Ngati
I'm not meaning to suggest NZ doesn't factor in manning/running costs - the recent example of the T-6 purchase shows they do. But in online defence debates, it is a factor that often doesn't attract the attention it deserves (IMO).
By way of example, DCNS currently touts their FREMM frigates as needing a crew of 108. Manning estimates for the Type 26 vary, but are often around the 130+ mark. People seem willing to spend hours debating the significance of a knot or two in top speed, or variations in the weapons or radar fit-out. We tend to ignore the difference in running costs that an extra 20-25 bodies will add up to over 30 years. (I'm using FREMM vs.T26 as an example, not because I know enough to prefer one platform over the other).
Ocean1
Appreciate the shine has come off the Aussie mining boom, and that is likely to be contributing to improved retention right across NZDF.
Agree that NZ has cut everything that can be cut and more, and is now reaping the predictable consequences. My impression is that the current Defence Minister has realised this, and there will be modest improvements in pay announced in the coming May budget (it helps that DefMin is also Associate Min Finance). This may stabilise the situation, but I doubt it will be enough to turn things around unless there is agreement to a multi-year boost in defence spending. I'll expect that about the time Satan takes up ice-skating!