Information Brief to the NATIONAL COUNCIL OF PROVINCES’ SELECT COMMITTEE ON CONSTITUTIONAL AFFAIRS AND SECURITY Department of Defence’s 2007/08 MTEF budget (Vote 20) Presented by Mr B.J. Engelbrecht Director Budgeting 4 JUNE 2007 11/22/2018 11/22/2018 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 1

INTRODUCTION Planning and Budgeting guidelines – Sep 05. 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 2

11/22/2018 11/22/2018 AIM To present Defence’s 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 3

SCOPE Historical perspective. MTEC Submission and outcome. 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 4

Historical Perspective 11/22/2018 11/22/2018 Historical Perspective 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 5

4,6% 1.2% 11/22/2018 11/22/2018 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 6

MTEC Submission and Outcome 11/22/2018 11/22/2018 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 7

Policy Proposals (Options) 11/22/2018 11/22/2018 MTEC SUBMISSION Ser Policy Proposals (Options) 07/08 (Rm) 08/09 (Rm) 09/10 (Rm) 1 General Modernization Capacity Strategic Airlift Capability 48 984 1 868 Intelligence Systems 126 167 129 Operational Vehicles Total 345 519 432 1 583 500 2 497 2 ICS Renewal (Deficit previous year) (Revised Requirement) 466 150 373 75 208 295 3 Infrastructure (Facilities) (SAMHS - OECP) 341 186 28 194 4 MSDS (Army) (SAMHS – OECP) 317 99 214 202 5 1 612 1 999 3 287 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 8

MTEF ALLOCATIONS: 2007/08 – 2009/10 (Final Letter of Allocation from NT) VOTE 20: DEFENCE 11/22/2018 11/22/2018 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 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 2 282 600 21 000 68 000 32 000 45 000 1 000 000 984 000 8 000 1 116 600 25 925 770 2 706 000 79 000 201 000 99 000 77 000 2 000 000 1 896 000 54 000 250 000 2007 MTEF ALLOCATIONS 25 922 255 28 016 354 28 631 770 Govt PoA Cluster Priorities DOD Priorities 2007_NCOP_Bud_Brief 2007_NCOP_Bud_Brief.ppt 2007_PCD_Bud_Brief_short.ppt 9

Vote 20: Budget & trends 11/22/2018 11/22/2018 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 10

2007 MTEF Baseline Adjustments per Economic Classification 11/22/2018 11/22/2018 2007 MTEF Baseline Adjustments per Economic Classification 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 11

2007 MTEF Baseline Allocation per Main Programme 11/22/2018 11/22/2018 2007 MTEF Baseline Allocation per Main Programme 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 12

Budget Overview Annual growth over MTEF 11,9% (excl SDP) 11/22/2018 11/22/2018 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 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 13

11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 14

Landward Defence 6,1% annual average increase over MTEF MSDS 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 15

Air Defence 8,2% annual average growth over MTEF. 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 16

Maritime Defence 8,2% annual average growth over MTEF. 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 17

Military Health Support 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 18

11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 19

Joint Support 12% average annual growth over MTEF 11/22/2018 11/22/2018 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 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 20

Force Employment 7% average annual growth over MTEF 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 21

Special Defence Account 11/22/2018 11/22/2018 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 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 22

In-year changes to programmes 11/22/2018 11/22/2018 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. 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 23

Defence Industrial Participation 2007_NCOP_Bud_Brief

30 x Augusta Westland A109 1,194 1,102 92.33% 39 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% 39 2007_NCOP_Bud_Brief

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 2007_NCOP_Bud_Brief

24 x BAE Hawk LIFT 24 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 2007_NCOP_Bud_Brief

28 x SAAB Gripen JAS39 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 2007_NCOP_Bud_Brief

4 x MEKO A-200 Patrol Corvette 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 2007_NCOP_Bud_Brief

3x Type 209 submarines 1,121 708 63.15% 747 94.83% 23 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 2007_NCOP_Bud_Brief

Defence Industrial Participation 31 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% 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 2007_NCOP_Bud_Brief

CONCLUSION Defence, through its Strategic Business Plan is supporting Government’s Plan of Action. Defence’s 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. 2007_NCOP_Bud_Brief

Discussion & Questions 11/22/2018 11/22/2018 2007_NCOP_Bud_Brief 2007_PCD_Bud_Brief_short.ppt 2007_NCOP_Bud_Brief.ppt 33

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