Low expectations for defence budget

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Defence analysts say finance minister Pravin Gordhan (pictured) will at best keep the defence and other security budgets at the level announced in his medium term “mini budget” in October and at worst make cuts.

Gordhan surprised last year when he pencilled in an increase for defence and intelligence of some R9 billion for the next three years, a move that will take the combined spending of the two departments from a current R34 billion to R41 billion in April 2012.

The minister did, however, cut R699 128 from this year’s defence allocation in his adjusted budget tabled on October 27. Vote 19 allocated R32 024 384 to defence in February last year. This was trimmed to R31 325 256. The cut was less than expected. In June it was reported that Treasury had cut the defence budget by R1.98 billion over the medium term, taking R740 469 000 from the current budget, R644 137 000 from next year`s and a further R595 638 000 from that of FY 2011/12. It is not clear if these cuts will still be made.

The Medium Term Budget Policy Statement (MTBPS), on its page 58, puts the revised budget at R34.1 billion for FY2009/10. The R2.8 billion discrepancy could be the state security (intelligence budget). This was in October 2008 included in the defence budget under a joint heading, “defence and intelligence”. There is no separate entry for state security in the state budget as the actual figure is classified.

This coming financial year’s defence budget – according to figures released last February – was to have been R32.389 billion. It will now be R36.5 billion, about R4 billion more. Because of the above ambiguity it is not certain all of this is for defence. Even so, the 2011 budget has also been boosted from R34.418 billion to R39.3 billion, an increase of some R5 billion. The 2012 budget is set to be R41.9 billion, according to the October 2009 medium term Treasury estimates.

This increase comes despite South Africa being in its first recession in 17 years and the worst global financial crisis since the 1930s. It also comes in the face of ballooning state expenditure and a fall in government revenue.

The budget increase comes close to the figures sought by the defence department in its 2007/8 Annual Report. That document avered that defence needed R41.3 billion in the 2011/12 financial year (it is getting R39.3 billion) to finance a credible force design (CFD) that can support a revitalised military as well as current peace operations – a key plank in SA’s foreign policy.

The DoD wanted R45 billion in 2017 and R46 billion by 2023, at which level spending would stabilise. The current budget amounts to about 1.3% of Gross Domestic Product (GDP); or less than five cents out of every Rand government spends.

The state security budget will likely increase about 8% this year, which is the average growth in government expenditure. The police budget, meanwhile, will climb to R56.3 billion from April 1 this year, from a revised R50.9 billion for the current year and an actual expenditure of R44 billion in 2008/9. In April 2011 the police budget,according to the MTEF will grow to R61.3 billion while in April 2012 it will increase to R65 billion,an 8.5% growth in three years.

Government expenditure will climb by the same margin, growing from a current R11.9 billion to R13.3 billion this April, R14.4 next April and R15.3 billion in 2012. Actual spending for the year to March 2009 was R10.3 billion. Confirmed spending on prisons that year was R12.6 billion. For the current year it is R14.9 billion and this will grow 12.8% to R16.3 billion in April, R20.4 billion next April and R21.3 billion in April 2012. This is, however, small beer when compared to the anticipated education budget of R160.2 billion, social protection allocation of R132.2 billion or the health department’s R100.8 billion.
Commentary

Defence strategist and consultant Rear Admiral (Retired) Rolf Hauter says the budget direction is “indeed a difficult call to make and will be subject to the decision on how … Gordhan intends to fund the budget. Allocations will have to be weighed against the a reduced inflow, an acceptable budget deficit and obviously increased demand in other areas,” he says.
“Overall, Defence will be lucky just to have the amounts mentioned in the 2009 Medium Term Policy Statement confirmed. What it will be spent on appears evident, to cover the salary increases that were implemented in December and most probably on operations envisaged during World Cup 2010. Over and above one must realise that the Minister still has a challenge to get the Military Veterans part of the Department fully operational.
“The Police stands a better chance of receiving the full amount. Crime remains a challenge and a priority. The only reason why fighting crime was kept low key in the State of the Nation Address is most probably not to sound alarmist before the World Cup,” Hauter adds.
“Although border management, as part of the crime fighting priority, is of the utmost importance it must again be reiterated that there will be preciously little to manage if the parties involved are not properly equipped! This includes dedicated equipment in all three environments land, air and sea. One should not be lead to believe that borderline control can be achieved purely through collateral use of equipment. This will be a very expensive solution,” he says.

Defence writer Helmoed-Römer Heitman says the “economic crunch could argue for cutting defence – despite it already being too tight – but the reality of having awarded massive salary increases argues against that. I suspect that we will see defence stay more or less at the budgeted amount with no increase to cover the new salaries, pushing the SANDF further out onto the slippery slope.
“I do not foresee any cuts in the police or intelligence budgets, although the police is, arguably, over-funded and needs to begin performing,” he adds.

Asked how the budget could be spent, Heitman said the allocation will have “to meet the new salaries and also fund some other improvements in the conditions of service. The other priority for the current MTEF must be to move ahead with the Army’s major projects, the Navy’s Project Biro [its offshore patrol vessel requirement] and to do something about airlift and [air force] maritime patrol [Project Saucepan].
“The latter will not see much spending required in this period, but need to be started. The main immediate expense for the Army will be Hoefyster [the Badger infantry combat vehicle], with some money for GBADS II [ground-based air defence, Project Protector, a short-range system, likely the Denel Dynamics Umkhonto] also falling into the period. Vistula [a logistic truck programme] needs to start, but is unlikely to require much funding in this period.
“The question of paying for border patrols must also be addressed. I gather that most – or even all – of the money set aside for that task has gone the way of all things mortal, so it remains to be seen where the cash will come from. They will need to find money to allow the SANDF to take on the role, and it needs to be a priority. But they will first have to find the money and, while they are at it, find out what the SAPS did with the money allocated to them for that role in the past few years. They clearly did not spend it on the mission.
“The police should spend some money on retraining those members who will come into contact with foreigners so that they can do their job properly and not create a terrible impression. The intelligence services need to spend some money on monitoring what is going on in our wider region. The current level of intelligence seems to be rather low.”



A third analyst,who asked not to be named, said he’d “argue that national security is the Achilles heel presently – given the international stage that the World Cup presents. I would like to recommend that this should enjoy THE priority between now and June but I have not been impressed by those in charge – they are intelligence lightweights and are supported by grandstanders & general incompetence within their departments,” the expert added. “So the additional funding would probably not bring about a commensurate improvement in security.”