I welcome this opportunity to speak today and thank the Academy for hosting today's meeting.

There are three areas I would like canvass today in advance of general discussion.

These are: the New Zealand strategic context, New Zealand's Defence Review 2009, and the New Zealand-China Defence Relationship

There are two chief aspects to New Zealand's strategic context. The first is the Asia-Pacific region and in particular the increasingly important role that China now plays in the region. China's remarkable economic transformation has benefited hundreds of millions of people. The scale and pace of this change is unprecedented.

New Zealand welcomes that change as an opportunity. The "Four Firsts" are evidence of this:

• New Zealand was the first Western country to conclude a bilateral agreement with China on its accession to the World Trade Organisation, in August 1997.


• New Zealand was the first developed economy to recognise China's status as a market economy, in April 2004.


• New Zealand was the first developed country to enter into FTA negotiations with China, announced in November 2004.


• New Zealand, in April 2008, was the first developed country to sign a high-quality, comprehensive and balanced Free Trade Agreement with China.

The second particular aspect that informs New Zealand's strategic context is the rising incidence of intra-state conflict and state instability. This has become more prominent over the past two decades and has superseded the earlier context provided by the super-power rivalry of the Cold War.

This has resulted in an increased demand for disciplined forces to undertake nation-building roles, either through a formal government-issued invitation or UN mandate. New Zealand attaches importance to having either a formal government-issued invitation or UN mandate before deploying personnel to nation-building missions. Increased demand has meant the armed forces of many nations, including New Zealand, are confronted with a resultant increase in operational rate and tempo.

New Zealand's strategic and security interest can best be described as a series of concentric circles.

The first concentric circle is drawn around New Zealand itself. This expresses the importance of securing New Zealand and its Exclusive Economic Zone.

The second concentric circle stretches out to include Australia and the South Pacific.

New Zealand has no closer defence partner than Australia. When Australia looks around the near region for a like-minded and effective defence partner it rightly looks to New Zealand.

This relationship is reflected in Australia's Defence White Paper, which also showed Australia's clear wish to further build the Australia-New Zealand defence relationship.

Given the geographic isolation and challenges of our immediate region, Australia and New Zealand need to have the capacity to act in an integrated way if we are to respond to regional demands with maximum effectiveness. In Australia, this has been characterised as acting "together alone" in a region where it would be expected we would have a primary interest and affinity.

That is why Australia's and New Zealand's defence capabilities must be interoperable and complementary to a considerable extent.

The next concentric circle brings in Asia, especially South-East Asia. Both New Zealand and Australia are networked into Asia in terms of our political, economic and security interests. Yet New Zealand has its own approach to Asia, which reflects our particular set of cultural and geographic circumstances. Our nearest neighbour is a friend. Our nearest region is the South Pacific. Asia is a source of economic opportunity and political connections on a range of fronts. We therefore share a widespread commitment to the continuing stability and prosperity of the Asia-Pacific region.

We attach great importance to our participation in Asia-Pacific regional architecture, including the ASEAN Regional Forum, APEC, and, most importantly from a New Zealand Defence Force perspective, the FPDA.

New Zealand considers regional defence co-operation and confidence-building as a crucial component of peaceful regional growth and development.

We view China's growth as a considerable catalyst to positive regional development. Both Australia and New Zealand, not to mention the global economy and the Chinese people themselves, have benefited from China's remarkable growth. Australia and New Zealand continue to take an interest and play an active role within the Asia-Pacific region, as befits the increase in our regional ties.

The final concentric circle stretches beyond Asia to the broader international sphere. New Zealanders expect to be engaged beyond our region. We expect to be asked to play our part in maintaining a stable international system.

We are a nation of travellers. Our history and our values drive us to a level of international engagement that is unusual for a country of our population size.

In many ways engagement in the current international environment is not a passive choice. Seven New Zealanders' lives have been lost in terrorist attacks. Some might say the terrorist threat is distant from New Zealand: let's leave others to deal with it.

In the end we have to ask ourselves - should we leave others to respond to international risks that affect New Zealand? I don't think New Zealanders want to be free-riders. That is why we are in Afghanistan and in many other UN authorised missions. That is why we are one of the world's exemplary peacekeeping nations.

The next area I would like to discuss today is New Zealand's Defence Review. Given the strategic changes I have just outlined, the Government's Defence Review has been undertaken to provide a pathway for Defence, especially over the next decade.

The review is not being undertaken simply because it is over a decade since the last formal review. Rather, the review is intended to set out the objectives of New Zealand's defence policy, and then the capabilities needed to fulfil them. The Review's outcomes will influence Defence for at least the next thirty years.

The Review process has involved extensive public consultation. A considerable number of written submissions have been received and we are currently undertaking a series of public meetings.

This Government believes all New Zealanders have a stake in the Review, which is making solid progress towards publication early next year. Major strategic priorities have been identified. The implications of these priorities on our capabilities, both now and in the future, are being worked through. I would note that this process is running concurrently with the wider public consultation, and although it is not completed, it is apparent there is a broad consensus on New Zealand's fundamental security priorities.

New Zealand needs to develop capabilities to match our strategic interests. We need capabilities to respond to a foreseeable range of circumstances.

Beyond our region we have a very wide range of capability choices. New Zealand's choices in the international arena should be guided by our areas of niche expertise.

Given the demands of our geography we are good at surveillance and reconnaissance. The P3 Orions, for example, are a sophisticated NZDF capability for such a small defence force.

We are already engaged in Asia and it is expected that we will make a contribution. Our participation in Five Power Defence Arrangement exercises with Singapore and Malaysia is an example of an effective use of our core skills, and has provided a framework for New Zealand, Britain and Australia to build capacity in these two countries. In particular, and given the distances involved, our maritime and surveillance capabilities are important to our regional partners.

Our naval capabilities give a very high profile internationally and we are regular visitors to China's ports. Our frigates have played a role in recent times in counter-terrorism missions in the Middle East.

The basic test is that the Defence Force should essentially consist of those capabilities that are likely to be used, rather than capabilities that are unlikely to be used except in the case of general warfare. 

The points I have discussed today show that defence issues are an integral part of New Zealand's strategic outlook for the Asia-Pacific region and our wider foreign policy. Defence deployments in response to our calculation of our strategic interests are symbolic of our values and New Zealand's willingness to play our part.

I would like to conclude with the most important component of my comments today, given our current meeting.

As Prime Minister John Key noted in his speech at Beijing University in April this year: "New Zealand celebrates the growing relationship between our two countries and the significant opportunities this presents for China and New Zealand alike."

We have a shared interest in the peaceful and sustainable development of our region.

The armed forces of our two countries work to further this shared interest. We work together as part of a network of defence forces co-operating throughout the Asia-Pacific region.

The growing outward focus of the People's Liberation Army means that New Zealand will have more occasions for greater interaction with the PLA in multi-lateral forums, maritime security and in UN-led peacekeeping missions.

The current interaction between our two armed forces in, for example, the areas of naval visits, training, and search and rescue demonstrates the healthy defence relationship.

I look forward to a continuation and growth of this healthy relationship, especially in the area of naval activities and disaster relief.

Thank you.