'Domestic' trans-Tasman flights a step closer

SYDNEY - Trans-Tasman flights could be reclassified as domestic routes by the end of this year after Prime Ministers John Key and Kevin Rudd today agreed to make it a priority.

Mr Key, following his first one-on-one meeting with his counterpart in Australia since becoming Prime Minister, said a common border was an achievable goal.

It would reduce travelling time, potentially reduce airfares and make trans-Tasman travel a "painless experience".

"The barriers are in a number of areas: biosecurity, physical security, quarantine issues, but I believe that they are surmountable," Mr Key told reporters.

"Last year the leadership group set an objective of reaching a more common border by 2015. In my view that's far too long.

"If we're serious about wanting to progress this issue we should be much more ambitious in a time scale."

With about one million annual visitors from Australia to New Zealand, making it the country's largest tourist market, boosting the numbers would have obvious financial benefits, Mr Key said.

Mr Rudd agreed an easier pathway between the countries would benefit both.

"It's one of those things we've decided to crunch it, see if we can get an agreement within the year. If we can't, we'll explain to you why," Mr Rudd said.

"We've decided rather than just have it languish in never-never land, to bring it into decision making territory."

The two prime ministers had one-on-one talks and dinner last night at Mr Rudd's Sydney residence, Kirribilli House, and talks continued today including cabinet ministers and business leaders.

Mr Key, who presented a $2 million cheque from New Zealanders for the bushfire relief fund, said the trans-Tasman relationship had "never been in better heart".

High on the agenda was the global financial crisis and the need for continued strong action to restore economic growth and protect jobs.

Mr Rudd will attend next month's G20 leaders summit in London, and said he would consult Mr Key on "the best set of responses on global co-ordinated stimulus and the question of returning private credit flows to normal, as soon as possible".

The leaders also discussed a move towards a single economic market after 26 years of Closer Economic Relations (CER), to align and strengthen the two economies, stimulate business activity, competitiveness and job creation.

"Worldwide (CER) is the model free trade agreement. It's been around for a quarter of a century, it's pretty good and we're determined to make it better," Mr Rudd said.

"Any obstacles remaining in the investment field and other fields we're determined to punch our way through."

Connected to that was a potential move towards a single emissions trading scheme, Mr Key said. Both leaders agreed to try and harmonise emissions reduction schemes as much as possible.

"From our point of view, developing climate change policy that was at odds with that in Australia would separate the economic market, rather than bring in together."

Potential stumbling blocks would be some "fundamental differences" between the two countries, notably the fact that 50 per cent of New Zealand's emissions come from agriculture, while that only contributed 25 per cent in Australia, Mr Key said.

The CER ministerial meeting in July would provide a report on progress to the prime ministers at a further meeting between them in Australia in August.

Mr Key's final engagement was lunch at the Trans-Tasman Business Circle in Sydney and he was scheduled to return home tonight.

- NZPA