The war for the defence dollar

Yesterday was D-Day - Decision Day - for the armed forces. Political editor JOHN ARMSTRONG examines the biggest defence shakeup since the Anzus crisis.

Who's the winner?

The Navy - sort of. There's no third frigate. Instead, the Navy will get a long-range, ice-strengthened "multi-role" vessel around 2005 to replace the ageing Canterbury.

The new ship will be able to carry small numbers of troops and vehicles - handy for peacekeeping and disaster relief in the Pacific, as well as evacuating nationals, protecting New Zealand's exclusive economic zone, undertaking search and rescue, and simply maintaining a "presence." With its limited firepower and helicopter, the 100m ship will be an adjunct to the Navy's two very modern Anzac frigates.

But it is not a frigate - and critics say a two-frigate Navy is not practical because one of them will always be tied up in dock. Then again, the last National Government backed off buying a replacement frigate for the Canterbury. And other countries' navies - Denmark, for example - have multi-role vessels rather than relying on just one class to patrol their waters.

The transport ship Charles Upham - decried as a "lemon" of a purchase - will be sold. Heavy "sealift" will be undertaken by commercial charter.

Prime Minister Helen Clark had flagged the purchase of two or three additional smaller, mid-range patrol ships, but decisions on those await further study of maritime patrol needs.

And the loser?

No surprises here. The 17 Skyhawks and 17 Aermacchi jet trainers will be sold. The Air Force is neutered, losing the air combat and air-to-ground strike capability it has had since the Second World War.

Up to 700 jobs will go, although some staff will be redeployed. A question mark hangs over Auckland's Whenuapai base. But the six Orion surveillance planes will be retained - and they will get a minor upgrade of their hopelessly outdated radar.

They may be fitted with expensive anti-ship Harpoon missiles. But they will do far less military work, such as submarine detection. Other Government departments - Customs, fisheries protection and so forth - will have much greater say in what the planes actually do.

The five propeller-driven Hercules transport aircraft will be upgraded or replaced with new ones. Same with those other work-horses, the 14 Iroquois helicopters.

The two Boeing 727s, which are used to ferry defence personnel and VIPs around the globe, will be replaced with leased or chartered passenger jets. It should be noted that much of this re-equipment programme was scheduled by the last Government.

The Prime Minister's spin has been to paint this as a massive $2 billion expenditure on the armed forces over the next decade when much of it would have happened anyway. Moreover, specific timings for upgrades and their exact costs were glaringly absent from the announcement.

What about the Army? More spin. As part of its drive to help the Cinderella of the armed forces, the Government is already buying 105 Canadian eight-wheel-drive armoured vehicles, light operational vehicles (essentially four-wheel-drives) and hand-held radios.

Again, National had earmarked those items as priorities.

Meanwhile, the Coalition has quietly dropped a proposal to boost the Army's two battalions with 500 extra regular troops. Instead, it will look at ways of making the Territorials more attractive to both civilians and employers.

Why is the Government doing all this? First, simple practicalities. Military hardware is very expensive, and technological advances are increasing the cost all the time. The pathetically weak New Zealand dollar makes matters worse.

Apart from rank-and-file members of the National Party, no one is calling for big increases in the defence budget.

Governments set defence priorities to spread the cost over years rather than take a big hit in any one year. But Governments have procrastinated on updating even basic stuff, like the Army's Vietnam War-era two-way radios.

The big crunch has arrived. And Labour is picking up the bill. But underlying this is a heavy ideological current shifting New Zealand away from doing things merely because they fit our allies' requirements.

Yesterday's decisions flow from last June's defence policy framework. This 20-page document stipulated the Government's core requirement for "well-equipped, combat-trained land forces which are also able to act as effective peacekeepers, supported by the Navy and Air Force."

The Government emphasises the words "combat-trained" and argues it is better to have depth in one branch of the armed forces rather than skimpy breadth of capability across all three.

In short, let's do a few things really well, rather than a lot of things badly.

Is that why the Skyhawks are being sold? Let's cut the pretence. A lot of people in this Government do not like New Zealand having jet fighters. With the public split along party lines, the Government is gambling most people will get over the warm-fuzzies induced by a Skyhawk fly-past.

But money is also driving the decision. The Skyhawks still have a market value - but won't for much longer. Selling the Aermacchis will also raise more cash.

On top of that, disbanding the air combat force will save around $870 million in operating costs over the next 10 years. This exercise in robbing Peter to pay Paul will help the Government find the $2 billion it will spend across the defence portfolio.

Will the Government get away with this? No one seriously thinks the Skyhawks are there to protect us from invading hordes. The strongest argument for their retention - as voiced by the "Group of Seven" former defence chiefs - is that getting rid of the Skyhawks limits New Zealand's flexibility in responding to unforeseen crises in the Asia-Pacific region in conjunction with allies.

New Zealand will only be able to send troops - which means more casualties. On top of that, land forces cannot operate without air cover or without the ground-attack assistance in which our strike aircraft specialise.

New Zealand troops need to be familiar with the techniques of forward air control and using close air support, even if that air support is provided by allies.

Helen Clark counters this by saying such training will be provided through exercises with the Australians. And she claims that the Skyhawks have been used in such a training role on only three occasions during the 32 years we have had them.

She says New Zealand will never deploy alone, and other countries will provide air cover. Moreover, the only occasion the Skyhawks might have been deployed - the 1999 landing in East Timor - they were not, although they coincidentally returned from exercises in Southeast Asia at the time.

Helen Clark argues that the planes have only once fired shots in anger - across the bows of a Taiwanese fishing vessel off the Taranaki coast in 1976. All this made the Skyhawks a low priority.

Will our friends and allies kick up a fuss? Australian ministers will despair - but only in private. At the very time Canberra is looking at a big defence bill for re-equipping its military, New Zealand appears to be easing back its help to its key ally.

New Zealand is not making it any easier for Australian ministers to pick up the phone when we strike trouble in other areas of transtasman relations. However, John Howard is conscious of the pressures on the New Zealand military caused by the East Timor operation.

The big question is whether the far more hawkish Kim Beazley, his likely Labor successor, will be so accommodating. In one of the documents released with the defence announcements, New Zealand officials warn that disbanding the air combat force was likely to be "negatively perceived" by the United States and would be "unwelcome news" in Washington, which is now expecting other countries to do far more to enhance stability in our region.

Malaysia and Singapore - New Zealand's partners in the Five Power Defence Arrangement - will also be less than impressed. But Washington and Canberra tend only to express anguish in public about the overall size of New Zealand's defence budget, rather than any particular part of it.

Helen Clark is promising modest budget increases of $300 million over the next five years for operational expenses, but is ruling out raising the percentage in terms of gross domestic product - the international standard for measuring a country's contribution to its defence.

Will National replace the Skyhawks with new fighters or fighter bombers? This is the acid test for the Opposition, which castigated yesterday's package as "cuts, isolationism and bludging."

Jenny Shipley argues that defence is now a defining issue between the centre-left and centre-right parties.

But it took until yesterday for her to commit National to re-establishing an air strike capability, possibly in conjunction with the Australians. National's problem is that the longer Labour stays in power, the more difficult it will be to rebuild the infrastructure to support jet fighters.

That will call for lateral thinking. One option that has been floated is to pay part of Australia's Air Force bill in exchange for training New Zealand pilots.

But politics is also the art of the possible. Apart from convincing the electorate that hundreds of millions of dollars should again be spent on jet fighters, National will probably need a centre-ground coalition partner to get back into power - and such a partner may jib at the expenditure.