At least one military base is earmarked for closure in a review of the Defence Force.
The Government has issued a paper outlining capabilities for the next 25 years.
There will be a push to create a combined air force and army hub at Ohakea in Manawatu. It would mean closing and selling the Linton base and reducing personnel numbers at Waiouru. Other bases will be reviewed.
The Government also wants to improve combat effectiveness and mobility. Additional operating and capital spending will be needed.
The paper recommends boosting combat capabilities so more troops can be deployed for longer on overseas missions.
A concurrent review has found up to $300 million that can be redistributed.
Prime Minister John Key says a lot of the report's contents came after extensive talks with Defence officials.
Mr Key says it is an acknowledgement that the Government does not have much extra but there is need for more equipment and personnel.
Mr Key says the only option is to look for savings.
The Chief of Defence, Lieutenant-General Jerry Mateparae, says it is not facing cuts as is happening in other countries, and there will be big investments in intelligence and surveillance.
The paper says some jobs held by uniformed personnel will be turned into civilian positions. Up to 1400 such jobs have been identified.
The Government also wants to speed up the sale of surplus off-base housing.
Defence Minister Wayne Mapp says infrastructure is run down and is not meeting requirements.
The Government says it will look at public-private partnerships too.
US described as stalwart partner
The United States is described as a stalwart partner of New Zealand in the Defence white paper.
Australia is named as New Zealand's principal defence and security partner, and the paper says New Zealand would respond immediately to any attack on that country.
It describes New Zealand as an engaged, active and stalwart partner of the US and says there has been a steady increase in military contact and co-operation between the two countries.
It says the next 25 years are likely to be more challenging than the previous 25.
And the outlook for the South Pacific is fragile.The paper says it is in New Zealand's interests to play a leadership role in the South Pacific, and that a weak or unstable Pacific region would pose risks to New Zealand.