Introduction


This site is the third in a series looking at the role, purpose, organisation and equipping of the New Zealand Defence Force. Previous sites have 1) compared the current force to a hypothetical alternative against a range of risks and 2) examined the scope for change towards 2030. The focus of this site extends from its predecessors proposing an entirely new structure from 2030 onwards.

On 8 June 2016 The Minister of Defence announced a white paper proposing the expenditure of $20 billion over 15 years on defence. The white paper is a traditional response to defence thinking rooted in WW2 concepts of strategy. 

It has completely failed to address the reality of assymetrical threats and the danger of disproportionate defence investment (which is exactly how the United States has failed so badly to respond to the so called terror threat). The five trillion cost of the "War on terror" is out of all proportion to the existential or even potential threat posed by Middle Eastern actors. 

While a tiny military power New Zealand is now following the same well worn path to defence overspending as the United States. We have the same invocation of assymetric threats used to justify investment in military hardware which is totally useless to prevent or fight them. We have the same total disregard for the welfare of the tax base which supports the military establishment.

What we are witnessing is the beginning of a deep state. This is when military bureaucracy stops responding to democracy in its own quest for power, prestige and influence in the face of any rational justification. This exists in numerous strongman states but it also exists in that supposed beacon of democracy - America. How do we know, because you can't vote against it.


The real danger to western powers is the tendency of western governments to ring-fence defence spending and isolate it from the other problems facing society. People who are employed in a thriving economy do not join terrorist organisations.The gradual decline of the Provisional IRA as a result of Ireland's improving economic circumstances is a clear reminder that "terror" and the economy are inextricably linked.

Professional defence analysts however are purely interested in their own branch of government or any other branch which justifies their existence. The American disease of isolating defence spending from social and other government spending has spread to New Zealand. The object of this site is to show how to achieve high level defence objectives at lower cost by changing priorities and methods to more economical solutions.

As this site will repeatedly show private companies can provide the non-shooting aspect of military operations far cheaper than the military can. If the army is a trucking firm, the airforce an air operator and the Navy a shipping line they are about ten to twenty times more expensive for taxpayers than any comparable civilian operation. Thus while we need a shooting component to the military using "terror" or "humanitarian missions" to justify retaining  a state transport capability needs very careful scrutiny.

Because the New Zealand Defence Force is already a very, very expensive organ of the New Zealand Government consuming NZ$3.2 billion per year of taxes or $1.25 of every $100 that changes hands (GDP) each year in the country. The naval 'combat' force (the frigates) operations cost $336 million per year of $1.5m for every day at sea the frigates spend. By comparison Pharmac's total annual budget for life saving drugs is a quarter of the defence bill at $850 million, while the Police's total crime prevention and operational budget is also a quarter of the defence budgets at $716 million, and the new initiatives in education budget in 2015-16 was $285 million. Or another way of looking at it is that the government puts four times the emphasis on defence as life saving drugs or police and spends more on frigates than new educational initiatives.

The budget for capital expenditure is even more astonishing. In 2016 the New Zealand government will spend $100 million on new housing, $94 million on Police and $1,006 million on defence and defence force capital lands, buildings and equipment. In short even a tenth shaved off our defence bill and added to some other aspect of government would have a very significant impact.

Total Appropriations by Budget Sector

CAPEX (Capital Expenditure on land, buildings, plant, machinery, ships, aircraft, vehicles, software)

The argument given by the defence force for its considerable expenditure on equipment is usually that anything less would be operationally unsafe for its people. This may be so but there is no particular need for them to be in harms way in the first place, and, by taking such a large slice of taxpayer funding that could be directed to saving civilian lives in New Zealand it is, in effect, killing New Zealanders every year who are deprived of life saving medicines, warm, safe housing,  and crime prevention because funding is directed to this giant game of soldiers.

Because there are no hostile nations within 4,000km of New Zealand's shores, and that the only foreign military operation on New Zealand soil (the French DGSE attacking Greenpeace's M.V Rainbow Warrior) was handled by the Police, the term "defence" is inherently at odds with both the actual risk of armed hostilities or, indeed, the actual activities of our "defence" force. In fact the NZDEF is an expeditionary force in most of its deployments and exercises. It doesn't wait for hostilities to reach New Zealand it actively goes looking for them elsewhere in the world.

CountryGDP/person 
(PPP$)
Closest potential 
hostile (km)
%GDP 
DEF
Population
 (m)
Defence
Industry
Singapore85,253163.15.5Yes (STENG)
Norway68,40001.55.2No
Switzerland58,5516410.78.3Yes (Mowag,SIG)
Ireland55,55313980.54.6No
Austria47,2504920.88.6Yes (Steyr)
Denmark 45,7096581.25.7No
Belgium43,5851010111Yes (FN)
Finland41,12001.35.5Yes (Patria)
NZ36,1724,8211.14.6No
Australia47,3893501.824 Yes (Austal)
source Wikipedia (2012 data)

This table of small nations (plus Australia) shows that New Zealand's defence spend given both our relative wealth (GDP per person in internationally standardised purchasing power parity dollars) and our distance to any hostile nation is completely our of proportion.  Ireland devotes the least of its GDP to defence (0.5), with Switzerland(0.7), Austria (0.8) and Belgium(1) also spending less of their GDP on defence than we do (1.1), taking advantage of their friendly neighbours. Not only has New Zealand the least need to spend on defence our relative wealth shows we can least afford to spend what we do on defence. 
Shown graphically with richest nations (gold) wealthy nations (blue) and average nations (black). NZ is the poorest nation (red). The linear regression line indicates NZ would spend about 0.8% of GDP. Of course if NZ was not included in this regression line it would be predicted to spend nothing. If we spent 0.8% on defence instead we would liberate $1.3 billion of defence spending for things like social housing and medicines.

The argument is that every government needs to spend on defence in order to prevent us being invaded or our sovereign rights transgressed on. This site does not dispute that there is a role for some defence spending but questions the current level given the absence of any realistic threat. The Republic of Ireland spends half as much as we do on defence (NZ$1.5 billion) and operates 7,200 army personnel with light armoured vehicles and scorpion tanks,  five offshore patrol vessels and an air corps with six utility helicopters, seven trainers and two maritime patrol aircraft.

The question is not whether we should spend on defence but how much do we realistically need to spend on it, when we could more usefully use that taxpayers money to save people's lives and educate our children to maintain our economy into the future instead.

This study progresses an argument as follows:
1. It examines the threats to New Zealand and determines the major ones are tectonic
2 It looks at the role of the military and concludes it is largely diplomatic
3 It details the flaws in our military examining massive cost disparities with other nations or comparable civilian operations
4 It discusses how military spending could stimulate some New Zealand industries, particularly fashion and clothing; aerospace and maritime industries
5 It proposes a smaller more focused defence force leveraging civilian efficiencies, creating clearer cost centres; and merging functions
6. It proposes selling our most expensive and useless military equipment and buying more appropriate ones
7. It shows how the focused defence force could provide better defence value,  reduced expenditure and a an economic and health dividend to taxpayers.
8. It looks at how the transition can be managed so that military personnel aren't plunged suddenly into unemployment.

There is no question that defence "experts" will sneer at this argument but don't be taken in by their culture of institutional bullying. They are defending expenditure on defence for the sake of expenditure because they are part of the problem. They refuse to see that expenditure on defence inarguably denies funding to other taxpayer services on which lives and our economy depends.

But there is more to it than that. Transferring spending from wages to military workers to civilian workers is only part of the problem. The other part of the problem is jobs. If we simply transfer military workers from a job to nothing there is a taxpayer benefit but not a social one. Better is to develop industries that employ more people and the defence industry has plenty of scope to do that. This doesn't necessarily mean making weapons. It can mean building on New Zealand's outdoor experience brands by adding the credibility a military agency like the Army brings with it. 

While our military is disengaged from the impost it creates on civilian life it will also be disengaged from the opportunities that it presents to improve civilian life. That wall needs to come down. It will take time and it shouldn't be rushed but the movement must start soon, before the military is allowed to gallop off on another mad spending spree subsidising something that adds costs not value to the New Zealand economy.

For an executive summary of findings see here.

Defence Costs Blog



Subpages (2): Background ExecSummary