The cost of arming NZ: Ageing gear, underpaid soldiers and a shortage of ammo

Sunday, 12 May 2024

A worldwide squeeze on the cost of ammunition threatens to undermine Defence Force training, as the Government grapples with staff shortages and ageing infrastructure.

The price of an 105mm artillery shell has soared by around 600% since the military last purchased ammunition in 2020.

And with each round now costing thousands of dollars, that makes live-fire training exercises an expensive undertaking.

Russia's invasion of Ukraine in February 2022 pushed up both prices and production as allies raced to supply munitions to Volodymyr Zelenskyy’s front line.

Last year, Nato Secretary-General Jens Stoltenberg warned Kyiv was burning through shells much faster than the West could produce them.

Then, the shell shortage intensified when US stocks of 155mm rounds were diverted to the Israel-Hamas war. The price rose from 2,000 euros ($3600) before Russia's attack to from 8,000 euros ($8,490).

Many Western armies have phased out 105 mm, but New Zealand still uses them in its lightweight howitzer, which fires high explosive shells up to 11km away.

They are lighter (although still weigh some 1850kg) and so more suited to the terrain in which the army operates, hilly, mountainous of jungle in the Pacific and Asia.

That’s part of the reason Kiwi troops were sent to England to teach Ukrainian infantry troops how to operate the L119 light gun.

Since June 2022, more than 500 Defence Force personnel have trained almost 3000 Ukrainians as part of Operation Tīeke.

“It’s simple economics: supply and demand,” said Josh Wineera, a retired lieutenant colonel from the Royal Regiment of New Zealand Artillery.

Wineera is also a former military attaché, Massey University lecturer in defence studies, and an expert in training foreign military forces.

“We are now into the third year [of the conflict] and all the expensive, high-tech weaponry is drying up. So, you then fall back on high explosive artillery shells —dare I say it back to the basics — and that is really affecting the global market.”

Earlier this year, it was revealed Moscow was on track to produce nearly three times more artillery munitions than the US and Europe, as many as three million a year.

There hasn’t been a squeeze on the weapons stockpiles like this since the Gulf War, Wineera said.

“Russia has its own industry, and it's always been about the heavy artillery, Wineera said. ”But this is a problem for Western countries. The munitions industries have never had to gear up for this because everyone wants to find the next missile.”

New Zealand doesn’t manufacture the shells and relies on an overseas market. A spokesperson for NZDF confirmed prices have risen by 600% and that it had already experienced increase lead times from suppliers.

“I think 600% is a conservative estimate,” Wineera said. “What that means for New Zealand is that they will have to rely more on two things: simulators and trying to piggyback on artillery training exercise with allies and friends.”

One such exercise takes place annually at the Waiouru Training Area with the Singapore Armed Forces, he said.

But forward observers — personnel who direct artillery fire onto a target — must discharge a certain amount of rounds to be qualified to the Nato standard.

“Somewhere along the line, you have to live fire to either qualify, or just to feel it,” Wineera said.

The Defence Force didn’t answer questions about how many live-firing exercises are to be conducted in 2024 and how that compares with previous years, nor how training has been impacted.

“The purchased ammunition has been funded out of working capital and is held in the NZDF’s inventory until fired,” a spokeperson said. “Once fired, for training or operational reasons, the increase in cost will be realised by the NZDF in the in-year operating budget.

“Increasing ammunition costs will mean that future operations will be more expensive to conduct when ammunition is required. Fiscal constraints across the Defence and broader public sector will require the NZDF to look at a range of options to carry out essential training and deliver outputs.”

He said the defence force is working through an “internal budget-setting process” for the next year. This includes identifying any costs related to the firing of ammunition.

“This increase in ammunition cost will then be considered for prioritisation against the other funding requirements,” he said.

Peeni Henare, who served as Defence Minister between 2020 and 2023, says it became obvious soon after the invasion that Ukraine was running out of shells and other ammunition.

As Cabinet weighed up what aid to offer Ukraine, the Defence Force asked that the shells were not included in a support package.

“We were obviously supporting them in training, and we were aware that if we ran out here it would take even longer for them to be produced, and for us to purchase to use for our own training.

“The fear at that time was that Russia could produce them at a rate that no other country could compete with.

“They [NZDF] didn’t say they were going to run out but there was limited supply and that was the case worldwide,” Henare said.

“They were quite clear to us there was a limited stock of shells and ammunition and that it probably wasn't economical for us to send those but instead to make a donation to the Nato fund.”

On Friday, Defence Minister Judith Collins announced a Budget injection of more than half a billion dollars to boost pay and pay for equipment upgrades.

Earlier this year, Defence Force chief Air Marshal Kevin Short painted a gloomy picture of stretched services.

Low pay and morale meant it was struggling to retain people: 26.9 per cent of skilled staff left in the last two years, hollowing out the organisation.

Defence has been persistently underfunded. Expenditure has fallen from 2.26% of GDP in 1991 to 0.99% in 2015.

In 2020 substantial capital expenditure on the new P8 Poseidon and C130J Hercules aircraft saw it reach 1.5%. It now sits around 1.4%, far short of the 2% expected of allied countries in Nato.

Of the $571m, announced by Collins, $163m will provide a wage boost and $408m will upgrade assets over the next four years. Almost $100m came from savings identified as part of the public service-wide cost-cutting drive.

It will pay for new helicopter navigation systems and radios, replacements for the frequently-deployed Unimog and Pinzgauer trucks, and cloud-based maritime surveillance.

Foreign Minister Winston Peters recently warned the country’s “long history of parsimony” would no longer be tolerated by partner countries.

Collins acknowledged the world is increasingly unstable.

“We have only to look at events in the Ukraine and Middle East to see how quickly people's lives can change. This Budget announcement is a signal that New Zealand is ready to step up and play its part to protect the freedoms that so many of us take for granted.”

Henare said it was unrealistic to expect spending to reach 2% of GDP in the near future, and difficult to justify in a cost of living crisis.

“But long-term, they do need that kind of projected spend to have security because it takes so long to do things in defence. It’s exactly what need so they can do that planning.”

A review of what the Government needs to spend, headed by Sir Brian Roche, is due to be published soon.

It is expected to recommend replacing the two ANZAC frigates and Project Protector ships, at a cost of around $10bn.

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