As defence armament heats up Down Under, can NZ sustain its response?
Tuesday, 2 June 2026
ANALYSIS: As small and middle powers work closer together to hedge against global volatility, many - including Australia and New Zealand - are also boosting military spending.
Global military expenditure reached $2887 billion in 2025, according to data published by the Stockholm International Peace Research Institute (SIPRI).
This spending rose 41% between 2016 and 2025, with the global share of GDP devoted to military expenditure sitting at 2.5% in 2025.
“The 2030s have been identified as the most dangerous decade since World War II,” Mike Hughes, director of the Defence Strategy Program at the Australian Strategic Policy Institute, told The Post.
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Australia is rapidly transforming its Defence Force from a low-intensity operation to a combat-capable service - and New Zealand is moving in the same direction.
With strategic competition only heating up in the Indo-Pacific region, is New Zealand doing enough to contribute, and are its efforts sustainable?
The global push to militarise on full display
The IISS Shangri-La Dialogue in Singapore pulls defence ministers, military chiefs, diplomats and arms dealers together to debate regional security and policy responses.
Although many speakers promoted dialogue at this year’s summit, military expenditure was front and centre, after US Secretary of War Pete Hegseth said America demanded 3.5% of GDP be the new norm.
Professor of International Relations David Capie said Hegseth’s speech was predictably transactional, but his comment suggesting New Zealand was “free loading” amounted to a storm in a tea cup.
“It’s no secret Washington wants all its partners to spend more on defence, but he didn’t have New Zealand in his sights. The messaging from the bilateral meeting afterwards was all very warm.
“Clearly the [New Zealand] Government wants to spend more on defence, but there’s also a recognition you don’t just walk down to the shops and start buying new ships and aircraft. It takes time to spend money well. And there are significant competing domestic pressures as well.”
New Zealand committed $12 billion to defence between 2025-2029, $9 billion of which was new money to modernise its military.
Hughes said from an Australian point of view, New Zealand had put too much emphasis on diplomacy over defence muscle.
“When the global order was working well, and countries like the United States were essentially footing the security bill for it, New Zealand had the freedom to pretend that diplomacy was all that mattered but in the current environment that we’re now in, diplomacy is insufficient.”
That was now changing, he said, although there were likely questions in Washington and Canberra as to how sustainable it was.
“The key thing I’ve noted is that 2025 Defence Capability Plan (DCP) essentially means that in terms of a percentage increase in the budget, New Zealand’s actually moving faster than Australia at the moment. That’s quite remarkable.
“Obviously, there will be eyes on the November election and whether New Zealand can sustain that over the long term, but the change in pace has been welcomed, certainly here in Australia and I'd imagine in the US.
“That would be part of why Hegseth, even though he has no problem calling people out … it was a very friendly calling out by comparison to what’s happened with Canada and Europe, particularly with NATO.”
New Zealand treads a careful line
Defence Minister Chris Penk was in the room when Hegseth called New Zealand a “free loader” and was quick to respond in a panel shortly after, saying it was New Zealand’s view that dialogue and defence spending were not “mutually exclusive”.
New Zealand has long pushed for diplomacy but last year’s DCP clearly sets out strategic conditions - along with a plan to meet them - that requires more than just talking.
Capie said smaller states like New Zealand were always going to see value in talking, but diplomacy was more persuasive when it was backed up with concrete action on regional security.
“New Zealand has always been a strong supporter of the inclusive ASEAN groupings. I think what’s interesting is we’re now seeing a greater engagement with new, smaller security-focused groups.”
Penk had a three-way meeting with his Japanese and Australian counterparts on the sidelines of the Shangri-La Dialogue; frigate procurement likely top of mind as New Zealand weighs up the relative merits of the Japanese Mogami-class and UK Type 31 vessels.
New Zealand also signed up to a pact to enhance international co-operation between more than half a dozen countries to protect undersea infrastructure.
“We’ve seen cables deliberately cut in the Baltic Sea and in and around Taiwan,” Capie told The Post.
“This grouping is a modest arrangement that gets countries together to agree to some common principles on cooperation and to share information and lessons learned. It’s an effort by a collection of mostly small and middle powers to try and shape rules and norms in an increasingly contested space.”
Battle lines drawn, but sustainability in question
The sustainability of New Zealand’s defence investment has been questioned by both Capie and Hughes for different reasons.
“I think the real challenge for doing more in the defence space is going to be people,” Capie said.
“Last year's Defence Capability Plan talked about growing the NZDF by 2500 people. That is a huge ask. We spend a lot of time talking about the need for new planes or ships, but they are not much use unless you have the skilled personnel to operate them.”
Hughes said it was New Zealand’s political landscape that was a variable - and whether defence spending would stay on track if there was a change of government.
In the meantime, New Zealand and Australia are poised to do more and more together, due to the ANZAC 2035 agreement to integrate armed forces and build an interoperable, combat-capable force.
Whether New Zealand can sustain the spending increases will be a key political question in the years ahead, but after decades of relying on diplomacy, Wellington clearly sees a need to do more - with more like-minded countries - to guard against the fallout of global volatility.
Anneke Smith’s travel to the Shangri-La Dialogue has been made possible by support from the Asia New Zealand Foundation.