The defence dollar to be stretched to protect New Zealand's interests

BY WAYNE MAPP

OPINION: Last year, the Government started work on the first major defence review in more than a decade. The main challenge is how best to defend New Zealand and our interests in the next 20 years.

We spend $2.1 billion a year on defence, so we need to make it count. The review must describe New Zealand's strategic interests, the right set of defence capabilities to meet them and how they are to be paid for. It will also have to reliably inform our defence partners how we view these matters.

A huge amount of work has been done over the past 11 months. The core concerns have been fully canvassed, gaps identified and problems found.

Looking at the strategic context, New Zealand's key defence responsibility is the South Pacific, out to Timor-Leste. Together with Australia, we have to be able to cover every reasonably foreseeable contingency, whether it be bringing stability to troubled countries, disaster relief, search and rescue or protecting our ocean resources.

Beyond our region we have choices. However, in the Asia- Pacific area, we should expect to be a reliable security partner. This is where our economic future lies. We need to contribute to the overall security of the region.

New Zealand has always taken an internationalist approach. That is why we are in Afghanistan. Terrorism with its roots in Afghanistan has killed New Zealanders. In partnership with 40 other countries, we are working to build a more stable Afghanistan so that it can be a responsible member of the international community, not a haven for terrorism.

All this means we need a deployable defence force that has the naval and air force capabilities to patrol and secure our region.

At present, there are some gaps in our capabilities. For example, we rely on sophisticated Orion aircraft to conduct the full range of maritime surveillance and search and rescue.

They are ideal aircraft for long range missions into the Pacific and beyond. However, they are more sophisticated than necessary for patrolling our own exclusive economic zone.

An option to cover this gap would be to have shorter-range, less advanced aircraft to cover the lower- level tasks. This would let us do more of these tasks for ourselves and help our South Pacific neighbours by basing these aircraft in the islands from time to time. The review will consider this option.

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One immediate problem we face is that defence spending will be tight in the next five years. This is due to two factors. The first is the introduction of $2 billion of new or dramatically improved capabilities: new helicopters, new ships and upgraded Orion and Hercules aircraft.

All these generate additional depreciation and operating costs. This money has to be found.

The second is the impact of the recession on government spending, which means only small increases in defence spending over the next few years. The Government has been determined to get more value for money. In defence, this means shifting expenditure from the back office to the front line.

With 38 per cent of the $2.1b annual expenditure being spent on personnel, we need to ensure more of that money is spent on service people who are able to be deployed on operations, whether peacekeeping, disaster relief or conventional missions.

Operating costs will also need to be carefully scrutinised. This means looking beyond the vital immediate costs such as fuel, ammunition and maintenance. We can look for efficiencies in how we manage our bases and replace infrastructure such as hangars and housing. We can also look at functions such as human resources, logistics support and training to ensure that we get the best value for the three services.

In the next six months, the Government will conduct a Value for Money project to find savings of about $50 million a year. This will close the funding gap and ensure that defence is sustainable over time.

If we can meet the short-term financial challenge, the higher level of depreciation will go a long way to funding the replacement of the core capabilities in the Defence Force. It will also allow some new capabilities to bridge the gaps that the review has identified.

The review is a major task. It is too important to be rushed. The public in New Zealand and in many other countries will scrutinise our review to see whether it is responsible, robust and sustainable.

All of this work will be brought together in a White Paper this year. This will set our course for the next two decades.

Wayne Mapp is the Defence Minister.