John Roughan: Australia's glow helps us shine, too

Prime Minister John Key and Australian Prime Minister Julia Gillard making friends in Auckland this week. Photo / Greg Bowker

Has this country ever had a more successful state visitor than Julia Gillard? The starchy woman of news clips turned out to be warm, spontaneous and genuine. She called us family, which is simply true.

Disasters on both sides of the Tasman this summer have underlined the fact.

I'm feeling doubly fond of Australia this week because my boy is coming home. He went there four years ago intending to stay. It was also a valuable career step and he is coming back to a job equally good. Auckland is where he wants to be.

We fret too much about the income gap and comparisons of economic growth. Australia's population and wealth help make this country a great place. We are a country town by comparison, a village in a beautiful landscape within easy reach of real cities. What better place to live?

We could do with a few million more people and I think we could accommodate more mining and many more coastal resorts without compromising our natural attractions very much, but that is a minority view. New Zealand is deliberately foregoing some wealth for the sake of wide open spaces and I can respect that.

Thank God for Australia, though. This would be a lonely Anglo-Celtic outpost in the South Pacific without it. We would take a different view of security. We would see the world exactly as Australia looks at it now. We wouldn't be a nuclear-free zone.

And in all honesty, we shouldn't be a nuclear-free zone. But that is another argument I won't win, not unless either country is seriously threatened. Our big mate knows, I think, that if it came to that point we wouldn't shrink from any form of mutual defence.

Our fortunes are so closely tied to Australia now that when prime ministers meet, somebody is bound to suggest we unite or at least adopt a common currency, which would amount to the same thing.

Unity is out of the question, I think, because we share only one parent. We are also a Polynesian family. Australia is coming to terms with an ancient ancestry of its own.

It is probably not helped by the many Pakeha who have moved there to escape the Maori revival but their departure is to be encouraged.

We were spared talk of unity this time, but a common currency was mentioned by a quiet pioneer of closer economic relations, Hugh Templeton, Muldoon's Trade Minister, when Gillard gave him a medal.

He should be careful what he hopes for. A common currency does not work without political unity, as Europe is painfully learning.

Germans have had to bail out economies over which they have no voting control. Portuguese, Irish, Greeks and Spanish, the "PIGS", are having to change their ways for the sake of the Euro's credibility. Both sides are resenting it.

The more you read economic news the more you realise why a national currency is called "sovereign". It is not just a token of trade, it reflects the value of the economy behind it and the way the economy is managed.

It is a pressure release when debt gets too high or trading conditions change.

A country that closes that valve by fixing its exchange rates or surrendering its financial sovereignty has to take political decisions that it usually finds too hard.

The pressure builds until it has to forcibly lower its living standards, maybe even reduce wage levels as Ireland had to do.

Britain, which decided not to join the Euro, has never been more glad. The Economist, always in favour of the Euro for everyone but the British, heaved a recent sigh of relief while arguing that for the rest of Europe there is no going back.

There probably isn't. Once a country has had a currency transfusion, and all the organs of its economy have begun to live on the wages, prices and interest rates generated by a larger economic unit, it would be hard to revert.

If we want to become a state of Australia, we could begin with a currency union. Otherwise we should keep our own dollar. It reflects our decisions, our control of inflation, our interest rates, our trade patterns and our incomes.

A common currency would reflect Australia's conditions predominantly. At times that might be a blessing, at other times a curse. At all times we would be at the mercy of decisions made in Canberra and we would need to seek a say.

That would mean joining the federation, if we were permitted. The richer states of Australia, contemplating net taxation losses, might take some convincing. We can do without that discussion.

We are family but we have our own place. All things considered, we are well off.