Defence yanks R2.1bn from contractors

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The National Treasury has approved the movement of R2.1 billion, mostly from the Strategic Defence Account (SDA), within the defence and military veterans budget to fund a salary shortfall in the military.

Of this some R2.038 billion was taken from various project budgets within the landward (South African Army) programme and R12.6 million from the seaward (SA Navy) programme. For the SA Army this represents the bulk of the R2.439 billion in the SDA allocation for the year to next March. Analysts say this will adversely affect the rejuvenation of the prime mission equipment of the land service, a stated priority for the South African National Defence Force (SANDF). It may also have a devastating effect on the defence industry.
“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,” says Helmoed-Römer Heitman. “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.”

Rear Admiral Rolf Hauter (Retired) adds that cuts of this nature “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.”

A reading of the Adjusted Estimates of National Expenditure (ENE), released last Wednesday, suggests R629 834 000 of the funds taken from the landward SDA comes from the Air Defence Artillery budget. The February ENE showed a 64.8% increase in expenditure there “due to the delivery milestones of the shoulder launched air defence artillery system [Project Guardian, GBADS 1] and mobile ground to air missile system [Project Protector, GBADS 2] programmes. The first involves Thales Defence Systems and the second Denel Dynamics and Reutech Radar Systems.

The AENE also stripped out R1.021 billion from the landward programme’s logistics or “support capability” sub-programme. This may include a R10 000 000 reduction of food and food supplies listed under virements and shifts. Heitman adds if this reading is correct, it is “the end of [Projects] Hoefyster [infantry combat vehicle], GBADS, Vistula [trucks], Sapula [rmoured personnel carriers] et al for the time being, unless money is produced in February from somewhere.”

The Air Force SDA budget of R2.272 billion escapes untouched, although R1.323 million is scheduled to be paid to BAE Systems/SAAB as a penultimate payment for the 26 Gripen advanced light fighter aircraft acquired as part of the strategic defence package )or “arms deal”). A final payment of R1.136 billion is scheduled for next year. The Air Force’s operating budget was, however, reduced by R1 971 000. The helicopter capability was stripped of R17.057 million, the fighter sub-programme loses R978.817 million and the transport and maritime capability R28.679 million. In addition, the AENE shows the SAAF has,after six months, already used 8279 of the 9500 operational flying hours allocated for the year to March 31.



The Navy also lost R1 287 000 from its operating budget. In addition, R37 069 000 was taken from funds for “contractors, fuel, and agency and outsourced services.” Virements under the heading “goods and services” totalled R4 million for he Military Health Service, R71 million for Defence Intelligence and R6.466 million from the “general support” subprogramme. Elsewhere in the AENE it appears this amount, under this last subprogramme is a “reduction on advisory services”. Also reduced is the repairs and maintenance budget within that subprogramme, reduced by R24 million.