Defence Capability Plan a solid start - and with real money

Tuesday, 8 April 2025

ANALYSIS: In the middle of a few weeks in which the Trump administration seemed determined to cast aside its global moral, military and economic leadership, the New Zealand Government released its long-awaited Defence Capability Plan.

Although the details of how the funding is set aside will not be seen until the May Budget, it delivers the biggest permanent uptick in Defence spending in post-Cold War New Zealand history. In eight years, Defence spending is expected to double to 2% of the economy.

“New Zealand’s geographic isolation no longer shelters us from threats to the extent it once did,” the plan stated.

If there was one sentence in the plan that summed up the current strategic challenges facing New Zealand, that would be it.

The plan was released 10 months later than expected - and what a change those months have brought. Chinese ships patrolling the Tasman Sea, the US poised to walk away from the role it has occupied since World War II and, in the middle of all of this, the biggest boost to New Zealand's Defence spend in decades.

Not only that, it puts New Zealand on a trajectory towards spending 2% of the economy in eight years. And the Government has described it as a spending floor, not ceiling, for what New Zealand will commit to defence spending.

Defence strategies are easy to write, but much harder to put real money against. But they are never really the former without the latter. Just a well-written wishlist with photos of ships and troops (We and the Aussies have been very good at these these past few decades.)

This plan appears to match baseline resource with strategic intent - at a high level at least. It is broadly supported by Labour.

The plan commits $12 billion of spending over the next four years, with $9 billion in new spending. It prepares the nation for a world in which New Zealanders will have to cough up more money to spend on their defence and hug Australian military capacity in the region more closely. Interoperability with the Australians will increase and the defence forces become more of an ANZAC force.

The projection of force in the region is among the biggest changes in this policy document. There is also an emphasis on the development and adoption of drone technology. New ships are on the list, but they come in a few years’ time.

But if the plan is followed through on, the general build up and repair job of under-resourced armed forces is across the board. In addition to investing more money into current vessels to bring and keep them up to scratch, it includes a widespread new spending programme to update Defence housing, bases around the country and to boost recruitment.

The Defence forces, which have about 8700 regular force personnel, 3300 reserves and 3000 civilians will have to grow by an estimated 2500 over the next 15 years. That will likely occur as new tech and kit comes online.

The backdrop for this is simple. Chinese adventurism in the Pacific and geo-strategic competition between China and the US sets the mood music. Plus, as the past couple of months have made clear, the US involvement in the region and in global security more generally, cannot be relied upon in the same way it could prior to Donald Trump becoming US president.

The domestic strength of the MAGA movement and clear isolation and protectionist turns taken by the US - including prior to Trump - mean that he may well not be an aberration.

The plan was also explicit about the threats posed by a rising China - seen most recently during its war games in the Tasman Sea in February.

“China’s assertive pursuit of its strategic objectives is the principal driver for strategic competition in the Indo-Pacific, and it continues to use all of its tools of statecraft in ways what can challenge both international norms of behaviour and the security of other states,” it said.

“Of particular concern is the rapid and non-transparent growth of China’s military capability.”

The full context of both the quantum of money and what the trade-offs were in order to pay for this will become clearer in the May Budget.

But this is serious new money. As Defence climbs in the list of importance during the coming years, the likely question for New Zealand will not be if it is too much, but whether it is sufficient and delivered quickly enough to satisfy our ally Australia, and the eye of Trump if it comes our way.

The amount of money for what looks like not very much is a reminder of just how expensive defence is. And it is a reminder of the extent to which the US has subsidised the democratic defence umbrella for decades.

The world has changed, the assumptions about defence that New Zealand’s political class has operated under, have also changed.

Conceptually, the plan looks pretty strong. And it is reflective of both Judith Collins being in Defence and perhaps more importantly, NZ First as part of the coalition.

We now await the Budget to see how this is financed, and how and when the money is locked in.