Prime Minister Chris Hipkins and Defence Minister Andrew Little at yesterday's pay announcement

The Government finally moved yesterday to deal with the Defence force pay crisis, which has seen Navy vessels put into mothballs, aircraft grounded, and doubts about whether the Defence force had enough technical staff to service new equipment.

At the same time, it signalled there might be more spending on equipment later this year.

Setting the scene, Prime Minister Chris Hipkins, in an apparent reference to the growing tension between the United States and China, said geostrategic competition, both within our own region and further afield, was intensifying.

That seems to have added urgency to a Defence pay gap that began to develop four years ago.

Defence Minister Andrew Little said the coming Budget would provide for a $419 million payroll boost over four years, which would l mean many would receive a salary increase of between $4,000 and $15,000 a year.

“It means 90 per of NZ personnel will be paid at or close to market rates for their skills,” he said.

“This is the largest investment and remuneration for personnel in a decade.

“We have a moral obligation to ensure our soldiers, sailors and aviators are paid fairly for the critical work that they do on behalf of all New Zealanders.”

Pay is one of the reasons that the Defence force has lost so many staff.

As attrition began to increase towards the end of 2021, when many Defence personnel were involved in running Managed Isolation and Quarantine (MIQ), the Chief of the Defence Force, Air Marshall Kevin Short, speculated that was a reason for the resignations.

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But In December last year, he told a Select Committee that the attrition had continued even after the end of MIQ.

“This attrition has continued even after the end of Operation Protect, driven by higher remuneration being offered elsewhere in what is a very strong labour market,” he said.

“Attrition is causing significant impacts, impeding the NZDF’s ability to deliver outputs and slowing the introduction of new capabilities into service.”

Late last year, the Navy had to tie up two offshore patrol vessels and one inshore patrol ship so that personnel could be reassigned to other ships in the fleet to keep them operational.

“What worries me about the current attrition rate is that it’s increased from February (2022) this year, month on month and that continued attrition means that, at the moment, we have about a thousand people less than we would expect in the Regular Force, and it looks like 10 per cent, but what makes it harder to manage is that is about 20 per cent of our fully trained and skilled people, and that includes losing instructors and supervisors,” Short told the Committee.

“And that’s why it has such an effect on us.”

At the heart of the resignations has been a pay gap between Defence and the private sector.

He said that last year the gap was between 18 and 89 per cent.

“They are using their trained skills that they’ve got within the Defence Force,” he said.

“We’ve lost the construction skills, whether it’s plumbers, electricians, builders, from the Army in particular; they’ve been attracted out into the industry.

“We’re losing skilled engineers into the power companies, into the railways, and we’re losing what I call good managers and decision makers into other Government departments.”

The Government’s spending yesterday extended beyond pay and included $328 million for Defence projects, including upgraded aviation fuelling facilities at Ohakea and new communications for the Navy’s two frigates and the new Bushmaster protective mobility vehicles.

There will also be $85 million to improve Defence housing.

Little said that the extra spending would still keep New Zealand’s Defence spending to about one per cent of GDP.

That compares with the recommended NATO member country of two per cent, a figure that Australia also reaches.

But times are changing, and Hipkins alluded to that in the press conference yesterday.

He said this was a time when New Zealand and the Pacific were experiencing escalating impacts of climate change.

“And geostrategic competition, both within our own region and further afield, continues to intensify and call upon our resources,” he said.

The Government is now waiting for Sir Brian Roche to finish his Defence Policy Review which will focus on the  Government’s “Defence policy interests, objectives, priorities, and high-level strategy, including indications of prioritisation.”

The statement is to assess the strategic environment and contingencies that New Zealand might face based on current and predicted trends and will include elements of strategic planning guidance for the employment of the current force over the near term.

It will define future force structures and will also include a capability strategy.

“This work, currently underway, will provide guidance to support immediate planning, along with a long-term strategy for New Zealand’s Defence policy, and support key future capability and resource decisions, the Secretary of Defence, Andrew Bridgman, told the Committee.

“Work is progressing on the development of the Defence policy and strategy statement and the future force design principles.

“This work has taken slightly longer than expected, mainly in an effort to ensure that we have undertaken sufficient engagement with key stakeholders and partners on the various products.”

Bridgman said it was expected it would be ready in the third quarter of this year.

It is now expected that this work will be completed in the third quarter of next year.

Little also suggested yesterday that the review could lead to a revised capability plan.

“It’s very much a strategic review, and we will assess our Defence capability needs on the basis of those reviews of the documents that come out of that review,” he said.

Both Bridgman and Little would seem to be suggesting that there will be a review of future Defence procurement, which might include answers on whether the frigates would be replaced when they start to reach the end of their operational life in the mid-2030s.

There are also questions about the future of the Southern Ocean patrol vessel, which had been scheduled to be delivered in 2027 and cost $300 – $600 million but which was deferred last March.

Labour has often seemed reluctant in the past to highlight its Defence spending, but yesterday, Litytle appeared with the Prime Minister, and it was clear they were looking for wide media coverage.

Not only has the international situation changed over the past year with Ukraine and also China’s increasing assertiveness across the western Pacific, but Defence now has a senior Cabinet Minister pushing its case at the Cabinet table.

That all adds up to the impression that the Government might be willing to spend more on Defence.