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INTRODUCTION

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. INTRODUCTION. Planning and Budgeting guidelines – Sep 05 Plan and budget scrutiny – May/Jun 06

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INTRODUCTION

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

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

  5. Historical Perspective

  6. 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

  7. 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

  8. MTEC Submission and Outcome

  9. MTEC SUBMISSION

  10. VOTE 20: DEFENCE MTEF ALLOCATIONS: 2007/08 – 2009/10 (Final Letter of Allocation from NT)

  11. Baseline Allocation

  12. 2007 MTEF Baseline Allocation per Economic Classification

  13. 2007 MTEF Baseline Allocation per Main Programme

  14. 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

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. 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.

  20. 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.

  21. 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

  22. 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.

  23. 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

  24. Defence Industrial Participation

  25. 30 x Augusta Westland A109

  26. 4 x AgustaWestland Super Lynx

  27. 24 x BAE Hawk LIFT 24

  28. 28 x SAAB Gripen JAS39

  29. 4 x MEKO A-200 Patrol Corvette

  30. 3x Type 209 submarines

  31. Defence Industrial Participation31 December 2006

  32. 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.

  33. 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.

  34. Discussion & Questions

  35. This slide was intentionally left blank

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