The problem defence faces is that the capital charge and the depreciation are a set of moving goal posts that impact on the operational budget. (last year about $850m) The more new gear with a high capital value you get the less money available you have for operational use and the longer you keep gear, the the lower the capital value it has, therefore the more money is available operationally. So defence has to continually walk a type rope to balance the books in regard to capital expenditure/operational expenditure.
NZDF General discussion thread
- Thread starter NZLAV
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kiwipatriot69
Active Member
Seems ridiculous idea to me Govt having a capital charge. In the end the shoestring budget it causes leads to delays in puchases of major aircraft and vessels ect, in turn adding extra cost to thier purchase or even operational shortfalls as we do now. Given the Kermadecs are now to be turned into a giant natural reserve, yet another reason for govt to fund our Navy patrols more.
And he's off to Gallipoli this week for the ceremonies there on ANZAC Day. So who knows. Maybe they will wait until around budget time or just after it.
It is ridiculous and no other country in the world, to my knowledge uses this system to fund defence. Even government experts,at the time of it's introduction said it was a poor fit. (polite civil servant words meaning it's a dogs breakfast). I would like to see that money put into a defence Capital Acquisition Account and not just sent back to the consolidated account.
kiwipatriot69
Active Member
Maybe there is a strategy involved too from Gerry Brownlee, and he is planning an Anzac Day or thereabouts release for Defence White Paper, while all the sentiment and lip service from govt ect is in the air?
No. Because it needs to be tabled in the house and Parliament is out of session for the rest of this month.
Zero Alpha
New Member
That's not really relevant. Most countries don't run accrual accounting. NZ does, and trying to fight agains the entire public sector accounting model is folly.
It does however mean there is a much more accurate information about the total cost of a capability. It's curious that we don't see people in the eduction and health sectors complaining about the capital charge like some do in the defence sector. It's probably got to do with a greater understanding of the cost of capital employed by people working on the asset-heavy parts of those portfolios (esp property).
It is instructive to look at the capital value of the defence property estate to understand why the capital charge is applied. The annual investment required to support the property portfolio is consistently higher than the capital acquisition budget for both minor and major capability projects.
recce.k1
Well-Known Member
If only that was possible, then the Capital Charge regime would be extremely attractive!
At $850m/year, NZDF's consolidated account over time (eg 5 years $4,250 billion ... 10 years $8.5 billion!) would not only fund a very capable defence force (think Mr C's naval plan, 2 fully equipped ACF squadrons + OCU, broader/mobile Army, further renewed infrastructure etc), it would also mean kit would be fully fitted for and with) ....
The rest of the usual NZDF operational budget would continue to fund day to day operations etc. All from pretty much the same Vote Defence budget of around $3 billion/year (or about 1.5% of GDP)!
So Treasury doesn't have to fund Defence any more than normal (or thereabouts)! Win-win ... or too good to be true? Trouble is the govt coffers don't get that $850b to re-allocate ... so need to find a way around that? (Well got to give credit to the PM for trying help things along by trying to triple tourism revenues today so maybe in time ...)
kiwipatriot69
Active Member
Well ive been working for a public high school for decades now and every teacher i talk to has something to say about Govt budgeting! they probably fear rocking the boat for thier employments sake.School is long overdue for a rebuild. Maybe thats the case with defence. But i digress.
kiwipatriot69
Active Member
John Key is in an awkward position really, he cant really talk about China's actions in the South China Seas for fear of angering and potentially losing that tourism and trade deal, which ironically will be helping to fund our defence force,in alliance with Usa. Who sees China as a threat, as does Austrailia. Which in relation, puts NZDF in an awkward position, do we see China as an emerging ally, or potential threat?
China is no ally of NZ. At present it is a highly potential threat to NZs security because of its actions in the South China Sea. If you want the definition of security read the first part of the 2010 DWP which included economic security as part of NZs security definition. A considerable component of our trade passes through the South China Sea.
The official line of the New Zealand Government is the same as the United States and Australia in that they take no position on competing claims to sovereignty over disputed land features in the East China Sea and South China Sea. Claims of territorial waters and EEZs should be consistent with customary international law of the sea and must therefore, among other things, derive from land features. Claims in the South China Sea that are not derived from natural land features as recognised by UNCLOS are fundamentally flawed. That territorial disputes should be resolved peacefully, without coercion, intimidation, threats, or the use of force. That parties should avoid taking provocative or unilateral actions that disrupt the status quo or jeopardise peace and security. New Zealand wants to engage with China and all other nations that follow international norms and behaviours which recognise international law and dispute mechanisms. New Zealand's strategic hedge is that it is balancing its trading and positive relationship with China whilst maturing its security and commercial relationship with the United States as a counterpoint.
China’s EEZ as recognised under the United Nations Convention on the Law of the Sea (UNCLOS) is relatively small at 879,666 km2 (where as Japan’s is 4,479,388 km2). This is a starting point to explain its assertive claims to many disputed islands in the region - China feels landlocked and it wants to control its sea-lane approaches and an expanded EEZ gives it that but also increases its rights of exploitation over all natural resources (fish, etc.), nonliving resources (oil, gas, minerals, etc.) as well as potential development rights of energy sources. It is undertaking a salami slice approach in incrementally pursuing its claims and creating islands, because does not want to get push back though it probably knows pushback will happen eventually.
China is not on evidence a direct threat in a classical military sense to New Zealand nor to Australia. However, its current SCS and ECS behaviour is outside mature rules based international behaviour in that it does not attempt to utilise international legal mechanisms to arbitrate its disputes using an evidence based framework. This means that it has a potential to threaten peace, good order and security in the region, which is a threat economically to New Zealand and its interests.
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Totally agree with you.How this will pan out in the future is anyones gess but for us to take sides at this point in time would set us up to lose no matter which way it went. The only role that we could possibly indulge in would be as a mediator, but personally I would stear clear of even that. The situation for what ever the rights and wrongs of it are, is of too long a standing and is too deeply ingrained in the political culture of all sides to be easily resolved. At this point in time I believe that for us to become involved , would be LOOSE, LOOSE for us.
kiwipatriot69
Active Member
Didnt see China as a direct threat, just the threat to our export shipping being potentially unable to have safe passage through it would be bad enough, should a naval conflict occurs between China and one of its 'neighbours' . Hypotheticaly speaking, if China did that, wouldn't NZ and Australia under ANZUS pact have to get involved?
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t68
Well-Known Member
No, ANZUS is a treaty which is involves a direct attack on either Us-AUS-NZ, PM Howard invoked it for 911
http://australianpolitics.com/2001/09/14/howard-government-invokes-anzus-treaty.html
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Todjaeger
Potstirrer
Realistically, it would depend. If the situation became tense enough to become a shooting war of some sort, it could result in attacks on Oz or Kiwi shipping, and/or RAN or RNZN vessels providing escorts for said shipping. A deliberate attack on an Australian-flagged vessel would constitute an act of war, which could trigger the ANZUS pact (and also bring US involvement, if it was not already.)
There is also the potential for the FPDA to get activated, if Malaysian or Singaporean territory or flagged vessels were to get attacked. That could draw the ADF and NZDF.
BTW I had covered this earlier, but it appears that over half of all exports, and over 60% of imports, pass through the SCS on their way to or from NZ.
t68
Well-Known Member
Yeah that could be a possabilty, but I'd imagine it would follow along the lines of what do you class as sovereign under the treaty. Case in point is the Falklands War, with the UK being NATO as is the US as the Falklands didn't come under NATO treaty aspects. But in saying that there is a possabilty of something like the Tankers War of the 1980 happening.
The Chinese may take the view that any lecturing by the US on the SCS situation is totally hypocritical as Congress has not ratified UNCLOS
Yes they have codified but have not signed off on on it. But when did hypocrisy stand in the way of politics eh!
About 30 odd Republicans are standing in its way. It is a pet project of Mrs Clinton mind you and if the Democrats get control of the HoR then she will be all over it. If she wins in November of course.....
NZ signed it 20 years ago.