Defence budget cut

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Treasury has cut the defence budget by R1.98 billion.

This emerged from a Department of Defence briefing to the Portfolio Committee on Defence and Military Veterans on Wednesday.

Briefers told MPs Treasury had cut this year`s budget of R32.024 billion by R740 469 000 and had taken R644 137 000 from next year`s budget and a further R595 638 000 from the FY 2011/12.

The officials were in the National Assembly to brief the largely new defence committee on the department`s strategic business plan and win support in the Fourth Parliament for a larger budget allocation.

The defence portfolio committee of the Third Parliament in March argued for an increase in defence spending. They also wanted the department`s budget to be driven by its mandate rather than by the money allocated by a parsimonious Treasury.

The briefers say the cuts made by Treasury in February after Finance Minister Trevor Manuel`s budget will “have a negative impact on the department” and will result in performance targets being revised downwards.

The R32 billion budget amounts to 1.3% of Gross Domestic Product (GDP); or less than five cents out of every Rand government spends. The Third Parliament proposed 1.7%. The department says its analysis of the funding needed to support a credible force design, government policy and peace support operations “indicates a requirement for a defence allocation of 2% of GDP.”

While MPs are generally in favour of increasing defence spending, Treasury is not. The R1.98 billion taken from defence is a response to the global recession and a dramatic fall in government income.

Government and Parliamentary sources say all other state departments have seen similar cuts. Falling tax income and increased government spending on service delivery may see further cuts imposed.  

Business Report late last month noted that Finance Minister Pravin Gordhan was already warning government departments of an austerity budget next year.

National Treasury guidelines for the preparation of expenditure estimates for the 2010 medium-term expenditure framework say the economic conditions South Africa finds itself in will lead to a reduced fiscus and that the efficiency-saving initiative will be a focal point in budget allocations.
“Responding to these challenges requires a strategic response. Departments need to channel available resources to service delivery projects, placing a premium on the efficient allocation of funds,” the guidelines advise.   

  

     

         

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