As has become the norm many Budget announcements are drip fed in the week or two leading up to the Finance Minister’s big day and much of the gloss and anticipation gone.  This week’s 2023 Budget had been touted by Prime Minister Chris Hipkins as a “no frills” affair with Finance Minister Grant Robertson dampening expectations in the days before the budget. Many therefore were surprised at the size of new spending and the level of debt forecast, though this should have been anticipated in an election year. In retrospect, the pre-budget announcements did actually give clues as to what the tenor of the whole budget would be.

There is plenty of commentary around the various big spend items announced on 18 May and over the next few days detail will become more apparent. The subject of this blogpost focuses on one of the many pre-budget day announcements, the near ¾ of a billion (over four years) appropriation for Defence.

The Defence budget package, announced by Defence Minister Andrew Little on 8 May  includes:

  • $419 million to boost Defence’s payroll
  • $85 million to improve Defence housing (payment goes to Iwi who now own the land) with up to 50 new buildings at Waiouru and a renovation pilot for 13 properties at Burnham, Linton and Ohakea
  • $328 million for upgrading Defence Force assets and infrastructure ($90 million of this to upgrade aviation fuelling facilities at Ohakea)
  • $93 million for communications to our frigates and new Bushmaster vehicles.

Specialist defence commentators will drill into the detail of the new equipment spending but it is the personnel spending that interests me most.

$419 million sounds like a lot of money and it will be welcomed by NZDF to fund pay increases of between $4,000 and $15,000 per annum to personnel depending on rank, role and service branch from 1 July. But in fact this is merely catch up from the pay freeze NZDF employees have experienced since 2017. Remuneration has failed to keep pace with the civilian marketplace and is now an estimated 5 percent on average lower than counterparts in civi-street.

At least the government has at last recognised the crisis the Defence Force is in. Lower pay has been touted as the reason it has experienced 30% attrition over the past two years. It is undoubtedly part of the story but a very simplistic analysis of the real problems in Defence. If government thinks throwing a bundle of money at Defence will plug the gaps that have caused significant capability loss it is either completely out of touch with reality or bereft of ideas for fixing the problems. It is akin to trying to buy insurance during an earthquake.

Solutions that have real impact will only be found when there is a thorough understanding of why people are leaving in droves. Human Resources research shows that money (remuneration) is usually the fourth reason a person leaves their job, Defence being no different. Job satisfaction, a sense of purpose in work, the way workers are treated by superiors are all routinely ahead of remuneration in reasons people stay in or leave their jobs.

The noticeable tipping point for those in uniform was when government announced the Defence Force would take over running security at MIQ hotels for COVID pandemic quarantining, after a couple of security guards fell asleep on night duty. Kim Knight, in a NZ Herald article last year entitled “MIQ: The two year tour of duty no soldier wanted” noted that “More than 6200 Army, Navy and Air Force personnel were involved in Operation Protect and the staffing of 32 managed isolation and quarantine hotels”.

No one joins the Army, Navy or Air Force to be a security guard. The work was as far from their regular jobs as dog-grooming is from politics. For over two years regular training was curtailed, career advancement hindered and people were taken away from their families erratically (sometimes as often as one week on, one week off). Combined with the boredom of MIQ minding it is little wonder many looked to the civilian labour-constrained marketplace for better work, better pay and better opportunity.

One would hope Defence Force chiefs had fought their corner while their staff were effectively purloined for ‘contract-busting duties,’ though any evidence of advocacy for their troops has been hard to see. The public saw MIQ security as an appropriate use of those in uniform – their duty perceived as keeping us safe. There is little understanding of the lasting damage this diversion of duties has done to the capability of our defence force and the vulnerable situation New Zealand now faces in national security terms.

An example of a capability that must be maintained is New Zealand’s responsibility to monitor (and respond) to the 6th largest Search and Rescue zone in the world. NZDF is the only national security agency government has to cover this. Such capabilities are compromised by the current state of the Defence Force.

S&R zone

Defence commentator Simon Ewing-Jarvie has written extensively about the NZDF’s labour issues on his UNCLAS blog and Patreon site where he talks about the NZDFs Long COVID problem. He notes the greatest losses have been from the ranks of Sergeant and Captain/Major. It takes approximately 10 years to train people to this level. NZDF cannot solve overnight a capability gap that is ten years in the making – it will take 10 years to fill. No amount of money today will fix that problem tomorrow. And if the additional pay is thought by government to be sufficient to lure well trained people back into uniform they are completely out of touch.

The budget announcement of $419 million to boost NZDF payroll will of course be received very positively by those working within Defence. Unfortunately, an unintended consequence may well be locking in those least economically mobile, some who may have had limited career options within Defence but will now stay for the pay bump because there is no incentive to leave. Had remuneration kept pace with the market from 2017 and government not committed large numbers of NZDF personnel to MIQ security guard duties in 2020 NZDF attrition would look very different today.

Government has huge expectations of Defence but has shown little respect for the real value and role of Defence Force personnel. The 18 May Budget payroll boost is about six years too late and when the real reasons for NZDF personnel woes are examined the only conclusion is government has come to the party with too little and too late.