Bank harmony the target for Cullen and Costello

Finance Minister Michael Cullen and Australian Treasurer Peter Costello. Picture / Mark Mitchell

Progress on transtasman banking regulation is expected from Finance Minister Michael Cullen and Australian Treasurer Peter Costello after the pair's annual bilateral talks in Melbourne tomorrow.

Concerns that the New Zealand banking industry, already 85 per cent owned by Australian banks, could eventually be overseen by an Australian-dominated single regulator arose last year when Cullen and Costello announced the establishment of a transtasman council on banking supervision.

The council included officials from the two nations' treasuries, reserve banks and the Australian Prudential Regulation Authority. It was to report on any potential legislative changes necessary to enable the regulation authority and the New Zealand Reserve Bank to support each other at least cost.

Objections to the idea of a single transtasman banking regulator included fears that it might not be in New Zealand's national interest and could reduce the tax base.

Harmonisation of the two countries' banking regulations is one of several transtasman business issues to be discussed tomorrow.

Commerce Minister Lianne Dalziel, also attending the talks, is expected to announce progress on mutual recognition of securities and further development of the two countries' memorandum of understanding on the co-ordination of business law.

Officials from both countries have been working on mutual recognition of securities for some years.

Under proposals developed over that time, issuers could offer shares or other securities in Australia and New Zealand, using the same offer documents and structure.Tomorrow's meeting is also likely to see the finalisation of an updated work programme. Areas of attention in the previous work programme included:

* Greater compatibility in the disclosure regimes in relation to financial products.

* Management of cross-border insolvency.

* Intellectual property rights. * Business law information sharing.

* Greater consistency in legislation affecting electronic transactions.

* Greater consistency in transtasman competition law.