The SA National Defence Force (SANDF), the largest and arguably most important component of Minister Nosiviwe Mapisa-Nqakula’s Department of Defence and Military Veterans (DoDMV), was warned about the ever-increasing cost of paying soldiers and other uniformed personnel three years ago.
It appears the warning has not been heeded in any way with a recent presentation to Parliament’s Joint Standing Committee on Defence (JSCD) pointing out “to date, there are no significant reforms or attempts to stay within the compensation of employees’ budget”.
The presentation by Dr Rendani Randela from National Treasury said (government) departments were given 2016/17 to prepare for the “compensation ceiling” going forward. This saw National Treasury approve a year-end shifting of funds to compensate for cost of employees (CoE).
According to Randela the Department of Defence (DoD) will maintain its personnel headcount at 75 000 and Reserve Force utilisation at over the 2.6 million mandays mark. A subsequent presentation to parliament this week revealed that the DoD’s actual strength as at 30 June 2020 was 73 595, which was below the planned average strength of 75 227 for June 2020.
Since Treasury’s warning, Mapisa-Nqakula’s department overspent its CoE budget resulting in irregular expenditure because this budget item is “specifically and exclusively appropriated”. Government’s money managers go on to point out the “upward adjustment” of the DoD salaries and wages bill through virements including moving funds from the Special Defence Account (SDA) and goods and services is “unsustainable”.
Secretary for Defence Gladys Kudjoe told parliament the DoD requires an average human resource strength of 77 000. “To assure a more sustainable defence capability, an average HR strength of 75 000 will be maintained during financial year 2020/21, supplemented by planned Reserve Force mandays of 2 695 963. This will result in a projected shortfall of R3,017 billion on the CoE budget for 2020/21″.
Randela told one of two Parliamentary committees tasked with oversight on defence and defence related issues the DoD rejuvenation strategy “in its current form will not resolve the challenges”.
“Current force design and structure is unsustainable and will lead to significant funding requirements for CoE while eroding the DoD’s capital and operating budgets,” according to the National Treasury presentation.
It further states the DoD “is likely to incur unauthorised expenditure in 2021/22 unless it deals with CoE pressure”. This will be a result of a R5 billion cut to the Special Defence Account and “possible further baseline reductions”.
In conclusion, Randela said there is “no space for additional funding from the fiscus given the constrained fiscal environment and the need to contain the public sector wage bill”.
He proposes, among others, the DoD “strikes a balance” on using the Reserve Force and “maintenance of the regular force” and suggests consider reducing the regular, or full-time force, and its civilian component and using “a high share” of reserves to have a national defence force that is “less costly and sustainable”.
Randela’s presentation ends by stating “any proposed plan that does not deal decisively with the DoD’s personnel headcount, force design and SANDF conditions of service is unlikely to succeed in assisting it to operate within the CoE ceiling”.
Compensation of employees takes up a growing percentage of the DoD budget. In 2020/21 it was R31 billion or 59% (against a projected 65%) and is set to increase to 65% in 2021/22 (against a projected 71%).
In a presentation to parliament by Rear Admiral Asiel Kubu, Chief Human Resources, he warned the human resources component “will eventually consume all resources required by the DoD to execute its mandate. This is largely due to constant budget cuts and the capping of the CoE ceiling below existing strength compelling the DoD to source additional funding from the operating portion of the budget.”