Australia urged to focus on transtasman relations

By COLIN JAMES

Putting more effort into transtasman harmonisation would help lift Australia's productivity and competitiveness, says the Australian Labor Party's shadow treasurer, Senator Bob McMullan.

In New Zealand partly as a guest of the Government, McMullan said in an interview that opening Australia to more competitive pressure from New Zealand would put more pressure on Australian companies to improve productivity.

"The more successful Australian companies are across the Tasman, the more they will be able to compete with other countries," he said.

He said the productivity lift as a result of the 1980s reforms (initiated by the Hawke-Keating Labor Governments) had carried the economy through the 1990s and into the 21st century. Now a new round of reforms was needed.

"The next round of reforms are not something the Government can do," he said.

"The Government's role is as a catalyst, creating the climate."

Future prosperity depended on innovation and new ideas leading to new businesses, but "less is happening than used to happen".

He praised New Zealand's innovation policies.

"Australia's investment [in innovation] is declining as a proportion of GDP at the very time it should be going up," he said.

The Australian economy had been doing well on the back of the 1980s reforms.

"But we are not doing what will make it do well five years from now."

Making the transtasman economies more of a single market by extending reform into finance would help that process.

He pinpointed:

* Harmonising the securities law so companies did not have to meet two different standards.

* Harmonising banking prudential surveillance.

* Encouraging the two stock exchanges to merge.

* As a first step to a single competition body, providing common membership of the two countries' watchdogs to handle proposals such as the Qantas/Air New Zealand hook-up.

Such moves would "reduce the cost of doing business and raising capital".

McMullan said harmonisation needed more effort from Australian politicians and officials.

But, he acknowledged, Australia's bid for a free trade agreement with the United States was "distracting" the Government. The US free trade agreement was a "dead-end route". Although he hoped the negotiators would do well, he considered it a "strategic mistake".

It would be much better to work to enhance the multilateral trading system through the Doha round of the WTO and drive domestic reform.