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Defence Department of Defence 1 Information Brief to the Portfolio Committee on Defence Department of Defence’s 2007/08 MTEF budget (Vote 20). Presented.

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Presentation on theme: "Defence Department of Defence 1 Information Brief to the Portfolio Committee on Defence Department of Defence’s 2007/08 MTEF budget (Vote 20). Presented."— Presentation transcript:

1 Defence Department of Defence 1 Information Brief to the Portfolio Committee on Defence Department of Defence’s 2007/08 MTEF budget (Vote 20). Presented by Mr B.J. Engelbrecht Director Budgeting

2 Defence Department of Defence 2 INTRODUCTION Planning and Budgeting guidelines – Sep 05 Plan and budget scrutiny – May/Jun 06 MTEC submission with Policy proposals to NT – Aug 06 MTEC deliberations – Sep 06 Final letter of allocation – Feb 07.

3 Defence Department of Defence 3 AIM To present Defence’s 2007/08 budget as incorporated in the 2007 Estimate of National Expenditure and tabled by the Minister of Finance on 21 February 2007 to members of the Portfolio Committee on Defence.

4 Defence Department of Defence 4 SCOPE Aim. Historical trends. MTEC Submission and outcome. Vote 20 Budget allocations and trends. Probable changes to structure. Conclusion. Questions/Discussions.

5 Defence Department of Defence 5

6 Defence Department of Defence 6

7 Defence Department of Defence 7 DOD Budget Analysis Declined from 15,5% of GE (1989) to projected 4,4% in 2009 Declined from 4,4% of GDP (1989) to projected 1,2% in 2009

8 Defence Department of Defence 8 DOD HR BUDGET Budget principle – (HR Commitment) 19% (89) → 58% (98) → 35% (02) → projected 40% (09) Changes to accounting policy – impact MSDS policy impact Impact of incentive schemes Perception

9 Defence Department of Defence 9

10 Defence Department of Defence 10 MTEC SUBMISSION SerPolicy Proposals (Options)07/08 (Rm) 08/09 (Rm) 09/10 (Rm) 1General Modernization Capacity Strategic Airlift Capability 489841 868 Intelligence Systems 126167129 Op Vehicles Total 345 519 432 1 583 500 2 497 2ICS Renewal (Deficit last year) (New Requirement) 466 150 373 75 208 295 3Infrastructure (Facilities) (SAMHS - OECP) 341 186 28 0 194 0 4MSDS (Army) (SAMHS – OECP) 317 99 214 99 202 99 5Landing Ships000 6Works Regiment Concept000 7Total1 6121 9993 287

11 Defence Department of Defence 11 2007/082008/092009/10 2006 MTEF ALLOCATIONS Departmental baseline CHANGES TO BASELINE Salary Adjustments Military Skills Development Remuneration of Health Professionals Health Support General modernisation capacity Strategic Airlift Capability Intelligence Capability Operational Vehicle Fleet Strategic Munitions Foreign exchange rate adjustments 24 665 776 1 256 479 10 000 50 000 14 000 300 000 48 000 100 000 152 000 - 882 479 25 733 754 2 282 600 21 000 100 000 45 000 1 000 000 984 000 8 000 - 1 116 600 25 925 770 2 706 000 79 000 300 000 77 000 2 000 000 1 896 000 50 000 54 000 250 000 - 2007 MTEF ALLOCATIONS25 922 25528 016 35428 631 770 VOTE 20: DEFENCE MTEF ALLOCATIONS: 2007/08 – 2009/10 (Final Letter of Allocation from NT)

12 Defence Department of Defence 12

13 Defence Department of Defence 13 2007 MTEF Baseline Allocation per Economic Classification

14 Defence Department of Defence 14 2007 MTEF Baseline Allocation per Main Programme

15 Defence Department of Defence 15 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) Salary Adjustments

16 Defence Department of Defence 16 Programme 1: Administration Admin 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.

17 Defence Department of Defence 17 Programme 2: 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 art equipment.

18 Defence Department of Defence 18 Programme 3: 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.

19 Defence Department of Defence 19 Programme 4: 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.

20 Defence Department of Defence 20 Programme 5: Military Health Support 10,6% annual average growth over MTEF 14,3% increase in Strategic Direction (06 to 07) Increased staff levels World Military Golf Championships (CISM) 23,1% increase in Specialist/Tertiary sub-programme (06 to 07) Skills allowance Dignitary ward at 1 Mil & 2 Mil Increased costs of referred patients Ambulance & support vehicles MTEF increase of 19,6% and 10,8% in the Specialist/Tertiary & Training sub-programmes respectively Increased MSDS intake Trg of MSDS members in emergency care for 2010. Decrease of 11,6% in Product Support - internal relocation to Area & Spec/Tertiary to alleviate drug shortages.

21 Defence Department of Defence 21 Programme 6: 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.

22 Defence Department of Defence 22 Programme 7: 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

23 Defence Department of Defence 23 Programme 8: Force Employment 7% average annual growth over MTEF period Special Operations increase with 13,7% on average over MTEF period. Personnel retention (Incentive scheme) Acquisition of specialised equipment Decrease in Support to the People is due to the gradual withdrawl of support to the SAPS. Regional Security Increase in OP MISTRAL due to replacement of equipment. OP 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 operations environment.

24 Defence Department of Defence 24 Programme 9: Special Defence Account 1,1% growth over MTEF period (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

25 Defence Department of Defence 25

26 Defence Department of Defence 26 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) 1,1941,10292.33%1,19492.33%39

27 Defence Department of Defence 27 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) 55314225.75%18875.66%6

28 Defence Department of Defence 28 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) 4,2522,95369.44%3,61681.66%1,595 24

29 Defence Department of Defence 29 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) 5,0503,43467.99%3,130109.71%42

30 Defence Department of Defence 30 OBLIGATI ON (Rm) ACTUAL PERFORMANC E 2006-12-31 (Rm) PERF VS OBLIG % CUMULATIVE PLANNED PERFORMANC E 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNED % CLAIMS UNDER CONSIDE- RATION (Rm) 2,9411,81161.57%1,97991.48%41

31 Defence Department of Defence 31 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) 1,12170863.15%74794.83%23

32 Defence Department of Defence 32 Defence Industrial Participation 31 December 2006 PROJECTOBLIGATIO N (Rm) ACTUAL PERFORMANC E 2006-12-31 (Rm) PERF VS OBLIG % CUMULATIVE PLANNED PERFORMANC E 2007-03-31 (Rm) CUMUL. ACTUAL vs PLANNE D % CLAIMS UNDER CONSIDE- RATION (Rm) CORVETTE 2,9411,81161.57%1,97991.48%41 SUBMARINE 1,12170863.15%74794.83%23 LUH 1,1941,10292.33%1,19492.33%39 HAWK 4,2522,95369.44%3,61681.66%1,595 GRIPEN 5,0503,43467.99%3,130 109.71 %42 MARITIME HELICOPTER 55314225.75%18875.66%6 TOTAL (ZAR) 15,11110,14967.17%10,85393.51%1,747

33 Defence Department of Defence 33 Possible changes to programmes C HR (Administration Programme) which will include the following elements. Joint Training Service Corps HR Support Centres EO & AA Elements of CPP Admin: The roll-down of some elements of FMD to the services J Sup: Roll-down of certain CMI elements to the services. Certain 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.

34 Defence Department of Defence 34 CONCLUSION Defence is supporting Government’s Plan of Action as alluded to in the Strategic Business Plan. Defence’s budget composition reflects cluster priorities. Capital renewal of Landward Defence and Military Health Service prime mission equipment remains mainly unfunded. Defence has the ability to expend additional funding through capital investment in the replacement of prime mission equipment subject to defence related industry capability and capacity.

35 Defence Department of Defence 35

36 Defence Department of Defence 36 This slide was intentionally left blank

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