Treasury nixes DoD spending plans

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Treasury has turned down Department of Defence submissions for additional funding over the next three years totaling some R11.3 billion, equivalent to just over one third of this year’s R30.7 billion budget. Finance minister Pravin Gordhan also cut that budget by about R2 billion from an expected R32 billion.

The military asked for the funds last year. It is not clear why Treasury turned down the additional funding proposals although it likely was the result of cost cutting caused by the recession and perhaps an absence of a convincing business case for the expenditure. Treasury has imposed “savings” worth R8 billion on the national defence force over the next three years, stating with the R2 billion this year.

The defence department wanted R2.8 billion to bolster salaries, R5.3 billion to for new equipment, R1.4 billion to better operate the helicopters, fighters, ships and submarines acquired under the 1999 Strategic Defence Package and R427 million to train the Reserve as well as R121 million to realise the defence enterprise information systems master plan.

Proposal

FY2010/11

FY2011/12

FY2011/12

Total

New SANDF Remuneration System

R 904 781 519

R959 068 410

R1 016 612 514

R2 880 462 443

Sub total: Rejuvenation (Equipment)

R796 870 000

R2 135 928 000

R2 356 330 000

R5 289 128 000

– Landward Systems

R543 870 000

R1 628 128 000

R2 081 330 000

R4 253 328 000

– Maintenance & repair of operational vehicle fleet

R150 000 000

R158 000 000

R165 000 000

R473 000 000

– Procuring critical ammunition

R100 000 000

R105 000 000

R110 000 000

R315 000 000

– Replacing operational ambulance fleet

R3 000 000

R244 800 000

nil

R247 800 000

Sub total: Operating SDP equipment

R410 569 787

R503 776 766

R 569 244 443

R1 483 590 996

– Aircraft

R 224 500 000

R299 100 000

R344 100 000

R867 700 000

– Ships/subs

R186 069 787

R204 676 766

R225 144 443

R615 890 996

Continuation training for the Defence Reserve

R135 863 858

R142 520 844

R149 504 725

R427 889 427

DEIS MP

R351 894 000

R397 991 000

R461 889 000

R1 211 774 000

Totals

R2 599 979 164

R4 139 285 020

R4 553 580 682

R11 292 844 866

Treasury instead allowed the department to make variations within the R30.7 billion budget worth R4.7 billion:

Allocated

FY2010/11

FY2011/12

FY2011/12

Total

New SANDF Remuneration System

R600 000 000

R730 000 000

R850 000 000

R2 180 000 000

Rejuvenation (Equipment)

nil

R100 000 000

R500 000 000

R600 000 000

Operating SDP equipment

nil

nil

R200 000 000

R200 000 000

Continuation training for the Defence Reserve

nil

nil

nil

nil

DEIS MP

nil

nil

nil

nil

Military Skills Development System

R50 000 000

R70 000 000

R100 000 000

R220 000 000

Salary adjustments

R422 721 000

R470 316 000

R510 142 000

R1 403 179 000

Department of Military Veterans

R20 000 000

R30 000 000

R30 000 000

R80 000 000

Totals

R1 092 721 000

R1 400 316 000

R2 190 142 000

R4 683 179 000

It remains to be seen if the department or Parliament will accept these constraints after much talk over the last two years of migrating the military from a budget-driven to mandate-driven paradigm and invoke the new Money Bills Act. The chairman of Parliament’s Portfolio Committee on Communications, Ismail Vadi, this week told Department of Communications officials the law required oversight committees to report back to the National Assembly on departmental budgets “and we have the option to accept, change some things or even reject the budgets.”

The DoD Annual Report for FY2007/8, published in October 2008 bluntly stated the budget was insufficient to build a credible force design. The report saw a need to boost defence budget to R41.3 billion in the 2011/12 financial year. It added the budget increase would allow the Services to “largely attain” their Credible Force Design (CFD) by 2025 and fully realise it by 2031. The CFD will require spending to reach R45 billion in 2017 and R46 billion by 2023 “when it should stabilise”.

The annual report added that the increase in spending and personnel was necessary in light of SA`s “significant role in the promotion of continental peace and security… Whereas the 1998 Defence Review envisaged that external commitments would be limited to the deployment of a single battalion (approximately 1 000 soldiers), force levels deployed in support of international commitments already exceed 4 500 soldiers.”

Should only limited funding be forthcoming – as now appears to be the case with the budget increasing by just 5.1% to R36.3 billion in 2012 from a trimmed R30 billion this year – a second option would be to partially attain the CFD. Under this model, which the annual report did not recommend, the SANDF “will have to focus on those landward programmes that are critical for the fulfilment of SA`s international obligations and commitments as ordered by government” such as the SANDF Operational Reserve, the requirements for UN and AU peace missions, humanitarian and disaster assistance and the contributions for the SADC brigade and AU Standby Force.

This option places “emphasis on the SANDF`s motorised infantry battalions, airborne and other rapid entry forces, military engineering capabilities, tactical intelligence, logistics support systems, military health capabilities and other appropriate combat support elements for the abovementioned forces. “The mechanised elements (armour, mechanised infantry and artillery) in the landward conventional capability would have been retained in survival mode with life extension programmes and little direct renewal of prime mission equipment.”

If no money can be found for the CFD, the SANDF will have to shrink to a size that “is both viable and sustainable over the long term. The SANDF would be partially able to meet ordered commitments. However, significant risks and limitations would exist,” the report warned. “The best possible output within the budget, with the best balance of forces, would be sought. Certain defence capabilities are reduced and other defence capabilities are completely lost.”
 



Pic: A Mfezi operational ambulance.