In a world of cheap drones, does a 2% defence target make sense?

Wednesday, 3 June 2026

Henry Cooke is deputy political editor at The Post, and writes a column every Wednesday.

OPINION: Let’s imagine, for once, some good news.

Mānuka oil becomes the it-product of the northern hemisphere summer after Taylor Swift posts about how much she loves it. Every upper-middle class person in the world decides they have to at least try it and will do almost anything to get it, from sleeping outside beauty stores to begging for it at birthdays to consuming TikToks about the best parts of New Zealand to experience an authentic mānuka experience.

At the same time we somehow manage to extract it at a far higher yield, meaning even as demand puts the price up, New Zealand can also produce dramatically more of it. Our economy expands 5%, or by about $22 billion, in the next fiscal year thanks almost entirely to this incredible good fortune.

The result? We buy one more $400m Seahawk helicopter than planned. After all - we promised to spend 2% of GDP on defence! Indeed, US Secretary of War Pete Hegseth would rather we spend more like $761m extra on defence thanks to our unexpected manuka boom, or 3.5% of our entire economy.

Read more:

• Defence Minister Chris Penk holds the line on defence spending, pushes for dialogue

• NZ pushes back against US Secretary of War Pete Hegseth’s claim it’s ‘free loading’ on defence

One can also imagine the inverse. A nasty superpower occupies some sub-Antarctic islands and sets off a chemical weapon by “accident” that imperils our dairy industry. GDP plummets and the economy contracts. Yet by the iron law of indexing defence expenditure to GDP, we decide to scale back our defence procurement plan, despite the new danger in our neighbourhood.

Neither of these scenarios are about to happen, but they illustrate the silliness of us aiming to link defence spending to the size of our economy, something the New Zealand political class has seemingly accepted as a fait accompli. The US, which has a giant arms export industry, would unsurprisingly like us to spend quite a bit more - as illuminated when Hegseth suggested we were “freeloading” over the weekend.

This silliness doesn’t mean that we should not spend more on defence. The Defence Force makes solid arguments about the age of its hardware and need for renewal, with most of our Navy fleet reaching a natural end-of-life point in the mid-2030s. Nobody wants to be caught with ancient ships if things really do heat up in the next decade. And remaining somewhat interoperable with our only actual ally in Australia makes sense.

But trying to match other countries with a GDP-level commitment ignores the real world.

For one, it sands down our natural advantage - that is, that we are in the middle of nowhere. Neither Napoleon nor Hitler managed to invade their number one antagonist at the height of their powers because of a 33km moat. Ours is around 1500km, and unlike England at those times, we aren’t particularly important. Given this, the idea that New Zealand should be embarrassed about not spending as much on its defence as France, Hungary, or Germany makes little sense. We live right at the end of a quiet street and that isn’t an advantage to be sneezed at.

The natural response to the above point is that war is changing and what worked for Churchill won’t necessarily work for us. But the changing nature of war and emerging cost asymmetries also illustrate the absurdity of thinking more spending will protect us more, particularly if that spending is tied up in top-of-the-line American hardware.

You can see this sea-change right now in the Middle East and Ukraine. Iranian Shahed drones appear to cost around US$20,000 (approx $33,700) each, while the high-end American Patriot missiles being used to “intercept” them come to around US$4m a pop. This cost disparity has helped the vastly poorer and less powerful Iran embarrass the most powerful military in the world.

A helicopter that costs 4000 teacher salaries and requires several highly-trained individuals to operate will seem a lot less useful if it can be destroyed by an unmanned drone that costs less than a new Toyota - even if it is the fifth one to attack it.

The Ukraine War shows that these drones can get even cheaper and are entirely reshaping the way all war is fought. Single-use “first-person view” drones for less than $500 allow remote pilots to rapidly fly small explosives right to the enemy - sometimes within buildings or vehicles. AI-enabled interceptor drones to replace those Patriot missiles are emerging. The drones are now seemingly giving Ukraine a new advantage - and are forcing militaries all over the world to rethink their entire idea of warfare.

Obviously the Defence Force is very aware of this change and is actively investing in drones. An unspecified amount of a $51m programme to modernise our maritime fleet will go towards drones and $25m has been set aside for “modernising” defence force training. This is likely to be money well spent - but pales in comparison to the $2b we are spending on five new helicopters from the US.

Which brings us to the real reason we seem to be so set on spending more on defence: Because the US wants us to. Prime Minister Christopher Luxon openly told us he would be reminding US President Donald Trump of our purchase ahead of their meeting last year. The official Defence Capability Plan sets out a desire to enhance our alliance with Australia and “the wider Five Eyes partnership” by making “material contributions”.

Perhaps 2% of spending would be a good idea, just in a different configuration. Perhaps even more. But given the rapidly changing nature of war it would be good if we could set out goals for this spend that went beyond getting a seat at the big boys’ table.