14 Apr 2022

Hitting the right balance on defence spending

From The Detail, 5:00 am on 14 April 2022
A Royal New Zealand Air Force C-130 Hercules transporting vehicles and other equipment and the Ōhakea base this morning.

A Royal New Zealand Air Force C130 Herucles being loaded at Ohakea air base. Photo: Supplied / New Zealand Defence Force

The war in Ukraine has prompted some countries to re-think their military spending and pledge big increases to defence budgets. Even though we’re about as far away from the conflict as you can get, does New Zealand need to follow suit?  

Since its reunification in 1989, Germany – Europe's richest and most powerful country – has been coy when it comes to military spending. 

But in late February, shortly after Russia invaded Ukraine, the new German chancellor Olaf Scholz delivered a speech to the Bundestag, the lower house of the German parliament. 

"In attacking Ukraine, Putin does not just want to eradicate a country from the world map, he is destroying the European security structure," Scholz said. 

"It's clear we need to invest significantly more in the security of our country in order to protect our freedom and our democracy." 

Scholz went on to pledge a massive increase in German defence spending: promising to raise its budget to 2 percent of GDP, in addition to a one-off injection of nearly NZ$160 billion.  

It was a move that staggered observers: a signal that a nation which could, perhaps, have been accused of relying too heavily on US protection through NATO was taking a step into a new era. 

Germany wasn't alone: Sweden and Finland are now both considering joining NATO, after decades of choosing to remain independent; Canada is planning on boosting its defence spend too. 

And even here in New Zealand – about as far as you can get from the conflict in Europe – Opposition parties are making noise about whether it's time to increase our own defence budget. 

New Zealand spends about 1.5 percent of its GDP on defence - $5.2 billion all up in the last Budget. 

That's a lot of money – and, interestingly, it has increased significantly since the Labour-led coalition government came to power in 2017. 

Part of the reason for that increase is new procurement: many of New Zealand's planes and ships have been in operation for decades, and are either being replaced, or have been replaced, in the last few years. 

And military assets are expensive: the replacements for our ageing fleet of C130 Hercules planes cost about $1.5 billion; the four P-8A Poseidon aircraft, which will replace the decades-old fleet of P3 Orions, come with a $2.3 billion price tag.  

"It's a valid question to ask," says David Capie, the director of the Centre for Strategic Studies at Victoria University. 

"Why would you spend money on defence when you could spend money on housing, or hospitals, or child poverty?  

"What I would say is the long-term interests of the country are based on our integration into an international trading order, where we can safely and securely trade with the rest of the world. 

"We have obligations and responsibilities to the realm of New Zealand, in the Pacific, but also to Pacific neighbours, in terms of wanting to be able to respond to the sorts of disasters, challenges, that we know are going to be increasingly a problem with climate change. 

"We also have to accept that there are malign actors out there – state and non-state – that would wish to challenge our interests and do us harm." 

New Zealand's military spend pales in comparison to our allies: Australia spends nearly NZ$50 billion a year, more than 2 percent of its GDP; Britain, NZ$90 billion; the USA, well over NZ$1.5 trillion. 

But Capie says it's overly reductive to look at military spending as a percentage of GDP: New Zealand has responsibilities to other countries, he says, and if we wish to be capable of helping our Pacific neighbours patrol their exclusive economic zones, or assist with humanitarian efforts in the aftermath of events like the Tonga volcano eruption and tsunami or unrest in Solomon Islands, this takes resourcing. 

Some writers have pointed to a new world order possibly unfolding, as the influence of the post-World War Two great powers wanes.   

Capie agrees it's a crucial juncture in geopolitical circles, and particularly for New Zealand.  

"The last 35 years or so has really been golden weather for New Zealand in our region. 

"It's been a region that’s been largely at peace … it's got more prosperous, it's been the most dynamic part of the global economy, and it's by-and-large been a region where the status quo, under US leadership, was broadly acceptable. But clearly in the last 10 years or so, that's begun to change.   

"I think we are living through a really tumultuous time in global politics … and I think that should cause us to reflect about what we can do for ourselves, but also how we work with partners to try and safeguard our interests." 

Find out how to listen and subscribe to The Detail here

You can also stay up-to-date by liking us on Facebook or following us on Twitter


PIJF Photo: .