The navy has confirmed it will have to stop using up to half of its inshore patrol vessels, as border security becomes a major concern.
The navy's four inshore patrol vessels, which help the Department of Conservation, fisheries, customs, and police maintain border security, have only been in New Zealand waters since 2009.
But now the navy has revealed to ONE News that one if not two of the ships will soon be out of action because the service no longer has enough people to run them all.
It comes at a time when the discovery of a fruit fly in Auckland is raising questions about cuts in border security.
The Government is also bringing in new laws it says will deter boat people and people smugglers from sailing here.
Iain Lees-Galloway, defence spokesman for the Labour Party, said Government cost cutting is driving people out of the military.
"If the Government seriously thought that hoards of people were going to be flooding across New Zealand borders then they would be making sure that these inshore patrol vessels were fully operational."
The Defence Force told a Parliamentary committee in March that switching more than 300 uniformed personnel to civilian roles within the NZDF had an impact much worse than had been expected.
It has seen resignations reach record highs and morale levels drop to record lows.
The switch to civilian roles was part of a cost-cutting exercise to meet a Government target of shaving $400 million off the defence budget by 2014/15 and the committee was told there was a plan to achieve savings of $355m by that date.
Lees-Galloway said the Government's plan is not working.
"Defence force morale is at rock bottom and that is starting to affect our ability to deploy the forces that we need to be able to deploy."
Aussie choppers 'cheap cast-offs' for NZ navy
Meanwhile, Labour is slamming the Government's plan to replace its trouble-plagued fleet of Seasprite choppers with refurbished older helicopters that were rejected by Australia.
Lees-Galloway said the Navy deserves better than "cheap cast-offs." The Australian Defence Force rejected the choppers in 2008 because they were considered unsafe and unsuitable.
Defence Minister Jonathan Coleman said the choppers have been modified with upgraded technology.
He said the airworthiness issues identified by the Australians have been corrected and there were plenty of escape clauses before the deal is done.
Lees-Galloway said: "If that's really the case and it really is such a good deal, then he should show New Zealanders how he has come to that conclusion.
"The last thing we need is to find we have more defence equipment that no one can help us with if it breaks down."
Seven of the 11 were originally built in the 1960s and the other four in the mid-1980s.
Seasprites have had issues with corrosion and a lack of pilots to keep them in the air.
- With Newstalk ZB