Finance Minister Nicola Willis speaks to the National Party's South Island regional conference in Christchurch on Saturday

The price of the foreign affairs “reset” is now becoming apparent, with Defence set to get a funding boost in the Budget.

Finance Minister Nicola Willis has confirmed that it will be one of the few votes, apart from Health and Education and possibly Police, which will get an increase in the Budget.

On Saturday, Willis unveiled the proposal to a National Party regional conference in Christchurch.

And the Party President, Sylvia Wood, suggested to the conference that National would prefer to govern without its coalition partners, New Zealand First and ACT.

Willis said her recent attendance at a Washington Five Eyes Finance Ministers conference made her realise that we were living in a less stable world.

“So it is important that New Zealand is able to contribute to our partnerships, and you will see an uplift in defence spending in this Budget,” she said.

“I don’t want to say it could be anything more than modest because we first need to review our capability and ensure that significant investments we make in the future are the investments that partners want to see from us, and that will allow us to make the best contribution.”

It thus looks likely that the Budget increase will address the concerns about Defence Force attrition rates raised by the Ministry of Defence in their Briefing to the Incoming Minister, Judith Collins, last November.

Last year’s Budget raised defence personnel pay but only to within five per cent of market rates.

“Further initiatives are in train to review outdated allowances that compensate for the specific costs of military service, whether that be the time spent away from home at sea, or the impact on military families of being directed where to live, regularly moved between locations, or being on 24/7 call out,” the Briefing said.


“Funding such initiatives will be the subject of future budget bids.”

The bid for this year would seem to have succeeded.

But Willis has also raised the question of capability, which would include the hardware such as ships and aircraft that Defence might need in the future.

Defence Minister Judith Collins confirmed to POLITIK yesterday that a revised capability plan will be sent to the Cabinet in June or July (after the Budget).

There are immediate issues that the plan will probably address such as replacing the Navy’s Seasprite helicopters and a currently shelved proposal to purchase on offshore patrol vessel capable of working in the southern ocean.

However, the bigger question will be whether to implement the recommendations of the Naval Fleet Review, which is looking at replacements for the entire naval fleet apart from the auxiliary ship, the HMNZS Aotearoa.

POLITIK National Party leader and Prime Minister Christopher Luxon addressing the aprty’s South Island regional conference at the weekend

Willis’s speech got a warm reception from the 150 or so delegates at the regional conference, and, during its 25-minute duration, it was interrupted eight times with applause.

The loudest came when she addressed tax cuts.

“We have successively increased tax by stealth, by not adjusting tax brackets for inflation, and our party campaigned on bringing some fairness back,” she said.

“And so in our Budget, we will be delivering tax reduction for working people.

“That’s what we said we would do, and we are a party that delivers on our word.”

After the applause had died down, she addressed criticism that the cuts were not affordable.

“There’ll be a couple of economists who say to you, ah look the better thing to do is not to let anyone have any more of their own hard earned money,” she said.

“The better thing to do with that would be to actually deal with all of the six years of imbalance that was built up over the last government and break a few promises.

“That would be the right thing to do.

“My view is this we won’t be able to fix this economy in one year, or frankly, get it all done in three.

“We’re going to need six, nine, 12 years to fulfil the potential of this economy.

“So I’d like a second chance in 2026, and I’d like to be able to look people in the eye and say we did what we said we would do.” (More applause).

She then highlighted two more Budget spending areas.

“You will see a comment to not only investment for infrastructure, but actually the means by which to turn that investment into spades in the ground and diggers on the road,” she said.

And the once researcher for former Prime Minister Bill English, the architect of Social Investment, is promising that too will be included in the Budget.

“We will be bringing back social investment,” she said.

“This Budget will lay the seed so that we have the apparatus, the analytics, and evidence in place so that we can work across government to identify breakthrough interventions. In budget 2025, I will be announcing to you our first big  flagship social investments.” (More applause).

Willis was something of a hit at the conference, and delegates told POLITIK that private meetings she had held while in Christchurch had left them impressed.

POLITIK National Party President Sylvia Wood at the party’s South Island regional conference on Saturday

National is going to need all the political help it can get to not only arrest its current slow slide in the polls but, more importantly, achieve every major party’s dream of not having to be reliant on minor parties to hold office.

Party President Sylvia Wood has set this as a clear goal for the party. She said it needed to be in the mid-40s, which would be a return to the levels of support that the Key government got.

“While we respect and work well with our coalition partners, the higher our party vote, the more we can achieve and the more efficient the decision-making process,” she said.

“Quite simply, the bigger our mandate, the more we can do.”

Willis’s Budget, with its tax cuts and increased spending for health, education, and Defence, will largely depend on how successful she has been in cutting expenditures.

And she told the conference she had been assiduous in her examination of spending.

“I have gone through line by line every vote to understand what the trends are, where the spending has gone, where there is wasteful stuff going on,” she said.

“We have gone line by line through our savings program to ensure that we have cut the chaff but not wheat.”

And that will be the political test whether the tax cuts are sufficient compensation for the Government services that Willis is cutting and whether health and education and Defence are the only areas where the electorate wants to see more spending.

Traditionally, New Zealand voters react adversely to austerity budgets; think Arnold Nordmeyer in 1958 or Ruth Richardson in 1991.

If they do, Sylvia Wood’s ambition to see National’s support go to the mid-40s may be thwarted.