Hi @boxer1,
Thank you for your question and welcome to the Bunnings Workshop community, it is great to have you with us.
As it doesn't look like there are too many cracks, I believe the mortar was just mixed without enough cement when it was installed, meaning it did not set as hard as some other areas.
With this being said, I believe the bugs are a symptom of the mortar being weakened, not the cause. It is likely that the holes are caused by insects who burrow into weak mortar to use it as a home.
I would suggest you remove the flaking and powdery mortar using a stiff bristled brush such as the Sabco Bamboo All Purpose Heavy Duty Scrub.
Once all loose material is cleaned you should repoint the mortar joins using a Hyde 13mm Tuck Pointing Trowel and Dingo 10kg Mortar Mix, following all manufacturer's instructions for mixing.
Fill the affected areas with the mortar, applying enough pressure to fill all the air gaps, then smooth the mortar to match the existing joins starting with the vertical joints, followed by the horizontal joints. Allow the mortar to dry to a semi hardened state before brushing again to remove any overflow or unsightly bits.
Let me know if you have any further questions, I'm happy to help.
Jacob
