Budget for Defence for 1999/2000

Defence

22 February 1999
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Meeting report

JOINT STANDING COMMITTEE ON DEFENCE

JOINT STANDING COMMITTEE ON DEFENCE

23 February 1999

BUDGET FOR DEFENCE FOR 1999/2000

Documents handed out:

Defence budget (the public did not receive a copy)

Please note: National Expenditure Survey : Defence Budget available from http://www.finance.gov.za/bo/budget_99/nat/survey/vote_22.htm

SUMMARY

The committee members were concerned with the lack of border patrols and assistance to police that the Defence Department says will be the result of defence budget cuts and yet the committee members agree with the government's priority on socio-economic expenditure.

MINUTES

Mr Grundling, Chief of Finance: Defence Secretariat, gave a briefing on the Defence budget. It followed on the last briefing in October 1998 that made the committee aware of the Department of Defence requests for its 1999/2000 budget and what its short, medium and long-term needs were. (The October meeting was closed to the public because of the equipment packages presented to cabinet in November.)

In 1989 the Defence Budget was 4,6% of the GDP, in 1997/1998 it was 1,6%. The Department of Defence was unable to spend its budget between 1989 and 1997 leading to further cuts in the budget termed "underspending". Now the Department is "overspending by 400 million", though with stringent expenditure control it may be able to break even.

Defence has been able to withstand these cuts and still function adequately. The Transformation plan over the past three years will draw down the force levels and further anticipate a budget of 1,5% of the GDP. There will be a huge margin between what the force design should be and reality. Should the budget decline to 1,4%, the force design will be cut further.

The mandate from the Constitution requires combat-ready forces to protect borders, support police and regional involvement. This mandate's implementation programme has endeavoured to make the structures more efficient and to make forces available (including during voter registration).

The briefing touched on the areas of personnel, support operations and capital renewal. In the short term, the marginal cuts are extremely tight. It is essential to reduce personnel numbers after inflation created by the integration of forces. Because the equipment has not been modernised for ten years, the strategic packages for re-equipment are now essential. A number of personnel would have to be retrenched at the end of 1999. Cabinet has decided to look at the affordability of retrenchment packages.

The budget was predicated at R10 billion annually from 1996 to 2007. Capital purchases rise to R3 billion annually after the year 2000 funded by a cut in personnel. The government team investigating the costs of the equipment packages is not yet in a position to go into detail.

Mr Visser gave the budget amounts for 1999/2000:

Basic allocation, incl. salaries: R5 770 m (1999) R 5 541 m (2000)

(personnel, 52% of budget)

Other Expenditure: R2 992 m (1999) R3257 m (2000)

Special Defence Account: R1 212 m (1999) R1629 m (2000)

Plus inflation costs for personnel: R300 m (1999) R275 m (2000)

Assistance to police and boarder protection is being reduced.

With regard to the Navy, of 9 strike crafts, only 4 would be available in 1999/2000 due to funding limits. Days at sea were also being reduced.

Support Operations - costs

Border Control Operations:

Option 1 - R135 million (as present)

Option 2 - R 60 million (cutting back)

Suspending boarder control - R 0 (nil)

Support to SAPS:

Option 1 - R141 million (as present)

Option 2 - R63 million (Swaziland, Namibian and Botswana borders would not be controlled)

Suspending police support - R0 (nil)

Elections 1999 would amount to R18,8 million

Operation Boleus (Lesotho) has depleted reserves, hence the need to cut support operations unless further funding is provided. The cost of the operation was R35 million plus equipment out of inventory which needs to be replaced. An estimated R144 million is now required to fund a contingency such as Operation Boleus.

RDP and GEAR require the restructuring of the budget to put the emphasis on socio-economic upliftment. Defence has been seized upon to fund the "peace dividend" of the transition in 1994.

The Department of Defence has spelled out annually what the implications of defence cuts and the consequences of not being able to carry out its mandate as a result of budget cuts. With such a decline, the capacity of the past cannot be maintained. Parliament has approved spending 2% of GDP, but allocations are still being cut and are now at 1,4%.

If Parliament want ships and submarines for the navy, planes for the Air Force, then 1, 7% of the GDP is required.

The Chairperson, Ms Modise, and Mr Makwetla (ANC) commented that the committee agrees with the Defence budget cuts for socio-economic reasons. However the Department of Defence annually gives the committee a long lamentation. It is a politically loaded debate in terms of cutting back on assisting the police and border patrol, especially with elections around the corner. The committee has been trying to be united with the Department despite disputes but there is no convergence on this issue.

Personnel

Totals:

April 1998: 93 324

Currently: about 88 000

By 2002: 70 000 personnel

The new plan of personnel reduction (dependent on retrenchment packages) is as follows:

1999/2000 - 5347

2000/2001 - 4668

2001/2002 - 6605

The target is to reduce personnel costs to R4.3 million or close to 40% of the defence budget.

Mr Marais (NNP) asked whether there was any intake into the SANDF. The response was they are still hiring personnel, especially in the navy and air force, but the figures presented are net after natural attrition and packages.

The Chairperson said that she was concerned that the cuts were such that the Army would be unable to reach the border in the event of war because of lack of spare parts. She wondered if the committee should accept this?

Capital Budget

Reduction from 4.6% to 1.6% of GDP. The Department always looked at paying personnel first, with capital expenditure coming from what was left over. This year only 8% of the budget was allocated to capital. It was intended to increase to 30%. In 1998/1999 it was R849,9 million.

The shortfall is R373 million which will have to be rolled over to be paid out of the next year's budget. Next year the Department anticipates a shortfall of R90 million.

Sales of R50m involve ammunition and equipment such as tanks.

The defence budget in 1999/2000 was R10 487 billion, which is 1.43% of the GDP and in 2002/2002 it is estimated to be R11 373 billion, which is 1.28% of GDP.

The Chairperson commented at the close that she did not believe that the committee had been taken seriously.

Mr Marais (NNP) said they had worked hard in the Defence Review. He was disappointed that a sustainable defence force for South Africa had not been reached. It is always painful to pay an insurance premium and the cuts in defence spending will be regretted. The stability of the country is at stake. 1.7% would be a more realistic allocation of GDP.

Mr Makwetla said that the budget document cannot pass with the endorsement of this committee because the document is staconcedes that sa borders unprotected. If the document is an accurate reflection of the state of affairs, we cannot endorse it. We would be seen as having reduced Parliament to a waste of people's taxes. In the document it says the Army has reached a point where it is difficult to protect the borders of South Africa. Sections of borders will be unmanned and that will become public knowledge.

Likewise support of SAPS will be reduced. In the current climate of crime, we cannot go to the public with such recommendations.

Training is to be cut by 50%. Personnel are inadequately trained and morale is low. These are serious developments. We need a serious review rather than support the Department of Defence.

Mr Grundling replied that Mr Makwetla's concerns were very real. This information is already on the government's website and is available internationally. Likewise all embassies will get it. This lament reflects the state of Defence as it has been declining. This committee had resolved to communicate this state of affairs to the Deputy President, but nothing was done. A parliamentary process is missing to liaise with the Department of Finance earlier in the system.

The Chairperson said that as it was available on the Internet, there was nothing that the committee could do before the budget vote on 9th March. By contrast, the Americans are budgeting more for Defence. The committee needed to start engaging with the Ministers of Defence and Finance.

Mr Makwetla commented that it was a serious security risk that the budget document which stated that South Africa has borders which are not being guarded, was already on the Internet.

The Chairperson added that the meeting in October had been closed to the press for security reasons. Why would the Department of Defence broadcast to the world that South Africa is now "naked". She said that meetings are closed so as to limit transparency on security issues.

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