Department of Defence forced to reduce personnel budget


The compensation of employees is the largest single expenditure item within the Department of Defence (DoD) and accounts for 57% of departmental expenditure, but the DoD aims to reduce this to 53% in the next couple of years as part of government’s cost-cutting measures.

This is according to the Department of Defence Strategic Plan 2015-2020 and Annual Performance Plan 2016 presentation, which was delivered to the Parliamentary Defence Portfolio Committee on Defence and Military veterans on 4 May.

The Department of Defence said that the budget allocation for the compensation of its roughly 80 500 employees is R26.8 billion in FY2016/17, R26.5 billion in FY2017/18 and R27.2 billion in FY2018/19. However, “as part of Cabinet’s decision to lower the national aggregate expenditure ceiling, the department’s compensation of employees’ budget has been reduced by R1.9 billion for FY2017/18 and R2.9 billion for FY2018/19, decreasing its share of the department’s total expenditure to 53.5 per cent by FY2018/19.”

This means a projected shortfall of R4 billion over the next three years for the Department of Defence personnel budget.
“After consultation with the DPSA [Department of Public Service and Administration] and NT [National Treasury], the department will develop and implement a plan to manage its personnel expenditure within its reduced personnel budget,” the presentation stated.

According to defence analyst Helmoed Romer Heitman, trimming the personnel budget is an obvious cost cutting solution, but only at first glance. “While the SAAF could shed quite a few people with no impact on its ability to operate, the Navy is not far from where it will need to be if Biro goes ahead, and the Army has too few people to do everything it is supposed to do, although the end of the Darfur mission helps – until the next one comes along,” he stated.
“The overriding requirement is for government to either fund the SANDF to the appropriate level, or to wind down its regional ambitions – which would not necessarily be a good thing in the long run.
“That said there are posts and entire structures that could be trimmed or even wound down to good effect, to free up posts within the SANDF for allocation where they are needed, and we could certainly scale down the ranks attached to some posts.
“There has to be a serious thinning out of the supporting and administrative structures at the top level and also in the services. Again, that will not reduce strength by much, but it will mean that the bulk of the personnel would be deployable when required.
“And, of course, we need to close down all of the posts that were created post 1994 in the name of transformation. They no longer serve any purpose: there was a real case for the ‘playing fields’ to be levelled then, but today there is no excuse for anything but appointments and promotions on merit. I would make one exception: Youngsters who show real aptitude, interest and potential, but are hampered by a poor school education could and arguably should, be given a shot at getting up to speed at a military school that could at the same time provide basic training and some general foundational military training.”

Finance minister Pravin Gordhan in February announced that Treasury would cut the public sector wage bill in an effort to lower expenditure by R25 billion over the next three years.

The Department of Defence’s presentation also noted that the goods and services budget has been reduced by R193.9 million for FY2016/17, R94.2 million for FY2017/18 and R82.4 million for FY2018/19.
“Contractors and property payments remain the department’s largest spending items under goods and services over the medium-term, driven by the significant costs of maintaining equipment such as weapons, aircraft and ships. Other significant goods and services spending anticipated over the medium-term includes R1.9 billion on property payments, R1.3 billion on operating leases, R1.2 billion on computer services, R896 million on food and food supplies, R810 million on subsistence and travel, R619 million on fuel, oil and gas, and R560 million for operating payments.”