NZ defence spending boost targets pay and projects

The increase in New Zealand’s defence budget by NZ$571 million over the next four years is a welcome sign when most government departments in New Zealand are facing significant budget cuts.

Minister of Defence, Judith Collins, announced the extra funding on 10 May 2024 just two days after a devastating fire in defence housing at Burham Military Camp that caused a fatality.

The breakdown of the new money is NZ$163 million devoted to New Zealand Defence Force (NZDF) personnel pay and NZ$408 million for the initiation of specific procurements. This will form part of the new National Party-led coalition government’s first budget expected to be announced in full on 30 May 2024.

The total includes NZ$99 million from savings found in the NZDF budget and $8 million from the NZ Ministry of Defence budget. A spokesperson from the NZDF told ADM that of this amount NZ$45 million was from reducing spending on contractors and consultants.

Peter Greener, a senior fellow at the Victoria University Centre for Strategic Studies in Wellington told ADM that half a billion dollars over four years is “a step in the right direction, but there are many more steps to go.”

He explained that successive governments have remained wedded to the NZ$20 billion capital investment for defence equipment procurement announced in the Defence Capability Plan (DCP) in 2016 that allocated funds through to 2030. This was adhered to in the DCP 2019.

But he added: “There has been no indication of any commitment to anything like that sort of money. We are going to have to wait for the next DCP [due in June 2024] to get an indication of what this government is going to commit to.”

When New Zealand’s Defence Policy and Strategic Statement (DPSS) was launched by the last government in August 2023, then Labour defence minister, Andrew Little, called for an increase in defence spending to closer to 1.5 per cent of GDP to enable New Zealand to improve its capabilities and better face the degrading geostrategic environment.

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Whilst the National Party’s coalition partners New Zealand First and the ACT Party have both signalled their desire to move towards spending 2 per cent of GDP on defence it is not clear if the government will pursue this kind of funding increase.

Collins’ announcement has seen four equipment procurement projects approved by Cabinet and will receive funding in Budget 24. These include an upgrade to the NZDF’s NH90 helicopters; new vehicles to replace the NZ Army’s ageing Unimog medium utility trucks and the Pinzgauer light utility trucks; the introduction of a Data Fusion System (DFS) to improve maritime domain awareness; and an upgrade to digital services known as the ‘High Side Capability Update Project’, which involves the NZDF’s classified environment.

“The government has chosen the projects very carefully to indicate that they mean business,” Greener said, “For instance, the military operational vehicles, they are looking for a Commercial Off The Shelf (COTS) solutions to replace existing vehicles so they will have something to show for it at not a huge cost.”

Under the Protected Mobility Capability Project (PMCP) phase one, the NZ Army is replacing its 361 unarmoured Mercedes Unimog trucks and Pinzgauer trucks with 230 new COTS utility vehicle – medium (UV-M) and – light (UV-L). A request for proposal closed in June 2023 with a decision expected this year.

The NZ Army has already replaced its 60 armoured Pinzgauer Light Operational Vehicle fleet with 43 Bushmaster NZ5.5 protected mobility vehicles that were delivered in 2023 under PMCP phase one.

Proceeding with the DFS maritime domain awareness project highlights the importance of the maritime domain and integrating information. Funds will provide a subscription to a cloud-based computer application. But DFS is a vastly scaled back version of the Enhanced Maritime Awareness Capability (EMAC) programme.

EMAC was supposed to provide new uncrewed aerial systems (UAS), among other capabilities, to support the four recently acquired P-8A Poseidon maritime patrol aircraft capability. A RFP for the DFS was released in August 2023 and a solution was supposed to have be selected at the end of last year.

“It is better than nothing,” said Greener, “but for a maritime nation like New Zealand it is not the perfect solution. Shorter range maritime surveillance aircraft to complement the P-8As was something I was keen to see alongside satellite capability.”

The NH90 helicopter upgrade includes the addition of new navigation equipment and radios that will improve interoperability with Five Eyes partners. Until recently the NH90 had gained fleetwide serviceability rates in excess of 70 per cent with the average rate of about 60 per cent since 2019, but the rate so far in 2024 has seen this drop to 34 per cent largely due to manpower limitations.

This fall in aircraft availability indicates how seriously the NZDF is suffering from attrition, with very high numbers of personnel leaving the service. This has impacted capabilities and the ability to deliver outcomes for the government. The latest focus on additional pay measures follows the efforts of the last Labor government to prevent further manpower losses. This is essential for the NZDF to recover its capabilities post Covid-19.

The NZDF spokesperson explained that the NZ$163 million remuneration is divided into NZ$40.75 million per year and will be used to continue the Interim Sustainment Allowances; increase the Military Factor by NZ$3101 per person (the Military Factor is additional pay for uniformed staff on top of salaries); bring Military Factor rates for reservists in line with regular forces; and increase the NZDF’s Operational Allowance.

“The NZDF has an interim workforce plan in place that focuses on retaining, recruiting and re-enlisting people,” the NZDF spokesperson said, “and we hope this additional funding will continue to drive attrition down and recruitment up.”

Greener said that “new kit, defence estate and retention of personnel are all part of capability.” But he added that the Ministry of Defence still has to find savings of 6 per cent like other ministries as part of the coalition government’s cost cutting agenda.

Damien Rogers, associate professor of International Relations and Security Studies at Massey University told ADM that Collins’ announcement was “unremarkable” for a right-of-centre government. He said there is a lack of debate in New Zealand about the direction of foreign and defence policy, which needs to be challenged and tested.