Branch office economy

By GREG ANSLEY in Sydney

Finance Minister Michael Cullen, fresh from meetings with Australian Treasurer Peter Costello and a bevy of influential businessmen, is relaxed about the picture of New Zealand as a branch economy.

More than this, he concedes that New Zealand will increasingly amend its corporate law and regulations to shadow Australian legislation as part of a renewed bid to harmonise business conditions on both sides of the Tasman.

"To some extent we are a branch economy," he told the Business Herald. "It's foolish to deny that. A great majority of our banks, for example, are Australian-owned.

"I think we have to recognise the relationship is not one of economic equals.

"Australia is much larger than New Zealand, so when we talk about harmonisation we have to recognise that this means we can influence matters to some extent, but fundamentally it's more Australian models that are going to be adopted - as we've done with competition law, as we're doing with disclosure laws, etc.

"I don't see that as a major problem for New Zealand. At the end of the day these aren't the things that make us a sovereign nation or make us different.

"It's not the nature of disclosure laws that make you a New Zealander or an Australian, and if you think it it is, I think it's time to get a life, so to speak."

The big problem is instead to stay on Australia's radar, prodding Canberra into a new enthusiasm for tying up the frustrating loose ends of closer economic relations - a common currency excepted - and convincing investors that New Zealand is more than sheep, Morris Minors and All Blacks.

On the first issue, Cullen emerged enthusiastic from his meeting with Costello, convinced that the Australian Treasurer accepted the importance of further strengthening the transtasman relationship after a decade of some acrimony. To prove it the pair released a discussion paper on the vexed issue of transtasman taxation.

But while Cullen may see willingness and movement in Australia, companies that have heard similar optimism before remain unconvinced.

Transtasman Business Council chairman Ross Patterson said there remained little movement in the key areas of unhampered investment, the mutual recognition of companies by regulators, portability of superannuation and taxation.

On the second priority - attracting Australian capital - Cullen concedes that New Zealand still has a big problem with perception: the Australian view that New Zealand is a second-rate, unsophisticated and largely agrarian economy. "We still have a lot of work to do in that respect," he said.

"The irony is that the makeup of the New Zealand exporting sector is actually somewhat more sophisticated than the Australian export sector.

"Australian exports rely more heavily upon crude commodity exports than New Zealand and we have both higher exporting per capita and a higher proportion of exports [that] are in manufactures than Australia.

"But we still have something of an image problem and we have to be very careful about how we promote ourselves."

Take The Lord of the Rings, for example. Australians regard the scenery as New Zealand's big contribution rather than the locally developed movie technology, which they mistakenly believe must be from Hollywood.

Similarly, Cullen believes, there is little understanding of the fact that New Zealand won the America's Cup with superior technology, not simply better sailing.

Beyond the time-capsule view of New Zealand, Wellington has also to shed suspicion of a Labour-led Government hauling the country back into a dank socialist cellar.

Cullen's two-day transtasman jaunt took a path familiar to New Zealand finance ministers trying to keep the country above the horizon and in good repute: addresses to an Economic Intelligence Unit forum on New Zealand and a roundtable with about 30 executives in Melbourne; a Transtasman Business Circle lunch and meetings with leading financial analysts and Stock Exchange officials in Sydney.

Judged by media coverage, even in the financial press, Cullen's visit followed a well-trodden track into oblivion.

But the more subtle messages from the number of senior corporate officers turning up to listen to what Cullen had to say supports his own belief that with a relatively healthy economy and an emerging awareness of Kiwi innovation, interest is beginning to stir.

Cullen sees a shift in the focus of interest:

"There is a recognition that we're doing a number of things, and people are interested in what we have to offer specifically."