The Government Communications Security Bureau headquarters. File image. Photo: RNZ / Samuel Rillstone
* This article has been corrected to reflect the funding cut with a large infrastructure project coming to an end. Also reference to GBSI has been removed as there was no reference to it in Budget 25.
Funding for the largest spy agency has taken a cut in Budget 2025.
The $267m for the Government Communications Security Bureau (GCSB) is well down on the previous two Budgets, and 20 per cent less than the GCSB's spending in the 2024/25 period.
Its partner agency, the New Zealand Security Intelligence Service (NZSIS), also received a modest reduction, with its budget dropping to $111m from $117m.
But GCSB and NZSIS said this reflects a large infrastructure project coming to an end.
"The GCSB appropriation contains both operating and capital funding and as a result there is likely to be volatility from year to year as capital projects start and finish," it said.
"Both the GCSB and NZSIS remain well funded and well positioned to carry out our important missions of keeping New Zealand and New Zealanders safe."
Between the two agencies, they have been allocated $375m in Budget 2025, down from $457m in 2024 and $515m in the budget for 2023.
Threats rise as funding falls
Funding changes come at a time of intensifying security challenges with both agencies reporting the country faces a "deteriorating threat environment" from violent extremism, terrorism, foreign interference and espionage.
In plain terms, both agencies report that protecting New Zealand is getting harder.
According to the GCSB's latest Cyber Threat Report, online dangers are particularly severe.
"As more cyber threat actors enter this environment, it is becoming increasingly difficult to disassociate or attribute state and criminal cyber activity."
The government has repeatedly given the deteriorating security environment, especially in the Indo-Pacific as a core driver behind a big jump in defence spending, starting now and lasting at least for the next seven years.
"New Zealand is increasingly exposed to security risks," the SIS said in its 2024 threat report.
"The cyber threats we face are evolving at a remarkable pace," said the GCSB in its 2024 annual report.
"The pace of geopolitical deterioration in recent years, and its impact on the rules-based architecture, has placed a greater significance on the GCSB's unique and legally mandated capabilities."
In February this year, GCSB Director-General and Chief Executive Andrew Clark said in February said in a statement to the Intelligence and Security Committee that over the past year threats from "malicious cyber actors... are more persistent, more sophisticated, and more capable of causing severe impacts to New Zealanders, and can come from anywhere in the world."
The agencies also work within the Five Eyes intelligence group, which has been adding functions such as a "federated" space system that conducts experiments.
There was also increasing demand to help Pacific islands build secure communications, and in July 2024 the GCSB took over the Computer Emergency Response Team from MBIE.
Despite this, the spy agencies were not immune to the public sector savings drive last year.
Both were restructured from 2023 amid "significant workforce and technology cost pressures". Both did a "rapid savings exercise" and joint financial sustainability drive delivering $11m in savings.
However, Budget 2025 has not required a repeat.
Neither the GCSB nor NZSIS has "provided any savings in Budget 2025", they said.
Overseas spy spending reshuffles
Among New Zealand's Five Eyes intelligence group partners, Australia, the UK and Canada have been raising spy agency spending, while the US is poised to cut intelligence jobs, and quite likely budgets.
Over the Tasman, Five Eyes partner Australia increased its spy spending by $45m over the next four years in its 2025 budget.
Canberra in 2021 promised $1.4b new spending on spies over the decade.
Like Australia, New Zealand embarked on big increases in spy agency spending several years ago, but here the spending brakes have been pulled.
In the US, the Washington Post has reported that the Trump administration "is planning significant personnel cuts at the Central Intelligence Agency and other major US spy units, downsizing the government's most sensitive national security agencies".
In the UK, the government is spending more on its intelligence agencies, as it recognises an increased "overlap" with the armed forces.
The Single Intelligence Account (SIA), which provides funding for the UK's, three main security and intelligence agencies was given a boost of NZ$770m for the 2023/24 and 2025/26 period, "ensuring that our world-leading intelligence agencies maintain their cutting-edge capabilities".
Aside from the spy agencies, Budget 2025 sees an end to funding for two arms of counter-terrorism efforts: A strategic framework for $250,000 in 2024/25, and a research centre set up in response to the Royal Commission into the mosque attacks, where funding dried up from $1.3m in 2023, to $500,000, to nothing in 2025/26.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
