New Zealand’s Prime Minister Christopher Luxon announced a sweeping defence overhaul on Monday, pledging to nearly double military spending to 2% of GDP within eight years, Reuters reported.
New Zealand and our allies and partners across the world are no longer in a benign environment. My primary focus is the economic importance of this country. However, there can be no prosperity without security, and defence is one vital component of that picture.
The NZ$9 billion (£4.3 billion or $5 billion) four-year injection marks a dramatic reversal from 2024’s austerity cuts, when defence budgets shrank 6.6% despite ageing equipment and personnel shortages.
The funding will modernise a force hobbled by decades of underinvestment, with current spending at just 1% of GDP–leaving frigates docked and diplomatic flights grounded by faulty Boeing 757s.
The blueprint prioritises are strike capability upgrades, including unmanned aerial systems and helicopter replacements; fleet sustainability, extending frigate lifespan while reviving Southern Ocean patrol plans; and diplomatic mobility, replacing the crisis-prone 757 fleet after high-profile breakdowns left officials stranded.
The spending surge follows 2023’s national security review, which urged stronger Indo-Pacific alliances to counter China’s regional influence. Yet challenges persist, as attrition rates remain high despite recent improvements, and AUKUS membership bids face scepticism over New Zealand’s limited defence-industrial capacity.
While Luxon frames the 2% target as essential for “credible deterrence,” critics like former Labour leader Chris Hipkins dismiss it as “arbitrary,” noting historical spending fluctuated between 1-1.5% of GDP. The opposition warns the plan risks fiscal overreach, but bipartisan consensus exists on addressing systemic underfunding, evidenced by last year’s NZ$571 million stopgap package for personnel retention.
