26
PRESENTATION TO THE PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS MAY 2012 PRESENTATION TO PCD DEPARTMENTS OF DEFENCE and MILITARY VETERANS VOTE 22: 2012 BUDGET VOTE 1
PRESENTATION TO THE PORTFOLIO COMMITTEE ON DEFENCE AND
MILITARY VETERANS
MAY 2012
PRESENTATION TO PCDDEPARTMENTS OF DEFENCE and MILITARY VETERANSVOTE 22: 2012 BUDGET VOTE
1
SCOPE
• Aim.
• Introduction.• Budget Information:
– Department
– Per programme
• Baseline reductions• Revenue• Concluding remarks.
2
AIM
To present to the Portfolio Committee on Defence and Military Veterans, Vote 22 for the 2012/13 MTEF period as per the 2012 Estimate of National Expenditure tabled by the Minister of Finance on 22 February 2012.
3
2012/13 2013/14 2014/15R'000 R'000 R'000
Initial Defence Baseline Allocation 37,371,242 39,702,174 42,084,304+ Additional Funding Received 638,207 773,635 911,026 Salary Improvements 283,207 315,635 351,828 All Services and Divisions
Strategic Defence Procurement 150,000 200,000 250,000 Defence Materiel Division
Military Ombudsman 5,000 8,000 10,000 Office of the Minister
Border Safeguarding 200,000 250,000 299,198 Joint Operations Division
- Budget Reductions -516,495 -531,149 -663,221
Reducing MSDS -495,305 -531,149 -663,221 SA Army, SAAF, SA Navy, SAMHSLog Div, MP Div
Saving on Health and Protection Function -21,190 0 0 SAMHS
Final Defence Baseline Allocation 37,492,954 39,944,660 42,332,109
Item Remark
Vote 22: Final allocation for the FY 2012/13 as received
from National Treasury on 25 November 2011
4
5
BASELINE REDUCTIONS
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15R Million R Million R Million R Million R Million R Million R Million
2008/09 23 50 99 0 0 0 02009/10 450 544 596 0 0 02010/11 447 627 624 0 02011/12 507 568 549 02012/13 516 531 663TOTAL 23 500 1,090 1,730 1,708 1,080 663
MTEF Cycle
Vote 22: Allocation per Main Programme: FY 2012/13
Budget increases from Rb34 in FY 11/12 to Rb37 in FY 12/13 to Rb40 (FY 13/14) and Rb42 in FY 14/15 at an annual average of 7.75%.For FY 12/13 the budget is estimated to be approximately 1.2% of projected GDP for the same period.Force Employment increases due to additional allocation for border safeguarding
Landward Defence increases due to Landward Defence renewal projects, procurement of ammunition and maintenance of operational vehicles.
Maritime Defence increase due to maintenance and repair of the frigates and submarines as well as provisions for hydrographic and offshore patrol vessels
General Support increase due to budget baseline adjustment of Defence Works Formation and a non‐recurrent provision in 2012/13 for the write‐off of unauthorised expenditure that occurred in 1997/98 as per SCOPA resolution.
6
2011/12 2012/13 2013/14 2014/15R'000 R'000 R'000 R'000
Administration 3,718,428 3,730,776 4,040,659 4,262,656 Force Employment 2,332,012 2,670,902 2,959,205 3,200,673 Landward Defence 11,328,608 12,686,731 13,751,279 14,253,986 Air Defence 6,355,776 6,749,665 7,204,878 7,709,470 Maritime Defence 2,564,677 2,551,307 2,755,491 3,198,209 Military Health Support 3,244,263 3,316,507 3,515,105 3,692,513 Defence Intelligence 661,636 709,663 740,475 778,507 General Support 4,143,687 5,077,403 4,977,568 5,236,095 TOTAL 34,349,087 37,492,954 39,944,660 42,332,109
Main Programme
Vote 22: Allocation per Economic Classification: FY 2012/13
Compensation of Employees represents 50.6% while Goods and Services amounts to 29.8% of total budget.Increases in compensation of employees provides for the military and reserve force salary dispensations as well as average salary increases of 5% and average pay progression of 1,5 to 2%, allocated annually during April and July of each year.
Relatively low growth in goods and services due to decrease in MSDS
Increases in transfers and subsidies are related to the development and delivery milestones of armament acquisition projects
Payments for capital assets increase due to procurement of logistic support vehicles by the SA Army
Once‐off provision for payment for financial assets in 2012/13 is for the write‐off of unauthorised expenditure that occurred in 1997/98
7
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 28,090,710 30,156,953 31,784,511 33,297,244
Compensation of Employees 17,555,296 18,967,786 20,251,854 21,364,171
Goods and Services 10,535,414 11,189,167 11,532,657 11,933,073
Transfers and Subsidies 5,907,281 6,376,133 7,548,372 8,393,426
Payment for Capital Assets 351,096 622,164 611,777 641,439
Payment for Financial Assets 0 337,704 0 0
TOTAL 34,349,087 37,492,954 39,944,660 42,332,109
Economic Classification
8
TRANSFER PAYMENTS
2011/12 2012/13 2013/14 2014/15R'000 R'000 R'000 R'000
Special Defence Account 5,973,388 5,260,016 6,379,685 7,157,973Armscor 820,871 914,753 966,989 1,030,776SASSETA 14,908 16,656 17,792 18,765Reserve Force Council 5,917 6,213 6,523 6,850Households 162,528 127,286 126,433 125,569Department of Military Veterans 0 51,207 50,941 53,488St Johns Ambulance Brigade 400 0 0 0TOTAL 6,978,012 6,376,131 7,548,363 8,393,421
Transfer Payment Recipient
Initial decrease in the transfer to the Special Defence Account is due to the moving of funds within the Air Defence programme from armament acquisition to the maintenance of air capabilities
Increase in the transfer payment to Armscor is due to additional allocations provided by C Navy to ensure sustainability of the Naval Dockyard and the Institute for Maritime Technology
DMV for the first time classified as transfer payment.
9
REVENUE
2011/12 2012/13 2013/14 2014/15R'000 R'000 R'000 R'000
Sales of Goods & Services produced by the Department 261,222 289,804 294,153 300,035 Sales of Scrap, Waste, Arms and Other Used Current Goods 21,144 18,377 18,653 19,026 Transfers Received 3,668,529 168,558 171,086 174,508 Fines, Penalties and Forfeits 11,796 3,720 3,776 3,851 Interest, Dividends and Rent on Land 2,597 2,545 2,583 2,635 Sales of Capital Assets 28,500 54,211 55,025 56,125 Transactions in Financial Assets and Liabilities 66,023 246,990 253,654 258,728
TOTAL 4,059,811 784,205 798,930 814,908
Receipts
The large provision for transfers received in 2011/12 reflects the once-off reimbursement by Airbus due to the cancellation of the A400M contract
The increase in transaction in financial assets and liabilities is based on expected reimbursements for peace missions
A
d
m
i
n
i
s
t
r
a
t
i
o
n
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Ministry 56,318 64,965 69,864 74,751
Departmental Direction 39,134 55,667 58,149 61,209
Policy & Planning 95,500 103,877 109,171 114,367
Financial Services 278,913 281,657 293,617 306,759
HR Support Services 595,902 614,659 639,308 666,089
Legal Services 162,580 175,258 184,604 196,560
Inspection Services 70,443 77,987 81,593 85,451
Acquisition Services 53,595 46,115 49,128 51,287
Communication Services 31,970 31,408 32,558 34,042
SANDF Command & Control 110,884 117,085 121,574 126,692
Religious Services 9,752 11,652 12,220 12,779
Defence Reserve Direction 18,097 16,856 17,648 18,573
Defence Foreign Relations 188,020 196,982 207,750 217,991
Office Accommodation 1,961,950 1,885,401 2,112,534 2,242,618
Military Veterans Management 45,370 51,207 50,941 53,488
TOTAL 3,718,428 3,730,776 4,040,659 4,262,656
Subprogramme
Budget increases from Rb3.71 in FY 11/12 to Rb3.73 in FY 12/13 to Rb4.40 (FY 13/14) and Rb4.26 in FY 14/15 at an annual average of 5.05%.Increases in Ministry due to additional allocation for establishment of Military Ombudsman
Increase in Departmental Direction due to function shift of supply chain office
Increase in Inspection Services is due to provision for closing down audits
Increase in SANDF Command and Control is due to staffing of organisational structures at the DOD HQ Unit
Decrease in Acquisition Services due to function shift of supply chain office
Decrease in Office Accommodation due to utilization of accommodation charges funding to establish 10
Administration
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 3,672,851 3,624,512 3,931,670 4,148,470
Compensation of Employees 1,256,319 1,301,586 1,373,615 1,440,233
Goods and Services 2,416,532 2,322,926 2,558,055 2,708,237
Transfers and Subsidies 32,148 90,116 91,327 94,730
Payment for Capital Assets 13,429 16,148 17,662 19,456
TOTAL 3,718,428 3,730,776 4,040,659 4,262,656
Economic Classification
Decrease in goods and services reflects the decreased accommodation charges being utilised for the Defence Works Formation
Increase in transfers and subsidies reflects the transfer payment for the Department of Military Veterans and an increased provision for SASSETA based on the department’s increased payroll
11
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Strategic Direction 109,580 109,391 113,790 120,247
Operational Direction 264,019 233,648 246,155 260,738
Special Operations 553,798 631,762 628,131 681,583
Regional Security 1,028,050 1,076,896 1,223,829 1,369,726
Support to the People 344,631 596,859 725,767 744,701
Defence Capability Management 31,934 22,346 21,533 23,678
TOTAL 2,332,012 2,670,902 2,959,205 3,200,673
Subprogramme
Force Employment
Budget increases from Rb2.33 in FY 11/12 to Rb2.67 in FY 12/13 to Rb2.96 (FY 13/14) and Rb3.2 in FY 14/15 at an annual average of 12.4%Increase in Special Operations is to provide for the development and acquisition of specialised equipment used by Special Forces
Increase in Support to the People due to additional allocation for border safeguarding
Decrease in Capability Management from 2011/12 to 2012/13 due to Exercise SHARED ACCORD which took place in 2011/12.
12
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 2,054,479 2,395,266 2,710,195 2,910,880
Compensation of Employees 1,126,656 1,297,375 1,435,761 1,551,097
Goods and Services 927,823 1,097,891 1,274,434 1,359,783
Transfers and Subsidies 208,268 201,374 172,728 195,521
Payment for Capital Assets 69,265 74,262 76,282 94,272
TOTAL 2,332,012 2,670,902 2,959,205 3,200,673
Economic Classification
Force Employment
Initial decrease and latter increase in transfers and subsidies due to the delivery and development milestones of specialised equipment used by Special Forces
Increases in compensation of employees and goods and services are related to the additional allocations received for border safeguarding
13
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Strategic Direction 556,075 387,034 389,806 392,326
Infantry Capability 3,361,685 3,812,948 4,922,011 5,033,848
Armour Capability 295,270 332,032 342,424 360,719
Artillery Capability 381,722 499,408 426,619 454,935
Air Defence Artillery Capability 389,008 630,694 425,941 378,622
Engineering Capability 498,308 540,839 571,566 605,261
Operational Intelligence 185,609 237,063 172,624 177,432
Command and Control Capability 125,996 159,954 167,848 176,841
Support Capability 4,361,756 4,760,887 4,941,807 5,195,817
General Training Capability 320,359 400,130 419,750 444,564
Signal Capability 852,820 925,742 970,883 1,033,621
TOTAL 11,328,608 12,686,731 13,751,279 14,253,986
Subprogramme
Landward Defence
Budget increases from Rb11.3 in FY 11/12 to Rb12.68 in FY 12/13 to Rb13.75 (FY 13/14) and Rb14.25 in FY 14/15 at an annual average of 8.6%
Decrease in Strategic Direction mainly due to rollout of CALMIS (Log Management System) in 2011/12 (RM 105)
Increase in Infantry Capability due to the extension of the development plan of the new generation infantry combat vehicle and the new generation operational supply support vehicles system
Increase in Artillery Capability due to delivery milestones of the artillery target engagement system
Increase in Air Defence Artillery Capability due to delivery milestones of the shoulder launched air defence artillery system
Increase in Support Capability due to provision for transport of redundant assets to be disposed of, procurement of ammunition and parachutes, replacement of logistic support vehicles and the delivery milestones of the mobile and rapid deployable mass feeding system14
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 9,465,951 9,989,817 10,772,775 11,367,098
Compensation of Employees 7,631,429 8,307,562 8,961,149 9,461,754
Goods and Services 1,834,522 1,682,255 1,811,626 1,905,344
Transfers and Subsidies 1,808,001 2,351,293 2,651,998 2,555,382
Payment for Capital Assets 54,656 345,621 326,506 331,506
TOTAL 11,328,608 12,686,731 13,751,279 14,253,986
Economic Classification
Increase in payment for capital assets due to replacement of logistic support vehicles (COTS)
Trend in transfer & subsidies due to delivery milestones of the artillery target engagement system, shoulder launched air defence artillery system and mobile ground to air missile system programmes
Decrease in goods and services due to reduction in MSDS intakesCompensation of Employees amounts to 65.5% of budget.
15
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Strategic Direction 14,691 16,318 17,069 17,934
Operational Direction 129,896 195,938 35,480 49,753
Helicopter Capability 747,508 879,857 777,344 693,497
Transport and Maritime Capability 711,262 495,534 1,251,560 1,342,917
Air Combat Capability 1,335,075 1,584,713 1,671,525 2,051,382
Ops Support and Int Capability 287,101 425,215 316,366 318,383
Command and Control Capability 343,435 410,270 366,188 357,748
Base Support Capability 1,402,119 1,568,073 1,576,485 1,649,182
Command Post 49,816 45,123 47,274 49,337
Training Capability 688,332 310,435 298,006 297,759
Technical Support Services 646,541 818,189 847,581 881,578
TOTAL 6,355,776 6,749,665 7,204,878 7,709,470
Subprogramme
Air Defence
Budget increases from Rb34 in FY 11/12 to Rb37 in FY 12/13 to Rb40 (FY 13/14) and Rb42 in FY 14/15 at an annual average of 7.1%
Increase in Transport & Maritime Capability due to the planned upgrade of the Falcon 900 project and to increase the serviceability of the C130 aircraft capability
Increase in C&C Capability due to the delivery milestones of the replacement of aircraft rescue and fire vehicles project
Decrease in Helicopter Capability due to the completion of the Rooivalk support helicopter project and the Oryx operational helicopter upgrading project
Increase in Operational Support & Intelligence Capability due to the implementation of protection systems at air force bases, units and deployed elements 16
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 4,460,749 4,898,363 4,608,761 4,719,721
Compensation of Employees 2,514,548 2,719,403 2,881,355 3,025,908
Goods and Services 1,946,201 2,178,960 1,727,406 1,693,813
Transfers and Subsidies 1,880,274 1,830,870 2,578,614 2,972,738
Payment for Capital Assets 14,753 20,432 17,503 17,011
TOTAL 6,355,776 6,749,665 7,204,878 7,709,470
Economic Classification
Air Defence
Decrease in goods and services during the latter part of the period is due to the huge aircraft maintenance requirements in 2012/13 while investing in aircraft development through transfer payments to the Special Defence Account in 2013/14 and 2014/15
Compensation of Employees amounts to 72.57% of budget
17
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Maritime Direction 489,368 445,489 465,163 483,843
Maritime Combat Capability 567,097 560,821 638,564 955,213
Maritime Logistic Support Capability 755,983 727,221 824,730 898,314
Maritime HR and Training Capability 245,033 305,251 302,370 308,753
Base Support Capability 507,196 512,525 524,664 552,086
TOTAL 2,564,677 2,551,307 2,755,491 3,198,209
Subprogramme
Maritime Defence
Budget increases from Rb2.5 in FY 11/12 to Rb2.5 in FY 12/13 to Rb2.7 (FY 13/14) and Rb3.2 in FY 14/15 at an annual average of 8.2%
Increase in Maritime Logistic Support Capability is due to the planned recruitment and staffing of personnel with scarce skills such as divers, technicians and engineers as well as the replacement of the hydrographic vessel
Increase in Maritime Combat Capability during the latter part of the medium term is due to provisions for the
replacement of the offshore and inshore patrol vessels and procurement of new harbour tugs.2012/13 overall budget decrease Rm13.37 due to reduced MSDS allocation.
18
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 2,109,238 2,169,900 2,246,032 2,282,137
Compensation of Employees 1,469,926 1,505,340 1,574,728 1,646,342
Goods and Services 639,312 664,560 671,304 635,795
Transfers and Subsidies 421,781 348,102 488,453 897,129
Payment for Capital Assets 33,658 33,305 21,006 18,943
TOTAL 2,564,677 2,551,307 2,755,491 3,198,209
Economic Classification
Maritime Defence
Decrease in payment for capital assets due to gradual downscaling of infrastructure upgrade in Simon’s Town and not replacing or procuring passenger motor vehicles
Transfers and Subsidies trend reflects delivery milestones of the SDPs while the increases in 2013/14 and 2014/15 are due to the provisions for the replacement of the offshore and inshore patrol vessels, procurement of new harbour tugs and the replacement of the hydrographic vessel.
Compensation of Employees amounts to 58.99%.
19
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Strategic Direction 232,154 240,413 224,158 259,646
Mobile Military Health Support 122,913 127,404 158,503 182,039
Area Military Health Service 1,054,871 1,002,181 1,056,989 1,108,784
Specialist/Tertiary Health Service 1,017,531 1,143,219 1,203,800 1,241,897
Military Health Product Support Capability 187,289 230,971 267,227 285,599
Military Health Maintenance Capability 242,753 198,963 221,138 233,945
Military Health Training Capability 386,752 373,356 383,290 380,603
TOTAL 3,244,263 3,316,507 3,515,105 3,692,513
Subprogramme
Military Health Support
Budget increases from Rb3.2 in FY 11/12 to Rb3.3 in FY 12/13 to Rb3.5 (FY 13/14) and Rb3.7 in FY 14/15 at an annual average of 4.6%
Increase in Specialist/Tertiary Health Service due to planned appointment of personnel with scarce skills and the acquisition of medical and surgical equipment.
Increase in Mobile Military Health Support mainly due to the initiation of a defence against chemical and biological warfare project.
Increase in Military Health Product Support Capability due to repair and replacement of operational ambulances.
Decreases primarily related to Rm21 budget cut.20
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 3,168,160 3,271,449 3,445,580 3,578,305
Compensation of Employees 2,266,820 2,457,813 2,574,737 2,705,307
Goods and Services 901,340 813,636 870,843 872,998
Transfers and Subsidies 42,522 43,496 55,127 99,436
Payment for Capital Assets 33,581 1,562 14,398 14,772
TOTAL 3,244,263 3,316,507 3,515,105 3,692,513
Economic Classification
Military Health Support
Decrease in payment for capital assets due to the replacement of motor vehicles, medical instruments, dental instruments and computer equipment in 2011/12 that does not require replacement in 2012/13
Decrease in goods and services due to reduction in MSDS intakes
Increase in transfer & subsidies due to the initiation of a defence against chemical and biological warfare project, development of a telehealth system and the development of a deployable health service
Compensation of Employees represents 74.09%
21
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Strategic Direction 1,368 32 33 34
Operations 408,020 424,006 436,402 453,594
Defence Intelligence Support Services 252,248 285,625 304,040 324,879
TOTAL 661,636 709,663 740,475 778,507
Subprogramme
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 249,761 280,835 297,656 321,802
Compensation of Employees 230,270 257,984 273,806 292,034
Goods and Services 19,491 22,851 23,850 29,768
Transfers and Subsidies 409,449 425,387 439,261 453,030
Payment for Capital Assets 2,426 3,441 3,558 3,675
TOTAL 661,636 709,663 740,475 778,507
Economic Classification
Defence Intelligence
22
Budget increases from Rm661 in FY 11/12 to Rm709 in FY 12/13 to Rb740 (FY 13/14) and Rb778 in FY 14/15 at an annual average of 5.9%
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Joint Logistic Services 1,699,556 2,215,121 2,346,713 2,466,830
Command and Management Information Systems 960,418 1,021,204 1,103,379 1,151,611
Military Police 432,471 439,526 467,902 488,159
Technology Development 339,864 328,547 275,117 287,980
Departmental Support 711,378 1,073,005 784,457 841,515
TOTAL 4,143,687 5,077,403 4,977,568 5,236,095
Subprogramme
General Support
Budget increases from Rb4.1 in FY 11/12 to Rb5.07 in FY 12/13 to Rb4.97 (FY 13/14) and Rb5.23 in FY 14/15 at an annual average of 8.8%
Increase in Joint Logistic Services due to establishment of Defence Works Formation
Increase in Command & Management Information Systems due to the provision for research and development of new generation telecommunication systems
Decrease in Technology Development due to the gradual completion of technology projects related to test and evaluation systems as well as electronic research and development
Increase in Departmental Support in 2012/13 is due to the provision for the write‐off of unauthorised expenditure that occurred in 1997/98 23
2011/12 2012/13 2013/14 2014/15
R'000 R'000 R'000 R'000
Current Payments 2,909,521 3,526,811 3,771,842 3,968,831
Compensation of Employees 1,059,328 1,120,723 1,176,703 1,241,496
Goods and Services 1,850,193 2,406,088 2,595,139 2,727,335
Transfers and Subsidies 1,104,838 1,085,495 1,070,864 1,125,460
Payment for Capital Assets 129,328 127,393 134,862 141,804
Payment for Financial Assets - 337,704 - -
TOTAL 4,143,687 5,077,403 4,977,568 5,236,095
Economic Classification
General Support
Decrease in payment for capital assets due to completion of AFB Waterkloof upgrade
Decrease in transfer and subsidies is related to the decreases in technology development
Increase in goods and services due to the establishment of the Defence Works formation
Once‐off provision for Payment for financial assets is due to the write‐off of unauthorised expenditure
24
CONCLUDING REMARKS
Challenges
•Rising fuel price and volatility of exchange rate will impact on executing borderline control.impact on training in SA Army, SAAF, SA Navy and supporting divisions.impact on operating budget due to envisaged price increases of a wide range of commodities used by Defence.
Confirmation.
It
is
hereby
confirmed
that
the
2012/13
Estimates
of
Defence
Expenditure
is
aligned
with
the
Department’s Strategic Plan and Annual Performance Plan.
25
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