New Zealand proposes to cut defense spending by 6.6% amid personnel and equipment shortages

New Zealand's conservative government will cut military spending by 6.6%, according to the Defense Minister's Office, even as the armed forces face aging equipment, manpower shortages and a desire to play a greater role regionally.

Proposed defense spending would fall to NZ$4.95 billion ($3.03 billion) for the year ending June 2025, according to unpublished data provided to Reuters by the defense minister. This year's defense budget was NZ$5.3 billion.

The new budget, due to be presented on May 30, would cut New Zealand's defense spending to 0.9% of GDP, from 1% this year, according to the Defense Forces.

The cuts come as recent government reports warn of aging equipment and the military struggles to recruit and retain personnel. Besides these challenges, the government wants to improve the state of the country's armed forces and take on more regional and global missions, as well as studying the application to join the AUKUS Defense Pact.

“I have always been clear that defense needs more funding and I am determined to support it,” Defense Minister Judith Collins told Reuters in an email, adding that key decisions on investment spending plans would be made after the Defense Capabilities Plan is finalized in June 2018.

The cuts put New Zealand at odds with many of its traditional partners, such as Australia and Japan, who are increasing spending in response to China's growing military presence in the region.

Japan, which was spending about 1% of its GDP on defense until 2022, will reach about 1.6% next year and aims to reach 2% by 2028. Australia will rise from 2% to about 2.4% over the next decade.

New Zealand Prime Minister Christopher Luxon has worked to increase international engagement since taking office, including sending a maritime security team to the Red Sea. But falling revenues and rising debt have hampered the country's ability to increase defense spending, even as it expresses concern about China's growing presence in the Pacific region and the deteriorating global security environment.

David Capey, director of the Center for Strategic Studies, said the government had made clear it wanted to spend more on defense and be seen to be doing more on defence, but decades of persistent underinvestment meant the chickens were coming home to roost. At Victoria University. One budget will not be enough to address this problem; It will require large and sustained investments over a long period.

The country's Ministry of Finance presents the government's budget, which must be approved by Parliament. Finance Minister Nicola Willis did not immediately respond to a request for comment.

The government said it wanted to cut spending by 6.5% to 7.5% on average across all agencies.

Three of the Royal New Zealand Navy's nine ships are already stuck in port due to crew shortages. The Air Force's Boeing 757-2K2 planes regularly break down, and in March, Luxon had to board a commercial plane to attend an Association of Southeast Asian Nations (ASEAN) summit after his plane was grounded.

New Zealand has also been forced to request assistance from other countries for maritime surveillance and regional search and rescue operations after withdrawing its P-3K2 Orions five months ahead of schedule due to personnel shortages.

In February, the outgoing Defense Minister, Air Marshal Kevin Short, estimated that the country was just over NZ$5 billion behind in defense spending compared to that planned in the 2019 Defense Capability Plan.

He told a parliamentary committee this year that readiness remained one of the biggest challenges facing the New Zealand Defense Force.

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Diplomatic sources say New Zealand's lag in spending and military capabilities will hurt its chances of joining the technology-focused part of the AUKUS defense pact. The government is currently discussing what the membership will entail.

Australia, Britain and the United States signed this agreement in 2021. It is essentially a plan to help Australia build nuclear-powered submarines, but the second step, which aims to develop other military technologies, such as hypersonic missiles, is open to other countries. South Korea and Japan have expressed interest.

According to diplomatic sources, applicants for membership must bring the money, technology, or industrial capacity to justify the additional complexity of adding new members.

According to a New Zealand government source, this puts New Zealand at a disadvantage.

“You have to show the money,” said an AUKUS diplomat based in Australia. The two sources declined to publish their names due to the sensitivity of the issue.

“You have to show you are investing in the industrial base that will make you a useful ally, otherwise you are adding complexity without reaping the benefits,” the Australian source said. ($1 = 1.6329 New Zealand dollars)