New Zealand boosts defence spending in face of ‘adverse’ security environment
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Defence spending will make up 1.23 per cent of gross domestic product in the coming year, according to New Zealand’s budget document.
PHOTO: REUTERS
WELLINGTON – New Zealand’s government will boost defence spending by 9 per cent, according to its 2026 budget unveiled on May 28, with Finance Minister Nicola Willis saying the country faces its “most adverse” security environment in eight decades.
Wellington needs to ensure “the capability to defend and advance New Zealand’s interests”, said Ms Willis, adding that the NZ$3.5 billion (S$2.6 billion) in new funding over the next four years will include extending the life of Anzac-class frigates, acquiring new drones and improving security and intelligence services.
“New Zealand faces the most adverse and contested geostrategic environment in the past 80 years,” she said.
Defence spending will make up 1.23 per cent of the country’s gross domestic product in the coming year, according to the budget document.
Foreign Affairs Minister Winston Peters announced a NZ$109.8 million boost to aid funding for the Pacific and NZ$145.3 million for offshore diplomatic work.
Mr Peters said the funding will “safeguard New Zealand’s front-line diplomatic and trade network”.
“(Wellington) must pursue a highly active and effective foreign policy to defend and advance New Zealanders’ interests,” he said.
Other big-ticket budget items include nearly NZ$1 billion to respond to the global fuel crisis created by war in the Middle East, which Ms Willis said has halted New Zealand’s expected economic recovery.
“The situation in the Middle East remains uncertain, so it is prudent to be ready should fuel prices rise further and add more pressure to households and businesses,” Ms Willis said.
She added that inflation – currently at 3.1 per cent – is expected to spike as a result of the war, but Wellington is attempting to “support those most affected by higher fuel prices”.
A NZ$150 million strategic fuel reserve has been put in place, with an additional NZ$450 million earmarked for temporary support if supplies worsen.
Eligible families will also receive a NZ$50 per week tax credit for up to a year, according to the budget document.
New Zealand’s Treasury warned that conditions have already worsened since it finalised its budget forecast on April 24.
“Should more severe shocks materialise, from the Middle East conflict or other sources, there could be permanent impacts on productive capacity, resulting in more enduring impacts on the economic and fiscal position,” the budget document said. AFP
