Allan Hawke: Neighbours, friends and all too often rivals ...

In a recent Lowy Institute poll of what Australians think about our friends and neighbours, 94 per cent thought positively about New Zealand, 4 per cent were negative and 2 per cent were unsure. I wonder what response New Zealanders would give to that question?

People from the West Island often make the mistake of thinking Kiwis are just like Aussies. They're not!

Kiwis often feel Australia takes them for granted, ignores them or patronises them. Even worse, we're sometimes indifferent.

Because the relative importance of the relationship is so much greater for New Zealand, Australians have a constant - if vague - sense, that we are continually being outsmarted through not paying sufficient attention to what you are up to.

The obverse of the coin involves Kiwis obsessing about Australia to the point of paranoia. And we have a bad tendency towards petty point-scoring and talking past each other - a bit like some marriages really!

Let me turn now to the three initiatives I mentioned earlier.

The CER ministers meeting

First, the expanded CER ministerial dialogue.

The second such meeting, at Queenstown, in December last year saw a detailed exchange on biosecurity issues of concern to both sides and resolved the Wine Equalisation Tax issue.

Ministers decided to develop an agenda for working more closely together on industry development issues in an endeavour to build globally competitive industry capacity.

A few months ago, we settled the arrangements allowing export of New Zealand's summer fruit (including apricots and plums) to Western Australia.

I'm pleased that the revised draft Import Risk Assessment was released last Thursday. The rather long gestation period in reaching this stage stemmed from court proceedings (that were finalised on November 18) and biosecurity, including Australia's rightful determination to follow rigorous and transparent science-based processes to ensure the risk assessment's integrity. We haven't reached the finishing post yet, but we're in the home straight.

I don't think I've ever been accused of subtlety - but let me give you an illustration of New Zealand's. Last Tuesday night, I was fortunate to be present at a dinner at Government House - the name cards were held in place by little apples.

A few niggling issues relating to "Rules of Origin", men's suits and meat pies remain on New Zealand's agenda.

Less well known than these cases are Australian concerns over access for seven tropical fruits (custard apple, papaya, longan, lychee, mango, mangosteen and rambutan), bananas, mushrooms and honey to the New Zealand market. We're also waiting on legislative changes to enable quarantine policy to operate without contravening the Hazardous Substances and New Organisms Act.

In typical Australian fashion, we have been very patient and not raised a public fuss about the lack of progress with these items.

More seriously, we will need to be very careful not to let these sorts of irritants become disproportionate in the broader bilateral context, as they have threatened to do on occasions - another example of where the value of personal relationships cannot be underestimated.

The Australia New Zealand Leadership Forum

All relationships need nurturing to preserve the romance.

Last year, Wellington hosted the Inaugural Australia New Zealand Leadership Forum, which brings together a group of around 80 political, business, academic, cultural, science, media, union and public service leaders.

In my view, the two sides came together with different expectations. The Australian side was keen to get some concrete outcomes, whereas the Kiwi side was more inclined to foreplay.

One official remarked: "I don't want to be told about our shortcomings by Australians." Another pondered why his colleagues were not inclined to take the Australian side at face value.

Business journalist Rod Oram commented: "It would be a serious mistake to believe that Australia is the answer to most of our problems By focusing too intently on Australia we would miss other, bigger opportunities."

Rod's assessment reflects the mirror image of Paul Keating's inclination to tell the Australian business community that every time Japan's GDP grew by 1 per cent, that equated to the whole of New Zealand's GDP. In other words, why bother with New Zealand when there are bigger fish to fry elsewhere.

At its initial meeting, the forum adopted "the free flow of people, trade and capital across the Tasman" as its vision.

The first forum also considered the question of a common currency. Currency union would remove exchange rate uncertainty and lower currency conversion costs for companies that do business between our two countries. It would increase transtasman trade and investment. So why isn't it a given?

As Michael Cullen has observed: "It's not a common currency that is on the table, it's whether we adopt the Australian dollar." Prime Minister Helen Clark regards it as a sovereignty issue. And it's certainly not on Prime Minister John Howard's agenda.

The second forum meeting in Melbourne on April 29-30 this year featured a range of written papers, presentations and working group sessions around the vision's three themes:

* The Single Economic Market initiative.

* A common border.

* Enhancing the skills base of both countries through joint standards and training efforts.

Australia and New Zealand have very similar standards of safety and security.

Our border agencies - customs, quarantine, immigration and aviation security - already work very closely together. But, there is scope for further measures and the differences between us can be resolved if the political and bureaucratic will is forthcoming.

We took an important step towards the common border objective last December during the six monthly meeting between our Foreign Ministers when we signed new advanced passenger processing arrangements.

I'm sure you'll be pleased to learn that on November 24 the primary line signs at Sydney, Brisbane and Melbourne International Airports were amended to read, Australian and New Zealand Passport Holders Only, affording New Zealanders going to Australia the same courtesy you extend to Australians when we come here.

I'd be surprised if many of you had heard of, or knew much about, these initiatives. They illustrate the perplexing tendency to play down the positives in the relationship, and to overstate and hype the differences and difficulties.

The Single Economic Market

Most people have forgotten just how controversial the CER proposal was in the early 1980s. The loud vocal majority opposition was convinced that New Zealand would suffer dramatically from such an approach. In fact, analysis of CER by New Zealand has shown that you have been a more significant beneficiary of the agreement than Australia has.

On January 30, 2004, Peter Costello and Dr Cullen set out an ambitious agenda to strengthen CER by pursuing a genuine Single Economic Market (SEM).

With that overriding aim at the forefront of their minds, the ministers decided to focus on five initiatives:

* Integration of the ANZ competition and consumer protection regimes (including implementation of the recommendations contained in the Productivity Commission's January 13, 2005, report).

* The transtasman mutual recognition arrangements governing offers of securities and managed investment schemes.

* The transtasman Accounting Standards Advisory Group, which has started to align the financial reporting requirements between Australia and New Zealand towards our ultimate goal of a common set of accounting standards and a joint accounting standard-setting arrangement.

* Whether an investment component should be added to the CER agreement

* A joint approach to transtasman banking supervision that delivers a seamless regulatory environment. Dr Cullen sees the SEM as the way to realising "a dream, where being a company in one country will be equivalent to being a company in the other country".

At a minimum, we need to adopt what represents best practice on either side of the Tasman. What we really need, however, is to set the standard in all that we do, just as we're doing with accounting standards where we are influencing what is to become the international standard.

I believe that history will look back on the SEM in the same way as CER is now viewed. The proviso is that a similar level of commitment will be required to realise the benefits and overcome the chaff being deployed to distract us from the target.

At the Gateway to Australia Trade Summit in Auckland on March 3, a senior Kiwi businessman argued in favour of broadening and deepening the transtasman relationship. But, here's the rub: He counselled a slow, sensible, cautious approach, saying that other things on the wider world front are more worth doing, so New Zealand shouldn't allocate too many resources to the Single Economic Market.

A significant proportion of elite business opinion over here shares that sentiment, seeing the SEM as a backdoor approach to an Australian takeover of New Zealand's sovereignty.

"If Australians are better than us at anything, it's screwing the scrum," sums up their attitude, and lies behind the orchestrated campaign against the SEM.

Having regard to the rhetoric of the naysayers, it's instructional to look at what has actually been going on.

Over the past decade, the growth in transtasman trade has averaged 9 per cent a year, which is greater than the growth in either country's trade with the rest of the world.

Australia's fifth largest market is New Zealand, which takes 7.4 per cent of our exports (2004), and contributes 3.7 per cent of our imports.

Australia is New Zealand's principal trading partner, taking 21 per cent of your total exports and sourcing 23 per cent of your imports.

At the end of March this year, Australia's investment in New Zealand was NZ$59.4 billion, having grown 24 per cent a year over the past three years, while New Zealand's investment in Australia was NZ$25.5 billion, up from NZ$15.9 billion three years ago.

A few observations

Our nations seem obsessed by sporting prowess as a mark of our identity and measure of global success. If our descendants are to enjoy a similar standard of living, we need to give due recognition to the deserving heroes and heroines in business, engineering, science, academia and other fields of endeavour.

We seem to live in the age of the ephemeral anti-hero - the celebrity poseurs flickering like moths in the spotlight for their fleeting moment of fame or infamy.

I suggest that both our countries need to celebrate the grace and spirit of those who put duty and service to the national interest ahead of public or private gain.

My greatest disappointment is that six years from initiation, we haven't realised our desire for an Anzac memorial. As Deputy Prime Minister of New Zealand, Don McKinnon made two valiant attempts to get regular face-to-face sessions at prime ministerial level - Paul Keating's response was to stare at the ceiling and say that he " ... could always pick up the phone".

John Howard was here for his annual meeting with his New Zealand counterpart earlier this year, the fifth such get-together on Kiwi soil since he became Prime Minister in March 1996 and his eighth visit here since that time.

Two things are unusual about that.

First, the only such annual meeting programmed in his diary is the one with New Zealand.

Second, it was Mr Howard who initiated such meetings.

John Howard's grandfather fought in World War I. His father and grandfather both fought in World War II. I suspect that it's these Anzac links which drive Mr Howard's attitude and approach to New Zealand.

History shows us that we shouldn't be sanguine that Mr Howard's successor will put as much effort and political capital into the relationship as he has.

Revisiting some of my earlier comments, I've concluded that when Australia departs from the stereotype and takes a real interest, then that's construed as a hostile takeover, annexation by stealth, or an attempt to turn New Zealand into a branch economy through hollowing out.

The opportunity to broaden, strengthen and deepen our already close economic integration is there for the taking. If there's a will, we've created a way, just as those responsible for the conception and launch of CER did.

CER set the standard for the rest of the world over 20 years ago - I believe that benchmark should drive today's transtasman agenda.

* Allan Hawke is the Australian High Commissioner to New Zealand.