annrep 1011 1 to 148.qxp - Department of Defence

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D E P A R T M E N T O F D E F E N C EDepartment of Defence and Military VeteransVote 21REPORT OF THE ACCOUNTING OFFICERfor the year ended 31 March 2011Execution of the border safeguarding function.Establishment of the new Service Dispensation.Enhancement of the SANDF's Landward Defence capabilities.Maritime security.Job creation.Enhancement of the SANDF's peacekeeping capability.National Youth Service.Revitalisation of the Reserves.Restructuring and support of the Defence Industry.Department of Defence Works Capability.1.2 Defence Vote: Rm 30 715,333 (Appropriation Act, Act No 3 of 2010)1.2.1 The DOD approved budget published in the Estimate of National Expenditure: 2010 report for the period 1 April 2010to 31 March 2011 was compiled on a cash basis per programme and amounted to Rm30 715,333. It included all entitiesunder control of the Minister of Defence and Military Veterans. The original budget was approved through legislativeaction and specifically the Appropriation Act, Act 3 of 2010. The original budget objectives and policies permain division of the Vote were also published in the 2010/11 Strategic Business Plan and will be reported on in detailin the relevant parts of this Annual Report. This was adjusted by a net reduction of Rm272,742 after virements, fundsshifts and additional allocations through the Adjustment Appropriation Act of 2010. Full details of the adjustmentsare provided in par 1.3 below.1.2.2 The 2010/11 Defence Vote decreased by Rm1 673,971 (5,17%) from the 2008 Medium Term Expenditure Frameworkallocation for the same year and decreased by Rm1 309,051 from the previous financial year's annual audited expenditureoutcomes. The Defence Vote amounted to 1,14% of South Africa's gross domestic product (GDP) or 3,75% oftotal government expenditure (GE). The overall decrease in the allocation is due to the termination of the A400M aircraftprocurement contract, exchange rate savings on the strategic defence procurement programme and the institutionof some efficiency savings.1.2.3 Additional and reduced allocations that influenced the 2010/11 Defence Vote are: Inflation related adjustment for salaries Rm 423 New SANDF remuneration system Rm 600 Upgrade of Air Force Base Waterkloof runway Rm 250 Military Skills Development System Rm 50 Military Veterans' affairs Rm 20 Foreign exchange rate adjustments Rm (503) Termination of the A400M contract Rm (2 067) Efficiency savings Rm (447)1.2.4 Landward Defence (32,5%) and Air Defence (9,73%) are the two largest programmes within the Defence Vote. Theyear-on-year increase in the Landward Defence programme was mainly due to the Military Skills DevelopmentSystem, procurement of critical ammunition and the establishment of a works capability. The large decrease in theAir Defence programme was due to the termination of the A400M aircraft procurement contract. The higher than156ANNUAL REPORT FY 2010/2011
D E P A R T M E N T O F D E F E N C EDepartment of Defence and Military VeteransVote 21REPORT OF THE ACCOUNTING OFFICERfor the year ended 31 March 2011average, year-on-year increases in the Administration and General Support programmes were mainly due to the establishmentof the Department of Military Veterans, the activities of the Interim Defence Force Service Commission,upgrade of the Air Force Base Waterkloof runway and the maintenance and repair of Defence infrastructure and facilities.1.2.5 From an economic classification perspective compensation of employees (43,79%) and transfers and subsidies(22,24%) amounted to 66,03% of the Vote, leaving available 33,97% for operating the department and renewing capitalassets. Significant operating costs provided for are contractors (Rm3 844), inventory, food and food supplies(Rm560), computer services (Rm971) and property payments (Rm506).1.3 Defence Adjustment Vote: Minus Rm272,742 (Adjustment Appropriation Act, 2010)1.3.1 The Defence Vote in total has decreased by Rm272,742 through the Adjustment Vote due to the following:1.3.1.1 Increases1.3.1.2 DecreasesUnforeseen and unavoidable expenditure to the amount of Rm225,000 for the support provided to the SouthAfrican Police Service during the hosting of the 2010 FIFA World Cup and for support provided during the2010 public service strike.Salary increase, including housing allowance, not included in the Vote to the amount of Rm352,400 whichwere allocated to the following programmes: Administration Rm 28,172 Force Employment Rm 20,032 Landward Defence Rm 149,412 Air Defence Rm 49,199 Maritime Defence Rm 29,789 Military Health Support Rm 43,754 Defence Intelligence Rm 4,340 General Support Rm 27,702Self financing expenditure to the amount of Rm149,858 resulting from the sale of equipment and spares duringthe previous financial year, originally procured through the Special Defence Account. This amount wasreallocated to the following programmes: Landward Defence Rm 13,396 Air Defence Rm 135,197 Maritime Defence Rm 1,265A declared saving on the Air Defence programme to the amount of Rm 1 000,000 due to the cancellation ofthe procurement of the A400M airlift capability.1.4 Adjusted Defence Vote: Rm 30 442,5911.5 Expenditure1.5.1 The total expenditure against the Adjusted Defence Vote amounted to Rm 30 313,985 resulting in a relative smallunder expenditure of Rm128,606 including an amount of Rm0,220 earmarked for the Regular Force MedicalANNUAL REPORT FY 2010/2011 157
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