KEY POINTS:
The Defence Force is expecting to be hit with serious staff losses over the next few months.
Parliament's foreign affairs, defence and trade select committee was also told New Zealand would be hard pressed to send troops to any new crisis in the Pacific.
Defence Force head Lieutenant General Jerry Mataparae said it was falling "slightly behind" recruitment targets.
"We are finding it increasingly difficult to recruit the right numbers and the right technical tradespeople in the navy, the army and the air force."
On top of that the force was expecting resignations - he did not put a figure on how many.
"Unfortunately the recent data indicates attrition rates are on the rise again."
There were 13,640 full and part time service men and women and civilians in the force.
"We are anticipating that this period from about December to March, which traditionally is a period of higher attrition, that we are in fact going to see that."
National MP Wayne Mapp said personnel had got modest pay rises around the rate of inflation.
Lt Gen Mataparae said this year an interim pay increase was made but it would be looked at again next year.
"Pay and remuneration is a special consideration for the Defence Force this and next year."
He said a remuneration strategy and housing assistance policy would be up and running and resourced by July next year.
The committee was told housing affected staff retention and a recent examination of the largely 1950s stock found the cost of bringing houses up to modern standards was $500 million.
The committee was told "an innovative" approach would be taken to reduce the cost. The problem was so bad because previously funding for maintenance had been diverted for other uses.
Mr Mapp questioned whether the army needed to be bigger or redesigned.
Lt Gen Mataparae accepted there was not enough capacity to be able to send an additional battalion if there was a new crisis in the Pacific.
There were already deployments in Afghanistan, Solomon Islands and East Timor.
"We will not be able to provide an additional battalion."
However, a smaller group could be sent for an absolutely critical deployment in the region.
Lt Gen Mataparae said that as part of the defence sustainability initiative the army was being grown.
He also said an army transformation programme was expected to be completed by the year's end.
Defence Minister Phil Goff told NZPA that when unemployment was low recruitment and retention would always be a problem.
Recruitment would focus on specific areas such as medical personnel, engineers, and technicians.
"It is a problem, but no greater problem than you would expect at a time of full employment and a parallel to what our colleagues are facing across the Tasman and elsewhere."
Mr Goff said the housing upkeep problem reflected the overall backlog of problems for defence when Labour became Government in 1999.
"We've put a huge amount into capital expenditure, some $3.3 billion through the long term development plan, we've put another $4.4b into the defence sustainability initiative. We are tackling these problems but we can't do them all at once."
- NZPA
