Time to improve on CER, MPs say after inquiry

By KEVIN TAYLOR

Government ministers have three months to deliver their verdicts on a wide-ranging report into New Zealand's relationship with Australia.

Welcomed by the Australia-New Zealand Business Council, the 52-page select committee report tabled in the House yesterday calls for New Zealand to go even further than it already has to align itself with Australia.

The report acknowledges that tensions sometimes arise - such as the collapse of Ansett Australia and New Zealand's long campaign to get access for its apples - but says the relationship is robust enough to cope with occasional disputes.

While disputes have hit the headlines, New Zealand and Australia have grown remarkably close economically in the 19 years since the CER agreement was signed.

The report came from the foreign affairs, defence and trade select committee, which has conducted a two-year inquiry into New Zealand's economic and trade relationship with Australia.

Chairman Graham Kelly said that in 1983, CER was one of the most comprehensive free-trade agreements in existence.

It resulted in an increase in two-way trade of more than 300 per cent, and the tearing down of other trade barriers.

Now, the report says, it is time to advance the relationship further.

To do that the committee wants an Australia New Zealand Economic Community (Anzec) formed to expand CER, a transtasman institute to push the process, and a new Cabinet post - a Minister Responsible for the Relationship with Australia.

The report has gained support from other political parties with the exception of the Greens.

Its MP on the committee, Keith Locke, said the report was "much too rosy" and gave insufficient consideration to the downsides of CER and how New Zealand should deal with them.

He said big Australian firms, often supported by subsidies, had taken a large chunk of the New Zealand market.

Australian businesses had taken over many New Zealand companies, and there had been a shift of production facilities and head offices across the Tasman.

But the Australia-New Zealand Business Council welcomed the committee's proposals.

Chairman David Truscott said Anzec was very close to the business view.

And he welcomed the proposed Minister for Australia.

He said the post, with its greater focus on transtasman issues, would go some way to achieving the committee's vision.

Truscott said the development of CER had for too long been incremental, and the new proposals would bring a welcome, long-term strategic approach.

Trade Negotiations Minister Jim Sutton said the recommendations would be carefully considered and responded to within three months.

He said the Government was already active on several fronts trying to advance CER and it was discussing with business what issues should be given priority.

"Australia is our most important economic partner. It is the destination for a fifth of our exports and the source of about a fifth of our imports.

"The trade balance was heavily in Australia's favour when CER was signed, but is now almost one for one," he said.

The committee also proposed that:

* New Zealand boost official representation in Australia, particularly at state level.

* The Government seek more involvement with Australia in negotiating bilateral free-trade agreements, particularly with the United States.

* Consideration be given to developing and marketing Anzec as a regional hub for trade, investment and transportation.

* Capital markets be more integrated, and the Australian and New Zealand stock exchanges resume merger talks as soon as possible.



* Tax policies be brought closer together - without necessarily having the same tax rates - and the issue of double taxation and imputation credits be resolved.



* A campaign similar to "Buy Australia" be adopted to promote NZ products within the terms of CER.

* Industry assistance policies be co-ordinated between the nations to avoid undercutting each other.

* The "extremely low level" of New Zealand programmes on Australian television be increased.

* Senior political, business and academic leaders hold meetings at least annually. The 20th anniversary of CER next year would be an obvious time to start.

* An academic position in a tertiary institution in each country be devoted to research and teaching on the transtasman relationship.

Currency union was not among the recommendations.

Speculation grew in 2000 and early last year about a union of the two currencies, largely prompted by growing support in New Zealand.

Kelly said the committee did not advocate currency union.

"It is one of the last steps you would take with any integration of the two economies. Currency union means, anyway, giving away some of our sovereignty."

Currency union would also not deal with some of the issues the committee had raised, he said.

The Cabinet now has 90 days to respond to the committee's report.