Information Brief to the NATIONAL COUNCIL OF PROVINCES

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Information Brief to the NATIONAL COUNCIL OF
PROVINCES SELECT COMMITTEE ON CONSTITUTIONAL
AFFAIRS AND SECURITY Department of Defences
2007/08 MTEF budget(Vote 20)Presented by Mr
B.J. EngelbrechtDirector Budgeting4 JUNE 2007
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INTRODUCTION

• Planning and Budgeting guidelines Sep 05.
• Plan and estimate of expenditure scrutiny
  May/Jun 06.
• MTEC submission with Policy proposals to NT Aug
  06.
• MTEC deliberations Sep 06.
• Final letter of allocation Feb 07.
• Budget expenditure starts on 1 Apr 07.
• In-year unknowns realignment.

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AIM

• To present Defences 2007/08 Estimate of
  Expenditure as incorporated in the 2007 Estimate
  of National Expenditure and tabled by the
  Minister of Finance on 21 February 2007 to
  members of the National Council of Provinces
  Select Committee on Constitutional Affairs and
  Security.

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SCOPE

• Historical perspective.
• MTEC Submission and outcome.
• Vote 20 Budget and trends per programme.
• In-year changes to structure.
• Defence Industrial Participation.
• Conclusion.
• Questions/Discussions.

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Historical Perspective
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4,6
1.2
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MTEC Submission and Outcome
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MTEC SUBMISSION
Ser Policy Proposals (Options) Policy Proposals (Options) 07/08 (Rm) 08/09 (Rm) 09/10 (Rm)
1 General Modernization Capacity Strategic Airlift Capability 48 984 1 868
1 General Modernization Capacity Intelligence Systems 126 167 129
1 General Modernization Capacity Operational Vehicles Total 345 519 432 1 583 500 2 497
2 ICS Renewal (Deficit previous year) (Revised Requirement) ICS Renewal (Deficit previous year) (Revised Requirement) 466 150 373 75 208 295
3 Infrastructure (Facilities) (SAMHS - OECP) Infrastructure (Facilities) (SAMHS - OECP) 341 186 28 0 194 0
4 MSDS (Army) (SAMHS OECP) MSDS (Army) (SAMHS OECP) 317 99 214 99 202 99
5 Total Total 1 612 1 999 3 287
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MTEF ALLOCATIONS 2007/08 2009/10 (Final Letter
of Allocation from NT) VOTE 20 DEFENCE
2007/08 2008/09 2009/10
2006 MTEF ALLOCATIONS Departmental baseline CHANGES TO BASELINE Salary Adjustments Military Skills Development Landward Defence Military Health Support Remuneration of Health Professionals General modernisation capacity Strategic Airlift Capability Intelligence Capability Operational Vehicle Fleet Strategic Munitions Foreign exchange rate adjustments 24 665 776 24 665 776 1 256 479 10 000 50 000 38 000 12 000 14 000 300 000 48 000 100 000 152 000 - 882 479 25 733 754 25 733 754 2 282 600 21 000 100 000 68 000 32 000 45 000 1 000 000 984 000 8 000 8 000 - 1 116 600 25 925 770 25 925 770 2 706 000 79 000 300 000 201 000 99 000 77 000 2 000 000 1 896 000 50 000 54 000 250 000 -
2007 MTEF ALLOCATIONS 25 922 255 28 016 354 28 631 770
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Vote 20 Budget trends
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2007 MTEF Baseline Adjustments per Economic
Classification
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2007 MTEF Baseline Allocation per Main Programme
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Budget Overview

• Annual growth over MTEF
• 11,9 (excl SDP)
• 6,2 (incl SDP)
• 03/04 Rb 20,5 to Rb 25,9 in 07/08 to Rb 28,6 in
  09/10.
• Additional funding Rb 1, 26 (07/08), Rb 2,3
  (08/09) and Rb 2,7 (09/10)
• General modernisation capability
• MSDS
• Foreign exchange rate adjustments
• Remuneration of Health professionals
• Strategic Munitions (09/10 onwards)
• Salary Adjustments

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Administration

• Administration Programme has doubled due to
  devolution of funds from NDPW.
• Property Management 12,3 average growth over
  MTEF.
• Departmental Direction 27,8 increase due to
  relocation of NCACC inspectorate.
• DFR increase due to increased representation
  abroad.

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Landward Defence

• 6,1 annual average increase over MTEF
• MSDS
• Op Veh fleet modernisation
• 41,6 increase in General Training
• Expansion of conventional reserves training
• MSDS member intake
• 12,6 and 11,4 increase in Artillery Air
  Defence Artillery respectively is due to the
  commissioning of new generation artillery
  equipment.

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Air Defence

• 8,2 annual average growth over MTEF.
• Base Support Capability 31,32 of programme
  increase with 6,5 over MTEF for integrating new
  training and fighter aircraft.
• Systems integrity.
• Infrastructure.
• Training.
• Increase in Strategic and Operational Direction
  sub-programmes over MTEF are due to acceptance
  and integration of light utility helicopters and
  Hawk training aircraft.

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Maritime Defence

• 8,2 annual average growth over MTEF.
• Decrease of 52,6 in Combat Capability and
  increase of 118,8 in Logistic Capability are
  because all items with log correlation are placed
  under Logistic Capability subprogramme.
• Increase of 15,3 in the Base Support Capability
• Increased M R of vehicles purchased in 2005/06.
• Increased use of contract workers in messes.

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Military Health Support

• 10,6 annual average growth over 2007 MTEF period
• 14,3 increase in Strategic Direction
• Increased staff levels
• World Military Golf Championships
• 23,1 increase in Special/Tertiary Health Service
  
• Skills allowance
• Dignitary ward at 1 Mil 2 Mil
• Increased costs of referred patients
• Ambulance support vehicles
• 19,6 and 10,8 increase over the 2007 MTEF in
  the Special/Tertiary Health Service Military
  Health Training Capability respectively
• Increased MSDS intake
• Training of MSDS members in emergency care for
  2010.
• Decrease of 11,6 in Product Support Capability -
  internal relocation to Area Spec/Tertiary to
  alleviate pharmaceutical shortages.

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Defence Intelligence

• 623,2 increase in Strategic Direction is due the
  centralisation of personnel related expenditure.
• Decrease of 22,7 in Operations is due to certain
  commodities relocated to the Support Services
  subprogramme.
• The 13,9 increase in Support Services is due to
  increased emphasis on recruitment, training and
  infrastructure rejuvenation at training units.

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Joint Support

• 12 average annual growth over MTEF
• Increase of 21,3 in the Joint Logistic Services
  over MTEF is due to Infrastructure investment
• 2007/08 Rm 80, 2008/09 Rm 230
• Increase of 11,3 in CMI Services over MTEF is
  due to information and communication technology
  enhancements
• 2006/07 Rm 50, 2007/08 Rm 118, 2008/09 Rm 200
• Increase of 17,3 in Joint Training is due to
  additional allocation for
• SA War College
• Warrant Officers Academy
• Training of MSDS officers at the SA Military
  Academy

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Force Employment

• 7 average annual growth over MTEF
• Special Operations increase with 13,7 on average
  over MTEF.
• Personnel retention (Incentive scheme)
• Acquisition of specialised equipment
• Decrease in Support to the People is due to the
  gradual withdrawal of support to the SAPS.
• Regional Security
• Increase in MISTRAL due to replacement of
  equipment.
• FIBRE closes in July 2007 replacement of
  equipment over MTEF
• Increases in Strategic Operational Direction
  are due to the effort to ensure fully staffed
  capabilities in the ops environment.

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Special Defence Account

• 1,1 growth over MTEF (impact of SDPs)
• The Procurement Services sub-programme grow on
  average with 21,1 annually over the MTEF mainly
  due to the strategic airlift capability
• Rm 577 in 07/08
• Rb 1,5 in 08/09
• Rb 1,9 in 09/10
• 25,1 average increase in the Intelligence
  related sub-programme
• Rm 221 in 07/08
• Rm 255 in 08/09
• Rm 307 in 09/10

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In-year changes to programmes

• C HR (Administration Programme) which will
  include
• Joint Training
• Service Corps
• HR Support Centres
• EO AA
• Elements of CPP
• Admin The roll-down of FMD elements to the
  services
• J Sup
• Roll-down of CMI elements to the services.
• Log elements to be moved to the services
• Total programme review underway
• Consolidation of Research and Development focus.
• Transfer Payments
• Establish Defence Evaluation and Research
  Institute.
• Transfer of Naval Dockyard to Armscor.

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Defence Industrial Participation
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30 x Augusta Westland A109
OBLIGA-TION (Rm) ACTUAL PERFOR-MANCE 2006-12-31 (Rm) PERF VS OBLIGA-TION CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
1,194 1,102 92.33 1,194 92.33 39
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4 x AgustaWestland Super Lynx
OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
553 142 25.75 188 75.66 6
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OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
4,252 2,953 69.44 3,616 81.66 1,595
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OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
5,050 3,434 67.99 3,130 109.71 42
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OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
2,941 1,811 61.57 1,979 91.48 41
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3x Type 209 submarines
OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
1,121 708 63.15 747 94.83 23
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Defence Industrial Participation31 December 2006
PROJECT OBLIGATION (Rm) ACTUAL PERFORMANCE 2006-12-31 (Rm) PERF VS OBLIG CUMULATIVE PLANNED PERFORMANCE 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED CLAIMS UNDER CONSIDE-RATION (Rm)
CORVETTE 2,941 1,811 61.57 1,979 91.48 41
SUBMARINE 1,121 708 63.15 747 94.83 23
LUH 1,194 1,102 92.33 1,194 92.33 39
HAWK 4,252 2,953 69.44 3,616 81.66 1,595
GRIPEN 5,050 3,434 67.99 3,130 109.71 42
MARITIME HELICOPTER 553 142 25.75 188 75.66 6
TOTAL (ZAR) 15,111 10,149 67.17 10,853 93.51 1,747
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CONCLUSION

• Defence, through its Strategic Business Plan is
  supporting Governments Plan of Action.
• Defences budget composition reflects cluster
  priorities.
• Capital renewal of Landward Defence and Military
  Health Service remains under funded.
• Defence is able to expend additional funding on
  capital investment and operating cost including
  compensation of employees.

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Discussion Questions
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Left Intentionally Blank