On The Myths Of Frugality In Our Defence Spending

one sense, Peru is the poster child of political
instability, having gone through nine presidents in the past
10 years, with several ending up in jail. Paradoxically,
Peru has also been a model of economic stability. Julio
Velarde has been the governor of Peru’s Central Reserve
Bank since October 2006, and Peru’s currency – the sol
– is widely regarded as being one of South America’s
strongest and most stable currencies.
Yesterday’s
run-off election in Peru would have elected the 10th
president in the past decade. It pitted a hard right option
– Keiko Fujimori, daughter of a previous extreme right
wing president – against a hard left option, Roberto
Sanchez. The result has ended up in almost a statistical
dead heat, with Sanchez reportedly ahead by only 4,300 votes
94% of the vote has been counted. Political gridlock and
mutual accusation of voter fraud will follow.
Velarde, meanwhile, will finish his fourth five year term as
governor of Peru’s central bank in July. If Sanchez wins,
he has indicated he will ask Velarde to stay on. Yet Velarde
may have finally had enough.
Defence: no expense
New Zealand’s chronic sense of insecurity is
never all that far from the surface. If we aren’t bragging
that we’re punching above our weight we’re anxious that
foreigners might not like us and/or might think we’re not
pulling our weight. As a result, we over-compensate, in the
hope this might win us favourable treatment from bigger
countries that are barely aware of our
Currently, this combination of self-doubt
and appeasement is being played out in our plans for Defence
spending into the early 2030s. None of the increase seems
based on any rational assessment of what equipment we might
usefully require to defend ourselves, in what locations, and
against whom. Our own security needs are commonly treated as
being entirely irrelevant. It seems to be all about pleasing
bigger countries, in the hope they’ll stop saying mean
things about us.
The current plan is to lift the money
spent on Defence to 2% of GDP by 2032. One justification for
this massive increase in Defence spending is that we live in
an unstable world. Maybe so. That still begs the question as
to whether an arbitrary 2% of GDP level of spending on
hugely expensive pieces of dubiously relevant equipment will
actually make this country any safer. Where’s the
cost/benefit analysis on any of this?
Moreover, it
begs the question as to why we would be spending vast sums
in order to be better integrated with the armed forces of
the very same superpower widely seen to be the prime
instigator of the global insecurity in question. The Iran
War for instance, was triggered by the same US
administration that is currently calling us names.
fact, it could be argued - God protect us from our friends -
that the defence spending envisaged is likely to make New
Zealand less safe in the years to come, by dragging
us into conflicts instigated by our traditional allies.
Interestingly, the same isolationist Trump administration
that is cracking the whip on our defence spending is
offering us no guarantee of protection in return, despite
our government’s apparent subservience to America’s
strategic plans.
Not only are we being pressured into
serving US interests for no equivalent commitment in
return... but the days of us getting mates’ rates for US
weaponry seems
to be over as well.
[Defence analyst Dr Mark]
Obren said the US would sometimes waive research and
development costs from sales, but it appeared not to have
done so for Australia or NZ - or for NATO, where the Trump
Administration now saw arms sales as much more of a business
opportunity. "The idea of cheaper equipment provided because
we're part of the boys' club, is coming to an
Good to know. So when we’re being told by
the US War Secretary Pete ( “Pete
loves war”) Hegseth that we’re freeloading, and need
to be spending more on Defence, its worth keeping in mind
that the person saying so is a salesman for the US arms
industry. And thus, best ignored.
Those years of
All of that aside...a repeated
rationale for the expensive outlays on our armed forces is
that our military needs have
allegedly been neglected by successive governments, thus
leaving the NZDF ill -equipped to meet the security
challenges of the scary world out there beyond our shores.
(Is the world any more unsafe now than it was during the
Cuban Missile Crisis, or when the US and the Soviets were
facing off in Europe? Or during the prior wars in Korea,
Vietnam, Bosnia etc? Arguably not.)
As mentioned, it
is hard to see how lining up obediently in battle formations
under the leadership of Commander-in-Chief Donald J. Trump
would ever be in New Zealand’s best interests. More to the
point, it is not as if our military has been forced to
subsist on survival relations over recent
Here’s a list I’ve compiled of some of
the expensive ways in which our armed forces have been
re-equipped over the course of the past 25 years. I’ve not
included the annual operational costs of the armed forces,
which are considerable. (Reportedly, it will cost $NZ30,000
per hour to operate our new Seahawk helicopters.) What
follows does not claim to be an exhaustive list. But it does
2001: Light Armoured Personnel Carriers for
the NZ Army. Cost : $NZ653 million.
2001 – 2026. Ove
this period, the NZDF has bought four generations of
helicopters for a range of purposes: the five AgustaWestland
A100 trainers, the nine NH90s, the ten KamanSH-2G Sea
Sprites, and the recently authorised purchase of five new
Sikorsky MH-60R Seahawks, for advanced anti-submarine and
anti-surface warfare.
The final contracted price for
the Seahawks package has yet to be formally announced.
Presumably, this final figure will include weaponry, spare
parts, maintenance platforms, housing for the choppers etc.
RNZ has reported a
ballpark unit figure cost of $NZ400 million for each of
the Seahawk choppers, a figure considerably more than that
paid (for a variety of reasons) by other
formally approved the Seahawks sales package for $US1.5
billion, or $NZ2.6 billion. Reportedly, the Seahawks
choppers will be operationally compatible with the Japanese
Mogami-class frigates that the Australian Navy has
already begun to purchase. By the end of next year, New
Zealand appears set to buy two of the same enhanced version
of the Mogami class frigates, at an estimated cost of at
least $NZ1.2 billion each. If some of the Mogami frigates
get built in Australian shipyards, the frigates programme
will create as many as 10,000 quality jobs – but only for
Australians.
2003. Two Boeing 757 aircraft, bought
second hand when 10 years old. Cost after
modifications: $NZ 220.6 million.
2007: New purpose-built
Defence Building, Aitken St Wellington. Cost $NZ110
million. Damaged beyond repair by 2016 Kaikoura earthquake.
Replaced by
extensively refitted Defence House Bowen St. Wellington
Cost :$NZ 203 million.
2017 : New rifles for
the armed forces. Cost: $NZ59 million
Poseidon P8-A purchase. Four anti-submarine surveillance
aircraft for RNZAF. Initial Cost: $NZ2.34 billion. Beyond
the airframes, costs were incurred in shifting the squadron
to Ohakea, upgrading the Ohakea tarmac, building a
$250 million purpose built hangar for the planes and
their flight simulator, and improving the quality of the
housing provided for squadron members and their
2018: Littoral operations vessel HMNZS
Manawanui. Cost: $NZ147 million. Sank in Samoa, 2024.
Listed as a $NZ77 million write off in Budget 2025, with a
further $NZ32 million earmarked for clean-up
2019: The purpose built, ice-strengthened fleet
tanker HMNZS Aotearoa. Cost: $NZ493 million. Estimated
annual cost of maintenance: $NZ 5.6 million.
Five new Lockheed C130-J30 Super Hercules transport planes.
cost: $NZ1.521 billion.
2025: Two new Airbus
A321XKLR aircraft to replace the NZDF’s Boeing 757s (see
above) on a lease to buy arrangement. NZDF estimate the
capital cost of this project to be $NZ620 million, plus
four year operational costs of $NZ80.86 million. Roughly
$NZ700 million then, so far.
2023- 2026. Pay increases
for NZDF staff. As outlined
here, the Clark government delivered pay increases to
NZDF personnel in 2001, 2002, 2003, and 2004, culminating in
a pay increase as part of the 10-year $4.6 billion Defence
Sustainability Initiative funding package initiated in
The pay rise provides for an average 4.3 per
cent increase, with the median rank increases ranging from 3
per cent to 7.5 per cent and will give a minimum two-step
pay adjustment of $1200 to all personnel, with additional
single service targeting of trades and
The issue of pay rises was addressed
again in 2023, in the REM23 Pay Adjustment. This $419
million salary increase (over four years) was the biggest
boost to military pay in more than ten years, and (as with
previous pay hikes) was meant to stem the high rates of
attrition of NZDF both to Australia, and into the private
Budget 2026 continued this pay process via the
REM26 adjustment, that allocated a further $120 million over
the next four years. The avowed focus of these recent pay
hikes has been on raising basic pay grades for junior and
middle-ranking staff, with the intention of bringing pay
rates to within 90% of that available to private sector and
/or equivalent Australian DF personnel. This
OIA response gives tables of NZDF pay grades in relation
to estimated market pay equivalents. Reportedly, the average
NZDF basic salary is $74,000 per annum.
BTW, as the
pointed out, civilian staff employed by NZDF should
automatically be included in these pay rises, but are not.
This Budget
2026 paper outlines several other funding boosts to
NZDF. Funding was made readily available for these
war-gaming activities:
*Building a modern secure
training facility at Linton Military Camp to prepare
soldiers for mission planning in contemporary combat
* There is also $23 million capital
and $2.5 million operating over four includes
targeted funding for immediate critical upgrades in areas
such as the rifle range at Waiouru, as well as simulation
and other tools....
*Technology accelerator:
$1.5 million capital and $16 million operating over four
years on a pilot programme focused on connecting industry
with Defence to solve specific military challenges. [No
details provided on what are these “specific” military
challenges facing New Zealand, that our private sector would
be able to help resolve. Since this is a “pilot”
programme, similar military activities offering potential
profit opportunities for the corporate sector are likely to
follow, in our own version of the military-industrial
2026 : Frigate upgrades. As the 2026 Budget
paper puts it :
This year we will be spending $143
million capital and $72 million in operating costs over four
years for “critical maintenance” on our two current
Anzac frigates. There is also funding for further work to
extend the life of the frigates, while the project develops
options for their replacement
Meaning: we’re
spending $215 million to keep these floating museums a
little longer on the water for what are mainly P.R.
purposes. BTW, this $215 million temporary fix for these two
old ships is slightly more than the $212.4 million that
Budget 2026 allocated to the school lunches programme for
240,000 New Zealand children, through 2027.
fighting platforms, the new frigates (even when equipped
with the new Seahawk helicopters) will make little security
sense beyond their subsidiary role within US/Australian or
UK-led battle formations. Even then they would be at serious
risk of being taken out by a swarm of $200 drones especially
if and when – in a battle setting – the enemy has
managed to jam the “command and control” systems of our
America’s warships are vulnerable.
Deploying an aircraft carrier, like the USS Gerald R.
Ford, into a tense area conveys a potent message; it’s
a powerful tool of “gunboat diplomacy.” But it’s
questionable whether commanders would want to send it into
an active war theatre, especially against China, which is
ready to launch swarms of accurate drones and anti-ship
missiles to disable even a mighty carrier—and to turn on
cyber-weapons to jam the high-tech sensors and guidance
systems that make the carrier and its escort ships so
Still, we continue to spend billions on
the likes of frigates, as if the nature of air and sea
warfare has not changed significantly in the past 50 years.
As taxpayers, we are paying a very expensive price to enable
the NZDF to engage in what – in a security sense - are
little more than games of military cosplay. We continue to
buy expensive, vulnerable weapons platforms that will be
“inter-operable” with the expensive, vulnerable weapon
platforms of our allies, while
our alleged adversaries rely on relatively cheap,
technologically advanced weapons. Guess who would be more
likely to prevail in real-life conflict
Living the Life
As the above list
indicates, the NZDF has never had to settle for the levels
of unmet need, perpetually deferred capital expenditure,
failing equipment, and inadequate pay and staffing levels
that have long dogged the public health system. Successive
governments of the centre-left and the centre- right have
given the NZDF what they have asked for. Time and again,
only the multi-billion dollar best has
Footnote One: The vast sums
cited above continue to be poured into a relatively small
receptacle. As this research article on
the military’s role in our Covid response pointed out
The NZDF generally has around 10,000 personnel at
its disposal — the Army has approximately 4600 regular
force staff, the Air Force 2540, and the Navy 2200. The Army
is therefore essentially a Brigade, the Air Force a single
fixed wing/rotary squadron (assets don’t include combat
aircrafts), and the Navy has two frigates, a new ice-breaker
vessel and smaller patrol
Footnote Two: To foster
the sense of a social purpose for its expensive needs and
tastes, the NZDF commonly points to its role in coming to
the community’s assistance in times of need. Yet from
responding to natural disasters to fisheries protection to
finding lost sailors, all of this work could be carried out
with civilian vessels, planes and drones that would cost far
less to buy and to operate, and without the risk of dragging
us into wars initiated by our friends and
neighbours.
Moreover, there is evidence that NZDF
personnel may not excel at or even welcome such socially
useful roles. True, the NH90 helicopters proved
to be very useful for evacuations in the wake of the
Kaikoura earthquake. In the aftermath of Cyclone Gabrielle
however, the NZDF bungled
its supply of water tanks to East Coast communities in
need. More to the point, many of the armed forces asked to
staff New Zealand’s managed isolation facilities during
Covid seem to have actively resented being asked to do such
work. As the above research article reports:
the 136 staff who completed exit 17%
identified Operation Protect as a “somewhat important”
or “very important” factor when deciding to leave [the
NZDF]. More recent figures have shown that 338 personnel
left the NZDF in 2021 up to October, with a third of them
citing involvement in OP PROTECT as a factor in their
decision to leave, and with 227 of these resignations coming
from the Army.
On the upside, the same body of
evidence suggests that the Covid MIQ deployment did enable
the armed forces to better develop some of its “soft
skills” in dealing with the public. In that respect,
perhaps losing the NZDF personnel reluctant to serve society
in non-lethal ways may have been a blessing in
Attrition from OP PROTECT may act to push
out some of those who are incapable of adapting, or of
accepting that “serving” one’s country might require
something other than traditional warfighting or even
peacekeeping.
There’s a thought. For decades,
the NZDF has been trained and expensively equipped for the
prime purpose of killing people living far away, in the
alleged “defence” of our national interests. As Sir
Roger Douglas once said, there’s got to be a better