. In this vein the purpose of the R20 million allocations,
timeframes and structure are still unknown.
4.1.2
Improving access to basic services, pension
and employment opportunities are vital to assist military veterans in improving
harsh socio-economic realities. Careful planning and co-ordination of both the
activities of the new Department and utilisation of its budget is essential.
The Committee thus urgently awaits the Strategic Plan of the new department.
4.2
Administration
4.2.1
The Department has repeatedly raised
concerns over its current budgetary challenges and the impact this may have on
the ability of the SANDF to fulfil its mandate. We re-iterate that whilst an
increase in the funding for the Department should be considered, maximum
efficiency and accountability in the planning and use of limited resources are
essential. Vigilant monitoring of the effectiveness of internal controls and
accountability must be prioritised.
4.2.2
Effective planning can only be done once
budgetary plans and expenditure are aligned to an updated defence policy. We remain concerned that an updated defence
policy/strategy is yet to be finalised. Since this document provides a long
term indication of the defence needs, the delays in both finalisation and
implementation mean that effective monitoring of defence activities is limited.
4.2.3
The Department reports that it will use
consultants to finalise the Defence Update and Defence Strategy as well as to
assist with resolving audit qualifications. However, while wide
public/stakeholder consultation in important processes should be encouraged,
greater self-sufficiency and less reliance on consultants are required in areas
that are core to the Department’s mandate.
4.3
Defence
Procurement
4.3.1 The Committee
remains concerned over the potential irregularities in the procurement of
defence equipment and services. While
strategies are needed to ensure maximum transparency in and integrity of
procurement processes, a clearly defined departmental policy which govern all
these processes is critical.
4.4
Border
security
4.4.1
Effective border control is essential to
ensure the safety and security of all South Africans and the Committee is
pleased that borderline security will soon be returned to the SANDF. However more information and interaction with
the Department is needed to assess whether the allocated budget for this
purpose is sufficient. Furthermore, greater clarity is needed on whether the
necessary equipment and infrastructure is available to ensure that the SANDF fulfils
its mandate at South African borders.
4.5. Skills
development and retention
4.5.1
The Military Skills Development System
(MSDS) is a means to rejuvenate and transform the SANDF into a fit,
appropriately skilled and representative defence force. However, little
information is known on the actual impact the MSDS has on employment creation
and skills development and thus greater monitoring is essential.
4.5.2
The Committee supports the modernisation of
the landward defence, but recognises that greater investment in appropriate
training programmes is needed to ensure that the SANDF is capable of
maintaining and operating new equipment.
4.5.3
Given the 22 percent vacancy rate projected
for the 2010/2011 financial year, it is clear that the Department is struggling
to maintain and attract critical skills.
While the Department has developed retention and recruitment strategies,
their effectiveness is doubtful given the continued loss of skills.
4.6 Operational
readiness of the SANDF
4.6.1 The extent to
which the SANDF can maintain and sustain its core capabilities to fulfil its
mandate is unclear, and the Committee will schedule interactions regarding the
combat readiness of the SANDF as a matter of urgency.
4.6.2 The existence
of ageing, obsolete equipment and ammunition in the SANDF is a grave concern.
This not only impacts on the combat readiness of the defence force, but also
means that the safety of soldiers is not guaranteed.
4.6.3 The outflow
of scarce skills from the SANDF is a grave concern especially given the
reported vacancy rate of 22 percent, the South African Air Force’s reduction of
flying hours due to the resignation of ground air crew, as well as the reported
underachievement of sea hours by the South African Navy.
4.7 Facilities
4.7.1 The
Department struggles with maintaining its facilities many of which may no
longer conform to the minimum requirements of the Occupational Health and
Safety Act. The Committee remains concerned over the backlog in the maintenance
and repair of defence facilities and this impacts on the operational readiness
of the SANDF.
4.7.2 The Committee
supports the intention to strengthen the capacity of the Works Regiment and its
potentially positive impact the ability of the defence force to maintain its
own facilities. However, the often strained working relationship between the
Department of Public Works (DPW) and Defence is a grave concern and greater
information is needed regarding the reported transfer of delegations from DPW
to DODMV.
4.8. South
African Defence Industry
4.8.1 A
sophisticated local defence industry is crucial in order for the SANDF to
maintain the necessary state of readiness in the most cost effective manner. It
is therefore crucial that the policy on the defence industry should be
finalised as a mater of urgency.
4.8.2 Little
information is known regarding the transformation of Armscor and the refocusing
of Denel. Greater interaction regarding these matters is thus needed.
5. RECOMMENDATION
5.1.1
The Portfolio Committee recommends that
DODMV budget be approved. Serious challenges identified by the Committee impact
on planning and management of the limited budget allocated to the Department. The Committee will increase its oversight and
monitoring of the DODMV to ensure greater compliance and improved management.
6. APPRECIATION
6.1 The
Committee extends its appreciation for all inputs made by all who appeared
before it.
Report to be considered.