POLITICS, DEFENCE & #BUDGET2018. The political fate of @NZDefenceForce rests in two simple questions. How important is defence in the current Govt’s political priorities and how much influence does @RonMarkNZF have? #NZPol #NZ

Politics, Defence & Budget 2018

There are many conversations going on about New Zealand’s national security. The most common one is the usual ‘blah blah’ about how many dollars were allocated to this and that. Another is much more important but frequently unreported – the relationship dynamic between the politicians. It is the latter that actually shapes the outcome for a portfolio.

The political fate of New Zealand’s Defence rests in two simple questions. The first is how important defence is in the scheme of the current government’s political priorities and the second is how much influence the current Defence Minister has.

Take a look at past behaviour of Government parties as an indicator of the future. Labour’s choices have often seen a reduction in combat capability – think air combat force for example. NZ First talks tough but, when in coalition with National, vetoed the acquisition of the second two ANZAC frigates. At least the Greens are up front in their disarmament desires. As a reminder, here are their campaign policies from the election:

Labour – broadly supports the capability upgrades outlined in the 2016 White Paper but reserves the discretion to examine further whether the proposed purchases meet capability requirements at the best value for money.

NZ First – Develop a marine-focused, professionally-orientated military, with a sufficient breadth of capabilities to provide operational independence, including air combat and blue-water naval elements. We will restore New Zealand’s strike capability with a small advanced force of jet trainer and combat aircraft. Prioritize combat-trained and orientated military forces that are best able to contribute to national and regional security, and to United Nations and other international peacekeeping and peace-making initiatives. Create a professional armed Coast Guard as a sub-service of the Navy, primarily tasked with non-military responsibilities such as Fisheries protection, SAR and Policing and Customs duties, allowing the Navy to focus on primary military tasks. Provide improved resourcing for Territorial and Regular Forces and better integration with Civil Defence, to enable effective assistance and cooperation during natural disasters, here and throughout the Pacific. Ensure capabilities to fully support and assist other Government agencies including Police, Customs, Fisheries, DOC, Coastguard, and Search and Rescue. Ensure improved pay, conditions, and on-going training to ensure recruitment and retention of quality service personnel. Establish an independent Armed Forces Remuneration Board to set pay levels. Provide improved resourcing for the Defence Force to expand the Limited Service Volunteer scheme, and to actively encourage and assist with the Cadet Forces, in order to build confidence, self-esteem, responsibility, and self-discipline, and provide training and rehabilitation programmes for youth and for at-risk young people. Maintain New Zealand’s commitment to its Nuclear Free Policy.

Greens – Specialisation as a niche peacekeeping force. Establish international peacekeeper training centre in NZ. Review the structure and governance of the NZDF, looking at which functions can be carried out by civilian agencies or put under joint military/civilian control. Phase out the ANZAC frigates as soon as possible. Not install specialist anti-submarine capability on maritime surveillance aircraft. Exclude participation by NZDF in the ANZUS Treaty, the Five Power Defence Arrangement and the UK/USA intelligence agreement. Investigate extending the reserve forces and reserve training to a wider section of the population.

Viewing Defence in the context of a three-year electoral cycle, here’s my assessment:

Year 1 – 2018: Prudence and payoffs – we’ve just seen that. Nothing much for Defence as it’s not seen as a big voter issue. It is the year of the next Mid-Point Re-Balance for Defence so something may come out of that.

Year 2 – 2019: This middle year in the electoral cycle is when Governments go large, and we can expect the tax hits here. They will be hoping that voters will have forgotten by 2020 or can be seduced. Nothing much for Defence here either but they may take ‘options on things’. A ‘fitted for but not fitted with’ Defence policy.

Year 3 – 2020: Using the extra revenue from last year, throw money in every direction. Defence will get something here as part of the natural order of election year cycles.

It is clear that Defence is not a high priority for this Government. That’s concerning because there are some important decisions to be made about platform replacement. Good ministers can get money for their portfolios. Putting aside this year’s abysmal budget result, how is Ron Mark placed in the machinery of Government?

First, the general view is that Ron, Jacinda Ardern and Grant Robertson aren’t exactly drinking buddies so there’s not likely to be any favours done for Defence in that department. The relationship between NZ First and Greens is toxic at the best of times and Defence is right in the middle of that. I can’t see Ron Mark and Golriz Ghahraman (Green’s Defence Spokesperson) nutting out an accord over a herbal tea anytime soon.

So that brings it back to how Ron is able to leverage NZ First’s support for the Government. Unfortunately, Ron Mark’s star, within his own party, appears to be waning. Were it not, Peters wouldn’t have stood back and let Fletcher Tabuteau roll Mark as Deputy Leader. NZ First got heaps of concessions out of Labour in Budget 2018 but they weren’t going to die in a ditch for Ron Mark or Defence. It’s unlikely that anything is going to change there.

For all the bold election campaign statements by NZ First, Ron Mark got money for a frigate upgrade cost overrun, some joint training and another 800 LSV trainees.

A few lowlights:

$148 million over four years is listed as a new initiative. It is actually the value of the cost overrun for the ANZAC frigate upgrade so it’s not generating any capability that wasn’t already signed up to. This money was announced in December last year. The culprit? Mark blames Brownlee. Brownlee blames Lockheed-Martin (whose NZ Managing Director of Strategy and Business Development, by the way, is retired Air Vice Marshall Graham Lintott). The bottom line is that the Ministry of Defence are responsible for procurement. Secretary of Defence, Helene Quilter did a mea culpa. Did anyone lose their job? No real accountability there!

But here’s the knife twist in this story. Not only is this not new spending, it’s actually caused a degradation in other Defence capability development. That’s because as part of their ‘kiss and make up’ exercise, the MOD agreed to reduce the specs on the new littoral operations vessel from a purpose-built military specification to a commercially available hydrographic and dive support vessel to ‘save’ a similar amount of money. In December, Mark attacked the previous Government over the frigates saying “it means the lives of men and women were now being compromised”. How can he possibly reconcile that with sending sailors into threat zones in a vessel not designed for self-defence and survivability? You can’t paint it grey and call it a warship.

The bulk of the money allocated for acquisition to MOD is for the construction of the new maritime sustainment vessel, HMNZS Aotearoa. Apart from a few legacy projects, there is nothing for the big ticket items listed in the 2016 Defence White Paper.

There is decreased funding of $18.176m for NZDF’s support to operations across the Middle East. I’m having trouble with this one. The budget notes say that this was as a result of successful conclusion to training, security, engineering and supervision for United Nations and Multi-National force operations in Iraq, Afghanistan and across the Middle East in the 2017/2018 year. However, as far as I am aware, no ops on that scale ended. The Iraq training team mandate is up in November 2018 and I assume that it won’t be renewed but, if that’s the case, the note misleads on the dates. I’m going to OIA it but would welcome any clues from readers on that one.

An increase in funding of $4.829 million for deployments to the Middle East that support maritime security and the contributions of support staff for United Nations operations in Korea, South Sudan and Mali saw the net drop in spending in this category land at around $39m (25% drop overall).

There are lots of bits and pieces that make up the final amount of money defence received including $6.25m for repatriation of bodies. $2.3m is to double the Limited Service Volunteer scheme to 1600 a year. NZDF is officially the largest youth training provider in the country which is a complete distraction from core business.

Finally, but very important, is personnel costs. These are currently about $1b of the cost of running defence. Is there, in effect, a pay freeze? Or, will the operating funds have to be used to retain ‘he tangata’. NZ First campaigned on this and has delivered nothing.

Don’t forget, also, about the ‘drag’ that capital charge and depreciation is having on NZDF’s funds. It’s time for that concept to go from the arms of state that must be asset heavy but can’t operate like private sector orgs. Of note is that third-party revenue for Defence was only around $17m. Surely all the training, transport, surveillance and dope crop collecting done on behalf of other Government agencies is worth more than that!

I made a satirical response to the budget on the day it was announced. There is a lingering whiff about this budget of speeches made in the 1930s such as there being “higher social priorities for our limited funds”. We know what came next.