National President Robin Klitscher; Chief Executive, Dr Stephen Clarke; veterans and members; distinguished guests; ladies and gentlemen: thank you for the invitation to address the 93^rd National Council of the Royal New Zealand Returned and Services' Association.  It is an honour to be here.

Yesterday, I was at Ohakea as the young men and women of the New Zealand Defence Force deployed to Afghanistan. They know they are going to a dangerous place, where death and injury are a daily risk.

They have been highly trained for the full range of contingencies, from combat to working with the local villages. They are your modern Defence Force. They are, as you have done, "carrying the flag for all generations".

They carry a tradition forged 93 years ago by New Zealand in what was once called the Great War, the War for Civilisation. Now, as in 1915, they serve far from home to protect those at home. Their tools and tasks are those of the 21^st century, but their values and spirit are identical to their forbears that you so have so ably represented through the generations.

Established in 1916 by the first wounded soldiers repatriated home from the Gallipoli Peninsula, the RSA has a long and proud history of service to its members, their families, and the wider community. It has also played a critical part in reminding all New Zealanders of their past.

This past still has the power to astonish. Over 16,500 New Zealanders were killed in World War One; a further 41,000 were wounded.  We had the highest per capita casualty rate of any country involved. World War Two claimed the lives of a further 11,625 New Zealanders, and wounded 17,000.  Once again our per capita casualty rate was among the highest. 

Last century, nearly 90,000 New Zealanders were killed or wounded during military conflict.

The 20^th century was beset by global conflict, at a scale that is now hard for us to imagine. No nation wishes to see a repeat. But conflict remains with us. It has changed its form in the 21^st century. There are new and challenging demands on our Defence Force, with a continuing high level of deployments.

It is for this reason that the Government went into last year's election campaign promising a major review of Defence. The policy, capability, and organisational structure will culminate in the publication of a Defence White Paper - the first in over 10 years. I intend to focus my comments today on the Review.  In particular, I want to discuss the broad strategic picture underpinning it.

In doing so, I would like to acknowledge your association's submission to the Defence Review. I understand your Defence Committee discussed the submission in detail with the Secretary of Defence and the Chief of Defence Force. I also intend to discuss the submission with your President, but you will see from my comments today that we agree on many issues. One of the crucial areas of agreement highlighted in your submission is the view that our Defence Forces must be appropriately equipped for the tasks we ask of them.

I have made a point of saying in many fora since taking office that our capabilities must match our strategic context. The Review will aim to achieve this goal and see the personnel of the NZDF deployed with the equipment they need. As your President noted last night, there have been about 15, 000 new veterans coming home over the past 15 years.

The essence of our Defence Force is that it is deployable at short notice and for extended periods.  We acknowledge that service to country by training, housing and equipping our personnel appropriately.

The Defence Review has received a great deal of public interest. Nearly 300 written submissions have been received, and the 16 public meetings held throughout the country have been well attended.

The Review's recommendations must be grounded in sound policy. Having a clear policy framework based on an assessment of our current and future security environment is critical to determining a capability mix and force structure that provides the Government with an appropriate set of options for meeting its security obligations, as well as delivering value for money.

Traditionally, New Zealand's defence policy has been seen by many as an insurance premium against the risk of inter-state conflict which while remote, was considered so consequential that governments committed considerable resources as a hedge against it.

However, the end of the Cold War has required the Defence Force to deal with the reality of resolving intra-state, rather than inter-state conflict. This has required complex new training, in addition to training for the more traditional roles of national defence.

The tempo of these intra-state operations has also increased sharply in the past two decades. This is not unsurprising. The end of the Cold War meant that many suppressed conflicts have come into the open. This has required disciplined military forces to provide security in failing states when all other solutions, including conventional policing, have failed.

The reality of this shift in posture has been the subject of recent comments by the just-retired British Chief of the General Staff, General Sir Richard Dannatt, where he made the point that even the major powers "must optimise for the most likely - which are stabilisation and counter-insurgency operations".

Many states' high-end, large platform defence combat capabilities are increasingly being employed in the resolution of intra-state conflicts.

The United Kingdom is, of course, able to give priority to more than one capability objective. New Zealand, as a smaller state, must be more deliberate about how we develop our capabilities. More than most other countries, we have to choose. 

This was the conclusion of the last major review of Defence - the 1999 Foreign Affairs, Defence and Trade Select Committee Inquiry into Defence Beyond 2000, in which I was heavily involved.

Chaired by the Hon Derek Quigley, the Select Committee Inquiry emphasised the need for depth not breadth, and focused on deployable forces. 

The basic tenet was that the New Zealand Defence Force should prioritise those capabilities that they were most likely to use.  In the words of General Dannatt, we needed to "optimise for the most likely".

In today's strategic environment, the New Zealand Defence Force needs to focus on those capabilities that are likely to be deployed, rather than those which are unlikely to be used except in the most extreme case. In practice, this means we have to ensure that our defence force can cover every reasonably foreseeable contingency in our region - the South Pacific out to Timor-Leste.

This means in large part, equipping the New Zealand Defence Force to cover a range of operations, including state stability and security operations in weak and fragile states, and humanitarian and disaster relief.

Our own region has been particularly prone to these problems. The small Pacific countries often find it difficult to provide the full tools of government. Some are particularly prone to ethnic and tribal conflict.

The breakdown in one state can destabilise its neighbours. They can disrupt from international order by potentially providing sanctuary to terrorists, trans-national criminals and pirates. 

These traumas have included terrible suffering within our region. The decade-long civil war in Bougainville, for example, claimed as many as 10,000 lives.

Our region is also vulnerable to the power of nature. The tsunami that hit Samoa and Tonga has been a stark reminder that devastation can come unexpectedly to any place at any time.

I acknowledge the contribution of the NZDF in helping Samoa in this disaster. Within hours, they had surveyed the area and the first personnel were on their way. An air bridge was established, specialists provided and helicopters deployed in the first few days. Once again, the importance of trained, effective and deployable capabilities was reinforced. The effort is a credit to all involved.

Currently, over 400 New Zealand Defence Force personnel are deployed on long-term operations overseas. The vast majority are in the fragile states of Afghanistan, Timor-Leste, and Solomon Islands. The consensus amongst diplomats and defence planners is that the requirement for these types of armed, multi-faceted interventions is unlikely to change in the short to medium term.

Our deployments go beyond our region - notably to Afghanistan.  When we make these wider contributions, they will come from the core capabilities we need for our primary obligations in the Pacific, and with our Asian partners.

This means that our armed forces require a credible range of capabilities to meet all likely challenges. They are trained and equipped for combat tasks. The importance of this was shown just a few weeks ago in Afghanistan. A unit of our PRT was involved in a fire-fight. Their fundamental training as combat soldiers came immediately to the fore. They were able to deal effectively with the threat using the skills and capabilities that you would all recognise.

An important focus of the Defence Review is the relationship with Australia. The Anzac partnership is our most fundamental defence and security commitment.  It is not just history that brings us together.  We also share the same values, our economies are increasingly intertwined, and our view of the world is similar.  

Both countries are actively involved in regional issues and recognise that we have a role to play in supporting peace, particularly in the South Pacific, but also in South-east Asia.

This does not mean our interests are identical.  A common misconception is that an alliance relationship requires both parties to relinquish control over aspects of their foreign and defence policy.

In practice, the defence relationship with Australia operates at a deeper level.  It rests on a set of shared interests that can nevertheless accommodate different approaches to specific defence and security issues.  Our differing views on the war in Iraq were an example of this.

The election of new governments on both sides of the Tasman has provided an opportunity to refresh the principles underlying the trans-Tasman defence relationship.  The commitment last month by Prime Ministers Key and Rudd to investigate an ANZAC defence contingent has added real impetus to this process.

This flowed into my meeting at the end of September with my Australian counterpart, Senator John Faulkner.  We agreed that giving the Anzac spirit greater contemporary relevance across the spectrum of our two defence organisations was a priority. 

The first major step towards realising this vision is the commitment to forming a Pacific-focused Rapid Reaction Force to respond to regional contingencies, including humanitarian assistance and disaster relief.  The force will regularly train and exercise together and be able to deploy at short notice.  To help facilitate this initiative we will look to revitalise our airlift agreement to effect an efficient Anzac airlift capability. 

Furthermore, the enhancement of our trans-Tasman information communication technology will be given priority over the next 12 months as a means to facilitate joint contingency planning and closer operational cooperation.

This commitment has particular relevance in the Pacific region, extending out to Timor-Leste.  New Zealanders expect the Government to play a significant and sometimes leading role in the South Pacific.  This expectation is matched in the region itself, and is shared by Australia.  The multiplying effect of our joint response was evident in Samoa.

In this sense, the Anzac relationship is a critical enabler for both countries, adding depth and reach to our respective capabilities.  A key outcome of the Defence Review is to ensure that we continue to play our part in this relationship.

The organisational structure of the Defence agencies forms part of the Review.  In particular, the Government has stated that it wants the Review to take a fresh look at the quality of the procurement and budgetary procedures within the Ministry of Defence and the New Zealand Defence Force.

The Review is taking a hard look at how we might be able to get more value for money out of the procurement process.

The Defence Review is considering how best to manage not only procurement, but also Defence real estate.  Deferring maintenance on Defence bases and critical infrastructure is not a long-term solution for managing operating expenditure.

Defence Force facilities should meet contemporary expectations and standards. It is time we stopped refurbishing facilities that were far from new when many of you here today served in the New Zealand Defence Force.  I have directed that all options should be placed on the table, including partnerships with the private sector.  

The tempo of operations has put some pressure on Defence and its personnel. Many service people are in their third or fourth deployment. This year the Government has committed an extra $52 million to improving the operations and capability of the New Zealand Defence Force. The new spending will be used to introduce new and upgraded equipment into service, restore infrastructure, and support personnel initiatives.

Grappling with the future is one part of my responsibilities. Ensuring that we learn from, and remember the past is another.

Military service places unique demands on people, whether they are deployed overseas or not. The training is rigorous. The discipline can be tough. The hours can be demanding. It is a calling apart from normal civilian life. This is why service in our armed forces deserves special recognition.

The Government is committed to formally recognising non-operational service.  This is long overdue.  Medallic recognition for those who undertook Compulsory Military Training and balloted National Service has been under consideration since the late 1990s.  The Associate Minister and I are currently considering a report from the Joint Working Group proposing the best way forward for this important project.

In closing, I would note that the key issues facing Defence generally relate to two questions - how we use the New Zealand Defence Force; and how we manage the development of Defence Force capability?

Both questions are, of course, interdependent.  How we use the Defence Force is determined in part by the capabilities it operates.  The success of the Defence Review 2009 will ultimately rest on whether we can provide a durable framework for guiding decisions on these questions.

The Royal New Zealand Returned and Services' Association has provided its views of these matters, and I thank you for your contribution.  The decisions which come out of this Defence Review will have long-term consequences, perhaps for the next quarter-century or longer.  We have to get them right.

Thank you.