Hon Phil Goff
Minister of Defence

17 October 2006

Speech Notes

Defence Priorities 2007

Speech to the annual forum of the Defence Industry Association of New Zealand, Te Papa, Wellington

Thank you for the invitation to the Defence Industry Association’s annual forum to speak with you today.

On Wednesday night the Minister of Defence Awards of Excellence will be presented on my behalf.

Can I today acknowledge the support provided by New Zealand industry to Defence which these awards highlight.

The Defence Industry's contribution is important to our goal of a modern Defence Force that can protect our national interests and promote security at home, in our region and internationally.

It is curious that your contribution should attract protest.

The right to protest, of course, is an essential feature of any democracy. Democracy tolerates a plurality of views, and safeguards freedom of speech and assembly, provided that it is not exercised in a way which prevents others also enjoying their rights.

Earlier this year the same protestors took the opportunity at a disarmament conference I spoke at to label me and the government warmongers for supporting the campaign against terrorism in Afghanistan. Perhaps they should reflect on what a world controlled by people who think like Al Qaeda and the Taleban would look like.

The situation in Afghanistan will continue to be difficult. But we can celebrate the facts that girls can again attend school, that women can participate in the work force, that the stadium in Kabul is again used for football and not for executions, and that Afghan people have for the first time the right to elect their governments and to have their human rights respected.

We can be relieved too that Afghanistan is no longer a country that hosts terrorists to launch attacks and slaughter innocent civilians such as occurred on 11 September 2001.

I am proud of the role our Defence Force plays in maintaining stability and security and providing the opportunity for development in Afghanistan, East Timor, the Solomons, Bosnia and elsewhere.

Their ability to win the confidence, respect and friendship of the peoples in the countries where they are deployed is something of which all of us as New Zealanders can rightly be proud. They save lives, they help keep the peace, they help prevent extremist political, religious and criminal elements imposing their ambitions on the rest of us.

The Defence Force also has critical roles at home providing border security including against criminal elements, providing search and rescue and maritime surveillance, responding to civil emergencies in the Pacific and domestically and ensuring a counter-terrorist capacity.

To be effective, our service men and women must be properly equipped to carry out their responsibilities. The role of the Defence Industry Association is to ensure as much as possible that this can be done by New Zealanders.

Most New Zealanders would applaud this.

Today I want to talk about the government’s defence policy. I want to outline the 2006 ”Defence Long-Term Development Plan” update that I’m releasing this morning. I want to discuss the role of your association in supporting the New Zealand Defence Force; and I want to touch on how this relates to another of my portfolios, disarmament.

When the Government took office in 1999 we inherited a Defence Force that had suffered a decade of expenditure cuts. Equipment was obsolete, and capabilities were failing. The Defence Force lacked a credible capacity to meet security threats.

We needed a long-term, coherent, and financially sustainable approach.

The priority we set as a new government was to invest in forces that are trained, equipped, and maintained at appropriate levels of combat viability and readiness. We determined to focus our resources in areas where we can achieve excellence and add value to international efforts to achieve security and stability. We recognised that trying to have the Defence Force do everything ran the risk of it doing nothing adequately.

Our goal was to build a strong niche force with a combat capable army and a modern Navy and Air Force.

While New Zealand does not face a conventional military threat, we do need to confront the challenges of terrorism, the proliferation of weapons of mass destruction and transnational crime, as well as deal with fragile states in our own region and respond to natural and humanitarian disasters.

The Defence Statement released in 2001 charted the future course for the Defence Force. It laid out a blueprint for strengthening the Army, expanding the role of the Navy, and upgrading the Air Force.

In doing so, we committed to spending over $3.3 billion on new equipment and infrastructure. This is the largest single commitment of capital funding given to Defence since World War II.

The Defence Long-Term Development Plan released in 2002 gave practical effect to those policy promises.

The LTDP remains our key capital planning document. It is regularly updated to enable decisions on defence acquisitions to be prioritised against the Government’s defence policy and project affordability.

The plan has provided the Defence Force with financial certainty. It has increased the information available to support investment decisions by New Zealand industry.

I am releasing today the third update of the ‘Defence Long-Term Development Plan’ which records the significant progress that has been made in re-building the NZDF:
 Thirteen projects have been approved by the Government and are in the acquisition phase;
 Five projects have been approved in principle by the Government; and
 Twelve projects are in their capability development phase;

We have made significant progress in re-equipping the Army.

The purchase of 105 Light Armoured Vehicles has been completed.

The last of 321 Pinzgauer Light Operational Vehicles will be handed over to the Defence Force at the beginning of November. A number have been deployed to Solomon Islands and Timor-Leste. Others have seen battle in Afghanistan. All the LOVs, which include armoured, non-armoured and special operations variants, have exceeded expectations.

There has been significant investment in additional firepower for the Army. Key purchases include Special Operations equipment, the Javelin Medium Range Anti-Armour Weapon and the acquisition of the cueing and identification system for the Mistral Very Low Level Air Defence System.

New tactical radios have given the army a modern, sophisticated means of communicating. Defence are now scoping out enhanced surveillance and reconnaissance capabilities. Other equipment purchases include new combat engineering equipment.

All of this will make for a more mobile and more versatile Army, capable of delivering more firepower in a greater range of situations.

The Government is making significant investments in the Air Force. All the RNZAF platforms are being upgraded or replaced.

As we planned, the two Boeing 757 aircraft purchased in 2002 are being converted from a straight passenger configuration to a combination passenger/freight role so they will be able to deploy troops and equipment.

Our C-130 Hercules fleet has commenced a major structural and life-extension upgrade which will run for five years. The first airframe is being done in Edmonton, but later aircraft will be re-built at SafeAir in Blenheim.

The major mission and communication systems upgrades for the P-3 Orion fleet will deliver a significant advance in New Zealand’s ability to conduct maritime and overland surveillance - capabilities which are in high demand.

In July this year, I signed a contract with NATO Helicopter Industries for the purchase of eight NH90 helicopters worth $771 million to replace the Iroquois.

This cost covers both the acquisition of the helicopters as well as spares, training and logistics.

This is the single biggest defence purchase since the frigates in the 1980s. It is also the last of the core capability projects on the ten year LTDP.

The NH90 represents a quantum leap forward and gives us equipment which will be in service for at least 30 years. The NH-90 will be a key enabler for all three Services, for military and peacekeeping operations, for police and counter-terrorism work, and for civil emergencies in New Zealand and the Pacific.

It carries 12 fully equipped troops as opposed to five in the Iroquois. Its maximum range is 800 kilometres rather than 330, and maximum lift 4,000 kilograms rather than 820. It can self deploy to the Pacific and is capable of lifting light operational vehicles off the multi-role vessel where there are no port facilities.

The market price is significantly higher than initial projections made before the aircraft was in production and as a consequence has absorbed more of the LTDP funding. However it still leaves around $1 billion which will fund the key remaining priorities I will outline shortly over the remaining term of the LTDP.

Last weekend the Ministry of Defence requested tenders for training/light utility helicopters. These aircraft will replace the Sioux helicopter, as well as providing a range of light utility capabilities well outside of the Sioux's capabilities covering both civil and military operations. Our estimate is that these will cost up to $110 million.

The Government has made a significant investment in upgrading the Navy.

The $500 million committed through Project Protector will buy seven new vessels – and an array of new capabilities. Tenix is drawing on the expertise of a range of companies. Some are international like the Dutch ship builder, Merwede. But numerous New Zealand businesses are also involved in the construction and fit-out of the two offshore and four inshore patrol vessels.

The first of the Protector ships, the Multi Role Vessel, HMNZS Canterbury, will be commissioned around April next year. And I will be attending the launch of the first OPV, HMNZS Otago, on 18 November in Melbourne. All seven new ships are scheduled to be launched by December 2007.

The Canterbury will be a really valuable asset. The MRV will transport a fully equipped Army company with its LAVs, LOVs and other equipment. It will also give us a command and control platform. It will carry up to four helicopters.

It will greatly improve New Zealand's ability to respond to natural disasters at home in the Pacific. It’s the type of vessel that we will use in deployments like those recently in Timor Leste and Solomon Islands.

The offshore patrol vessels, which are also helicopter capable, will have an important maritime counter-terrorism role as well as patrol responsibilities in the South Pacific and Southern Ocean.

Together with the inshore patrol vessels, they will deliver real capability in the policing roles navies are increasingly being asked to perform.

Project Protector has provided significant opportunities to local industry. New Zealand companies New Zealand companies are benefiting to the tune of at least $110 million dollars worth of business.

Twenty-six New Zealand suppliers have been contracted by Tenix to assist with the construction of the fleet. They are located in places as diverse as Auckland and Kawerau.

I want to highlight one example. Auckland based IT company, Computer Brokers, recently won a multi-million dollar contract to supply the networks and core IT systems for the seven Protector ships.

Computer Brokers will spend the next 12 months designing and installing the networks and IT backbones of all seven vessels. The company has already taken on additional staff and has spent $1.5 million tripling the size of its Albany offices.

This type of involvement in defence procurement and through-life support and maintenance is critical if we are to get the best value for our defence dollar.

The new projects on this year’s update will require significant inputs from New Zealand industry. Three of the projects are focussed on Defence Force infrastructure.

The first project involves the rationalisation and modernisation of the Navy’s fuel installation at the Devonport Naval Base in Auckland. The Navy used to have tunnels near the base for storing fuel. These were decommissioned several years ago. The new infrastructure will replace commercial supply and the Navy’s tanker to provide more adequate and reliable supply.

The second project involves the replacement of the Navy’s 60hz power generation and reticulation system at the Devonport Naval Base. This is the system that powers the Navy’s ships whilst they are berthed alongside at the Base. The system is old and unable to cope with current demands. This will become worse when the Project Protector vessels arrive. A new reticulated system will provide an adequate and secure supply of power.

The third infrastructure project involves the upgrade of the taxiways at the Ohakea Air Base. This is needed for the safe operation of the Boeing 757 aircraft and the new NH90 helicopters.

The fourth new project involves advanced pilot training for the Air Force after 2008. Currently, the Air Force leases B200 King Air aircraft to undertake this role. The leases run out in 2008 and replacement capability possibly also leased is needed.

The fifth project covers a refit of the ANZAC frigates’ hull and systems. This will involve working on the diesel engines, gas turbines, heating, ventilation, air conditioning, and other systems.

The sixth project focuses on the ANZAC frigates' weapons system which provides close protection for the ship. This is the system which provides a last line of defence against such threats as fast inshore attack boats as well as anti-ship missiles and attack aircraft.

The final new project is providing for modern, effective, real time communications for the Defence Force.

Investigations are under way to determine whether the Defence Force should take up an opportunity to use part of a satellite that will be launched in 2010.

The satellite will have New Zealand commercial users. It may also offer solutions for other government agencies that require sophisticated communication options alongside the Defence Force.

I will be getting a report early next year on whether this project is feasible and affordable.

All of these planned projects have estimated costs that are expected to be met within the remaining funding in the LTDP. The exception is the new training aircraft project where we will look to lease these aircraft.

Similarly, other priority projects already listed on the LTDP but yet to be significantly advanced, are covered.

This includes the consolidation of the Air Force at Ohakea.

I expect to see first indications of the costs of this consolidation in March 2007. This will be when the project’s consultants, Beca Carter, present their first estimates.

This update contains updated estimated acquisition costs for a number of projects already on the LTDP. Projects are also being costed on a “whole of life basis”.

As the Minister also responsible for the Disarmament portfolio as well as Defence it is worth noting here the crossovers between these portfolios.

Recently, I announced that New Zealand will co-sponsor a new United Nations resolution led by the United Kingdom, backing the establishment of a treaty to regulate trading in conventional arms. New Zealand’s co-sponsorship of this new resolution underlines the importance we attach to advancing the concept of an arms trade treaty at the international level.

The UN resolution would be an important step towards developing tighter controls to prevent these weapons from falling into the wrong hands and the current fatality rate of more than a thousand people a day as a consequence of this.

Negotiating an arms treaty will not become a reality until those countries opposing it can be persuaded that the treaty is critical to protect humanity and to achieve greater stability and security in the world.

New Zealand companies that export military equipment must meet strict licensing rules agreed internationally to ensure that trade is consistent with our broader foreign, strategic and security policy objectives.

These rules are an essential element of our non-proliferation and disarmament policy. They also enable us to implement our international commitments for controlling the proliferation of weapons.

This Forum brings together companies supporting the New Zealand Defence Force. The goods and services you supply are essential to its needs. You also provide employment for New Zealanders, contribute to the development of the regions in which you are located, pay taxes and rates, and are a source of technological innovation and entrepreneurship.

Time permits me to mention just four of the many examples of companies making such a contribution.

The first is Noske-Kaeser. Established in 1997 as part of the Anzac Ship programme, last year Noske-Kaeser acquired Conzept Engineering. With this acquisition the New Zealand operation became the headquarters of Noske-Kaeser worldwide. It acquired all the intellectual property in the N-K product range. This includes, amongst other products, sophisticated fire-fighting equipment and air conditioning and ventilation systems.

In 2005 Noske-Kaeser won the Specialised Manufacturing Exporter of the Year Award. Earning $15 million in international sales in 2004, the company remains export focused. Noske-Kaeser has identified and targeted markets that call for specialised equipment requiring a high level of technical expertise.

These results demonstrate what can be achieved through kiwi ingenuity, innovation and dedication. It also demonstrates how success at home can provide a platform for success in the international market place.

The second company is Motor Sport Apparel (MSA) Ltd. MSA is a Levin-based textile fabrication company, which has secured a contract for making training vests for the Danish army. MSA Ltd has a staff of 28 and was established in 1980. Seventy percent of its work is for the New Zealand Defence Force. This includes full combat vest, pouches and windproof jackets.

The third company is the Defence Force’s prime clothing contractor, Yakka Apparel Solutions Ltd. Yakka Apparel has 130 suppliers, of which all but six are New Zealand based. This means that over ninety percent of the Defence Force’s clothing comes from local manufacturers.

Finally, Marops, is a small company based in Cambridge. It was a winner at last year’s Industry Awards. It has been successful in building a business around the training needs of the Defence Force. This company, in association with some others which have specialist expertise, has developed computerised training programmes which are second to none. They are now sought after by overseas defence forces.

The Defence Industry Awards of Excellence tomorrow can only recognise a few companies. It is pleasing to see the overall standard of the companies represented here today and the level of service that each company provides the New Zealand Defence Force.

I extend my best wishes to those nominated for Defence Industry Awards of Excellence for tomorrow evening’s award ceremony. To all of you attending this Forum thank you for your contribution to the Defence Forces and to New Zealand.

ENDS

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