A surplus of defence riches, but lack of skill and experience

Analysis - Heading into next week's Budget, Judith Collins would not want any more money for weapons, even if it was offered to her.

Other ministers have been tightening their belts under orders from high in the lead-up to Budget Day next Thursday. But not the Defence/Space/Spy Minister, who has at least $9 billion of new money to spend - and $12b all up - by 2029.

"If you said to me, could we instantly put it up even more, right now I'd say, maybe better not just right now," Collins told a Wellington audience early this month, when asked if she wanted more funding.

"It's a really good question because if we could have more, that would be great.

"But we have to be able to spend it properly.

"So any fool can go out and buy a whole lot of things. But you have to have the personnel."

A shortage of personnel is just one problem facing the minister.

While Collins has a surplus of defence riches to spend on weapons and capital projects, she has inherited a defence force that is demonstrably not ready to spend it.

It not only needs more soldiers - and clever ones to buy and master new technology - but more and better houses for the ones who remain.

It is working with a "significantly depleted... collective skill and experience base", it said 10 months ago - an issue which would take several years to fix - and it just sank a $100m ship off Samoa.

The findings about the sinking were released on a Friday, just three days before Collins put out the long-awaited Defence Capability Plan on how to spend $12b.

The NZ Defence Force (NZDF) learned this week that it would also get more than half a billion dollars - $680m - more for domestic and international missions and training over the next four years, plus almost $160m for personnel allowances.

The NZDF told RNZ last week it was in a state of constant review of its personnel, and was ready for whatever the government asked of it.

That self-assessment jars with its own reports to the public and MPs, and several points that Collins made, including the reliance on second-hand planes for three decades.

"We do need to actually get the right equipment for our people and not have to spend the entire time cannibalizing," she said.

Six months ago, NZDF confirmed an RNZ leak that it faced a $360m operating deficit this year. It promised a number of cuts, but confirmed that all missions would go ahead.

Now the money tap has been fully turned on, starting with a pre-Budget announcement last weekend of $2b+ for navy helicopters (which comes out of the $12b) and the extra missions spend (that comes out of almost $1 billion more over four years for 'housekeeping', or operational expenses).

"Our personnel are being called upon to go more places, more often and for longer to play New Zealand's part in contributing to global security," Collins' said in a statement.

'Severely degraded'

But one of the defence force's most recent missions ended with the Manawanui under water at a Samoan reef, and an inquiry that found a host of inadequacies at crew, leadership and Navy level.

At its most basic level, the crew were not properly prepared to drop anchors as they motored on autopilot towards the reef.

At a much more senior level, the hydrographic survey ship had gone through substandard preparation in the preceding months.

Problems with training, experience, risk management, supervision, "haste", leadership, distraction and "hollowness" - among others - all contributed to the sinking.

The year before it went down, the Chief of Navy said: "We don't have enough sailors."

The 2025 Court of Inquiry said: "The hydrographic capability within the RNZN is severely degraded."

The inquiry recommended 11 reviews, but the defence force gets to decide how to do the reviews - it will be marking its own work.

As a mission "output", the Manawanui was an embarrassing failure. It shows among other things, that a capital input - the ship itself - was not enough where other less obvious inputs - training to use the autopilot, say - were deficient.

Scaled up, the question becomes how a defence force desperate for specialists will manage $12b of inputs; and the extra $680m to "sail, fly, patrol and train more often" through to 2029, takes on huge importance.

The Office of the Auditor-General took a close look at the NZDF's 'Sustainability Initiative' to improve capabilities, but that was almost 20 years ago. Its recent audits have been about how Operation Respect - about treating people better - has been going.

Other militaries face similar pressures around hollowing out, and face similar criticisms they are top-heavy with senior officers.

'But while the US, UK and Australia have embarked on cutting senior officers or structural overhauls, or are positioning for that, the NZDF has not.

The rebuild - like the Manawanui reviews - will be led from the top.

The very top level - Chief of Defence Force and the three Service Chiefs in navy, army and air force - was refreshed last year. The Public Service Commission managed what candidates were offered to the government to consider.

The chief must come from within the defence force. Outside input is strictly limited.

"There were no nominations received from government parties, no communications from other MPs or ministers about the appointment and no instructions were given to the ministry or interview panel about 'shortlists' or who should be interviewed," the commission told RNZ in an OIA.

How the top of the NZDF operates has its detractors. Sources close to the front-line talk about "command under-performance", and frustration among senior people pushing paperwork.

"Get most of these senior people back with their troops," was one message.

The attempted rebuild will be unprecedented, having to manage both massive budgets and huge volatility. The $12 billion must be used upgrade old assets - frigates and decrepit housing; procure new ones - missiles, space, cyber, drones and to keep up with the US-Australia push for human-machine-integration; and deliver enough skilled people to maintain and master the new technologies.

And the ranks are thinnest where they matter most.

"Critical leadership and instructional rank brackets from Corporal to Staff Sergeant, and from Captain to Lieutenant Colonel, were particularly affected" by the post-Covid turnover, the annual report said.

Collins called it an "appalling" level of turnover.

Attrition - 'knocked that one on the head'

New weaponry aside, next week's Budget can be expected to deliver more mundane spending, such as on pay rises in the lower ranks.

Competition on that front is coming from the Australian Defence Force (ADF), which recently extended a $670m recruitment bonus scheme until 2028, to try to fill up scoured-out reserve forces.

Its enlisted numbers were 4300 below approved levels in 2024, but the number of brigadiers - paid almost $200,000 a year - was nearing 60 when the ADF has only a handful of combat and support brigades.

As in other industries, the other side of the Tasman can be attractive. An NZDF veteran who retains close links with people still in uniform told RNZ: "The conditions, the training and pay are so poor, if you want a career in the defence force you're best to go to Australia."

Advocates close to the front line want the Budget to deliver $400m in better pay and conditions at the NZDF.

NZDF's reserves have also been at low levels, a big problem for the likes of rotating out peacekeepers in Ukraine.

In the regular force, Collins told the Wellington audience the churn had stopped, with the Navy at a "record low" 5.8 percent turnover now.

"So we've actually knocked that one on the head," she said.

"The problem there though is that the ones, the people we lost, a lot of them were people with 10 to 15 years experience, very senior capable trainers.

"And so we have to make sure that we spend some time training further and growing the people we have, as well as the new ones that we've got money to come in to the forces."

The pre-Budget announcement had $39m to pay people more on deployments.

A now-stabilised defence force faces both old and new recruiting challenges. To replenish its lower ranks it quietly reduced educational entry requirements last year, as RNZ recently revealed.

Yet by September this had not helped - it was tracking to follow the five-year trend of falling enlistments. At the same time, it will need many more high-tech specialists to run things such as drones, which will not come cheap and could cause a log-jam.

Todd Newett - an analyst of defence economics in Australia - has a suggestion for the Australian Defence Force that could be relevant here: Delink pay from rank, so that technicians can be paid enough to retain them, but without having the high rank that might exacerbate senior officer bloat.

Upgrades of housing and the NZDF's rundown estate are factored into the $12 billion spend by 2029.

However, the years-long projects to deliver on these have hit delays, and advocates for the lower ranks, such as Mission Homefront - co-founded by Waiouru military mother Erin Speedy - are demanding more results.

But the NZDF has a patchy record, with Treasury reports pointing to its solid control of spending, but not of time - its projects face some of the public sector's longest delays.

A long march

The expanding budgets of defence forces around the world enable fixes, but do not guarantee them.

Canada faces similar problems as New Zealand with housing and pay, and soldiers voting with their feet.

So does the UK, where a review of the military ongoing since last year stated it would look at "how service life can be improved for those who commit to serve their country in uniform". The UK also introduced policy to "incentivise those at the lower soldier rank levels".

A whole other approach is exemplified by the US under President Donald Trump. His administration has left diversity equity and inclusion (DEI) initiatives crushed in the wake of what defence media have called "one of [the army's] most consequential restructuring efforts in decades".

It was "slashing legacy systems, reorganising commands, and accelerating the development of technologies", to deliver "streamlined force structures aimed at future high-end conflict".

Ultimately, all the militaries have the same over-riding aim: To be more lethal, more combat-ready, to have more strike force.

Collins has embraced this. She stressed at the Wellington forum that deterrence was the point, that it was not controversial to acquire new missiles to achieve that.

For now, the minister has $12 billion to work with, and some idea of what to do with it, under a capability plan she said took years of "focused work" by agencies to prepare, after 35 years of "under investment".

The public might now demand more speed, less haste.

But taxpayers might face their own demands, for even more money, and in the not-so-distant future.

"Our plan is to get to the two percent of GDP by 2032 and 33," Collins told the Institute of International Affairs forum.

"But we've also said as part of that plan that every two years we'll do a check in to see if we can go faster or put more into it."

She pointed to Poland aiming to get to five percent GDP on defence.

"It's a floor, not a ceiling, as the prime minister likes to say, and I think that's a good way of looking at it.

"Will we do more? Well, we might have to do more."

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