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SELECTED ISSUES OF THE BUDGET,

STRATEGIC PLAN & ANNUAL

PERFORMANCE PLAN FOR

DEPARTMENT OF DEFENCE

BUDGET: VOTE 19

15 APRIL 2015

Peter Daniels

PRESENTATION OUTLINE

• Introduction• Situational analysis• Expenditure analysis• DOD Budget• Selected performance indicators• Personnel information• Defence Review 2014• Planning Milestone 1 (2015 – 2020)• Defence Enterprise Risk• Ministerial priorities• Chief SANDF priorities

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• National Development Plan 2030, • Medium Term Strategic Framework 2014 – 2019,• New Growth Path (NGP),• Industrial Policy Action Plan (IPAP),• 2014 and 2015 State of the Nation Addresses, • Forum of South African Director-Generals (FOSAD)

Action Plan 2014 – 2019,• Defence Review 2014,• National Security Strategy,• Minister’s Delivery Agreement, and • DOD Environmental Scan

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Situational analysis

Expenditure analysis

Maintaining and expanding South Africa’s defence capabilities

•Implementation of SA Defence Review 2014 • Milestone 1: Immediate, directed interventions to arrest the decline in critical defence

capabilities. • Landward Defence, Air Defence, Maritime Defence and Military Health Support Programmes.

•Defence Works Formation (DWF) • Employ personnel and focus on operationalising the unit. • Moved funds – R951.8 million over the medium term

•Acquiring equipment & developing systems • Budgeted for medium & light transport aircraft, New generation mobile communication

capability and Precision guided air force ammunition (SAAF). • A hydrographic vessel & offshore patrol vessels, upgrading of frigates and static communication

and replacing heavy weight torpedo capability (SA Navy)•Military Skills Development System

• Continue to give effect to the one-force concept.• Expects to grow to 81 108 members in 2017/18 – DWF, MSDS joining Reserves

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Expenditure analysis…

• Safe guarding South Africa’s Borders and territorial integrity• Safeguard borders & territorial integrity with 13 landward sub-units (22 required)• Borders with Zimbabwe, Swaziland, Mozambique, Lesotho, Botswana and Namibia. • Expenditure is projected to be R2.8 billion over medium term.

• Cyber security• Will focus on cyber security over medium term, • Finalising a cyber Warfare Strategy in 2015/16 • Establish a Cyber Command by 2018/19 ( Defence Intelligence Programme)• Projected cost of R511 million

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DOD BUDGET

• Allocation of R44.579 bn versus R42.83 bn • 4.% and R1.722bn increase on FY2013/14• 1.1% of GDP (Defence Review target p.9-20 at 2014/15 rand

value)• Increase in programmes 1, 2, 3, 5, 6, 7 and 8• Decrease in Programme 4: Air Defence – concern flying hours• Compensation employees increased from R22.5 bn to R24.6 bn

relates to 55% of budget.• Concern 40:30:30 ratio (Personnel, Capex and Opex)• Defence Review target 45%

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Selected performance indicators

Figures of defence attaché offices differ (43 ENE vs 41 in 2015 APP etc.)

Number of MSDS members decrease but greater need for it

Different Reserve force days (2014 APP) Target of Number of flying hours versus flown in

2013/14 (4 471 vs 6 300) – keep pilots current Sea hours target versus actual in 2013/14 (11 081 vs 22

000) realistic/downscale operations

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•Funded posts at 31 March 2015 = 77 605 - for 2015/16 funded will be at 79 445 •Grow to 81 108 in 2017/18•Programme biggest number Programme 3: Land Defence ( +- 51%)

Biggest increases/decrease•Programme 3 (1 859) from 40 121 (2013/14) to 41 980 (20017/18) (Operational requirements)•Programme 8 (948) from 4 878 (2013/14) to 5 826 (2017/18) (DWF staffing)•Biggest decrease is 1 091 in the Air Defence programme between 2013/14 and 2017/18

Questions •How manage reduction to 72 000 by end of Milestone 1 (Defence Review 9-20)?•Plans to exit members – criteria, reskilling, transfer other departments•What causes the reduction in the Air Defence programme?

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Personnel information

Five Strategic Planning milestones to restore defence capabilities:

•Planning Milestone 1 (2015 – 2020): Arrest the decline in critical capabilities through immediate, directed interventions. •Planning Milestone 2: Rebalance and re-organise the Defence Force as the foundation for future growth.•Planning Milestone 3: Create the sustainable Defence Force that can meet current ordered defence commitments.•Planning Milestone 4: Enhance the Defence Force’s capacity to respond to nascent challenges in the strategic environment.•Planning Milestone 5: Defend the Republic against insurgency and/or armed conflict to the level of limited war. Milestone 5 above reflects the Constitutional mandate to its fullest possible extent.

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Defence Review 2014

Arrest the decline in critical capabilities through immediate, directed interventions.

•Implementation through Defence Review Implementation Plan (DRIP)•Activities mainly in Landward Defence, Air Defence, Maritime Defence and Military Health Support programmes•Comprehensive planning to be conducted in 2015/16 •Incremental implementation in 2016/17 onwards within available resources. •Developed a performance indicator to monitor development of DRIP•Will engage National Treasury on appropriate funding arrangements•DOD Long-term Extended Defence Development Plan consists of the military strategy, force design, force structure, capability strategy and acquisition plan to achieve the Defence Strategic Trajectory.

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Planning Milestone 1: 2015 - 2020

Defence Enterprise Risk• Disconnect between the Defence Mandate and the Budget Vote: Inability to execute

constitutional mandate.• Inadequate DOD organisational Structure: Inadequate structure may compromise

expected defence output.• Impaired Force rejuvenation: Ineffective feeder system and ineffective exit mechanism• Deteriorating DOD Facilities and Infrastructure : morale implications and may result

litigation and non-compliance• Non verifiable DOD performance Information: may lead to unreliable financial & non-

financial information.• Increase in Fraud and Corruption: Weaknesses in internal controls opportunity for

fraud & corruption• High prevalence of litigation: Inability of the DOD to abide by its prescribed policies

and procedures• Forfeited rights on DOD Property: Possible land claims may impact Defence readiness

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Ministerial priorities• Strategic Leadership:

• Development of directives and implementation mandates• Appointment of Leadership and Project teams

• Defence Funding Model• Developing of a Funding Model for Defence • Identifying and Directing preservation funding (etc)

• Organisational Renewal• Repositioning of the Defence Secretariat/ Establishing a Defence accountability concept• Establishing a Delegation regime

• Human Resources Renewal• Right-sizing the Personnel component• Strengthening the DOD HR Value Chain

• Capacity Renewal • Enhance Domain awareness• Establish Special Operations Forces

• Defence Industry• Development and Implementation of the Defence Industry Strategy• Establishing a focussed and aligned Defence Industry

• Defence Commitments• Optimising Border Safeguarding• Internal Operations, Intervention Operations, Peace Missions and Regional Assistance Operations

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Chief SANDF priorities

• Strategic Direction – Defence Review 2014• Restructuring of the SANDF – Defence Review guidelines• Renovation of DOD facilities – Defence Works Formation• Development & maintenance of strategic reserves – important

for possible future eventualities• Implementation of HR strategy – downsizing, one force concept• Revitalisation and effective utilisation of Reserves – increased

utilisation borders and peacekeeping• Enforcement of military discipline- need a disciplined force• Development of SANDF capabilities- arrest decline current

capabilities13

Thank youPeter Daniels

Content Advisor: Portfolio Committee on Defence and Military Veterans

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