1. 2004/05 Medium Term Expenditure Framework
Department of Defence
2004/05 Medium Term Expenditure Framework

2. SCOPE Aim Expenditure History Defence Challenges
Policy & Budget Priorities
Budget Submission
Policy Options
Conclusion & Discussion

3. AIM
To present the Department of Defence’s Estimate of Expenditure for the 2004/05 MTEF period to the Joint Standing Committee of Parliament on Defence.

4. Expenditure History Item Financial Year (R'000) 2000/01 2001/02
2002/03
Defence Vote
13,909,843
16,052,950
18,844,734
Defence Expenditure
13,900,166
16,044,647
18,835,801
Amount Surrendered
9,677
8,303
8,933
Percentage of Vote
0.07%
0.05%

5. Defence Challenges Affordable & Sustainable Health & Age Profile
Personnel Retention
Reserve Forces
Main Equipment Obsolescence
Infrastructure & Facilities
NEPAD Support
Combat Readiness Levels
Criminality
Information Systems
Exchange & Inflation Rates

6. Defence Policy & Budget Priorities

7. Defence Support for Government’s Diplomatic Initiatives in Africa
African Union Structures
Common Africa Defence & Security Policy
SADC Security Management
High Profile NEPAD Programmes
Sharing Experiences such as Disarmament, Demobilization etc
Donating Excess Equipment
Sharing Learning Opportunities
Opening Military Attaché Offices

8. Defence Support to Regional Security
Potential deployments wrt Post Conflict Reconstruction
Commitment to OP MONUC II, Phase III in the DRC
Commitment to the establishment of an Africa Mission in Burundi
Emergent commitment for the establishment of an African Standby Force

9. Restoration of Defence Capabilities
Renewal of HR Composition
Deployable Combat Readiness Levels
Rebuilding Mobilization Reserves
Disposal of Surplus Stores & Equipment
New Information Technology Systems
M&R of Defence Facilities & Infrastructure

10. Defence Budget
Submission

11. DOD MTEF ALLOCATION: 2004/05 TO 2006/07 (Nominal Terms)
2005/06
2006/07
R'000
20,257,326
22,123,617
22,360,684

12. Defence Allocation per Main Programme: 2004/2005 DoD Budget: R20 257 million
Joint Support million (11,37%)
Military Health Support million (6,44%)
Maritime Defence million (5,39%)
Air Defence million (10,97%)
Landward Defence million (16,42%)
Administration 720 million (3,55%)
Special Defence Account million (39,11%)
Command & Control million (6,02%)
Defence Intelligence 146 million (0,72%)

13. Allocation per Sub-Programme: Administration R720m
Defence Foreign Liaison R 49,4 million (6,9%)
Political Direction R 13,5 million (1,9%)
Policy and Planning R 49,9 million (6,9%)
Departmental Direction R 5,5 million (0,8%)
HR Support Services R 256,9 million (35,7%)
Inspection Services R 37,1 million (5,1%)
Legal Services R 65,5 million (9,1%)
Religious Services R 4,2 million (0.6%)
SANDF Command and Control R 6,3 million (0,9%)
Financial Services R 170,6 million (23,7%)
Acquisition Services R 31,0 million (4,3%)
Corporate Communications R 20,3 million (2,8%)
Reserve Component R 9,5 million (1,3%)

14. CHANGES
Inspection Services increased by 40 per cent from 2003/04 to 2004/05 due to the establishment of the Anti-Fraud Directorate and extra funding allocated for Crime Prevention.

15. Allocation per Sub-Programme: Landward Defence (R3 326m)
Strategic Direction R 180,4 million (5,4%)
Infantry Capability R 1 454,6 million (43,7%)
Armour Capability R 124,3 million (3,7%)
Artillery Capability R102,9 million (3,1%)
Engineering Capability R 178,5 million (5,4%)
Air Defence Artilery Capability R 82,3 million (2,5%)
General Training Capability R 149,6 million (4,5%)

16. CHANGES
The 8,7 per cent, 10,4 per cent and 14,6 per cent increase in the Infantry, Armour and Air Defence Artillery capabilities respectively, is mainly due to the multi-role force design training as to be able to additionally undertake force employment duties in support of internal operations (support to the SAPS). This is necessitated because of the Infantry capability that is deployed in Central Africa.
The 9,8 per cent increase in the Artillery capability is mainly due to the commissioning of the Artillery Targeting Acquisitioning System (GBAT)
The deployments in the DRC and Burundi also causes the Operational Intelligence subprogramme to increase by 9,7 per cent.
The Strategic Direction subprogramme decreases by 10,6 per cent due to the distribution of funds to other capabilities in order to sustain ongoing internal deployments.

17. Allocation per Sub-Programme: Air Defence (R2 222m)
Command Post R 34,0 million (1,5%)
Strategic Direction R 5,8 million (0,3%)
Operational Direction R 27,6 million (1,2%)
Helicopter Capability R 268,2 million (12,1%)
Air Combat and Recce Capability R 196,8 million (8,9%)
Transport and Maritime Capability R 205,1 million (9,2%)
Command and Control Capability R 144,4 million (6,5%)
Base Support Capability R 521,6 million (23,5%)
Training Capability R 226,6 million (10,2%)
Technical Support Services R 489,2 million (22,0%)
Ops Support and Int Capability R 103,0 million (4,6%)

18. CHANGES
The decrease of 62,3 per cent in the Operational Direction is mainly due to the distribution of funds for the incentive scheme to all relevant subprogrammes.
The 57,1 decrease in the Command Post subprogramme is attributed to the closing down of the forward Air Command Posts (FACP) as well as the closing down of the Air Operations Teams (AOT). These personnel will be incorporated under the Base Support capability, hence the increase of 22,8 per cent increase in this subprogramme.
The increase of 61,7 per cent in the Strategic Direction subprogramme is mainly due to the relocation of the Defence Research Centre contract of Rm 2 from the Air Combat subprogramme.

19. Allocation per Sub-Programme: Maritime Defence (R1 093 million)
Maritime Direction Capability R 220,9 million (20,2%)
Maritime Logistic Support Capability R 167,9 million (15,4%)
Base Support Capability R 282,6 million (25,9%)
Maritime Training Capability R 140,7 million (12,9%)
Maritime Combat Capability
R 280,5 million
(25,7%)

20. CHANGES
The immediate focus of the Navy is to allocate resources to the operating budget in preparing for the acceptance of the 3 Patrol Corvettes. This is evident in the 15 per cent increase in the Maritime Combat capability subprogramme over the medium term.
The decrease of 17 per cent in the Maritime Logistic Support capability subprogramme is attributed mainly to the realignment of the personnel allocation due to the closing down of Fleet Maintenance Unit (Durban) and Naval Armament Depot (Durban).
The Maritime Training capability subprogramme increase of 15,8 per cent is mainly attributed to the incorporation of the maritime reserve units into this capability (Rm 10).

21. Allocation per Sub-Programme: Military Health Support (R1 306 million)
Military Health Training R 99,2 million (7.6%)
Strategic Direction R 90,4 million (6,9%)
Military Health Support R 43,8 million (3,4%)
Area Mil Health Services R 442,5 million (33,9%)
Specialist Health Services R 523,03 million (40,1%)
Product Support Capability R 49,3 million (3,8%)
Base Support Capability R 57,4 million (4,4%)

22. CHANGES
The average increase of 42,8 per cent per year over the medium term in the Product Support capability is due to the upkeep of medical stock and equipment at medical depots, which is mainly utilised for deployment purposes.
The increase of 173,2 per cent in the Base Support Capability id due to the establishment of the General Support Base Thaba Tshwane North. This causes the decrease of 14,4 per cent in the Strategic Direction subprogramme, because the base was previously provide for in this subprogramme.
The increase in the Military Health Training subprogramme of 24,9 per cent is due to the renewal drive to train support personnel within the SAMHS to be able to provide an acceptable level of medical service.

23. Allocation per Sub-Programme: Defence Intelligence (R146 million)
Defence Intelligence Support R 134,2 million (92,0%)
Strategic Direction R 0,2 million (0,11%)
Operations R 11,5 million (7,89%)

24. CHANGES
The decrease of 94,7 per cent (Rm 2,7) in the Strategic Direction subprogramme is mainly due to the fact that all foreign related visits are incorporated under the Special Defence Account.
The decrease of 41,5 per cent the Operations subprogramme is attributed to the fact that Defence Intelligence relocated all sensitive activities as well as foreign visits to the Special Defence Account.
The increase of 8,8 per cent in the Defence Intelligence Support Services subprogramme is mainly due to the increased effort by Defence Intelligence to upgrade the South African Intelligence College (SADIC) and the satellite training facility at Fontana as well as the upgrade of the highly deteriorated HQ facility.

25. Allocation per Sub-Programme: Defence Intelligence (R146 million)
Strategic Direction R 4,6 million (0,20%)
Joint Logistic Services R 622,1 million (27,06%)
CMI Service R 816,4 million (35,44%)
Military Policing R 213,3 million (9,26%)
Service Corps R 49,7 million (2,16%)
Acquisition Services R 2,5 million (0,11%)
Joint Training R 101,1 million (4,33%)
Departmental Support R 348,7 million (21,42%)
Assistance R 0,35 million (0,02%)

26. CHANGES
The decrease in the Joint Support Management subprogramme of 21,4 per cent is mainly due to the reallocation of activities to the Joint Logistic Services subprogramme.
The final payment for the relocation of the San community from Schmidtsfrift to Platfontein of Rm 3,6 was done in 2003/04. This is evident in the decrease of 91,1 per cent in the Assistance subprogramme.

27. Allocation per Sub-Programme: Command & Control (R1 219 million)
Peace Missions in Africa R500,0 million (57,43%)
Operational Command and Control R 108,3 million (8,89%)
Special Operations R 135,4 million (11,11%)
Conventional Operations R 275,2 million (22,58%)

28. Allocation per Sub-Programme: SDA (R7 924 million)
Procurement Services R ,2 million (23,16%)
Strategic Defence Procurement R 5 501,9 million (69,44%)
Intelligence Related R 65,4 million (0,83%)
Operating R 521,1 million (6,58%)

29. CHANGES
Procurement Services subprogramme increase by 24.4 per cent, and this can be attributed to the following:
- Additional allocation of Rm 143 for the Combat Support Helicopters.
- Additional allocation of Rm 70 for the upgrade of Casspir armoured personnel carriers.
- Additional allocation of Rm 170 for the new portable ground to air missiles.
The increase of 29,2 per cent in the Intelligence Related subprogramme is mainly due to the fact that Defence Intelligence will conduct all foreign related visits and certain sensitive activities under the Special Defence Account.

30. Allocation per Main Item: DoD Budget (20 257 million)
Compensation of Employees R million (38,36%)
Payments for Capital Assets (Buildings) R 67 million (0,33%)
Goods and Services R million (20,67%)
Transfer Payments R million (40,64%)

31. Allocation per Cost Category Including Strategic Defence Packages: DoD Budget (R20 257 million)
Personnel Expenditure R million (38,36)
Armament Acquisition R million (16,41%)
Operating Expenditure R million (30,47%)
Capital Expenditure R 67 million (0,45%)

32. Allocation per Cost Category Excluding Strategic Defence Packages: DoD Budget (R14 755 million)
Personnel Expenditure R million (52,66%)
Operating Expenditure R million (30,47%)
Capital Expenditure R 67 million (0,45%)
Armament Acquisition R million (16,41%)

33. Operating Funds

34. Defence Policy Options

35. Options Recommended by the National Treasury
Program & Policy option
DEPT BE
1. Peace Support
DRC
315,549
125,000
322,325
129,000
328,825
132,000
Burundi
564,378
373,000
577,044
385,000
599,953
394,000
Medical Consumables
37,950 -
40,040
42,040
Obsolete main medical equipment
43,500
Medical mobilisation unit
18,220
10,550
11,080
Medical task team
15,000
15,830
16,620
Airbase infrastructure
37,500
Special Forces brigade
8,190
5,130
Sub-total
1,040,287
498,000
970,919
514,000
998,518
526,000
2. Military skills development
260,400
596,500
768,800
3. Helicopter systems
Maritime 03/04 projection
391989*
413733*
438,557
Maritime 04/05 projection
260,291
-131,698
216,949
-196,784
448,402
9,845
Maritime Operate
Rooivalk
301,000
313,000
268,000
Rooivalk Operate
78,000
85,000
92,000
379,000
398,000
375,000
277,845
4. Diplomatic initiative
Attaché offices
33,890
19,910
22,290
Presidential aircraft, operate
11,000
23,210
24,370
VVIP hospital ward
10,000
3,500
3,680
54,890
46,620
50,340
General capacity
1,000,000
Total excl SDP
1,734,577
799,999
2,012,039
827,000
2,192,658
1,803,845
SDP 03/04 projection
5,620,744
6,696,685
4,608,293
SDP 04/05 projection
5,342,103
6,045,815
4,018,711
Deficit/savings
-278,641
-651,870
-589,582
2004/05 (RM)
2005/06 (RM)
2006/07 (RM)
300000
200000
300000

36. Changes in the DOD’s allocation since the previous presentation

37. Conclusion
Defence requires a stable Medium Term Expenditure Allocation to:
Finance its ordered commitments
Rebuild capacity
Renew IT systems