The state spent R520.6bn on bailouts and debt relief over the past decade, which left little for other programmes, including defence, the National Treasury said in parliament on Tuesday.
Other factors were the slow GDP growth, high debt service costs and the priority given to state-owned enterprises, grants and free higher education, it said.
Parliament’s defence committee called on the Treasury to explain the department of defence’s claim that it had been underfunded for several years and has incurred unauthorised expenditure — R2.9bn in 2022/23 and R3.4bn in 2023/24 — for compensation of employees that was not budgeted for.
The lack of funds has led to the SA National Defence Force (SANDF) not being able to modernise its equipment.
Treasury acting chief director of public finance Mashudu Bidzha said R520.6bn expenditure had been financed through baseline adjustments and increased borrowing. National, provincial and local baselines were reduced by an accumulated R457bn over the period on the assumption that baseline adjustments were aligned to inflation.
“Spending on infrastructure and essential goods and services took the brunt of the baseline adjustment, directly impacting service delivery,” Bidzha said.
He recommended the defence department implement measures to be more efficient so as to avoid overspending of its budget. “There is limited scope for additional funding given the constrained fiscal environment,” he said.
The Treasury recommended the department manage overtime spending, which cost R520m in 2023/24, and other discretionary allowances in addition to a “mobility exit mechanism” that allowed military personnel to leave before retirement age.
Over the past two financial years, total such exits amounted to 2,540 with the majority of personnel being 55 years and older, but Bidzha said early retirement was needed to alleviate the pressure of the salary bill on the budget. The department’s salary bill in 2023/24 was R24.4bn of a total budget of R56bn.
“A soldier for life notion should be reconsidered,” as well as the retirement age of 65 stipulated in the Defence Act, Bidzha said, noting that while the personnel headcount had declined the salary bill had increased.
The department recorded a decline of 9,120 in personnel headcount from 78,011 in 2014/15 to 68,891 in 2023/24 but this had had no discernible effect on compensation of employee expenditure, he said.
“This had occurred after the department received additional funding of R1.8bn during the 2022 medium term expenditure framework to implement the exit mechanism for SANDF personnel.”
The Treasury recommended a reduction in the number of defence attaché offices — the department spends about R320m annually on defence foreign relation issues — as well as the merger and disposal of non-strategic assets.
“The department should expedite the implementation of the recently developed cost recovery model for services rendered to other departments,” Bidzha said.
More stringent control over overtime payments was needed as this item had grown steadily, with significant increases noted for the deprivation, leave credits, leave gratuity and standby allowances.
Bidzha referred to the impact on the budget of long and open-ended peacekeeping missions by the SANDF.
He noted that since 2017/18 the department of defence had received R13bn in additional funding for missions, UN reimbursements and other emergencies. This included R2.4bn for the deployment of troops in Mozambique, R2.1bn for troops in the Democratic Republic of Congo, R3bn for Covid-related interventions and R4.5bn in reimbursements from the UN.
Since 2012/13 the department had received R37.3bn in additional funding through the medium-term expenditure framework processes.
Another concern of the committee was budgetary allocations for border safeguarding by the SANDF. Bidzha said the department had received an additional R2bn since 2012/13 in that regard and had been allocated R4bn over the next three years.
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