Virements

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In February this year the South African Army was allocated R2.439 billion in funds under the Special Defence Account (SDA) for projects. Last week, R2.038 billion of this was grabbed back as virements in the adjusted budget.

This leaves just R401 million in the landward SDA programme. The movement of the money, to fund last December’s generous salary increases, is so at odds with the Department Defence’s often-stated goal to rejuvenate the Prime Mission Equipment of the Army, it deserves comment.

Movements in the SDA, especially in the October “mini-budget” is not uncommon, but the scale of this year’s migration is spectacular and should be a profound worry to industry. Is it an aberration or will it be a trend? It does set a precedent,of course: this year an unfunded salary increase, next year perhaps border deployments…

As mentioned elsewhere on these pages in preceding days, the virements come on top of a R272 million decrease in the defence budget (R30.7 billion to R30.4 billion), and follows a R3.2 billion “saving”imposed on defence on February, part of a R8 billion budget cut over the medium term. The February budget cut caused the military to lament to Parliament the next month that they are some R7.3 billion underfunded for this year alone.

It is likely these decreases that placed exceptional pressure on the defence ministry to raid the SDA kitty. Let’s face it, from a ministerial point-of-view acquisitions are discretionary and can be delayed, but salaries cannot. Not that this assists industry. The use of the SDA as a piggybank of last resort undermines the financial certainty industry needs to make investment and other decisions.

Consultant and naval strategist, Rear Admiral Rolf Hauter (Retired) summed it up nicely: “Warnings on the sustainability of the SANDF [South African National Defence Force] have been sounded countless times, alas to no avail. It actually goes beyond SANDF sustainability because it impacts directly on the defence industry. The latter is being compromised in its ability to retain employment levels, never mind creating employment, while irreplaceable skills are being lost. If there was ever an urgency to balance defence policy and budget the time is now. No defence force of the size and shape of the SANDF, nor the associated defence industry required to support it has ever been, nor will it ever be, sustained on the current budget.
“I must therefore call for an urgent defence review in the short term. The review must strike a manageable balance between the size, shape and employment of the SANDF with the available financial resources that government can afford to allocate to defence in relation with national priorities. Most important is that such a review must be implemented to the word without fear or favour. If not, the review will be to no avail and the SANDF will suffer even more. In addition, the review must be sufficiently transparent to allow the defence related industry to plan the supply of products and services to the ‘reviewed SANDF’ in a way that will ensure the reliability required.
“Last but not least, Government will have to brace itself for further industry closures, job losses and the eventual disappearance of high tech skills in the industry. Added to this will probably be an increased reliance on foreign suppliers which will lead to added strategic risks over the medium to long term.
“Nevertheless, I salute all in the DOD and congratulate them with what they keep achieving despite the dire challenges with which they are faced. Such achievements will, however, eventually become impossible,” Hauter says.

Defence analyst Helmoed-Römer Heitman says that time may be closer than one thinks. The DoD’s April 2010- March 2013 strategic plan cut flying hours for the Saab Gripen advanced light fighter from this years’ 550 hours to just 250 for next year and 2012. He noted the North Atlantic Treaty Organisation requires fighter pilots to log at least 20 flight hours per month (240 flight hours per year per pilot) to remain qualified. That is obviously not possible on the current budget.
“A defence force is a complex machine that needs to be maintained carefully over time; it does not respond at all well to on/off funding, and very quickly loses its edge and also becomes brittle when underfunded,” Heitman says. Cutting defence funding because of a – visibly so – temporary hiccup in government cash flow is a thoughtless kneejerk action that is going to cost us in the long term.
“Given the damage that it will do to the defence industry, it is also going to cost us economically – companies will shrink or close down, and future equipment acquisition will be from overseas, so money that could have been spent here, and which would have retained and developed skills, will flow out of the country. I do not think there is another sector that will have quite the same knock-on damaging effect as a result of cuts as defence.”

Frankly South Africa’s defence spending is small change. Total state expenditure this year is R818 billion or some 30.3% of Gross Domestic Product (GDP). Defence spending amounts to just 1/26th of this, less than 1.3% of GDP and about 3.75 cents of every rand. This means 96 and a quarter cents of every Rand spent by government is NOT spent on defence.

South Africa has a long tradition of skimping on defence with more important social needs and a low threat environment the usual reasons for this. Defence minister Oswald Pirow in September 1938 said its potential wealth despite “South Africa has much poverty and there is a definite upper limit to what the country is prepared to spend on defence” – a comment as true today as when it was first uttered.

Pirow also held that it was a “certainty” that due to its distance from Europe – the most likely theatre of war – South Africa would have at least six months after the outbreak of hostilities to prepare a defence. Well he was wrong about that: Just 13 months after he spoke and just one month after the outbreak of war in September 1939 – the German “pocket battleship” Admiral Graf Spee sank two ships off Angola, rounded the Cape and sank another off Inhambane, Mozambique the next month. Captain Hans Langsdorff then returned to the Atlantic to sink two more off Angola. With its six 11-inch (279mm) guns the Graf Spee could have done considerable damage to any of South Africa’s port cities, had Langsdorff chosen to do so.

The Union Defence Force, the SANDF’s forerunner, was in a sorry state at the time, unready for war and on the face of it unable to defend the country. One can go on, at length, on the topic; but the point is South Africa was caught with proverbial pants down in September 1939. Technology was somewhat simpler then, but even at the time a great effort had to be made to improvise a navy and scrounge equipment for the Army and Air Force. Improvisation always comes at a higher cost – in money and blood – than deliberate planning and some equipment, such as artillery, armour and missile systems cannot be divined at short notice for all the will, patriotism and money in the world.



Shall we learn from the unhappy experience of World War Two or raid SDA funding and be caught short again?