Prime Minister Chris Hipkins and Defence Minister Andrew Little. Photo: Dom Thomas
The government's Budget this year will boost New Zealand Defence Force (NZDF) pay rates by $4000 to $15,000, at a cost of $419 million over four years.
A further $328m will also be spent on upgrading NZDF assets and infrastructure.
Defence Minister Andrew Little announced the decision alongside Prime Minister Chris Hipkins after today's weekly Cabinet meeting.
Hipkins had just arrived back from the Coronation of King Charles in the UK over the weekend.
The trip included a visit to the facility where New Zealand Defence Force (NZDF) troops are training Ukraine troops, where Hipkins announced further support for Ukraine.
Hipkins said the Budget would be "no-frills" but the "dedicated women and men of our defence forces" were one group of New Zealanders whose wages had lagged behind.
"It's unfair and it's leading to significant rates of attrition. It's also putting at risk our ability to make necessary deployments whilst also responding to events such as Cyclone Gabrielle."
He said he knew from conversations with his counterparts New Zealand's personnel were held in the highest regard globally.
"It was humbling to meet with our trainers putting in 100-hour weeks to ensure the Ukrainian armed forces have the skills necessary to defend their homeland against Russian aggression.
"Our soldiers, sailors and members of our airforce also play a vitally important role in supporting us domestically during times of crisis and we've seen this too often in recent times - most recently with the defence force moving quickly to support New Zealand through the recent floods and Cyclone Gabrielle."
The new pay rates are set to take effect from 1 July.
Hipkins said the government had invested "a historic" $4.5 billion to upgrade the defence force since Labour entered government.
He said they had realised at that time that "after nine years of underinvestment and neglect and deferring upgrades in investment, our defence force workforce and the important assets that they use and rely on had been run into the ground".
Little said the funding boost would mean 90 percent of NZDF personnel would now be paid at or close to market rates, and had been his top priority since he took over the portfolio.
"It's in response to key concerns raised with me by personnel throughout the ranks who I've met with or heard from right across the country. It's clear that rates of pay in our defence force have fallen behind rates payable for comparable roles outside the military."
Little did not want the next pay rates increase to wait for five years, he said, and he would be keen to review other countries' approach to the matter.
He said the government funded NZDF to have a certain number of personnel in each of the services - the Navy, Army, and Air Force - and "we wanted to get them back up to the full complement".
"We lost about 800 personnel in the last year, I don't have the precise number of the gap we want to be filled but we want all those gaps to be filled."
Marine Electrical Technicians and Army Combat Drivers would see the highest increases, of $10,000 to $15,000.
He said enlisted personnel were not able to join a union, and could not go on strike, "but we know Kiwis expect them to be there when we need them most".
"We have a moral obligation to ensure our soldiers, sailors and aviators are paid fairly for the critical work that they do on behalf of all New Zealanders. This is a responsibility that this government takes seriously.
"This increase is four times greater than any previous defence remuneration boost over the past decade. It will go a long way to address attrition issues and make defence a career of choice."
He said the $328m for defence projects included $90.7m for upgrades to aircraft fuelling facilities at Ohakea, $93.7m for communications equipment for frigates and Bushmaster vehicles, $59m for operational funding for frigate maintenance, and $85m for defence housing in Waiouru, Burnham, Linton and Ohakea.
The communications upgrade came as a result of interoperability requirements - particularly with Australia and the United States, Little said.
"We need to have a platform that means the users of our vehicles can communicate effectively to our counterparts from other militaries with whom we regularly exercise."
Part of the housing commitment is also a requirement under the Ngāti Rangi Claims Settlement Act 2019 for 50 homes to be built at Waiouru.
The funding announced today would take the overall spend as a percentage of GDP to about 1 percent, Little said. A strategic review, called the Defence Policy Review, was assessing the NZDF needs for now, he said.
