Cullen says we can waltz with Oz in single economic market

By FRAN O'SULLIVAN, assistant editor

Finance Minister Michael Cullen wants to keep the focus on the big picture while he fills in the jigsaw pieces to create a transtasman single economic market.

Dr Cullen returned to New Zealand at the weekend clearly buoyed by the successful outcome of his talks with Australian Treasurer Peter Costello in Melbourne.

"The big picture - as both Peter and I see it - is as far as possible moving towards a genuine single market where businesses on each side of the Tasman do not face additional costs imposed by Government regulation," he said.

Dr Cullen said it was important to keep the focus on the long-term objective so it was not derailed by "the very few people on the nuttier fringe of the protectionists".

He signalled that the bureaucracy will need to be cranked up to ensure swift progress is made towards realising sweeping moves agreed between the treasurers to set up common regulatory platforms in three areas: transtasman competition policy and administration, banking prudential systems and accounting standards.

They are up against tight deadlines to have frames of reference agreed by mid-year for the respective study groups.

Talks with Reserve Bank Governor Alan Bollard over plans to put the Australian and New Zealand banking system on a common prudential platform will be scheduled. Australia owns 80 per cent of the New Zealand banking system. But rogue currency trades at National Australia Bank (owner of the BNZ) have caused security concerns.

Dr Cullen said the Government would work through longer-term framework issues with the central bank and the Australian Prudential Regulatory Authority.

He said there "were some big issues" and differences of perception to work out between the countries.

"Given the high level of integration of the banking sectors, can you realistically say you can actually hermetically seal yourself off from each other in the event of major problems?" he questioned.

"Or do you impose a list of costs along the way and find it actually won't work in the event of the uncontemplatable happening?"

During his Melbourne visit, Dr Cullen also met top Australian competition regulator Graeme Samuel, who declined the Qantas bid for a slice of Air New Zealand on anti-competitive grounds.

He said that although the Qantas/Air NZ situation was not directly discussed ["I am Air NZ's shareholding minister"], Mr Samuel had made the point that he and Commerce Commission chairman Paula Rebstock "couldn't actually talk to each other about what they were doing" during the respective merger applications as that would have breached regulatory rules.

Dr Cullen observed that Mr Samuel's Australian Competition and Consumer Commission had a more "hands-on" role in discussing competition policy than its NZ counterpart. The upcoming research will cover joint decision-making on transtasman issues by the competition authorities.

Work on transtasman accounting standards is already under way - sparked by the Enron debacle.

New Zealand Trade & Enterprise will also be charged with schooling prospective exporters and investors on how to take advantage of the single market.