KEY POINTS:
New Zealand and Australia are to investigate the feasibility of making retirement saving schemes portable between the two countries.
An officials' working party would be set up to look at the portability of retirement funds during a person's working life, Australian Treasurer Peter Costello and Finance Minister Michael Cullen announced yesterday after their annual talks in Wellington on progress towards a single economic market.
"It has been a major issue for companies operating transtasman with people moving back and forward between the two countries," Cullen said.
As well as the ability to transfer savings across the Tasman, which would enhance labour mobility, benefits could include streamlining the number of small and administratively-expensive accounts. The fact that Australia has compulsory superannuation while Kiwisaver, due to begin on April 1, allows people to opt out, was not seen as an impediment.
Much of the ministers' meeting was devoted to reviewing progress on routine co-operation between the two Governments on initiatives already under way. That includes the incremental progress towards the goal of "seamless" commerce across the Tasman, in areas such as banking supervision and the co-ordination of business law.
Negotiating a new tax treaty between the two countries is likely to begin shortly. It is expected that will lower non-resident withholding tax rates on dividends and possibly interest and royalties.
The international tax review discussion document the Government released in December indicated a measured approach towards lower withholding tax rates could both increase New Zealand's attractiveness as an investment destination and reduce tax barriers to offshore investment from New Zealand.
Australia has already moved in the same direction in its double tax agreement with the United States and Costello said he welcomed the direction for change signalled in the discussion document.
But, at the media conference after the talks, Costello made it clear he was not interested in moving towards full mutual recognition of imputation/franking credits.
That would amount to allowing New Zealanders to "cherry pick" within Australia's tax system.
Australia has, however, made what Costello described as an ambitious offer on access to Australian investment markets, an area in which the Closer Economic Relations treaty - with its focus on trade - is deficient.
There was no reason why it should be easier for Americans to invest in Australia (under the provisions of the US-Australia free trade agreement) than New Zealanders, he said.
Changes would relate to such things as requirements for Foreign Investment Review Board approval.
Australia would be looking for reciprocity. Cullen said no applications for business investment in New Zealand, as distinct from the purchase of land, had been turned down since 1984, but any changes to the regime would have to get through Parliament.
The ministers also discussed climate change and moves towards trading in rights to emit greenhouse gases.
Costello would not be drawn on the longer-term prospects for a single transtasman carbon market.
"As the world moves towards carbon trading we would not want to be left out. But no real global trading system would work without having the largest emitters in system: the United States, China and India."
STEPS TOWARDS A SINGLE MARKET
Australia and New Zealand are to:
* Start negotiating a new tax treaty
* Study the feasibility of making superannuation schemes portable between the two countries
* Work towards adding investment provisions to the CER pact
* Keep on with the co-ordination of business law
