Yet world military expenditure reached US$2718 billion in 2024, an increase of 9.4 percent in real terms from 2023 and the sharpest year-on-year rise since the Cold War.
New Zealand’s new Defence Capability Plan announced in April 2025 proposes $12B in funding over the next four years, including $9B in new spending. This will raise New Zealand’s defence spending from just over one percent of GDP to more than two percent in the next eight years.
This increase won cross-party acquiescence despite financial pressures on health and education and the perilous state of New Zealand’s finances.
Most current Defence expenditure is waste, however it is possible to make better use of much of it for economic development. This would mean investment in New Zealand’s advanced technology industries and much greater investment in key parts of our research sector, especially in the universities.
Australia plans to acquire over the period from now till the 2050s a fleet of nuclear-powered submarines at a total programme cost of between A$268B to A$368B. New Zealand law bans entry into its waters of nuclear-powered as well as armed vessels. By the 2050s new technology will likely have made these submarines obsolete.
US aircraft carriers may soon find it difficult to defend themselves against hypersonic ballistic missiles or AI-coordinated drone swarms.
New Zealand intends expanding its army to 6,000 personnel by 2030. There will be high interoperability with Australia and every chance this will work well.
New Zealand must balance its relationships effectively with the US and China. The $2.4B cost for the Poseidon aircraft was a fee to pay for “Five Powers” (or “Five Eyes”) membership. It was a good investment when the US was the trusted leader of the democratic world and upholder of the rule of law. However, there are dangers that arrangements such as AUKUS and Five Powers will be seen by China as confronting. The mercurial personality of the current US president creates further uncertainty.
New Zealand is committed to democracy and the rule of law; however, our biggest trade partner and export market is autocratic China. New Zealand must avoid any strategic alliances that are perceived as anti-China.
New Zealand could not influence the outcome of a major military conflict between China and the US. The only sensible strategy for us is to stay out of any conflict and continue to promote open markets and rule-based trade.
Using the defence budget to drive NZ’s technological and economic development
The multi-billion dollar expansion of the Defence Budget is partly catching up on deferred expenditure. More significantly it should support business and economic development through investment in digital, communication, aerospace, materials, robotics and other technology and the human capital and knowledge stocks bundled around them.
From the founding of Glaxo in the 19th century, New Zealand has always been good at creating new, knowledge-intensive businesses with global potential. However, it struggles to grow them to scale in international markets while retaining core competencies and benefit streams in New Zealand.
Using large scale and multi-year government procurement programmes can achieve scale economies and longer-term work continuity. It would also foster economies of scope, that is opportunities formed by relational space and variety and not by volume.
Our current approach to defence investment is flawed because it assumes replacing old frigates (for example) with more modern ones which still follow the same military assumptions, even though the nature of warfare has changed radically and not just incrementally.
We have capable engineers, technologists and scientists in our knowledge-intensive businesses. Our universities respond fast to changes in industry and student demand so long as they are funded to do so. Our businesses are competent with short and flexible production runs applied in aerospace and space applications. Rocket Lab’s Electron rockets have carbon fibre bodies and 3D-printed rocket engines. We have some strengths in robotics.
We can buy inputs and components from almost anywhere in the world. However, we must retain in-house our core design competencies.
We need to super charge our top-performing university teams in fields such as artificial intelligence, communications, robotics, aerospace engineering and perhaps even in quantum computing (obviously a high risk field).
We need to gear government purchasing and procurement policy to grow firms that deliver multi-purpose technology that competes in civil as well as defence and security markets.
Interesting examples of New Zealand firms working at the high-tech end include Dawn Aerospace, which is pioneering space plane technology, as well as Rocket Lab which is involved in hypersonic missile-related work. Kea Aerospace is working on stratospheric aviation that can transform data acquisition and communications for applications such as environmental monitoring, precision agriculture, disaster management and maritime awareness.
Government procurement gives scale, stability and predictability over timeframes that give firms confidence to invest. It can ensure that New Zealand firms develop the technologies and capabilities to help the economy diversify and become more knowledge and skill intensive, and that these capabilities are both anchored in New Zealand and looking outwards.
Digital technology can overcome our scale constraints and turn them into advantages. For example, 3D printing technology makes small-scale flexible manufacturing viable.
The New Zealand Defence Force will deliver defensive cyber capabilities. Additionally, cyber capabilities will be developed to include deployable teams capable of offensive use of them.
The Defence Force will focus on long endurance unmanned aerial systems (UAS). The provision of continuous, real time information is a key determinant in the effectiveness of military operations. Unmanned aerial systems enhance awareness of the operating environment and provide intelligence, surveillance and reconnaissance tasks to support military forces. For more and more operations unmanned aircraft will replace crewed aircraft.
A project is underway to deliver small scale remotely piloted aircraft. These aircraft will be able to be deployed and operated organically by small task groups or ships, in support of operations in the maritime, littoral and land environments.
The Falkland’s war showed how vulnerable large, high-cost warships were to subsonic, low-cost anti-ship missiles. In Ukraine low cost and diffuse anti-tank, anti-aircraft and anti-ship missiles have won out over such platforms as tanks, aircraft, and the cruiser Moskva.
Future conflict up to the 2030s and beyond is likely to be diffuse, mobile, information-intensive and precision-based.
The Ukraine war illustrates the importance of improvisation and repurposing of technology to new applications. Precision targeting in turn depends largely on real-time information flows and technology and componentry that is so widely used that only pariah states struggle to access it.
If it had the government or private sector procurement funding New Zealand could have a credible defence and security industry of its own. This might include drones for many purposes such as surveillance, resource protection, search and research, supply lifts, mine and submarine hunting, and as platforms for air to air and air to surface missiles.
The “big ticket” items in the existing Defence planning include replacements for the ANZAC frigates. However recent experience, including in the Black Sea, suggest that such vessels are too vulnerable for frontline operations. The ice-strengthened Danish Thetis ocean patrol vessel is slower and less well-armed than the ANZACs but better value for money.
It is possible for New Zealand to meet its defence and security needs and maintain faith with its friends through defining security to encompass multi-purpose technologies, that is, technologies that have both a military and security and a civil market.
Modularity must be an important feature of our future navy. Modularity of a ship’s mission systems or “payload” must be distinct from the platform that carries them. The same platform (ship) could carry an anti-submarine warfare module for one mission, and for its next mission may carry a disaster relief module or a hydrographic survey module.
Autonomous aerial, surface and underwater vehicles are now mainstream capabilities. They greatly extend surveillance coverage and reduce the need to expose crewed platforms to attack. Autonomous vehicles are effectively capability modules in themselves and are designed to be moved from host platform to host platform according to need.
Many countries, including New Zealand with Rocket Lab, are active in space satellite launches. Some countries are working on ground-based anti-satellite weapons and, in some cases, space-based anti-satellite capabilities. Rocket Lab is heavily involved in hypersonic missile technology development. It has upgraded its Electron rocket to deliver “glide and ballistic” payloads of up to 700 kg at hypersonic speeds.
SYOS is a robotics and aerospace company that produces autonomous vehicles for the land, sea and air. It employs over 50 engineers, with headquarters in Tauranga. Syos Aerospace has recently been awarded a NZ$67M contract to supply unmanned military vehicles to Ukraine. The SA200 UAS can outcompete many conventionally-crewed helicopters in a range of applications.
Decisions on new helicopters for the New Zealand Defence Force should be paused whilst the potential alternative approaches offered by SYOS and other such companies are considered.
How would we know if we were succeeding or not?
Harvard University publishes an Atlas of Economic Complexity that ranks the complexity of a country’s exports. Economic complexity is a good proxy for innovation that leads to productivity and higher incomes. It also signals resilience, that is the more complex a country’s export mix the greater its ability to manage commodity economic shocks.
Economic complexity reflects a country’s past innovation performance. It also signals its generativity – the ability to create something new, and the willingness to promote the younger generations’ wellbeing and their long-term futures.
If the above policies were progressed effectively, we would see it in our rating in the Economic Complexity Index (ECI). This would show an economy more sophisticated and differentiated in products and services that are more profitable and which are less prone to trade barriers. We would also have many new sources of learning and knowledge application, spurring innovation in new fields.
References
Winsley, P. 2023:How to defend New Zealand without killing anyone (preferably).Peter Winsley blog. 6 October 2023
Dr Peter Winsley has worked in policy and economics-related fields in New Zealand for many years. With qualifications and publications in economics, management and literature. Peter blogs at Peter Winsley - where this article was sourced.
This increase won cross-party acquiescence despite financial pressures on health and education and the perilous state of New Zealand’s finances.
Most current Defence expenditure is waste, however it is possible to make better use of much of it for economic development. This would mean investment in New Zealand’s advanced technology industries and much greater investment in key parts of our research sector, especially in the universities.
Australia plans to acquire over the period from now till the 2050s a fleet of nuclear-powered submarines at a total programme cost of between A$268B to A$368B. New Zealand law bans entry into its waters of nuclear-powered as well as armed vessels. By the 2050s new technology will likely have made these submarines obsolete.
US aircraft carriers may soon find it difficult to defend themselves against hypersonic ballistic missiles or AI-coordinated drone swarms.
New Zealand intends expanding its army to 6,000 personnel by 2030. There will be high interoperability with Australia and every chance this will work well.
New Zealand must balance its relationships effectively with the US and China. The $2.4B cost for the Poseidon aircraft was a fee to pay for “Five Powers” (or “Five Eyes”) membership. It was a good investment when the US was the trusted leader of the democratic world and upholder of the rule of law. However, there are dangers that arrangements such as AUKUS and Five Powers will be seen by China as confronting. The mercurial personality of the current US president creates further uncertainty.
New Zealand is committed to democracy and the rule of law; however, our biggest trade partner and export market is autocratic China. New Zealand must avoid any strategic alliances that are perceived as anti-China.
New Zealand could not influence the outcome of a major military conflict between China and the US. The only sensible strategy for us is to stay out of any conflict and continue to promote open markets and rule-based trade.
Using the defence budget to drive NZ’s technological and economic development
The multi-billion dollar expansion of the Defence Budget is partly catching up on deferred expenditure. More significantly it should support business and economic development through investment in digital, communication, aerospace, materials, robotics and other technology and the human capital and knowledge stocks bundled around them.
From the founding of Glaxo in the 19th century, New Zealand has always been good at creating new, knowledge-intensive businesses with global potential. However, it struggles to grow them to scale in international markets while retaining core competencies and benefit streams in New Zealand.
Using large scale and multi-year government procurement programmes can achieve scale economies and longer-term work continuity. It would also foster economies of scope, that is opportunities formed by relational space and variety and not by volume.
Our current approach to defence investment is flawed because it assumes replacing old frigates (for example) with more modern ones which still follow the same military assumptions, even though the nature of warfare has changed radically and not just incrementally.
We have capable engineers, technologists and scientists in our knowledge-intensive businesses. Our universities respond fast to changes in industry and student demand so long as they are funded to do so. Our businesses are competent with short and flexible production runs applied in aerospace and space applications. Rocket Lab’s Electron rockets have carbon fibre bodies and 3D-printed rocket engines. We have some strengths in robotics.
We can buy inputs and components from almost anywhere in the world. However, we must retain in-house our core design competencies.
We need to super charge our top-performing university teams in fields such as artificial intelligence, communications, robotics, aerospace engineering and perhaps even in quantum computing (obviously a high risk field).
We need to gear government purchasing and procurement policy to grow firms that deliver multi-purpose technology that competes in civil as well as defence and security markets.
Interesting examples of New Zealand firms working at the high-tech end include Dawn Aerospace, which is pioneering space plane technology, as well as Rocket Lab which is involved in hypersonic missile-related work. Kea Aerospace is working on stratospheric aviation that can transform data acquisition and communications for applications such as environmental monitoring, precision agriculture, disaster management and maritime awareness.
Government procurement gives scale, stability and predictability over timeframes that give firms confidence to invest. It can ensure that New Zealand firms develop the technologies and capabilities to help the economy diversify and become more knowledge and skill intensive, and that these capabilities are both anchored in New Zealand and looking outwards.
Digital technology can overcome our scale constraints and turn them into advantages. For example, 3D printing technology makes small-scale flexible manufacturing viable.
The New Zealand Defence Force will deliver defensive cyber capabilities. Additionally, cyber capabilities will be developed to include deployable teams capable of offensive use of them.
The Defence Force will focus on long endurance unmanned aerial systems (UAS). The provision of continuous, real time information is a key determinant in the effectiveness of military operations. Unmanned aerial systems enhance awareness of the operating environment and provide intelligence, surveillance and reconnaissance tasks to support military forces. For more and more operations unmanned aircraft will replace crewed aircraft.
A project is underway to deliver small scale remotely piloted aircraft. These aircraft will be able to be deployed and operated organically by small task groups or ships, in support of operations in the maritime, littoral and land environments.
The Falkland’s war showed how vulnerable large, high-cost warships were to subsonic, low-cost anti-ship missiles. In Ukraine low cost and diffuse anti-tank, anti-aircraft and anti-ship missiles have won out over such platforms as tanks, aircraft, and the cruiser Moskva.
Future conflict up to the 2030s and beyond is likely to be diffuse, mobile, information-intensive and precision-based.
The Ukraine war illustrates the importance of improvisation and repurposing of technology to new applications. Precision targeting in turn depends largely on real-time information flows and technology and componentry that is so widely used that only pariah states struggle to access it.
If it had the government or private sector procurement funding New Zealand could have a credible defence and security industry of its own. This might include drones for many purposes such as surveillance, resource protection, search and research, supply lifts, mine and submarine hunting, and as platforms for air to air and air to surface missiles.
The “big ticket” items in the existing Defence planning include replacements for the ANZAC frigates. However recent experience, including in the Black Sea, suggest that such vessels are too vulnerable for frontline operations. The ice-strengthened Danish Thetis ocean patrol vessel is slower and less well-armed than the ANZACs but better value for money.
It is possible for New Zealand to meet its defence and security needs and maintain faith with its friends through defining security to encompass multi-purpose technologies, that is, technologies that have both a military and security and a civil market.
Modularity must be an important feature of our future navy. Modularity of a ship’s mission systems or “payload” must be distinct from the platform that carries them. The same platform (ship) could carry an anti-submarine warfare module for one mission, and for its next mission may carry a disaster relief module or a hydrographic survey module.
Autonomous aerial, surface and underwater vehicles are now mainstream capabilities. They greatly extend surveillance coverage and reduce the need to expose crewed platforms to attack. Autonomous vehicles are effectively capability modules in themselves and are designed to be moved from host platform to host platform according to need.
Many countries, including New Zealand with Rocket Lab, are active in space satellite launches. Some countries are working on ground-based anti-satellite weapons and, in some cases, space-based anti-satellite capabilities. Rocket Lab is heavily involved in hypersonic missile technology development. It has upgraded its Electron rocket to deliver “glide and ballistic” payloads of up to 700 kg at hypersonic speeds.
SYOS is a robotics and aerospace company that produces autonomous vehicles for the land, sea and air. It employs over 50 engineers, with headquarters in Tauranga. Syos Aerospace has recently been awarded a NZ$67M contract to supply unmanned military vehicles to Ukraine. The SA200 UAS can outcompete many conventionally-crewed helicopters in a range of applications.
Decisions on new helicopters for the New Zealand Defence Force should be paused whilst the potential alternative approaches offered by SYOS and other such companies are considered.
How would we know if we were succeeding or not?
Harvard University publishes an Atlas of Economic Complexity that ranks the complexity of a country’s exports. Economic complexity is a good proxy for innovation that leads to productivity and higher incomes. It also signals resilience, that is the more complex a country’s export mix the greater its ability to manage commodity economic shocks.
Economic complexity reflects a country’s past innovation performance. It also signals its generativity – the ability to create something new, and the willingness to promote the younger generations’ wellbeing and their long-term futures.
If the above policies were progressed effectively, we would see it in our rating in the Economic Complexity Index (ECI). This would show an economy more sophisticated and differentiated in products and services that are more profitable and which are less prone to trade barriers. We would also have many new sources of learning and knowledge application, spurring innovation in new fields.
References
Winsley, P. 2023:How to defend New Zealand without killing anyone (preferably).Peter Winsley blog. 6 October 2023
Dr Peter Winsley has worked in policy and economics-related fields in New Zealand for many years. With qualifications and publications in economics, management and literature. Peter blogs at Peter Winsley - where this article was sourced.
2 comments:
Large parts of this could have been written by Neville Chamberlain and the appeasers in the 1930's.
NZ democracy is ,,changing,, ..the etho state will see things differently
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