Aussie barriers to true trans-Tasman market remain

ROBERT AYSON
Last updated 08:45 06/12/2013

Relevant offers

OPINION: There was a sea of cabinet ministers at last week's Australia-New Zealand Leadership Forum in Sydney.

And for the first time the deputy prime ministers from both countries - Julie Bishop and Bill English - were there.

Plenty of trans-Tasman bonhomie was in the air. Friendly noises about Australia's priorities as it moved into the G20 chair were followed a couple of days later by the invitation for New Zealand to take part in 2014.

New Zealand also got plenty of plaudits for its management of challenging economic circumstances at a time when the newly elected Abbott Government faces a big budget deficit.

But while the Aussies are fans of the Key Government's fiscal rectitude, and are also copying our economics-first foreign policy, we shouldn't expect much more movement on closer integration between the two neighbours.

Freeing up the remaining economic and regulatory barriers between Australia and New Zealand is the raison d'etre of this business-based forum, which has been an annual fixture since 2004.

As various politicians, CEOs and commentators were sharing the forum stage, trade ministers Tim Groser and Andrew Robb also fitted in the annual meeting on closer economic relations, which remains an international model for how close two economies can become.

This agreement has also allowed Australian and New Zealand to draw closer links with some of their leading Asian economic partners. And a 2009 free trade deal between the two CER economies and the 10 countries of the Association of Southeast Asian Nations gives us the inside running on a good portion of Asia's evolving trade and investment architecture.

Accordingly, the main theme of this year's leadership forum was how New Zealand and Australia can use their bilateral co- operation to boost their engagement with Asia's growing economies.

That's prudent because both countries recognise Asia as the focus for so much of our current and future prosperity. But it is also necessary because the progress on even closer Australian-New Zealand economic and financial co-operation appears to have ground to a bit of a halt.

One such frozen area is trans- Tasman air travel. With as many as 14 regulatory processes for travellers to go through and the added disincentive of Australia's significant passenger movement charge, things appear to be worse in 2013 than they were several years ago.

But the unresolved issue causing the most frustration is the double taxation of company dividends, which is a barrier to trans-Tasman investment and business development.

Ad Feedback

Apparently the Australian Treasury's revenue people believe that Canberra would lose up to A$700 million (NZ$771m) a year. Given their deficit problem, this obstacle may be hard to shift.

The New Zealanders were polite on this point, perhaps believing the chances of a change are small. The exception was a robust speech by Labour leader David Cunliffe, who referred to this tax credits issue as "unfinished business which in our view must be progressed if our mutual relationship is to be taken to the next level". Good luck with that.

THERE was even less talk focused on the issue that really riles New Zealand mums and dads: access to student loans, and an array of benefits that taxpaying Kiwi expatriates in Australia have helped pay for.

But don't hold your breath for much movement on this either. We are left with a very close, although not seamless, trans- Tasman economic relationship and a joint desire to focus our co- operation into the region. That sounds good, although as a business-led forum eyeing the joint possibilities in Asia, there was not a lot of emphasis on the South Pacific.

The one exception was Papua New Guinea, a country of vast natural resources, but also significant challenges, which is raising its own regional game.

Instead, the big prize for Australia remains a free trade agreement with China. Given that New Zealand hit this jackpot five years ago, there was a distinct note of "how did you do it". In some rather delphic answers, the Kiwi contingent hinted that having a good political relationship with China and the reputation for maintaining independent foreign policy do no harm at all.

Whether that message is going to be lost in the noise of Australia's diplomatic dust-up over China's East China Sea policy remains to be seen. Australia's relations with Indonesia haven't been going too well since the Abbott Government assumed office either.

One of the best things the Abbott Government can do for New Zealand is to get its lines right in charting Australia's regional relations.

That would require some creativity and flexibility we have yet to see from the new team in Canberra. And whether that happens or not, the dream of moving from a trans-Tasman free trade area to a genuinely single economic market seems likely to remain unfulfilled.

Robert Ayson is on research leave from Victoria University's Centre for Strategic Studies, and is a visiting fellow at the Australian National University.

- © Fairfax NZ News

Comments

Special offers

Featured Promotions

Sponsored Content