Budget For 1998/98: briefing

Meeting report

DEFENCE PORTFOLIO COMMITTEE
20 MAY 1998
BUDGET FOR 1998/98: BRIEFING

Documents handed out:
Budget briefing to Joint Standing and Portfolio Committees of Parliament on Defence: 20 May 1998

SUMMARY
The purpose of the meeting was to familiarise the members of the Portfolio Committee on Defence with the budgetary issues facing the SANDF, in order to allow them to participate meaningfully in the budget debate on 26 May. There was a request that the committee become involved in lobbying the government for an increase in the priority it gives Defence in its budget allocation.

DETAILED MINUTES
At the outset of the meeting, Mr. HA Smit (NP) asked that the committee meet as soon as possible to discuss the theft of arms from Tempe Military Base and other similar incidents.

Mr Yengeni (ANC) responded that the Joint Standing Committee on Defence had already asked the Minister to prepare a delegation to appear in front of the committee. He continued that this was a very serious matter and that although he had noted the Minister’s response, he felt that immediate steps should have been taken against the commanders. He said that piles of military equipment did not just disappear and that the country and the Defence Force needed to be reassured.

Mr Groenewald (FF - Chair) responded that at the time of similar thefts at National Intelligence HQ, no immediate action was taken and although it was known to have been an "inside job", the matter had still not been resolved. He agreed that the matter needed to be dealt with swiftly.

BUDGET PRESENTATION
The presentation was lead by Mr. Jack Grundling (Acting Chief of Finance).

Mr Grundling started by pointing to the optimum distribution of the budget, i.e. 40% to personnel, 30% to operating costs and 30% to capital acquisitions. At the moment however, because of the integration process, the personnel budget is 57%. This puts pressure on operating costs and capital. He pointed out that at the moment the SANDF is unable to decrease personnel other than by voluntary severance, resignations and non-renewal of short term service contracts. The SANDF is also awaiting the outcome of negotiations on the Employer Activated Retrenchment Mechanism.

Mr. Grundling also noted that the increased number of personnel resulted in incremental increases in e.g. clothing, food, ammunition etc. Last year spending on capital renewal was 12%, this year 8%. Mr. Grundling said that in his opinion, the survival of the defence industry was at stake.

PERSONNEL PLANNING
Col de Wit (SSO Personnel Planning - Personnel Division) continued with the presentation. He reminded the committee of the need to reduce the personnel component of the budget from 57% to 40%. At present the SANDF has 93 324 full time members; by 2002, the goal is 70 000 - a reduction of 23 324. Through natural attrition, selective non-renewal of contracts and EIR’s and VSP’s, the department hoped to reduce numbers by 6076 in 98/99, 12 100 in 99/2000 and 5148 in 2000/01.

SPECIAL DEFENCE ACCOUNT
R Adm Verster (Director Weapon Systems Acquisition Division) gave a breakdown of the capital component. He pointed out that the White Book capital amount had decreased from Rm961 in 97/98 to Rm809 in 98/99. Furthermore Rm171 of the overcommitment authority (Rm300) had been spent in 97/98 and would have to be offset against this year’s budget. Rm50 had been received in respect of sales of aircraft. This meant that the total capital amount available this year would be Rm688. R Adm Verster told the committee that this translated into one third of a tank regiment or 1,3 fighter aircraft or two thirds of a Corvette. The Department had therefore requested a loan from the Dept. of State Expenditure of Rm771. This was to be paid off over a period of 4 years, at a cost of Rm340. (calculated as 17% of shortfall over 9 months).

Mr. Yengeni (ANC) asked for further explanation of this loan.

R Adm Verster responded that this amount would be used to bring the present allocation into line with last year’s budget. If this was not done projects like the Rooivalk which had already absorbed Rm2000 would have to be scrapped.

Mr. Yengeni then asked what the implications were of only having Rm688 for capital renewal.

R Adm Verster responded that at present no new projects were being initiated. Only those already underway, such as Rooikat and Cheetah were being rolled over. The priority was to complete existing projects.

Mr. Yengeni asked whether this meant that the acquisitions programme could not continue.

R Adm Verster responded that package deals could be placed now using bridging finance, with payment to take place after 4 or so years. Strategic alliances could start now.

Mr. Grundling told the committee that the 8% was not enough for government to government negotiations.

LANDWARD DEFENCE PROGRAMME
Brig Genl Venter (Chief of Army Staff Planning - SA Army) told the committee that because of the decrease in funds available to cover operating costs, it was increasingly difficult logistically, to employ the available manpower. This meant that landward defence was compromised. To illustrate, he pointed out that in 1997 21 commando platoons, 1 part-time company and 40 full-time companies were deployed. In 1998, 23 commando platoons, 5 part- time company and only 19 full time companies have been deployed. This translated into an increase in illegal border crossings & drugs and arms smuggling, which would mean and increase in crime and unemployment. Courses would also have to be curtailed as would joint training and military exercises, which would mean a decrease in levels of preparedness if called on for international peacekeeping.

Mr. Molekane (ANC) asked whether, despite the ANC opinion that internal military involvement should decrease, more money could not be found elsewhere to bolster the SANDF’s border patrolling. How had negotiations gone between the SANDF and the SAPS?

Genl Venter responded that no funds had been made available.

Mr. Groenewald (FF - Chair) asked what percentage of the budget went to patrolling borders.

Genl Venter did not know, but will calculate the amount.

Mr. Makwetla (ANC) said that the political implications in respect of Landward Defence seemed unacceptable, in terms of using commandos and part-time forces, as well as the fact that training cuts will inevitable retard efforts towards representivity

AIR DEFENCE PROGRAMME
Brig Genl Hartzenberg (Chief of Air Force Staff Planning) told the committee that there had been an 8,4% decrease in real terms in the Air Force Budget. In order to come in at the amount available, flying hours would need to decrease to 35 000. This, he said was not a viable amount and would mean the demise of the fighter line. At least 50 000 hours of flying was required. This meant a shortfall of Rm90. He also reminded the committee that although the SANDF goal was a capital amount of 30% of the total budget, the Air Force, being capital intensive, was working towards 40%. At present the amount available is 29.4%. While personnel accounts for 35,5%, the goal is 30%.

MARITIME DEFENCE PROGRAMME
R Adm Trainor (Chief of Naval Support) told the committee that the navy had never been the recipient of large budgets and that the baseline was therefore very low and margins limited. Capital investment from 1985 to 1997 had been a mere 7%. The impact of this was that the Navy was not able to continue with its required operations, as ships were not available. He pointed to a number of examples, e.g. SAS Outeniqua which should be at sea, but is non-operational and requires spares. SAS Jan Smuts is being stripped for spares instead of refitting etc.

Sea days have decreased from just over a thousand in 1996 to 600 in 97/98, as a result of increased breakdowns. The result is that South Africa has less authority in her maritime zone and an increase in criminality at sea. R Adm Trainor said that the Navy was a cost-effective security asset which was suffering the effect of being kept below critical mass for more than a decade.

MEDICAL SUPPORT PROGRAMME
Maj Genl van Rensburg (Chief of Medical Staff Planning) ended the presentation, telling the committee that a survey by the Dept. of Public Service had shown that at present only R1365 is spent on medical treatment for each member per annum. This compared very poorly with over R3000 in other public sectors. His department also estimates that an amount of Rm20 is required to cover the requirement (which flows from recommendations by the Human Rights Commission) that dependents of married female members should also receive medical benefits. 66% of the budget goes towards personnel and very little funding is left for capital acquisitions.

Ms Kota (ANC) expressed her annoyance with the fact that the SANDF always complains of the expense of integration and doesn’t seem to be looking at rationalising in other areas, pointing out that soldiers are paid a lot less than generals. She said that she was concerned that this was indicative of a certain mindset.

Mr. Grundling responded by saying that there is rank inflation in the SANDF and that at times the mindset is wrong, but that this is the point of the transformation process.

Mr. Ramaremisa (NP) expressed concern about the border control problem and asked what should be done.

Genl Venter responded that the matter also involves South Africa’s neighbours and that talks were being held with, for example, Mozambique to assist with patrols. Diplomatic/government input in this respect would be useful.

Mr. Makwetla (ANC) asked why the defence budget had only been topped up to facilitate integration and not until completion of rationalisations and transformation. He also asked where the decision of a Defence allocation of 1,5% of the total budget came from.

Mr. Grundling answered that the integration process took longer than expected and restructuring was expected to have been completed by now. As far as the budget, he said that the Minister of Finance recommends to government the allocation, on the basis of national priorities. Discussions will be held again on 2 June and he suggested that this cycle the committee should get involved in increasing the priority given to Defence.