Last week, the Herald revealed the consequences - that the HMNZS Wellington, one of two new offshore patrol vessels, had been tied up at Devonport since June.
Only two of the four inshore patrol vessels (IPVs) have been in service at any one time and have spent fewer than their target days at sea because of staffing issues.
Despite unemployment among 20 to 24-year-olds running at 18.5 per cent, no quick fix is in sight. The shortages are in critical areas, including engineering officers, technicians and watchkeepers where lengthy training and experience is required. The Herald reported that 18 Australian sailors were now helping to plug gaps in the ships' complements.
It means the huge taxpayer investment in the reshaping of the Navy - the Project Protector fleet - is unable to meet expectations. The $650 million purchase of the six-strong patrol fleet and multi-role vessel Canterbury stemmed from the Labour Government's decision to realign our Defence forces to reflect modern realities: peacekeeping and emergency response, regional (Pacific) security, and keeping our vast economic zone secure from threats - including fisheries protection and border security.
With the Orion fleet of six patrol aircraft also at reduced strength while upgrading continues, it means surveillance of our exclusive economic zone is well shy of desired levels. The heightened risks are wide-ranging: increased illegal incursions by foreign fishing fleets, rule breaches by our own fishing companies, biosecurity breaches and the signal it sends to asylum-seekers and drug-runners that they have little chance of detection should they wish to sail our way.
Then there's politics - if we expect Australia to watch our back in regional security, we need to at least carry out the limited functions we commit to. These regional responsibilities also (theoretically) extend to helping our Pacific neighbours safeguard their economic zones.
The patrol fleet's current availability is not just breaching the Navy's own targets - it is a fraction of the target set in 2002 by Government agencies who are the fleet's main customers, including Customs, Conservation and Fisheries. Citing the greatly increased need for surveillance and detection, the agencies settled on annual targets of 1371 sea days for surface patrols and 2000-3000 hours' flying time for the Orions.
Project Protector was conceived with these agencies' needs in mind. Ahead of the fleet's commissioning in 2010, the Navy anticipated having ships on the water for up to 840 sea days, an average of 140 days per ship. But, in 2011/12, it set a reduced target range of 534-590 days for the inshore patrols and achieved only 397 days. One inshore patrol ship, the Hawea, spent just 59 days at sea, or 43 per cent of its target.
The Government's response was simply to lower the targets for 2012/13 to a range of 484-585 sea days for the inshore patrols. That the offshore vessel HMNZS Wellington has been tied up since June confirms staffing issues are continuing to limit the Navy's capabilities.
Nor are the Orions meeting targets, flying just 1553 hours on EEZ patrols last financial year against a target of 2250 hours.
None of the "partner" agencies will publicly express concern about our unguarded waters. The most telling comment is from the National Maritime Co-ordination Centre, which last year described the Navy's availability as "adequate".
The fishing industry is not so acquiescent. Seafood NZ spokesman Don Carson says the industry relies on monitoring and enforcement of regulations to convince overseas markets we are fishing sustainably. Diminishing global fish stocks are increasing the likelihood that foreign fleets may risk venturing into our waters, says Carson. Any lessening of surveillance would be disappointing.
Fisheries researcher Glenn Simmons says the shackles on sea patrols add to the evidence that "fisheries surveillance is a joke".
"Foreign charter vessels are out of control," says Simmons, whose research sparked the Government clampdown on charter fleet employment abuses. "There's no oversight and no enforcement. They dump as much [unwanted catch] as they can."
Lance Beath, a former Defence staffer now with the Centre for Strategic Studies in Wellington, says New Zealand needs to meet realistic targets and maintain a presence in Pacific waters to show it is pulling its weight in regional security.
"And if they are not out there as much as they should be, that obviously has impacts on training and capability. Why would you buy new ships and not put them to sea?"
He says the reduced operational capability has had a perverse outcome - helping Defence to meet its savings targets.
The arrival of the seven ships had been expected to revive moribund naval morale, ending years of frustration over budgetary restraint and outdated ships and equipment. The Navy's changing role promised more action of the type that attracts recruits: chances to travel, to be physically active, to perform valuable roles in emergencies, to gain experience with other countries' forces and ships. But enthusiasm waned as delivery dates blew out and, when the ships were accepted, they had multiple defects. The delays led to a spike in departures as officers trained for the new vessels lost patience.
Then came the civilianisation project, which followed a Government edict to Defence to trim $350 million-$400 million from its budget by 2014/15. This came after a "value for money" review led by former State Services Commission head Rod Deane, and a Government white paper in 2010 which proposed a suite of cuts and savings. Part of the drive was for Defence to retain the savings to put towards the huge upcoming costs of ships and other equipment due for replacement in the next 15 years.
Civilianisation meant converting many military positions to civilian appointments with lesser allowances and conditions. The Defence Force identified 1400 positions, mostly "back office" administrative posts and logistics and training roles for civilianisation in 2011. But it did so without identifying how many military posts it would need going forward, an Audit Office inquiry released this month found.
Halfway through, Defence discovered it needed more military staff overall. Although it moved to scale back the project, it was too late.
"NZDF always intended to reduce the number of military staff through the civilianisation project but has lost far more military staff than intended," Auditor-General Lyn Provost reported. "The loss of so many military staff ... has made it more difficult for the NZDF to do its job."
Across the three services, 500 people were made redundant, two-thirds of them uniformed (frontline) staff, former Defence Minister Phil Goff told Parliament last year.
But up to 1500 more left voluntarily, disillusioned at the handling of the process. There were complaints of selection bias. Those who valued job security and signed 15-year contracts felt betrayed.
The Audit Office report hints at the damage done to "the bonds of camaraderie, integrity and commitment" that are part of military culture and the resulting impact on morale and staff turnover. The Navy had even warned Defence that its workforce was about right and that being forced to reduce military staff increased the risk of not being able to put to sea. The Army and Air Force also expressed reservations.
In 2011/12, turnover in the Navy doubled "from a manageable 11.25 per cent at the start of the financial year to an unsustainable 22.96 per cent at year's end," the Defence annual report says. The shortages of trained personnel began to significantly limit operations early last year. The shortages were in "several critical specialist areas essential to the safe and effective operation of the ships".
But civilianisation was just the final straw for many. Turnover had been an issue for more than a decade, with the Navy's justifiable practice of training recruits in skilled trades such as engineering, and paying tertiary education costs, leaving it vulnerable to the higher pay rates available in the private sector. Australia's mining boom, bringing firms here in search of recruits, lured more to leave.
On top of the problems with the new ships, pay became an issue. Staff went four years without a pay rise until last year, when cost savings from the civilianisation project allowed an adjustment. But it was not evenly distributed (senior ranks got most) and, in some cases, conditions and allowances (including superannuation entitlements?) were clawed back.
"It was a case of giving with one hand and taking away with another," says Labour's defence spokesman, Iain Lees-Galloway.
Those with a longer-term view point to societal changes. Gone are the days when school-leavers eyed the Navy as a 30-year career - though the job security, while reduced, is still an attraction. Weeks at sea on overseas deployments have downsides for married couples and those raising families: temptations to step back into "civvy" life grow over time. For women, who now comprise a third of the naval workforce, issues of sexual harassment and assault, equal opportunities, maternity leave and pregnancy duties still cause some friction, an Equal Employment Opportunities survey found.
Beath says staff retention is a regional problem, with Australia's Defence Force looking to plug its gaps by recruiting New Zealanders.
But on top of all the push-pull factors, civilianisation was like a dambuster. The impact of the loss of senior hands goes beyond the inability to put ships to sea. Those left talk of the pressure of increased workloads, covering for several vacancies and of safety fears arising from young recruits being promoted beyond their experience levels.
Defence has raised the possibility that one or more of the ships could be sold.
From the horizon, it may seem that our Navy lurches from storm to storm with few sustained periods of fair weather. This may be because the news media tends to focus on the storms.
But Defence is keen to emphasise that things have moved on from "the dark days" of late 2011. Turnover has fallen - though it is still a worrying 18 per cent. Last year's pay rise was a Government acknowledgement that the squeeze had gone too far.
Sources say though morale could be better, it could be worse. They talk of the pride that comes with doing meaningful work for their country - be it rescuing yachties, responding to Pacific cyclones or the Rena environmental emergency. Our sailors maintain an international reputation for their abilities and enthusiasm in such crises, even if their equipment sometimes limits their capabilities.
Australian officers have been warmly welcomed; part of a reciprocal arrangement which will give New Zealanders opportunities to gain experience on Australian ships. Many ex-Royal Navy sailors have been recruited and there are exchange arrangements with Canada. Beath says the healing military relationship with the United States should allow more exercises with the world's biggest navy.
Vice-chief of the Defence Force, Major-General Tim Keating, says the HMNZS Wellington is due for recommissioning in April and a third inshore patrol vessel will go back to sea in June. The fourth will be engaged in training.
Keating says the Navy is moving away from "sea days" as a performance measure and is discussing with Government agencies how to better employ the ships. Instead of having an IPV at sea for 200 days "going up and down, hoping to bump into something", it may be more effective to target use of the ships to operations and areas where illegal activities are known or suspected to be taking place, he says.
"We have great people - we want to use them smartly."
But what will do most for staff retention and morale, as Beath points out, is getting ships out to sea.
