Peter Winsley: How our defence investment decisions can help lift New Zealand’s economic complexity and performance

China and the United States are the world’s two superpowers and New Zealand needs good relations with both. We look to the United States to uphold liberal democracy and the international rule of law. New Zealand is part of the Five Powers (“Five Eyes”) arrangement which largely focuses on surveillance and intelligence gathering and involves combat capabilities. The $2.4B cost for the P8-A Poseidons to replace the Orions is part of the price we pay for Five Powers membership. It is a good political investment.

Australia is New Zealand’s closest ally. Our current defence expenditure is about 1.5% of GDP, compared to Australia at about 2% (2020 figures). Australia expects New Zealand to invest more in defence, and support for this seems to be growing in Parliament. However, we also need to uphold our nuclear-free policy, given Australia’s plans to acquire nuclear-powered submarines.

Despite shared values and close defence ties, the United States and other democracies restrict New Zealand’s primary industry exports. In contrast, our free trade agreement means China is by far our largest export market.