BUDGET REDUCTIONS TRENDS RESTRICTED 1 Personnel

Transcript:BUDGET REDUCTIONS TRENDS RESTRICTED 1 Personnel:
BUDGET REDUCTIONS TRENDS RESTRICTED 1 Personnel Capital Operating CURRENT MTEF ALLOCATIONS RESTRICTED 2 RESTRICTED 3 CURRENT MTEF ALLOCATIONS National Revised MTEF Allocations: 2022/23 and 2024/25 as received on 28 January 2022 Special Defence Account (SDA). Defence Industry Implications Loss of sovereign defence industry capability. Eventual loss of local OEM support to defence combat systems. Loss of IP (Engineers and Scientists). No investment by Defence into new technology development and experimentation. Defence Industry has lost critical mass and is unlikely to recover except for niche industries. Denel unlikely to survive (reduced OEM RMO and export business only). RESTRICTED 4 BUDGET REDUCTIONS TRENDS Personnel Capital Operating Special Defence Account (SDA). Implications for the DOD should the Contracts be terminated. Fruitless and Wasteful Expenditure. Should the DOD terminate the contracts, the DOD would have made expenses towards components/sub-components (for example sections of the vessels and partially completed survey motorboats) which the DOD cannot use. Legal Fees/Litigation. The DOD will have (via Armscor) to face litigation due to breach of contract. Payment of Outstanding Contract Amount. The Original Equipment Manufacturers will keep the DOD liable for any outstanding revenue due to terminating its contracts prematurely. During the departmental budget deliberations, the entity registered funding requirements totaling Rm 704,8 over the 2020/21 MTEF in respect of the Naval Dockyard and capital requirements among others. None of these requirements could be funded from the departmental baseline. The reduction on the SDA will have an impact on Armscor to the effect that Armscor maintain certain critical technical capabilities for the successful execution of its acquisition activities. Although these capabilities are required for both work done on the SDA as well as operating activities on the GDA, Armscor may lose some of these critical skills if no capital projects are executed and it will be costly to re-establish such capabilities when funding became available. RESTRICTED 5 BUDGET REDUCTIONS TRENDS Personnel Capital Operating Technological Advancement. Evolving and readily available technology coupled to the highly competitive arms market has resulted in military technology, weapons and equipment that are less expensive, more portable, more destructive, easily available and easier for non-state actors to operate and maintain. SANDF may lag behind these technological advancement and may be far inferior in the battlefield compared to our adversaries. Special Defence Account (SDA). Budget cuts on capital acquisition inhibit industry business thereby threatening the existence of the local defence industry. South Africa will have to