The Government’s upcoming Budget will contain $571 million of new funding to boost pay for Defence Force staff, upgrade its NH90 helicopter fleet and replace dated military vehicles.

The pre-Budget announcement made by Defence Minister Judith Collins also includes $107m in cuts to the NZ Defence Force (NZDF) and the Ministry of Defence — part of the Government’s efforts to reduce public service spending.

However, Collins has revealed NZDF didn’t reach the Government’s spending cut target of between 6.5-7.5 per cent, saying she wasn’t going to push the Defence Force to cut further spending given the rising number of deployments and the more challenging geopolitical environment it operated in.

“You can’t get blood out of a stone.”

Of the $571m, $163m would be used for “remuneration for uniformed personnel” to help address the Defence Force’s issues with attrition that have heightened in recent years.

The remaining $408m, comprising $127m in operating funding and $281m in capital funding, would be used for new projects.

While it was yet to get Cabinet approval, one of the projects Collins referenced was initiating the replacement of the 40-year-old Unimogs and Pinzgauer trucks, used to carry personnel and equipment and provide off-road mobility during events such as Cyclone Gabrielle.

“Replacement vehicles will have integrated communications that will enhance interoperability with regional and global partners such as Australia, Canada, the United Kingdom and the United States,” Collins said.

New Zealand’s NH90 helicopter fleet would also get new navigation systems and updated encrypted radios to allow for interoperability with overseas partners.

The new funding would also go towards a cloud-based computer programme that would give the Defence Force better visibility over the country’s maritime domain, leasing 35 homes for staff based at the Devonport Naval Base and upgrades to the Linton Military Camp.

In Budget 2023, the previous Labour Government spent $419m solely on boosting NZDF staff pay by $4000 to $15,000.

In a press conference today, Collins acknowledged her Government was spending less, describing the $163m as what could be afforded.

She couldn’t say what level of pay rise staff would get because it would depend on their salary.

Collins said pay rises would be decided by the NZDF’s executive team, but she expected it would go to “where it was most needed”. She said she couldn’t imagine it would be given to primarily senior staff.

An entry-level NZDF staffer earned about $65,000 a year, mid-range staffers earned about $85,000, while officers with about four years of experience could earn $90,000 to $180,000, depending on their level of training and the number of deployments they had done.

Collins said increasing pay was a key tool to combat attrition. Almost 27 per cent of skilled staff had left the NZDF in the past two years, and that had imposed severe limitations on its capacity to respond to natural disasters and operate its assets.

According to Collins, attrition in December 2022 had reached 17.7 per cent, but had now dropped to 10.1 per cent. She claimed attrition in the Air Force and the Navy had also decreased, but didn’t give figures.

Asked whether she had an attrition target, she said 7 per cent would be a “great target”. Collins acknowledged she was “ambitious” and that it might take time to achieve.

The $107m of cuts reinvested in NZDF’s “front line” comprised $99m from NZDF and $8m from the Ministry of Defence.

A statement from Collins said the cuts had been achieved through ending projects, reducing international and domestic travel, and decreasing contractor and consultant spending.

When asked how close NZDF got to the 6.5 per cent target, Collins said: “Well, they did well. You can’t get blood out of a stone.”

She then referenced how the Defence Force was in a “pretty dire state” when she took over as minister, saying morale was low and as such, she wouldn’t be pushing it for further cuts. Collins didn’t outline what proportion NZDF had cut its spending by.

Today’s announcement preceded the incoming Defence Capability Plan, which would outline the Government’s spending priorities for the NZDF through to 2040. The plan was expected to reach Collins in the next month.

New Zealand spends the equivalent of 1 per cent of GDP on defence — less than the 2 per cent some of New Zealand’s allies spend on their defence forces.

Act and New Zealand First campaigned on gradually increasing the defence spend to 1.5-2 per cent of GDP respectively.

Collins said it would be “lovely” to get to 2 per cent, but said it was important to remember other areas needed investment.

Labour leader Chris Hipkins highlighted how the Government’s spend on remuneration was much less than his Government had made.

“If anything, this is just keeping the lights on.”

Hipkins didn’t agree with linking defence spending with a proportion of GDP, deeming it “arbitrary”.

However, he accepted the NZDF needed more funding so it could have greater capacity for search and rescue, and disaster recovery.