Why a 10% pay gap could undermine the $12b defence upgrade

Author: Lachlan Rennie ,
Publish Date: Fri, 31 Jul 2026, 5:00am

A number of our military personnel are earning far less than they could earn elsewhere.

A document released by the Defence Force under the Official Information Act in June shows as of May “military base salaries were on average 10% below the market rate”.

It follows separate figures released under the Official Information Act in July last year showing 88.5 percent of the military rank and pay-grade steps lag behind the equivalent market median.

Among them, Brigadiers were up to 32.5 percent behind civilian equivalent roles.

Only 15 of the 133 pay scales were at or above the market median rates.

A personnel advocacy group says the Government’s funding for defence capability is wasted – if a market pay gap persists.

The $12 billion Defence Capability Plan, unveiled last year, includes $9 billion of new spending over four years. It'll take New Zealand’s defence spend from just over one percent of GDP, to more than two percent.

The plan includes new strike capabilities, new maritime helicopters and VIP aircraft, drones and accomodation upgrades.

Mission Homefront co-founder Erin Speedy said attrition will rise if personnel aren’t properly compensated and the Defence Force will lose its best capability – its people.

“If there’s no one there to operate this equipment, these drones, these ships, these new, all this brand new fancy gear, then it’s just going to sit there gathering dust.”

In Budget 2026, the NZDF received $120 million over four years for pay and remuneration.

She said this boost is a band-aid.

Speedy said every few years pay falls significantly behind the market, attrition spikes and the Government injects a one-off funding package.

“If you look at the last government investment into pay in 2023, that was a $419 million targeted pay package...that was meant to make a massive difference in bringing salaries up to at least 5% within market. And three years later, you know, we’ve seen, seen it drop significantly already by another 5%.”

The Defence Force said it operates in a fiscally constrained environment like other public sector agencies.

“The market pay gap within base salaries of NZDF personnel is undesirable, however it should be noted the NZDF provides a number of benefits to our military personnel, including an additional payment on top of base salaries that recognises the unique nature of military service.”

The Defence Force said it’s also implementing Critical Continuity Payments as a targeted response to retain key ranks within a small number of critical trades and qualifications across the Royal New Zealand Navy, New Zealand Army and Royal New Zealand Air Force.

It said it’s working through how the $120 million funding boost for remuneration is allocated.

“The NZDF will be prioritising increases to military and civilian pay tables.”

The Defence Minister’s giving assurances work is being done to retain personnel and address the historic underspend.

Chris Penk said it includes the $120 million pay package, continuity payments for key personnel and investing up to $600 million into modernising military homes.

He said they want careers in the Defence Force to remain attractive, adding attrition rates have stabilised and have halved since their 2023 peak of nearly 16%.

“It’s worth noting other benefits on offer to NZDF personnel include discounted financial advice like retirement planning and a mortgage brokering service, discounted insurances, access to Defence Force superannuation schemes, as well as the Defence Force providing medical and dental services for military personnel.”