Labour asks how National will get to $12 billion defence spending target
Labour is calling out National for not setting out a funding pathway to meet its target of spending 2% of GDP on defence by the 2032/2033 fiscal year.
The coalition set this goal out in the 2025 Defence Capability Plan. On current economic forecasts, that would require spending about $12 billion on defence in 2032/33.
According to a World Bank tracker used by National and the last Labour Government, New Zealand is spending about 1.1% of GDP on defence, which has been the norm for the past two decades. Treasury figures put today’s defence spending at $3.8b, slightly less than 1% of GDP.
Each year, the operating and capital allowances must be tipped into this spending line to increase it to $12b by 2032/33 to hit the Government’s target. However, this is when the operating allowances, at $2.4b a year, are under pressure to fund existing services.
Labour’s finance spokeswoman Barbara Edmonds alleged National’s inability to set out a pathway to 2% of GDP was hypocritical, given its focus on Labour’s fiscal plan.
“National continues to attack Labour, but when asked how it will pay for its own defence commitment, it has no credible answer,” Edmonds said.
Labour’s fiscal plan has been public for weeks, but National would rather recycle old attack lines than explain its own numbers, she said.
Edmonds said the increased funding for defence would need to come at the cost of spending on other essential services.
“Extra defence spending has to come out of the same unallocated funding that National’s own plan says is meant to cover new hospitals and schools.
“That means it can’t be paid for without squeezing them, making deeper cuts elsewhere or borrowing more.”
National’s finance spokeswoman Nicola Willis replied by noting unanswered questions over Labour’s fiscal plan.
“Instead of worrying about how a National-led Government will meet its defence commitments by 2032/33, Labour should focus on explaining how it will fund its $18b hidden bill next year if it gets into government.”
Willis said a large portion of the 2% target would come from the capital allowance, which is set aside for one-off durable investments, rather than the operating allowance.
“A big component of the Government’s defence commitment is spending on new equipment and there is room in the government’s capital allowances to enable that to happen.
“National has shown over the past three years that it can operate within the spending limits it sets.
“That is in stark contrast to the previous Governmentm which wildly overspent every year it was in office and left New Zealanders with a $170b bill,” Willis said, using a figure for net core Crown debt when the government changed in 2023.