The plan aims to upgrade the defence force and boost domestic high-tech, digital, and manufacturing businesses.
A strategic approach is needed to involve New Zealand industry and build private-sector defence capability.
New Zealand’s response to a more complicated and challenging geopolitical and defence environment in our part of the world is a multibillion-dollar defence plan.
The Government has announced $12 billion of funding over the next four years, including $9b of new spending. Ithas talked about this new investment as an opportunity to upgrade our defence force.
But we should also be looking at it as an opportunity to significantly improve the prospects for our domestic high-tech, digital and manufacturing businesses.
We all know we have a productivity problem. We are less productive than nations to whom we normally compare ourselves, and our productivity growth is also poor.
Prime Minister Christopher Luxon and Defence Minister Judith Collins pictured during a post-Cabinet press conference following the announcement of the defence plan in the Beehive Theatrette, Parliament, Wellington on April 7, 2025. Photo / Mark Mitchell
One of the reasons for this is we have a small defence sector. In most other countries, businesses operating in the defence sector are a major contributor to productivity enhancement, creating high-value, highly productive and well-paid jobs.
We should be thinking about this new Government spending as a big opportunity to effectively involve New Zealand industry and build our own private-sector defence industry capability. This should be done in such a way as to enable Kiwi businesses to engage, not just with our New Zealand Defence Force upgrades, but also those that will be taking place in neighbours and allies such as Australia, Singapore and further afield.
After all, New Zealand is not the only one increasing its defence capability through new spending. There are some organisations in Australasia that already help in some aspects of this work. We have the New Zealand Defence Industry Association, and Australia has its Industry Capability Network, which purports to also work with New Zealand firms to supply Australian Government needs, including in defence.
But to my mind, what we need is a much more deliberate, properly resourced and strategic approach to making the most out of our new defence spending — and that of our neighbours — from a New Zealand industry perspective.
Over the past few days, our Prime Minister has praised Syos Aerospace, a New Zealand firm operating in the United Kingdom, building unmanned aerial vehicles that have been used in the defence of Ukraine. We need to think about how we can upscale 100 firms such as Syos, to be working with the NZ Defence Force and others.
This is not just about making those New Zealand companies aware of the possibilities.
It is about working with them on things such as building their capability to bid for projects, ensuring project spend is chunked out in such a way that Kiwi firms can actually bid for them.
It’s about enabling proper timelines and engagement frameworks so that New Zealand businesses can compete fairly. It’s about Defence Force procurers being willing to take a bit of a risk on innovative new opportunities. And a willingness to actively work together. Many New Zealand businesses have told me over the years they feel locked out of Government contracting work of this sort, exactly because of these kinds of issues.
In the absence of deliberate, structured and strategic engagement with New Zealand industry, the work will tend to go to the usual suspects. Big overseas defence companies.
On the one hand, we don’t want to discourage those firms. On the other, we do not want to unfairly tilt the playing field towards New Zealand firms. What we do want to do is level it for everyone.
What we need, therefore, is a true partnership between the New Zealand business sector — particularly the high-tech manufacturing and digital sectors — and the Government to ensure Kiwi firms have an authentic and ongoing capability to properly bid for government defence work of one sort or another.
This could be a partnership between the Government and the BusinessNZ family, or the relevant industry sector groups or, more likely, some special purpose partnership. It should enable real translation between what the Defence Force says they need and how New Zealand firms actually operate on the ground. That cannot be left to chance, nor just to the innovative brilliance of one or two New Zealand companies we might celebrate in the media.
It is about making clear to companies that might never have thought about supplying New Zealand’s defence needs that they have an opportunity to do so. It is about encouraging start-ups in the space to think about how they might use crossover technologies that might be useful in both civilian and defence applications.
The Australians have been doing this for decades, and they now have a defence sector to be proud of — one that is providing high-quality, high-paid jobs and community prosperity. We need to do the same, but on our own terms. Not by subsidisation and protectionism but by making sure that New Zealand firms have a fair opportunity to truly engage.
