PM Christopher Luxon would consider Singapore drone testing in NZ airspace

Prime Minister Christopher Luxon has talked up the prospect of stronger defence ties with Singapore, including possibly allowing Singaporean drones to use New Zealand airspace.

Luxon says he would also be interested in more joint training exercises, but refused to commit to increased funding for the Defence Force in the short term.

The prime minister is in Singapore as part of his trip this week to Southeast Asia, which will also be stopping in Thailand and the Philippines.

The Singapore leg will include meetings with Prime Minister Lee Hsien Loong, President Tharman Shanmugaratnam and Deputy PM Lawrence Wong.

Luxon told reporters he was keen on deepening New Zealand's defence ties with Singapore.

"I think there is more work that we can do, to do more work together in the defence and security space. We've historically had joint exercises whether that's back home in New Zealand or overseas as well in the region."

Asked whether that could include allowing Singaporean Unmanned Aerial Vehicles - UAVs or drones - into New Zealand's airspace for testing, he said that could be part of the discussion.

"Those are things that we'll continue to discuss, I'm up for deepening defence ties with Singapore period. And so I'm up for any of that conversation we want to have," he said.

However - although the coalition has spoken in the past about wanting to increase New Zealand's defence spending to 2 percent of GDP - Luxon was cautious about committing to further funding for the NZDF given the economic conditions.

"We would like to lift our defence spending but as you know at home we have a structural deficit and a fiscal deficit, and so we have to fix our finances and our fiscal situation first and foremost.

"We are going to go through a defence capability review which has been kicked off, we have new leadership coming into our defence forces as well, so in fairness I want them to be able to identify what is the capability that we plan to build and develop over the coming years with the new leadership team in the defence forces."

After a brief stop in Cairns on his way to Singapore yesterday, following news of Iran's strike on Israel, he urged all sides to de-escalate.

He restated his position on that conflict, saying it would "obviously" be a feature of the conversation with Prime Minister Lee.

"Clearly we condemn the actions of Iran, this is something quite different and it's quite a delicate moment in the history of the region," Luxon said.

"We just urge restraint and de-escalation in this region, it's the last thing this region needs is more escalation of conflict ... we're living in a more volatile, more uncertain, more complex, more ambiguous world. There's a lot more geostrategic competition, as you have all observed."

He would not directly answer whether New Zealand had made a mistake in not more forcefully condemning the strike from Israel against Iran's embassy.

"Let's be clear, this conflict is not going to be resolved militarily," he said. Instead Hamas and Israel needed to get around a negotiating table and "advance, ultimately, a two-state solution".

He said he had come to Singapore specifically because it was the gateway economy to the region, as New Zealand's fourth-largest source of exports and fourth-largest source of investment.

Luxon said he was meeting with major investors as part of his visit, and New Zealand needed to do much better at attracting investment, as Singapore had done. This could be improved through RMA reform, and the government's fast-track legislation.

He was also intending to speak to the island nation's leaders about climate change and the green economy, which was part of why Climate Change Minister Simon Watts was also on the trip.

"I think there's a huge opportunity for us to work with Singapore in particular around how we can advance sustainable finance for example or the way we work in cabon markets, there's a whole bunch of reasons, or things we could potentially collaborate in that space."

It was one of the five pillars of the cooperation agreement between the two countries, he noted.