In one sense, Peru is the poster child of political instability, having gone through nine presidents in the past 10 years, with several ending up in jail. Paradoxically, Peru has also been a model of economic stability. Julio Velarde has been the governor of Peru’s Central Reserve Bank since October 2006, and Peru’s currency – the sol – is widely regarded as being one of South America’s strongest and most stable currencies.
Yesterday’s run-off election in Peru would have elected the 10th president in the past decade. It pitted a hard right option – Keiko Fujimori, daughter of a previous extreme right wing president – against a hard left option, Roberto Sanchez. The result has ended up in almost a statistical dead heat, with Sanchez reportedly ahead by only 4,300 votes after 94% of the vote has been counted. Political gridlock and mutual accusation of voter fraud will follow.
Julio Velarde, meanwhile, will finish his fourth five year term as governor of Peru’s central bank in July. If Sanchez wins, he has indicated he will ask Velarde to stay on. Yet Velarde may have finally had enough.
Defence: no expense spared
New Zealand’s chronic sense of insecurity is never all that far from the surface. If we aren’t bragging that we’re punching above our weight we’re anxious that foreigners might not like us and/or might think we’re not pulling our weight. As a result, we over-compensate, in the hope this might win us favourable treatment from bigger countries that are barely aware of our existence.
Currently, this combination of self-doubt and appeasement is being played out in our plans for Defence spending into the early 2030s. None of the increase seems based on any rational assessment of what equipment we might usefully require to defend ourselves, in what locations, and against whom. Our own security needs are commonly treated as being entirely irrelevant. It seems to be all about pleasing bigger countries, in the hope they’ll stop saying mean things about us.
The current plan is to lift the money spent on Defence to 2% of GDP by 2032. One justification for this massive increase in Defence spending is that we live in an unstable world. Maybe so. That still begs the question as to whether an arbitrary 2% of GDP level of spending on hugely expensive pieces of dubiously relevant equipment will actually make this country any safer. Where’s the cost/benefit analysis on any of this?
Moreover, it begs the question as to why we would be spending vast sums in order to be better integrated with the armed forces of the very same superpower widely seen to be the prime instigator of the global insecurity in question. The Iran War for instance, was triggered by the same US administration that is currently calling us names.
In fact, it could be argued – God protect us from our friends – that the defence spending envisaged is likely to make New Zealand less safe in the years to come, by dragging us into conflicts instigated by our traditional allies. Interestingly, the same isolationist Trump administration that is cracking the whip on our defence spending is offering us no guarantee of protection in return, despite our government’s apparent subservience to America’s strategic plans.
Not only are we being pressured into serving US interests for no equivalent commitment in return… but the days of us getting mates’ rates for US weaponry seems to be over as well.
[Defence analyst Dr Mark] Obren said the US would sometimes waive research and development costs from sales, but it appeared not to have done so for Australia or NZ – or for NATO, where the Trump Administration now saw arms sales as much more of a business opportunity. “The idea of cheaper equipment provided because we’re part of the boys’ club, is coming to an end.”
Good to know. So when we’re being told by the US War Secretary Pete ( “Pete loves war”) Hegseth that we’re freeloading, and need to be spending more on Defence, its worth keeping in mind that the person saying so is a salesman for the US arms industry. And thus, best ignored.
Those years of “neglect”
All of that aside…a repeated rationale for the expensive outlays on our armed forces is that our military needs have allegedly been neglected by successive governments, thus leaving the NZDF ill -equipped to meet the security challenges of the scary world out there beyond our shores. (Is the world any more unsafe now than it was during the Cuban Missile Crisis, or when the US and the Soviets were facing off in Europe? Or during the prior wars in Korea, Vietnam, Bosnia etc? Arguably not.)
As mentioned, it is hard to see how lining up obediently in battle formations under the leadership of Commander-in-Chief Donald J. Trump would ever be in New Zealand’s best interests. More to the point, it is not as if our military has been forced to subsist on survival relations over recent decades.
Here’s a list I’ve compiled of some of the expensive ways in which our armed forces have been re-equipped over the course of the past 25 years. I’ve not included the annual operational costs of the armed forces, which are considerable. (Reportedly, it will cost $NZ30,000 per hour to operate our new Seahawk helicopters.) What follows does not claim to be an exhaustive list. But it does include:
2001: Light Armoured Personnel Carriers for the NZ Army. Cost : $NZ653 million.
2001 – 2026. Ove this period, the NZDF has bought four generations of helicopters for a range of purposes: the five AgustaWestland A100 trainers, the nine NH90s, the ten KamanSH-2G Sea Sprites, and the recently authorised purchase of five new Sikorsky MH-60R Seahawks, for advanced anti-submarine and anti-surface warfare.
The final contracted price for the Seahawks package has yet to be formally announced. Presumably, this final figure will include weaponry, spare parts, maintenance platforms, housing for the choppers etc. RNZ has reported a ballpark unit figure cost of $NZ400 million for each of the Seahawk choppers, a figure considerably more than that paid (for a variety of reasons) by other countries.
The US has formally approved the Seahawks sales package for $US1.5 billion, or $NZ2.6 billion. Reportedly, the Seahawks choppers will be operationally compatible with the Japanese Mogami-class frigates that the Australian Navy has already begun to purchase. By the end of next year, New Zealand appears set to buy two of the same enhanced version of the Mogami class frigates, at an estimated cost of at least $NZ1.2 billion each. If some of the Mogami frigates get built in Australian shipyards, the frigates programme will create as many as 10,000 quality jobs – but only for Australians.
2003. Two Boeing 757 aircraft, bought second hand when 10 years old. Cost after modifications: $NZ 220.6 million.
2007: New purpose-built Defence Building, Aitken St Wellington. Cost $NZ110 million. Damaged beyond repair by 2016 Kaikoura earthquake. Replaced by extensively refitted Defence House Bowen St. Wellington Cost :$NZ 203 million.
2017 : New rifles for the armed forces. Cost: $NZ59 million
2018: Poseidon P8-A purchase. Four anti-submarine surveillance aircraft for RNZAF. Initial Cost: $NZ2.34 billion. Beyond the airframes, costs were incurred in shifting the squadron to Ohakea, upgrading the Ohakea tarmac, building a $250 million purpose built hangar for the planes and their flight simulator, and improving the quality of the housing provided for squadron members and their whanau.
2018: Littoral operations vessel HMNZS Manawanui. Cost: $NZ147 million. Sank in Samoa, 2024. Listed as a $NZ77 million write off in Budget 2025, with a further $NZ32 million earmarked for clean-up costs.
2019: The purpose built, ice-strengthened fleet tanker HMNZS Aotearoa. Cost: $NZ493 million. Estimated annual cost of maintenance: $NZ 5.6 million.
2020 : Five new Lockheed C130-J30 Super Hercules transport planes. Reported cost: $NZ1.521 billion.
2025: Two new Airbus A321XKLR aircraft to replace the NZDF’s Boeing 757s (see above) on a lease to buy arrangement. NZDF estimate the capital cost of this project to be $NZ620 million, plus four year operational costs of $NZ80.86 million. Roughly $NZ700 million then, so far.
2023- 2026. Pay increases for NZDF staff. As outlined here, the Clark government delivered pay increases to NZDF personnel in 2001, 2002, 2003, and 2004, culminating in a pay increase as part of the 10-year $4.6 billion Defence Sustainability Initiative funding package initiated in 2005.
The pay rise provides for an average 4.3 per cent increase, with the median rank increases ranging from 3 per cent to 7.5 per cent and will give a minimum two-step pay adjustment of $1200 to all personnel, with additional single service targeting of trades and branches.
The issue of pay rises was addressed again in 2023, in the REM23 Pay Adjustment. This $419 million salary increase (over four years) was the biggest boost to military pay in more than ten years, and (as with previous pay hikes) was meant to stem the high rates of attrition of NZDF both to Australia, and into the private sector.
Budget 2026 continued this pay process via the REM26 adjustment, that allocated a further $120 million over the next four years. The avowed focus of these recent pay hikes has been on raising basic pay grades for junior and middle-ranking staff, with the intention of bringing pay rates to within 90% of that available to private sector and /or equivalent Australian DF personnel. This OIA response gives tables of NZDF pay grades in relation to estimated market pay equivalents. Reportedly, the average NZDF basic salary is $74,000 per annum.
BTW, as the PSA has pointed out, civilian staff employed by NZDF should automatically be included in these pay rises, but are not. This Budget 2026 paper outlines several other funding boosts to NZDF. Funding was made readily available for these war-gaming activities:
*Building a modern secure training facility at Linton Military Camp to prepare soldiers for mission planning in contemporary combat scenarios.
* There is also $23 million capital and $2.5 million operating over four years….which includes targeted funding for immediate critical upgrades in areas such as the rifle range at Waiouru, as well as simulation and other tools….
*Technology accelerator: $1.5 million capital and $16 million operating over four years on a pilot programme focused on connecting industry with Defence to solve specific military challenges. [No details provided on what are these “specific” military challenges facing New Zealand, that our private sector would be able to help resolve. Since this is a “pilot” programme, similar military activities offering potential profit opportunities for the corporate sector are likely to follow, in our own version of the military-industrial complex.]
2026 : Frigate upgrades. As the 2026 Budget paper puts it :
This year we will be spending $143 million capital and $72 million in operating costs over four years for “critical maintenance” on our two current Anzac frigates. There is also funding for further work to extend the life of the frigates, while the project develops options for their replacement
Meaning: we’re spending $215 million to keep these floating museums a little longer on the water for what are mainly P.R. purposes. BTW, this $215 million temporary fix for these two old ships is slightly more than the $212.4 million that Budget 2026 allocated to the school lunches programme for 240,000 New Zealand children, through 2027.
As fighting platforms, the new frigates (even when equipped with the new Seahawk helicopters) will make little security sense beyond their subsidiary role within US/Australian or UK-led battle formations. Even then they would be at serious risk of being taken out by a swarm of $200 drones especially if and when – in a battle setting – the enemy has managed to jam the “command and control” systems of our fleet. For example:
America’s warships are vulnerable. Deploying an aircraft carrier, like the USS Gerald R. Ford, into a tense area conveys a potent message; it’s a powerful tool of “gunboat diplomacy.” But it’s questionable whether commanders would want to send it into an active war theatre, especially against China, which is ready to launch swarms of accurate drones and anti-ship missiles to disable even a mighty carrier—and to turn on cyber-weapons to jam the high-tech sensors and guidance systems that make the carrier and its escort ships so powerful.
Still, we continue to spend billions on the likes of frigates, as if the nature of air and sea warfare has not changed significantly in the past 50 years. As taxpayers, we are paying a very expensive price to enable the NZDF to engage in what – in a security sense – are little more than games of military cosplay. We continue to buy expensive, vulnerable weapons platforms that will be “inter-operable” with the expensive, vulnerable weapon platforms of our allies, while our alleged adversaries rely on relatively cheap, technologically advanced weapons. Guess who would be more likely to prevail in real-life conflict scenarios.
Living the Life
As the above list indicates, the NZDF has never had to settle for the levels of unmet need, perpetually deferred capital expenditure, failing equipment, and inadequate pay and staffing levels that have long dogged the public health system. Successive governments of the centre-left and the centre- right have given the NZDF what they have asked for. Time and again, only the multi-billion dollar best has sufficed.
Footnote One: The vast sums cited above continue to be poured into a relatively small receptacle. As this research article on the military’s role in our Covid response pointed out :
The NZDF generally has around 10,000 personnel at its disposal — the Army has approximately 4600 regular force staff, the Air Force 2540, and the Navy 2200. The Army is therefore essentially a Brigade, the Air Force a single fixed wing/rotary squadron (assets don’t include combat aircrafts), and the Navy has two frigates, a new ice-breaker vessel and smaller patrol vessels.
Footnote Two: To foster the sense of a social purpose for its expensive needs and tastes, the NZDF commonly points to its role in coming to the community’s assistance in times of need. Yet from responding to natural disasters to fisheries protection to finding lost sailors, all of this work could be carried out with civilian vessels, planes and drones that would cost far less to buy and to operate, and without the risk of dragging us into wars initiated by our friends and neighbours.
Moreover, there is evidence that NZDF personnel may not excel at or even welcome such socially useful roles. True, the NH90 helicopters proved to be very useful for evacuations in the wake of the Kaikoura earthquake. In the aftermath of Cyclone Gabrielle however, the NZDF bungled its supply of water tanks to East Coast communities in need. More to the point, many of the armed forces asked to staff New Zealand’s managed isolation facilities during Covid seem to have actively resented being asked to do such work. As the above research article reports:
….Of the 136 staff who completed exit surveys…almost 17% identified Operation Protect as a “somewhat important” or “very important” factor when deciding to leave [the NZDF]. More recent figures have shown that 338 personnel left the NZDF in 2021 up to October, with a third of them citing involvement in OP PROTECT as a factor in their decision to leave, and with 227 of these resignations coming from the Army.
On the upside, the same body of evidence suggests that the Covid MIQ deployment did enable the armed forces to better develop some of its “soft skills” in dealing with the public. In that respect, perhaps losing the NZDF personnel reluctant to serve society in non-lethal ways may have been a blessing in disguise:
Attrition from OP PROTECT may act to push out some of those who are incapable of adapting, or of accepting that “serving” one’s country might require something other than traditional warfighting or even peacekeeping.
There’s a thought. For decades, the NZDF has been trained and expensively equipped for the prime purpose of killing people living far away, in the alleged “defence” of our national interests. As Sir Roger Douglas once said, there’s got to be a better way!