Expert queries CER priorities

By KEVIN TAYLOR

Tidying up the loose ends in the economic relationship between New Zealand and Australia may not be worth the effort, says a leading international relations expert.

Dr Steve Hoadley, an associate professor of political studies at Auckland University, says New Zealand's closer economic relationship with Australia is already "95 per cent of the way there", and questions the need to fine-tune CER even further, given that most commercial barriers have been down for a decade.

A parliamentary committee recently released its findings on a two-year inquiry into our economic and trade relationship with Australia.

The foreign affairs, defence and trade committee wants the 19-year-old CER arrangement expanded into something called Anzec (Australia New Zealand Economic Community).

It says we should also push for a merger of capital markets, appoint a minister for Australia, and take other measures to snuggle even closer to our big brother.

But Hoadley said it would take time and energy for New Zealand to advance CER, and a much higher priority was a free-trade deal with the United States.

"New Zealand ought to be exerting a lot of energy trying to work out a common position with Australia. Maybe not a total merger of positions but at least harmonisation, which is of course the key word of the whole CER relationship."

Hoadley says the report has identified some differences between us and Australia over various issues, for example in the area of imputation credits, but not big problems.

"Maybe we are at the 95 per cent point, and now we are working on the last 5 per cent.

"We really are at the marginal improvements, which certain businesses would like to see."

He does not think a minister for Australia is a good idea either.

"With all respect, Judith Tizard being Minister for Auckland has not really made all that much difference and if you have a minister for Australia what about the United States or Japan?"

He says existing mechanisms should be strengthened, such as our High Commission in Canberra.

Reaction from the upper echelons of the Government to the committee's work has been muted so far, but it has to respond.

Ministers have 90 days from the report's release to reply.

Prime Minister Helen Clark will shortly lead a business mission for a goodwill assault on Australia.

But an insider says she probably won't read the report until she gets on the plane. That may not matter much, given that the Australians have said little about it either.

But clearly many Kiwi parliamentarians are concerned about relations with our bigger, louder and more aggressive neighbour, which also happens to be our largest trading partner.

Helen Clark is visiting Australia to counter anti-New Zealand feeling over Ansett and the Rugby World Cup fiasco, widely regarded across the Tasman as another business-management failure.

The delegation, which will include Telecom chief executive Theresa Gattung and other corporate leaders, follows strained transtasman relations in several areas. But on the business front the relationship is about as barrier-free as one could expect.

Business New Zealand chief executive Simon Carlaw says many of the issues the report discusses "come up against the rock of sovereignty".

"The unanswered question really is how far do you want to go.

"Sovereignty colours views on common currencies, whose standards do we adopt, or financial market standards."

He says the sovereignty issue is a debate that New Zealanders have not yet had.

"If you don't want to confront that sovereignty issue then you are really left to dealing to the remaining matters in CER that would move it to a full free-trade agreement."

He agrees with Hoadley that in economic and commercial terms we are already 95 per cent of the way to full agreement.

He said the last 5 to 10 per cent represented the hard yards and required solving sovereignty issues.

New Zealand needed to look more at its visibility across the Tasman. For example its decision to withdraw from the state capitals, which no doubt saved money, needed to be revisited.

"The state Governments are an important part of the wheeling and dealing that constitutes government in Australia.

"In those smaller states we are much more level footing than we are on the eastern seaboard or at an Australian Commonwealth level."

Committee chairman and Labour MP Graham Kelly said he did not expect an immediate reaction to the report from the Government.

"Having taken all this time to deal with it, there would be no point for immediate reaction."

He says ministers will have to get advice, talk to each other, and order papers.

Commenting on a visit by the committee to Australia last year, Kelly said the Australians had told them there were no issues of concern, but New Zealand submitters to the committee had disagreed.

"We have tried desperately to put it in a context so we are seen as not whinging," he says of the report.

The report outlines a long-term strategy for a common economic community, that Kelly thinks could work.

"We have got to suck them into this new concept and then start engaging them on the issues."

The report makes it clear New Zealand will have to do all the work to advance the relationship towards economic union.

But it appears we need to talk seriously about sovereignty first.

* Tomorrow in Dialogue on Business, Wyatt Creech, former Deputy Prime Minister and National's associate spokesman on foreign affairs and trade, and Denis McLean, former Defence Secretary and Ambassador to the US, discuss our relationship with Australia.