Capital expenditure on defence in New Zealand - Data and Analysis (2000-2033)

IBISWorld forecasts capital expenditure on defence to surge by 38.1% in 2025-26, to reach $9.89 billion. The NZDF is responsible for securing New Zealand's sovereign interests and ensuring preparedness for joint operations. The NZDF operates through three key output capabilities; the New Zealand Army (Ngati Tumatauenga), Royal New Zealand Air Force (Te Tauaarangi o Aotearoa), or RNZAF and the Royal New Zealand Navy (Te Taua Moana o Aotearoa), or RNZN. Surging defence expenditure over 2025-26 can mainly be attributed to strengthening investment in a range of capability improvements and operational equipment. The 2025 Defence Capability Plan reveal that the Ministry of Defence is set to receive around NZ$9 billion in funding from early 2025 through to 2028. This includes over NZ$2 billion in maritime helicopters and an estimated NZ$600 million to NZ$1 billion on NZDF vehicles. These initiatives drive defence capital expenditure over the year, prompted by recent geopolitical uncertainty in regions like China, Russia and the US.Over the past five years, expenditure has grown strongly on the army, RNZAF, and RNZN capabilities. The outbreak of COVID-19 had a mixed impact on defence spending, with reduced activity during the outbreak limiting expenditure in 2020-21. However, the NZDF was also involved in managing the outbreak, supporting expenditure.A strategic review of New Zealand's defence capabilities, which culminated in New Zealand's Defence Whitepaper 2016, has supported growth in capital expenditure over the past five years. The planned capital expenditure from 2018-19 through 2026-27 was influenced by the decisions taken in the Defence White Paper 2016, Strategic Defence Policy Statement 2018, and recommendations from the Defence Capability Plan Review 2019. Yet, these plans were subsequently revised with the introduction of the Defence Capability Plan 2025, reflecting evolving strategic needs and technological advancements. Collectively, these documents guide New Zealand Defence Force investments and inform decisions on acquiring new equipment to maintain and boost its performance.Increased spending on equipment in the three years through 2023-24 has been mostly attributed to the approved funding for the purchase of Boeing P-8A Poseidon aircraft for prospective air surveillance and the Lockheed Martin C-130J Hercules for future air mobility. The New Zealand Government has also allocated increased funding to combat rising instances of cybercrime over the past five years. Due to these initiatives, alongside the introduction of the Defence Capability Plan 2025, defence spending is projected to expand as a share of New Zealand's GDP over the period, from 1.46% in 2020-21 to a projected 3.40% in 2025-26. Overall, IBISWorld expects capital expenditure on defence to rise at a compound annual rate of 21.0% over the five years through 2025-26.