Executives to drive tax reform

Leading New Zealand corporate figures will place a new round of transtasman taxation reform on the agenda at a meeting this week.

Movement towards a single Australasian market has been "pretty limited" since last year's inaugural forum, according to Kerry McDonald, who co-chairs the Australian New Zealand Leadership Forum.

But a raft of regulatory reforms will be debated this week in Melbourne, including a contentious proposal to harmonise transtasman banking prudential supervision.

"Neither country can afford to miss the opportunity of improving its competitiveness to better compete in the global market," McDonald said.

He highlighted an urgent need to ensure that shareholders in companies operating on a transtasman basis could fully access dividend imputation and franking credits.

PricewaterhouseCoopers chairman John Shewan - who recently crossed swords with Australian Treasurer Peter Costello on the issue - will lead the charge within the two-day meeting.

Under pro rata rules, franking or imputation credits are allocated in proportion to the percentage of shareholders residing in either country - not where the tax is paid. This can result in double-taxation when shareholders are not able to access sufficient credits and, at company level, it can mean a waste of credits. Companies say the way to resolve the problem is for full mutual recognition of imputation credits between the two markets.

McDonald, who is chairman of Bank of New Zealand, is optimistic that the banking issues will be resolved. "I am sure the Australian and New Zealand Governments are going to be fully alerted to the sovereignty issues.

"We're talking about two sovereign nations so the policy harmonisation process has to recognise that."

The issues up for debate include regulation, skills shortages and a proposal for a common border and education. But McDonald conceded it was difficult to create a public constituency for transtasman regulatory reform despite its obvious benefits.

"That is the main rationale for the forum. That's why it is important that we've got such a strong group attending this time - chief executives and chairmen across a wide range of businesses."

As well as top corporate figures, the meeting will also be attended by Foreign Minister Phil Goff, Economic Development Minister Jim Anderton and Reserve Bank Governor Allan Bollard.

The agenda

* Banking prudential reforms - a potential deal-breaker.

* Securities, accounting and competition rules - under way but slow.

* Shareholder tax imposts - transtasman firms say dividend imputation should be next.

 

* Fran O'Sullivan will report from the forum.