Business leaders are split on whether the Government’s commitment to raise defence spending to 2% of GDP is enough to keep New Zealand secure in an increasingly volatile world.
Just under a third (32%) of respondents to the Herald’s 2025 Mood of the Boardroom survey believe the target is sufficient, while 43% say it falls short. The remainder (25%) are unsure.
The debate comes as the Government commits $12 billion over the next four years — $9b of it new money — to modernise the New Zealand Defence Force. Spending is expected to climb above 2% of GDP within eight years.
For many executives, the challenge is scale. “A percentage of our small GDP will never be enough,” says Mainfreight CEO Don Braid. “Strong security relationships with other nations remain our only options.”
Jason Paris, chief executive of One NZ, is direct: “We will never be able to invest enough to protect ourselves without our partners.”
Forsyth Barr managing director Neil Paviour-Smith warns, “New Zealand is only truly ‘protected’ if we are part of a credible set of defence alliances. The cost of that may well be more than 2% of GDP.”
New Zealand is only truly ‘protected’ if we are part of a credible set of defence alliances. The cost of that may well be more than 2% of GDP.
Several major investments are earmarked between now and 2028. These include replacing the ageing Boeing 757 fleet ($600m to $1b), acquiring maritime helicopters ($300m to $600m), and enhancing strike capabilities ($100m to $300m) in addition to cybersecurity, drones, and personnel housing upgrades.
Ventia executive general manager Damian Pedreschi emphasises the need to support people as well as hardware. “Our defence force will always be small but mighty,” he says. “We need to give them the appropriate living and working facilities, and up-to-date equipment to carry out their core functions.”
Several respondents highlight that the debate is as much about credibility with allies as it is about the headline figure.
“For our allies, the commitment no doubt speaks louder than the percentage,” says Institute of Directors CEO Kirsten (KP) Patterson. “It’s a signal to friends and allies that we take our shared security seriously.”
Others stress that execution is what matters. “Chronic underinvestment needs a transformational approach,” notes ServiceNow country director Kate Tulp. “How will Defence spend that investment at pace with the current skill sets employed? This will be the determining factor.”
Chronic underfunding is repeatedly cited. “Defence has been woefully underfunded for decades. Significant investment in innovation is essential, just look at how fast things are moving in Ukraine,” says Retirement Villages Association executive director Michelle Palmer.
Dairy Holdings chairman Greg Gent adds that catch-up capital is essential, given the lift is “off a very low base”.
Auckland Business Chamber CEO Simon Bridges calls it “the right thing” but says one could argue the timeframe is on the tardy side: “A job worth doing is worth getting on with.”
Still, not all believe New Zealand should be chasing higher figures.
“We have to be realistic about our country’s balance sheet,” says Freightways chairman Mark Cairns. “Two per cent of GDP seems a sensible lift from where we have been.” “To go from 1.2% of GDP to 2% of GDP will require $30 billion of additional cumulative funding. Where is that coming from?” asks Cameron Bagrie, managing director at Bagrie Economics.
Some are sceptical of the value of the spend.
“It’s probably one where we would be better off considering carefully our diplomatic efforts than trying to build a modern navy,” says Jarden managing director Silvana Schenone.