Government focused on trimming military hardware spend, despite Ukraine war, and Chinese Pacific threat

The Royal New Zealand Navy's largest ever ship, HMNZS Aotearoa, arrives into Devonport Naval Base. Photo / Michael Craig

The Government will not say whether the war in Ukraine has caused it to rethink its decision to run a ruler over the defence budget.

However, comments from the Defence Minister and the Prime Minister suggest ministers will stick with their current defence spending strategy, which is to pivot away from expensive hardware towards retaining staff, and fixing the ailing defence estate.

Last year, new Defence Minister Peeni Henare announced that Labour, who had taken over the portfolio from NZ First's Ron Mark, would review the Defence Capability Plan, a document put together under the NZ First-Labour coalition.

He said at the time, this would align the portfolio with Labour priorities.

This was widely interpreted as meaning expensive defence hardware commitments would be pared back or pushed into the future, with the spending focus shifting to retaining staff and maintaining the existing defence force estate.

Since then, the Government has deferred the purchase of a Southern Patrol Vessel, which was initially meant to be built by 2027.

Shrinking defence spend

New Zealand spends relatively little on defence.

Figures from the OECD show New Zealand spends about 1.5 per cent of GDP on defence, down from about 2.5-3 per cent at the height of the Cold War. Australia's defence spend is currently about 2 per cent of GDP, and the OECD average spend is 2.48 per cent.

When asked whether the deteriorating global security situation as a result of the war in Ukraine would cause him to rethink the review, Henare would not give a definitive answer.

Instead, he said defence spending decisions would be made on the merits of each individual project, and would go to Cabinet as individual business cases.

"Future Defence Force capability investment decisions are for Cabinet to consider subject to individual business cases in the context of the Government's wider fiscal considerations and priorities," Henare said.

He added that he was "committed to ensuring the New Zealand Defence Force is equipped to operate effectively across the full range of its requirements".

Henare listed "broad spectrum" of requirements placed on the modern defence force, including staffing MIQ facilities, providing aid to Tonga following the volcanic eruption and tsunami last year, and helping with the evacuation of Afghanistan last August.

Henare said the Government remained committed to the priorities published in last year's defence priorities plan, "People, Infrastructure, Pacific".

Those priorities signalled a shift away from expensive tech towards retaining and rewarding staff, ensuring the defence estate buildings were well looked after, and focusing on New Zealand's capability in the Pacific.

Prime Minister Jacinda Ardern spoke last week on concerns this Ukraine was not the time to be cutting back on the defence budget. She would not be drawn into a discussion on spending priorities ahead of the budget.

Defence Minister Peeni Henare. Photo / Jason Oxenham

"There is a number of pressures on our Defence Force, particularly around the Defence Force estate, around retention of workforce, but all of those are for Budget consideration. So I won't say anything further on that now," Ardern said.

National's acting defence spokesman Gerry Brownlee urged the Government not to cut any spending at "a time of great uncertainty amidst the Russian invasion of Ukraine".

"[Any cuts to New Zealand's defence budget (either operational or capital expenditure) would send the wrong message to the nations we have traditionally been partners with, and the world," Brownlee said.

Pacific Threat

There are fears the globally deteriorating security environment will add to the uncertainty in our own region, as China and the United States vie for Pacific power.

Last month, the United States published its Indo-Pacific strategy, in which President Biden promised "to strengthen our long-term position in and commitment to the Indo-Pacific.

The strategy called out China for "the economic coercion of Australia", the "bullying" of nations in the East and South China Seas, and "undermining human rights and international law", and warned that China was combining its "economic, diplomatic, military, and technological might" to pursue "a sphere of influence in the Indo-Pacific and seeks to become the world's most influential power".

Since then, it has been revealed that China and the Solomon Islands are negotiating a security deal, which could give China a foothold in the region.

Ardern described the development as "gravely concerning," to RNZ on Monday morning.

The agreement raises the possibility that China could one day have a military base in the Pacific. This scenario was obliquely referenced as something of a worst-case scenario in last year's New Zealand Defence Assessment, a document that outlined the current threats facing New Zealand.

It warned that the "establishment of a military base or dual-use facility" by a state that did "not share New Zealand's values and security interests" would "fundamentally alter the strategic balance of the region".