Covid-19 forced govt to cut back defence spending - Peeni Henare

The $20 billion spend-up on defence is the latest Covid-19 casualty, with a range of options to scale it down now before the finance minister.

The major investment in a range of new military hardware and upgrade was announced by former Defence Minister and New Zealand First MP Ron Mark in 2019 .

It foresaw New Zealand increasingly being called upon to respond to regional emergencies, including those caused by climate change, to protect its backyard from a range of threats and continue to work closely with partners like Australia.

The current minister - Labour's Peeni Henare - says Covid-19 means the Budget is now much tighter, and furthermore, defence will look different under Labour than it did under its coalition with New Zealand First.

The last Labour defence minister was Phil Goff in 2008; Henare says when he got the job last year, Prime Minister Jacinda Ardern "was quite clear that she wanted Labour, us, to put our fingerprint on defence", but what that looks like will be influenced by Covid-19.

"I made it clear that I wanted to have a policy reset, in the first instance.

"You'll see a distinctive shift and the ability for Labour to be able to influence this ... portfolio but in line with our broader objectives, and that is obviously with respect to foreign policy," Henare says.

The Defence Capability Plan included $1b to replace the old 1960s Hercules fleet with modern versions - or "Super Hercs" - by 2023, and four new P-8A Poseidon aircraft, which will replace the Orion fleet, also in use for decades.

Those projects are largely completed, along with the frigate upgrades, and so won't be affected.

Henare, though, is flagging more of a focus on upgrading bases and other infrastructure that supports defence force personnel.

"It's little known that in a flood in king tide, quite a large percentage of the Devonport base goes underwater, and that's a problem," he says.

Cabinet's also signed off on a "significant investment" on a logistics base for Linton Camp near Palmerston North.

There are question marks over much of the plan, however, including the timetable for the new Southern Patrol Vessel (SPV), and a proposed "enhanced" sealift vessel to work alongside HMNZS Canterbury - between them estimated to cost more than $1.5b.

Henare's reluctant to start naming projects that might be scrapped or delayed, saying "all of the capability plan" progressed under former minister Ron Mark is "still on the table".

"So right now, I can't say that parts of the [plan] under my predecessor will be scrapped, but a redraft will look towards aligning with our priorities under this government."

The very initial wheels have begun to turn on the potential purchase of the SPV for Southern Ocean operations a ship "designed to operate in one of the harshest environments on the planet".

There was a Request for Information to gauge market interest in May, with a view to taking a business case to Cabinet early next year.

However, Henare says there are "still decisions that Cabinet will have to make" on that vessel, when asked for details about projects that might be canned.

While he will not put a figure on how much they're looking to trim overall, Henare says the new plan will not have a $20b price tag.

"There are a number of options that have been presented to the minister of finance and ... it is now in his hands really and ultimately Cabinet will have to make that decision."

All of those options feature some degree of scaling back, says Henare, as well making sure the decisions help New Zealand economically.

"We want to be stimulating our economy and how do we do that in the defence portfolio? One way not to do that is to send large amounts of our money offshore."

NZ and its defence partners

National's warning the government to proceed cautiously, as there are significant operational and strategic risks.

"Frankly, it's a pretty lean operation as is it, and to be cutting in to that would be making serious strategic decisions and scaling down in a way that could be considered reckless," defence spokesperson Chris Penk says.

"We'll have to wait and see what the detail is, not only in terms of our own national security but also in the way that our allies will perceive us."

New Zealand does not have the luxury of making these sorts of decisions while ignoring the foreign policy implications, Penk says.

"The reality is that we are not equipped to have an independent foreign policy backed by a military that is able to stand alone.

"So we do need our friends, we do need allies and so we do have to take seriously the attitude that they would have to us being less inter-operable with them and carrying our weightless overall."

Henare says while there's some "disappointment" among the services, New Zealand's key defence partners, including Australia, will understand, and not see it as reneging on a commitment.

"We'll all agree that, and it was the case, too, with my interactions with some of my colleagues around the world that Covid has put a particular strain on all countries, not just ours and we all look towards, what does economics viability look like into the future?

"And I'm quite upfront that for us, it means that we do have to redraft our capability plan," the minister says.

"But we do remain committed to the treaties that we've signed up to, the obligations that we have with some of our partners, and of course, how we might grow our capability into the future but I'm under no illusion there is a challenge in front of us."

The importance of the trans-Tasman relationship, and the ability for the two militaries to train and deploy together, or 'interoperability', was raised in Queenstown by Australian Prime Minister Scott Morrison.

Henare was asked if the new plan would hinder future cooperation.

"No, not at the stage ... we're yet to decide on the redraft, but my view of it is no, it won't be."

Green MP Golriz Ghahraman wants the spending pulled back considerably, including scrapping the second frigate upgrade.

Much of the existing plan's about keeping defence partners and allies happy, she says.

"It was already incredible what the coalition spent and it was Labour that made that agreement with New Zealand First last term and we saw just billions of dollars be committed to the defence, war-making vessels, essentially."

Spending on some social services is dwarfed by what has gone towards the frigate upgrades, she says, and the massive overspends that have already happened.

Victoria University strategic studies professor Robert Ayson says the redraft might raise some eyebrows among defence partners, but a solid base has already been laid - the most important New Zealand's commitment to the new P-8s.

"Because that brought New Zealand into a class of that maritime surveillance capability that locked New Zealanders in as a partner in that area, a combat relevant capability for advanced operations in the Asia Pacific or Indo-Pacific as the government is now calling it."

The new Hercs and frigate upgrades will also give some comfort, Ayson says.

However the redraft may raise some questions about New Zealand's medium to long term commitment to traditional defence relationships and alliances, he says.

"But I actually think the P-8 commitment means that New Zealand can come back and say, 'well, we're there with you', so from that point of view I don't think it's as difficult as it might be."

However it will mean there will be some things that New Zealand "may find more challenging to be involved in in the future", Ayson says.

Ron Mark declined to comment.