Defence Budget 2001-2004: briefing

Defence

04 October 2000
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Meeting report

JOINT STANDING COMMITTEE ON DEFENCE
4 October 2000
DEFENCE BUDGET 2001 - 2004

Present:
AFRICAN NATIONAL CONGRESS
Bloem, DV
Diale, NL
Fassie,
Kota, Z
Makwetla, SP
Maphoto, LI
Mashimbye, JN (CHAIR)
Mohlala, RJB
Mogale, EP
Morwamoche, KW
Nqculu, LV
Ntuli, SB

DEMOCRATIC ALLIANCE
Gogotsha, J
Jankielson
Koornhof
Schalkwyk, DA
Smit, H

DEPARTMENT OF DEFENCE
Brig Jack Grundling, Chief of Finance
James April, Chief Director: Budget
Dawid Fourie

Documents handed out:
Defence Budget Planning submission for the Medium term
[e-mail info@pmg.org.za for this document]

Discussion
Grundling: On October 28 the Minister of Finance will consider the Budget for approval by Cabinet in early November. Now is an opportunity for the Joint Standing Committee on Defence to intervene with Cabinet prior to this approval. Later on, Parliament cannot change a money Bill.

Schalkwyk: There are a lot of negative reports from the SANDF regarding inadequate petrol, tents and other supplies. How can the Committee intervene?

Smit: Has the R74 million lent to Mozambique to support its election been repaid?

Grundling: No, recovery of those funds is now the responsibility of the Department of Foreign Affairs.

Nqculu: MPs are disempowered when told too late about problems when it is too late to act.

Mashimbye: Why are MPs told repeatedly there is no money for fuel, uniforms, etc?. Is that true?

Grundling: I can confirm these shortages. Today's presentation will provide insights into why. The guidelines were produced last year. That is the time MPs can best make their impact. It is too late by the time the Budget process is produced. Politically, you must decide whether we can maintain a big defence force with inadequate money. There are major diseconomies, and consequently major wastage, in managing the SANDF.

Schalkwyk: It is internationally accepted to spend 30 percent on capital equipment. South Africa is spending too high a percentage on personnel. Yet South Africa cannot retrench surplus personnel without considering the social consequences.

Grundling: We are operating on 40 percent for personnel, 30 percent for operating expenses and 30 percent for capital equipment. The higher ratio for personnel reflects our African circumstances. There is an inclination within the Defence establishment to blame lack of funding, and to say it requires R18 billion for sustainability in terms of current force design and associated structures as described in the Defence White Paper and Defence Review. We must also be aware of where we come from, as illustrated by these ratios.

1989/90: 4.6% of GDP spent on defence --- 19% on personnel (conscription) and 44% on capital
1994/95: 2.5% of GDP - 37% on personnel - 28% on capital
2000/01: 1.6% of GDP - 39% on personnel - 34% on capital

If the personnel percentage could be cut to 35%, there would be adequate funding for operating expenses although losses through criminality and negligence are far too high.

The Defence budgets for the current and following two years are:

Rand billions

 

 

 

Years

2000/01

2001/02

2002/03

Defence Budget

13.8

15.3

16.5

Procurements

2.8

3.8

4.5

Personnel

5.7

5.7

5.8

Operating expenses

5.2

5.6

6.1


Nqculu: Is the personnel budget for 81 000?

Grundling: Yes. From the current budget of R15 272 213 000, R51.5 million must be transferred to the Department of Public Works to maintain Defence buildings. This is far too low. We are maintaining a Defence establishment that is too big for the availability of money. The Personnel allocations are frozen because the Executive still has not allowed the retrenchment of surplus personnel. On procurements: in 2002/03, R4.056 billion will go to the acquisition programme for the SA Navy and SA Air Force, but nothing for the SA Army or Medical Corps.

Kota: What are the priorities of the SANDF? Why put the focus on retrenching personnel?

Grundling: We need to review the construct of the Defence business. I am not targeting personnel. I am saying we need instructions on how the money available is spent. We can spend 80% of the Budget on personnel, if so instructed. There is too big a gap between ambition and reality. After allowing for administration and the special defence account (for acquisitions) and other expenses, three branches of service were allocated funding in 2000/01 as follows:

Army -- R3.3 billion of which R2.3 billion was for personnel and R769 million for operating expenses.
SAAF -- R1.8 billion, of which R820 million was on personnel and the maintenance work is outsourced.
Navy -- R923 million, of which R601 million was on personnel and R253 million to run and service the Navy.

Thus, only R2.9 billion is available to actually run the SANDF. The Defence economy is structurally faulty. Politically, you must decide whether we can maintain a big defence force with inadequate money. There are major diseconomies present in managing the Department of Defence, with major wastage. Given the macro-economic circumstances, can South Africa afford military expenditures, including accidents of vehicles, thefts etc.

Mashimbye: What do you recommend?

Grundling: I sincerely believe it is time to review the Defence function. Either sufficient money is allocated -- or there is recognition that South Africa must cut the Defence Force. SANDF is presently not productive.

Mashimbye: Finance forces us to review what to do with Defence. NGOs and civil society have been saying so. We must review objectives. We can only do what South Africa can afford.

Nqculu: Please comment on Appendix E regarding risks on expenditure allocations.

Grundling:
The Rooivalk may have to be abandoned.
Durban and Ysterplaat plus another base may have to be closed.
The Navy can only maintain 15 rather than 24 vessels.
Peace support operations impossible.
Additional 8 000 personnel must be retrenched.
Air Force may have to dispose of 88 aircraft and 46 helicopters.
Health Service will be unable provide comprehensive service because of HIV/Aids.

Bloem and Makwetla proposed that the meeting should be closed as being too sensitive for public presentation, and that documents should be returned.

Nqculu: Nothing is so fundamental in a democracy as the right to information and public knowledge. Nothing in this document needs closure. Government policy is transparency. There is a democratic right to transparency.

Schalkwyk: An armaments manufacturer would love this information. He was worried about landward defences.

Mashimbye, as chair, ruled that the meeting would continue open after a short break.

When the meeting reconvened, it focussed upon the "Allocations Per Main Programme," which the Treasury has recommended as follows:

 

2001/02

02/03

03/04

Non Statutory Force Pensions

501 million

 

 

DRC Peacekeeping

13.2 m

 

 

Strategic Defence Packages

(exchange rate losses etc on acquisitions)

164.2 m

28.8 m

419 m

Lifeline

161.4 m

145 m

152.8 m



The meeting closed at 12:15.

 

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