By Fiona Cooper, Director, ANZLF New Zealand
NZIIA Hawkes Bay, 2nd May 2019
Thank you, Dick, for the kind introduction and for giving me the opportunity to talk to you all today.
I am delighted to have this opportunity to talk to you about New Zealand’s relationship with Australia.
Today I would like to talk about:
- The history of the trans-Tasman economic relationship
- The role of the Australia New Zealand Leadership Forum
- The current status of bilateral trade and investment
- The importance of Australia for New Zealand.
Our relationship with Australia is the quiet achiever amongst all our bilateral relationships.
It quietly goes on in the background, often taken for granted while other relationships hog the headlines – such as our complex relationships with China and the USA; the impact of the Brexit saga for our relations with Great Britain and the European Union, and our expanding relationships with the growing economies of South East Asia and North Asia.
The importance of our relationship with Australia has ebbed and flowed over the years but the fact remains that it has been a significant partner for New Zealand for well over 150 years.
During the 1890s, New Zealand was deeply involved in debates about the structure and nature of the Australian Federation. Issues of common concern included migration, defence, transportation, currency, commerce and trade. By the late nineteenth century, the two economies were highly integrated. Trans-Tasman travel was largely unrestricted and there was a great deal of two-way commerce and investment and consultation on policy issues.
The 1901 Australian Constitution still holds a clause in paragraph 6 of the Preamble that allows for New Zealand participation in that Federation. As we all know, ultimately New Zealand declined to become an Australian state, preferring instead to retain control over its own national interests and ensuring over a hundred years of passionate competition between our respective national sports teams.
As the twentieth century went on, the two countries grew apart economically and diversified their international relationships, underpinned by the growth of refrigerated shipping and access to the British market. By 1952, the value of New Zealand exports to Australia had fallen to just 1.6 per cent of our total exports. Both countries were guilty of overlooking economic opportunities right on their doorsteps.
It was not until Britain declared its intention to integrate into the European Economic Community in the 1960s, finally doing so with full membership in 1973, that Australia and New Zealand were prompted to place a renewed emphasis on strengthening the bilateral relationship with each other and to forge new markets around the world.
In 1960 the Australia New Zealand Consultative Committee on Trade was established to explore possibilities for increased bilateral trade. This led to annual meetings of the Trade Ministers and to increased levels of communication and consultation among officials and business leaders, resulting in the signing of the New Zealand Australia Free Trade Agreement (the original NAFTA) in 1965.
Unfortunately this agreement did not live up to its potential due to its structure and also the numerous exceptions that were carved out to protect the manufacturing sectors in each country.
The NAFTA was superseded by a bilateral Agreement on Tariffs and Tariff Preferences in 1977, and the Nareen Declaration in 1978 which was made by Australian Prime Minister Malcolm Fraser and NZ Deputy Prime Minister Sir Brian Edward Talboys which set the tone for a new era of bilateral cooperation.
After several years of negotiations, the Australia New Zealand Closer Economic Relations Trade Agreement (fondly known as CER) came into effect in 1983, laying the foundations for the well-integrated trans-Tasman economy that we all benefit from today.
Although economic consultations increased greatly with the advent of CER, the political relationships between the two countries were not close for a long time, particularly after the ANZUS dispute. This might have had something to do with the personalities of our respective leaders but also the fact that the world was changing, and we were both focussed on our national interests and differing strategic outlooks. And until CER really hit its stride, there continued to be big differences in approach across many policy areas. The governments simply were not in synch.
Thus other mechanisms were established to engage a greater range of non-state actors in the bilateral relationship from the late 1970s onwards.
For example, the two governments set up the Australia New Zealand Foundation to support projects aimed at strengthening trans-Tasman good will with an emphasis on youth exchanges.
In fact, my first job in MFAT’s Australia Division in 1988 included being Secretary to the Australia NZ Foundation. I worked closely with the Foundation Chairman Sir Brian Talboys who by then had been retired from politics for several years. I recall he was a most gracious gentleman and elder statesman who treated me with great kindness. I was sad that the Foundation was disbanded in 1998, and even sadder when Sir Brian passed away in 2012 after many decades of exemplary service to our nation.
The other important bilateral initiative undertaken in the late 1970s was the formation of the Australian New Zealand Businessmen’s Council (1978) which was set up to encourage trans-Tasman trade and investment and to identify potential barriers to be addressed by the two governments. Thankfully it was renamed the Australia NZ BusinessCouncil in 1988.
This Council played a valuable consultative role during the CER negotiations and at many CER Ministerial meetings during the 1980s and 1990s, lobbying for a trans-Tasman borderless market and the free movement of goods, services, people and capital.
There were many successes during that time. CER led to the elimination of all tariffs and quotas on goods traded between Australia in NZ by 1990. Thanks to CER’s Trade in Services Protocol, most services can be traded across the Tasman without restriction. Thanks to the 1995 bilateral Food Standards Treaty we have common rules for food standards which resulted in lower compliance costs for food exporters and more consumer choice. Thanks to the Trans-Tasman Mutual Recognition Arrangement, anyone who is registered to practice an occupation in one country is able to also practice in the other. And New Zealanders and Australians are free to visit, live and work in each other’s country under the Trans-Tasman Travel Arrangement.
But by the early 2000s it appeared that progress on CER had stalled. It looked as though the bilateral relationship was being taken for granted by the governments of the day. Interest in the Australia NZ Business Council dwindled, especially on the Australian side, and the Council’s ability to influence policy declined.
Senior officials particularly on the NZ side were again looking for ways to reinvigorate the relationship. The business community also recognised that they needed to re-engage to support the bilateral relationship and get it refocussed on economic challenges and opportunities. Thus, with the blessing of both governments, the two business communities got together in 2004 to form the Australia New Zealand Leadership Forum.
The ANZLF started out as a relatively small annual meeting that brought together around 50 Australian and New Zealand senior leaders from government, business and academia, to discuss how the two countries could leverage the CER Agreement and prosper together in the global economy.
Over the years it has grown in size and stature – by 2006 there were 80 people and at the last Forum in March 2018 we had nearly 300 people, including 12 government ministers from both sides.
This public-private partnership approach meant that the Forum has been able to help build relationships between business leaders, government ministers and senior officials and ensured both Governments had a better understanding of what the business community needed from the bilateral relationship.
Fifteen years after it was started, the ANZLF remains the best opportunity for Australian and New Zealand businesses to work together to influence the trans-Tasman policy agenda.
But the Forum is no longer just an annual conference. It is underpinned by a year-round work program of business-led activities, and advocacy with governments, to realise opportunities to deepen the relationship. We have five sector groups working between Forums to prepare recommendations and deliver initiatives to advance the bilateral relationship in the areas of tourism, infrastructure, health technology, indigenous business and innovation. If you would like more information about those groups, I would be happy to talk about them when we get to the Q&A.
FROM CER TO THE SEM
What began with CER was significantly advanced in 2004 with the launch of the Single Economic Market agenda. The SEM aims to create a seamless trans-Tasman business environment, in which it as easy for New Zealanders to do business in Australia as it is to do business in New Zealand and vice versa. The SEM seeks to lower business costs arising from different, conflicting or duplicate regulations or institutions in either country and increase the ease with which both businesses and people can operate across the Tasman. Some of the SEM initiatives supported by the ANZLF include:
- Streamlined border processing and the introduction of the Smartgate technology we use on arrival and departure from our international airports;
- Greater regulatory coordination leading to a range of business law improvements in such areas as insolvency law, financial reporting, competition policy, business reporting, intellectual property law and consumer policy.
- Measures to expand and streamline investment leading to the CER Investment Protocol in 2013
- The launch of the Australia New Zealand Infrastructure Pipeline in 2016.
- A new initiative since last year’s Forum that is showing particular promise is the Australia New Zealand E-invoicing initiative. This will encourage both governments and businesses to move towards paperless invoicing with a view to speeding up payment times to five days or less, which will help the cashflow position of small businesses in both countries. It is estimated that e-invoicing will deliver productivity improvements worth $30 billion over ten years across the two countries.
- One area where the ANZLF has advocated for many years without success is in relation to the need for mutual recognition of imputation or franking credits to remove double taxation of share dividends. In principle, this remains a priority for the ANZLF and we hope that in due course the two Governments will reach an agreement on this issue.
With all the effort that was put into the CER and the SEM, it should come as no surprise that Australia was our largest trading partner for many years until the end of 2017.
In 2018, even though trans-Tasman trade had risen to NZ$27.6 billion, Australia was pushed into second place by the rise and rise of NZ’s goods exports to China (with whom two-way trade is now worth over $30 billion).
Second place is still pretty good. Last year NZ exported goods to Australia worth over $9 billion and our services exports were worth over $5 billion. Australia remains our largest services export market, taking a third of New Zealand’s total services exports. Australia is a major source of tourists and business travellers to NZ and quite a lot of international students.
Investment is another key component of the economic relationship. In 2017 two-way investment was worth NZ$175 billion. Australia is NZ’s top investment destination – in 2017 NZ invested over $58 billion into Australia.
More than half of all foreign direct investment into New Zealand comes from Australia. In 2017 Australia invested over $116 billion here. Unlike investment from some other countries, we seem to be pretty comfortable with it, apart from the occasional niggle about Australian banks.
There are now many companies operating on a trans-Tasman basis, creating a huge pool of stakeholders with an interest in the health of the bilateral relationship and keen to improve the inter-operability of our two economies.
Although it is not currently our top trading partner, I would argue that Australia remains New Zealand’s most important bilateral relationship.
Inevitably as the smaller partner New Zealand has to work harder to get Australia’s attention which is often directed towards its larger trade and strategic partners. The annual meeting between the two Prime Ministers, and regular meetings at the ministerial and senior official level help to ensure that we are not overlooked.
We are likeminded on many issues. We maintain independent but similar trade policies and have negotiated free trade agreements together or in parallel.
Australians and New Zealanders make more than two and a half million short term visits across the Tasman each year, and there are substantial resident populations of New Zealanders in Australia, and Australians in New Zealand.
We are key partners in in defence and security matters. Each ANZAC Day we recall our shared history, exemplified by the ANZAC spirit, and our shared values such as commitment to democracy and freedom.
Australia has been there for us through thick and thin as we have been for them. The images of dozens of Australian first responders assisting in the aftermath of the awful earthquakes in my home town Christchurch will stay with me for life. And New Zealand emergency forces have assisted during Australia’s terrible natural disasters from raging bushfires to devastating floods.
Although we retain distinct cultural identities, we are natural partners and the closest of friends. In fact, when the former Australian Prime Minister Julia Gillard became the first foreign leader to address the New Zealand Parliament back in 2011, she said that for Australia, “New Zealand alone is family”. Subsequent Australian Prime Ministers, and there have been quite a few, have been similarly warm in their praise of the bilateral relationship.
The relationship is strong and enduring, and able to withstand the occasional disagreement that inevitably arises.
The forthcoming Australia NZ Leadership Forum on 13 September 2019 will be an occasion to get to know some of the new Australian political leaders and to look ahead to the forces that will shape the bilateral relationship in years to come. We must never again take this important bilateral relationship for granted. As the then Prime Minister, John Key, said in 2011:
“The people of Australia
and New Zealand are forever joined.
The future holds much for our two great countries. Increased prosperity, opportunity and
security are ours to grasp. In all
that we strive for: we are stronger together.”
 I’d like to acknowledge the MA thesis by Simon Le Quesne “Mixing Business With Politics? The Role and Influence of the Australia New Zealand Leadership Forum” (2011) for some of the historical material in this speech.