Equipping a focused defence force.

Equipment decisions by the NZDF in the past have ranged from unduly influenced (ANZAC frigates), to borderline corrupt (NH90s and LAVIIIs). The ANZAC frigates were the result of rampant bullying by Australia to provide an adjunct to their fleet which didn't meet any of our operational needs but did meet the career aspirations of the officers of the Royal New Zealand Navy. The NH90s have not lived up to any of the claims made for them and were bought by a body of staff who were either incapable of negotiating a reasonable deal or enjoying themselves big noting it so much that they forgot entirely about the people footing the bill. The NZLAV specification was curiously designed so that only the eventual winner could win it and has provided us with perhaps the most expensive collection of mothballed and thoroughly useless vehicles in the world.

The Pinzgauer Light Operational Vehicle was somewhat in the middle. We bought 321 of the things for $93 million in 2004. Acceptance tests revealed gearbox problems that had to be fixed under warranty by the manufacturer. The Pinzgauer is one of the best off-road vehicles in the world and anyone who has one is the envy of their off-roader club. But when we sent our troops to Afghanistan the only ones who took their Pinzgauers were the SAS (aboard US C-17 cargo planes). Everyone else had to lease Toyota Landcruisers and Humvees and that was how we ended up with the casualties we did. Many of the ten soldiers who died in Afghanistan died in vehicles that did not have the armour needed to protect our troops from ambushes or improvised explosive devices. So we bought a vehicle we couldn't deploy, we didn't deploy it, and it wouldn't have been any use if we had deployed it because Pinzgauers (even the armoured ones) aren't built with the deep V hull you need to deflect mine blasts.

That said in recent years the Army in particular has improved its act considerably. The purchase of 194 MAN HX trucks for $135 million was a sensible option. Yes, that means they cost $696k each but that isn't so outrageous for a heavy cross-country truck. These are good military trucks and will last at least until 2030. Similarly the Lewis Machine & Tool rifles bought to replace the Steyr AUG. Buying from a small firm with good quality product means good service because we are a client that matters. We wouldn't matter to FN or H&K.

There is no question that the restructured defence force would need to retain a great deal of the kit the NZDF has now. But some of it is simply falling apart and needs replacement (e.g. the CH-130H Hercules and the P-3K Orions); some of it traps us into high cost, low value options for far too long which don't fit the new structure (e.g. the ANZAC frigates, the NH90s and 73 of the 105 LAVIIIs) and needs to be phased out; and some parts of the structure don't exist yet and need equipping. The following chart provides an overview of the approximate depreciation schedule of NZDF assets.

This suggests the unneeded LAV IIIs might fetch $100-200m on a good day, the NH90s could raise $400m (given they are still new) and the frigates around $400m tops for the pair. All and all surplus equipment might raise $800m. Assuming anybody wanted to buy them. That could certainly purchase much of the replacement equipment the new force structure would need. The only exception would be the replacement aircraft for No.40 (transport) and No.5 Maritime Patrol which will soon need replacing anyway; and as the plan is to merge the two into one squadron the result will be far less expensive than it would otherwise be.

Over time we also have to take into account technological development. Already the US Army is developing autonomous trucks. If an autonomous vehicle trips an IED nobody dies. It would be reprehensible not to use vehicles which could save lives. Similarly why send aircraft into the Pacific looking for needles in the great ocean haystack when increasingly sensitive and increasingly cheap to launch low earth orbit satellites are able to do the job?

There is also the issue of New Zealand preferential purchasing and development. Every other military in the world does this, why shouldn't we? As we saw in opportunities from defence spending defence spending can be a catalyst to industrial development beyond defence.

And finally there is the question of military industrial cooperation. Historically we have followed Australia's lead like some lost little brother. But Australia is setting itself up to be a regional superpower with only Singapore for competition. Australia builds some platforms itself of value but its defence force is built around defending a continent not a large exclusive economic zone with some islands in it. Our similarity to Australia is very limited.

While European and American military equipment has proven to suffer from predatory pricing and poor value for money there are other options. Russian equipment while excellent is unfortunately a political bait for the Kremlin and falling for it would be geopolitically foolish. Similarly Chinese, Israeli or Turkish offerings which while tempting will come with strings we don't need. Fortunately this leaves a wide array of other nations worth looking at. BAE and Denel in South Africa; Embraer in Brazil; Saab in Sweden; and STENG in Singapore come with reduced geopolitical risk and a second world awareness of value.

Conclusions

Selling unnecessary equipment now while it still has some value could allow us to re-orient and re-equip the defence force with equipment which can reduce our on-going costs. The main points here are that:

• The NH90s are a spectacular and expensive fail because they were never built to be used near the sea. Given these machines are still relatively new we have an opportunity to sell them now and replace with better value machines without losing money.
• The LAVs were a spectacular fail as well because they are not only hard and expensive to deploy (because they weigh so much) but don't fit well with the peacekeeping look. Because their Odos are so low we can replace most of them with better suited vehicles.
• We need to replace the Hercules and Orion aircraft soon. If the Air Force had its way it would buy A400Ms and Poesidons for about $3 billion. But with the advent of Rocket labs and Embaers KC-390 plus a bit of corporate venture investment the whole lot could probably be replaced for less than a third of that.
• The ANZAC frigates are slowly slipping down the depreciation curve being halfway through their lives. Bought for a different (Soviet) era they no longer do anything less expensive vessels can't do. We could replace them with ships which better meet both our allies needs and ours and enhance our status as an Antarctic treaty partner
• The outrageous amounts of money being wasted by defence could, if redirected into projects involving New Zealand ventures, develop industries and jobs we don't have now. This has to be better than syphoning our taxpayers pockets to pay foreigners for things we don't want or don't use.