Cullen calls transtasman truce

By JIM EAGLES and NZPA

Finance Minister Michael Cullen wants to see a transtasman agreement on attracting foreign business.

Its aim would be to end transtasman bidding wars over existing operations and focus on luring investment into Australasia.

Cullen said he intended raising the idea with senior Government colleagues. If it won support, he would then raise it with the Australian Government.

He said the idea grew from growing irritation with Australian state Government attempts to entice New Zealand firms to move across the Tasman.

"We have a competitor on [the other] side of the Tasman, where both state and federal Governments quite ruthlessly throw money, including trying to bribe New Zealand firms to go over the Tasman to Australia," Cullen said.

"We can't match that level of intervention, but we sure as hell can't lie back and think of Brisbane."

Cullen said he would like to have the proposal considered within the Closer Economic Relations agreement between the two countries.

"It sometimes seems it would be better if we had a general agreement across the board that our attraction programmes are designed to attract [firms] into Australasia."

This would be better than attracting firms backwards and forwards across the Tasman, "which is a beggar-thy-neighbour approach".

The minister first floated the idea in an interview with the Australian newspaper. Its economic editor, Alan Wood, described his proposal as timely.

Wood said there was a "rising tide of dissatisfaction" within Australia over the "arms race" between the states.

In 1996, a federal Government report concluded that bidding wars were costly and produced few benefits in terms of jobs and economic growth, but no action followed.