"In the year to July 2013 the (military) will deliver $190 million in savings after achieving $140 million in the year prior," New Zealand Defense Minister Jonathan Coleman said.
"These savings free up resources to improve the defense force's military capability," he said in a Department of Defense written statement.
"The defense force budget estimates for 2013 sees increases across a range of military outputs, such as land combat forces, naval patrol and support forces and fixed-wing transport forces. These funding increases to the military outputs deliver on the government's promise in the Defense White Paper to shift resources from the back office to the front line," Coleman said.
Increased defense spending will finance hardware upgrades and life-cycle support projects already approved by the government.
In the pipeline are upgrades to the ANZAC-class frigates, replacement parts for the Seasprite helicopters made by Kaman Aircraft Corp. and the purchase of new medium and heavy trucks.
"This sees the New Zealand Defense Force capital expenditure budget increase from $318 million to $583 million for the financial year," he said.
"Budget 2013 confirms the defense force reforms have achieved the difficult task of making back-office reforms and achieving savings while also delivering projects to enhance the defense force's military effectiveness."
Defense spending details come after last week's Defense Department announcement that it will buy 200 trucks from Germany's Rheinmetall MAN in a deal worth $111.3 million.
The vehicles will be delivered by the end of next year and replace Unimog and heavier Mercedes trucks.
Coleman said last week that the same military vehicles are being purchased by the United Kingdom.
"We bought them at a great price by purchasing off the same production line as the (British), achieving an economy of scale."
The trucks being purchased are 4x4s, 6x6s and 8x8s in a number of variants, including trucks fitted with winches and cranes, dump trucks, trucks fitted with specialized pallet and container handling equipment and tractor/semi-trailer combinations.
The Defense Ministry said some specific components -- such as semi-trailers and dumper bodies -- will be manufactured in New Zealand.
While defense spending is rising, the government remains committed to keeping a tight rein on many other spending areas.
The goal of the government is to have at least a small budget surplus of $75 million by June 2015, a report by the New Zealand Herald newspaper said.
Net debt by June 2015 would be about $70 billion.
The economy should grow an average 2.5 percent over five years with unemployment falling from 6.7 percent to 5.2 percent.