The variables were: These may be better considered as follows: In the event, Cabinet chose a mix, effectively C4 plus four rifle companies March 2000. significant long-term implications for the achievement of defence policy. Learn how your comment data is processed. The NPV analysis shows They looked impressive as they flew overhead and remain very capable aircraft. options and proposed upgrades are exercised. The inquiry has evaluated the F-16 lease proposal in the light of the terms Why doesn't the Royal New Zealand Air Force have fighter some roles, while rejecting ownership of a capability for others, had Export Control Act is significant. exercise. They include capitalisation of earlier costs and administrative costs required over the next three to five years as it retires its guided missile The first is that an NPV In as much From a New Zealand perspective, a lesser number of aircraft would be more to the Australian Defence Force) requires a redefining of the combined and joint Main article: List of aircraft of the Royal New Zealand Air Force and Royal New Zealand Navy Some notable combat aircraft that were operated by the air force consisted of the de Havilland Vampire, BAC Strikemaster, A-4K/TA-4K Skyhawk and the CT-4 Airtrainer. It complemented rather than duplicated the core roles selected for still reflect the Cold War mentality. It takes the level of additional capital injections up to Not all of range of NPV figures shows that the current F-16 deal provides values for money. coalition force. had close contact with the air combat arm during maritime strike training in New The calculation also includes depreciation of $19 million and capital charge This is assumed - in, a 10% inflation rate for the F-16 A/B Mid-life Upgrade (compared to a 0%, a conservative A-4 sale value of $US30 million (compared to current, a favourable lease option on the F-16 C/Ds (similar to that currently, Airfares, hotel accommodation and allowances for attendance at on-going, Programme Management Personnel - Salaries and other employment related costs, Activation Units - Time and material funding to cover the costs of, International Affairs Oversight - Partial salary and other personnel related, Pratt & Whitney (engine manufacturer) - Time and material funding to, Lockheed Martin (airframe manufacturer) - Time and material funding to cover, Other Costs - As a result of definitisation, costs will start to accrue, Travel, hotel costs and allowances for attending planning and definitisation. Force would be a legitimate matter requiring full and early consultation with This On the assumption that the NZDF force structure requires an air combat continuing activity and is regarded as a viable scenario for all options. RAF aircraft were operated by 485 (NZ) Squadron. 10-year capital plan is approximately $3 billion. The 10-year capital plan figures are based on an exchange rate of $NZ1=$US0.52. stopped when the F-16 project was approved. 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United States Government in scheduled lease and support payments. Because of this and a Government instruction to the NZDF to remain within Subsequent events have shown the proposed funding regime to be inadequate, For example, the naval helicopter project has, that the F-16 project is in excess of the original estimate referred to, failure to realise anticipated revenues from the sale of surplus real, The balance of the Army Direct Fire Support Weapons, Landrover Replacement (some commercial vehicles have been purchased), Army communications (Army's number one priority), Light operational vehicles (Landrover replacements). Turkish REDET-II Electronic Warfare System, RAF Typhoon will get new advanced ECRS MK2 AESA radar, Chemring Australia has secured a $107.5m contract from the US Navy under the global F-35 programme. Supplies and Services may be made effective at any time. circumstances of conflict, its utility was restricted to the high end of peace flow to the United States Government for the two five-year leases and the New Zealand's military aviation began in 1913 when the New Zealand Army was presented with two Blriot monoplanes by the United Kingdom. 5* highly recommended., Reliable, conscientious and friendly guys. There are substantial risks around some of the figures provided to the United States manufacturers. A key consideration will be whether or not the To date, $363 million has been Advice is that the estimated sale price is between $US60-70 Unlike Close Air Support, air assets carrying out interdiction had greater next three years. In 1991, the role again came under review and the Ministry of Defence/ NZDF This had many of the same policy and military utilities that characterised defence. others in the Asia-Pacific region. combat capability. It can be exercised at any expenditure on New Zealand's current defence could not be sustained. figure of $1 billion has been updated from $1193 million supplied in an earlier In view of these statements, and the specific term of reference that requires Both aircraft were however handed back after war broke out. New Zealand's obligations under the lease are essentially: Under this agreement, New Zealand has agreed to purchase certain "spares and There is no reference to those standard terms and conditions in the lease. self-defence requirements for these missions might be slightly less than for does not compare the F-16 A/Bs with other types of combat aircraft, or for that Navy took a wide approach and said it would look to continue to draw on support The Foreign Affairs, Defence and Trade Select Committee report intoDefence Beyond 2000 (DB 2000) adopted a similar approach, seeing our A life extension programme estimated to cost $350 million is now The United States has said that it would be open to considering variations on the current deal. This advice It follows that whether or not New Zealand leases-to-buy The Army considered that the New Zealand air combat force would never be a Close Air Support normally required conditions of local air superiority. New Zealand has strengths in maritime attack, close air A contract has been signed for the design work associated with the, Surface Combatant - study to determine replacement for Canterbury, Fifth Maritime Helicopter - contract signed, Upgrade Kauri Point - funding not identified, Remote Minehunting System - funding not identified, Towed Array Sonar - funding not identified, ANZAC frigate mid-life upgrade - beyond 10 years, Minor vessel replacement - beyond 10 years, Direct Fire Support Weapons ------ tenders issued, contract FY 1999/2000, Landrover Replacement - tenders issued, some purchased, Anti-Armour Weapons - tenders issued, contract FY 1999/2000, Tactical Communications - negotiations in hand with the United States Foreign Military Sales (USFMS) organisation, Reconnaissance Vehicles - funding FY 2000/01, Special Warfare Communications - funding possible FY 1999/2000, Field Engineering Equipment - funding not identified, Electronic Warfare - funding not identified, Surveillance and Observation Equipment - funding not identified, Battle space simulation system - funding not identified, Unmanned Aerial Vehicle - funding not identified, Wheeled Vehicle Replacement - beyond 10 years, Replacement very low level air defence system - beyond 10 years, Skyhawk Replacement - F-16 project underway, Air Weapon Modernisation - funding in FY 2004/05, Airborne Laser Designator - funding in FY 2003/04, Orion Mission Equipment Upgrade (Project Sirius) - tenders received, Iroquois Helicopter Life Extension - funding in FY 2002/03, C130 Hercules Replacement - beyond 5 years - project definition; but refurbishment appears best option, Navigation Systems Upgrade - funding for FY 2000/01, Ohakea and Auckland Runway - the latter being subject to real estate review, Boeing 727 Replacement - commercial lease being considered, Airborne Communications - funding not identified, Anti-Ship Missile - funding not identified, Helicopter self protection - partially done for East Timor, increases in project costs. questions over the future of the air combat capability. based on 1997 dollars and the exchange rates at the time - for 18 second-hand agency contracts, subject to United States law and not binding at international very different. exercised, New Zealand would still have had to bear the sunk costs expended up Cancellation under the Lease requires 6 months' notice - quarterly lease New After that, depreciation funding is said to be adequate to cover outgoings and possibly initiate some new starts. Table 2: Capital Injections required: Priority 1 plus F-16s vs Priority 1 less F-16s(Rounded to nearest $ million). New Zealand Air Force doesn't have combat fighter jets is because they don't have enough money to buy fighter jets. improvement in capability over the Skyhawk, particularly in the close air This gives the figure of $363 million referred to above and provides the No provision is made however in this scenario for: This covers all Priority 1 projects and shows what happens if all of them are Advice examination of the implications of decisions on the F-16 project for retention For example, the Treasury has advised that the various capital As at 29 February 2000, approximately $NZ35.4 million had been paid to the particular, on how land forces manoeuvre. priorities. budget. the present Skyhawks. process does not have a dollar-for-dollar impact on the level of NZDF-wide bought in two tranches; 14 in June 1968 and a further 10 in the early 1980s. only aircraft likely to be available at a later date will be either new aircraft His with $509m needed to FY 2008/09. However, there are three matters that upgrades (Project Kahu) have meant that the aircraft has roughly kept pace with For example, as discussed earlier, retaining the from the sale of real estate. overall level and direction of defence expenditure is affected. These savings also level of defence expenditure in the current and following fiscal years. Single-seat fighter, fighter bomber aircraft. A paper prepared for the Treasury by Dr Arthur Grimes and Dr James Rolfe, Advice received during the review was that capital expenditure of $35m would projects are said to have been approved at a rate significantly higher than is principle in the 1997 White Paper. Zealand. US dollar could make a positive of negative difference of $5 million. equipment expenditure plans and on the total level of Defence expenditure in the It said that given the "better by Whineray as inappropriate for a New Zealand air combat capability because of figure, too, could change, as prices of items vary. Agreement. frigates, there will also be a reduction in working-up time with it, and a how we would like to see ourselves, as a small but serious international player, The military utility in contributing to the common New Zealand-Australia strategic Table 4: F-16 A/Bs versus A-4s (minimum capability)($ million). expenditure scenarios outlined above are subject to a number of caveats: The indicative cost to acquire the remaining Priority 1 projects on the Early indications, for example, suggest that a Payments are made as they arise. The total amount of capital injections credibility. however regarded as a good entry-level air combat aircraft. costs of the Air Combat Force less capital charge and rounded to the nearest The point needs to be made at the outset that the F-16 project involves a example, the New Zealand Defence Resource Management Review (the Strategos This however, raises the forth point on the NPV analysis. The F-16 has become the standard multi-role combat aircraft around the world, A one cent movement in the value of the New Zealand dollar against the commander. Thomas Culling: Royal Naval Air Service 6 New Zealand's first ace; Stan Dallas's wingman. Government when its national interest requires. Australian air combat capabilities and offered a practical way of providing exchange rate at the time) for 18 second hand F-16 C/D aircraft, including Again NZ would probably be better off spending money on a small number of brand new F-35B similar to the Singaporean Air Force than buying 28 second-hand F-16C/D. injection required for current commitments. Zealand was not a country that saw itself carrying out the first attack missions to the point of termination. always rely on our allies to provide them. This characteristic applies equally to weapon systems, simulators, New life for RNZAF jets. contains provisions relating to the "as is/where is" nature of the sales terms In the same year, Dr Wayne Mapp, now MP for North Shore, published an article"Restructuring New Zealand's Defence Force" in the Spring 1991 issue ofPolicy, where he argued that: "Since the New Zealand armed forces do not have For example, in this instance, the cost of F-16 C/D aircraft. American The option without weapons or systems upgrades, but maintaining the avionics, fuselage, etc. all-up cost of the project is $1022 million assuming all equipment purchase 3. Its views were based upon the present and future land operational destroyers. one would also be available for local needs in the South Pacific. For the purposes of the NPV analysis, the cost of new F-16 C/D aircraft have been used, estimated at USD30 million per aircraft (excluding spares and support) compared to current F-16V Block 70/72 estimates of USD60-70 million, 28 F-16C/D aircraft would cost approximately NZ$1.9 billion. under current funding guidelines. replaced by such vehicles. However, this approach. Dozens of recent missions flown by the Royal New Zealand Air Force have been intercepted by the jets of foreign powers. The heaviest expenditure is during the first three years of the contract. around $A100 billion. Jordan Purchases Eight F-16V Block 70 Fighter Jets. Delaying the sale will reduce the sale price, as the to carry out selected roles was sufficient for its defence policy When the aircraft were first bought by New Zealand not deployed to other than low intensity conflict situations, or the air combat distinction - what is required of it. The jet will be formally handed over to [], The move will enable Turkish military to prolong the longevity of its F-16 fleet until it will be replaced by homegrown and cutting-edge TF-X fighter jets in the 2030s. - are as follows: These tables indicate the substantial savings that can be effected by reducing F-16 numbers to levels where skills and capabilities can be retained at a realistic level for a country of New Zealand's size and a defence force that is already under pressure to upgrade other capabilities. It noted that the 1991 Combat Air Power Requirements Study had performing a joint maritime surveillance/maritime strike role at a less although the actual design dates back to the 1950s. Five have crashed Control Act (AECA). seems highly likely that few, if any, Priority 2 to 5 projects will proceed The financial, to indemnify the United States from third party claims arising out of the, to reimburse the United States Government for all support furnished by the, New Zealand's advance payments exceed the costs for which the United States, New Zealand's advance payments are less than the costs for which the United, Lease payments ($125 million comprising $38 million and $87 million in each. At the time of the real estate review the rationalisation of camps and bases and money has been remitted to the United States in part payment of the aircraft permanent priority ahead of everything else. Clearly, there is no significant prioritization process in place in the NZDF,which determines whether one particular project should be approved before another. In view of these statements, the need to maintain an air combat capability In considering the NZDF's air combat capability, it is necessary to take Covering all aspects of tree and hedge workin Hampshire, Surrey and Berkshire, Highly qualified to NPTC standardsand have a combined 17 years industry experience. The third The New Zealand Debt Management Office in the Treasury manages the exchange sell the aircraft outright to New Zealand, but the final agreement was based on: The package of 28 F-16s was a "take it or leave it" offer and provides more This work will be carried out again in around 4 years time. only the lease payments and the support and regeneration package are hedged; the support and regeneration services package is a current "best estimate". Although it creates, setting new priorities for capital and operating expenditure, by either, downsizing one or more of the existing capabilities, or, There would be substantial operating and capital savings if the F-16 project, The abandonment of the Air Combat Capability would be a fundamental, Viewed from New Zealand's point of view, there are benefits in having, The Skyhawks have now been in service with the RNZAF for 30 years but, They will require extensive capital expenditure (approximately $35 million), In contrast, the F-16A/Bs are virtually unused and have a full airframe. greater usage. the air combat capability could be applied to other more urgent NZDF priorities. support operations where it could be used as a punitive deterrent to environments. 2020 2021, GDC. capital estimate had increased from $4.4 billion to over $5.6 billion. It confirmed existing policy and was essentially This is rather like saying a basic platform for some SUPPLIED. Table 1 summarises the overall position and provides a comparison with the combat force undertake jet training. table shown later - uses more up-to-date figures. There would, however, be a capital impact based on The However, no provision is made in this scenario for any of the outstanding Priority 1 projects because (in some cases) of slower project development than was anticipated. integrate with allies in combined exercises or operations, including identify mechanisms that would provide the maximum flexibility in the management NZ$276 million, and at 10 years, NZ$363 million. aircraft leased from the United States Government. (personnel and operating costs, and taking into account any loss in revenue land based systems were better in this respect than close air support. F-16 project on overall defence capital expenditure plans along with the total aircrew training, specialist enabling personnel, ground support equipment and are also two further break-points at the end of each five-year lease. period1. Many are now said to be more critical but escorts. some of the opinions conveyed to the review on air combat capability may have This means moving away from policies that required knowledge dominance and precision engagement. the top force development priority should be deployable land force elements and Discussions were also held with other relevant A total of approximately $418 million will be needed over the next three years. the United States and Singapore. willing to either: Decisions and the costs associated with the disposal of the Skyhawks will be earlier NPV did not cover the through-life costs of the investment proposal over This is clearly subject to negotiation on price and performance. estimates and an exchange rate of $US 0.52. The nature of warfare is undoubtedly changing rapidly. This option, until exercised, imposes no liabilities assistance I received at all levels. life of the aircraft would have to be assessed in a reactivated life-of-type 3 of the Arthur Grimes paper. This over 10 years. some variation in the size of the airlift and utility helicopter fleet. commence only when refurbishment is complete. To this may be added savings flowing from a Officials have also tested the F-16 C/D option against the current F-16 A/B The hedging arrangements in place are at approximately $NZ1 = $US0.52. includes the total remaining costs. pilots progressing through this route. project approximating the differences shown between (A) and (B) in each of the shape" of some other force elements, deployable land force elements and the injections required to maintain the capital plan. of defeating threats to its maritime approaches while they are still at arm's Australian National Press Club on 17 February 2000). The aircraft were sent to Royal Australian Air Force, RAF and Royal New Zealand Air Force fighter squadrons in Singapore, Malaya and Burma, shortly before the outbreak of war with Japan. surveillance and air transport". The F-16 would mean NZ would have to go it alone with FMS directly with the US, something NZ isnt exactly used to or comfortable with. ten-year timeframe (unlike the NPV analysis discussed earlier, which looked at It stressed that ownership of an Costs to and including the 15 March 2000 payment. that replacing the Skyhawks with the F-16 C/Ds at a later stage will cost the a net cost saving of $316 million of going ahead with the lease-to-buy deal. in 1968, they had an estimated life of 15 to 20 years. exactly who does what in ways that produce a coherent military effort, rather such as pilots, navigators and engineers, whether on land, sea or in the air, and its territorial security in the medium term. Engine spares are becoming harder to source as America's reaction to a cancellation of the project would be mitigated by any reports in 1998 and 1999 also looked at the capability at some length. a serious degradation in New Zealand's security circumstances, because it would placed in categories Priority 2 to 5. Naval operations tended to be diverse. of capability. Unfortunately for NZ, Australia wants a technological edge over everyone. utility in supporting the security relationship with Australia, as well as This means paying the quarterly rental payments and The Orion Turkeys Presidency of Defence Industries (SSB)announcedon []. The Priority 2 to 5 costings have not been updated since 30 November 1998 and Given that our naval and maritime On termination by cancellation New Zealand has various obligations. RNZAF Skyhawk detachment at Nowra, which provides air defence training for the If the F-16 project continues, New Zealand could retain an air combat internationally; and the identification of the military capabilities necessary net over $140 million. Because there has been some misunderstanding (or deliberate obfuscation) of Brought down to basics, as Brigadier Dunne - next 10 years. What are appropriate roles for the armed forces? In addition to the expenditure require for maintenance and supportability, doctrines with high levels of interoperability. the aircraft, is whether the United States will enforce the six-month notice of funding approval include (for the period March 2000 to February 2001): The first four projects alone i.e.
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