Hon Lianne Dalziel
Minister of Commerce, Minister for Food Safety,
Associate Minister of Justice, MP for Christchurch East

10 October 2008 Media Statement


"Where to from here": Launch of NZAC

Key Note Address Commerce Minister Lianne Dalziel at the launch of the New Zealand Australia Centre, Canterbury University, to Commemorate the 25th Anniversary of CER
Christchurch Art Gallery
Worcester St, Christchurch
10.15am

University Chancellor, Dr Robin Mann; Acting Vice-Chancellor Professor Ian Town, and NZ Institute of International Affairs President, Hon Russell Marshall; Dr Te Maire Tau representing Ngai Tahu, Dr Rod Carr Vice President of the Canterbury Employers Chamber of Commerce; Simon Murdoch, Chief Executive of the Ministry of Foreign Affairs & Trade; academics and students.

I can think of no better way to celebrate the 25th Anniversary of the signing of the Australia-New Zealand Closer Economic Relations Agreement (ANZCERTA) and the uniqueness of the trans Tasman relationship than to participate in the formal launch of the New Zealand – Australia Research Centre at Canterbury University.

The theme for today's launch is "where to from here" and I have been asked to set some context for the day. Looking at the quality of the panellists and the themes that they will address I am confident that you will be impressed with both the breadth and depth of the discussions that will follow.

The starting point for any reflections on the future of the economic relationship needs to be grounded in an understanding of both the historical and the contemporary drivers for closer cooperation and what we have achieved.

At the broadest level, not least because of our geographical position and distance from the rest of the world, there is no more important relationship to New Zealand than that with Australia.

The depth of our economic relationship is built on a foundation of shared values, reflected in our respective approaches to social and economic reform, shared legal frameworks, strong and deep people to people links, and a complex set of multifaceted historical, social, and cultural ties. As Australian Prime Minister, Kevin Rudd, described the relationship between our two countries, "it’s as close as it gets".

Before I turn to the current agenda and the next steps, let me begin by reflecting a moment on one of the central drivers of the relationship, the value of which is not always appreciated as the foundation upon which CER was built; and that is the people to people relationships that personalise the official relationship starting with the Trans Tasman Travel Arrangement.

New Zealanders and Australians are free to live and work in each others countries. There are today in the order of 460,000 New Zealanders living in Australia and about 63,000 Australians living here. Our citizens have deep stakes in each others well being by way of marriage, children and broader social and economic relationships. Around two million New Zealanders and Australians make short-term visits across the Tasman each year. Unlike the intemperate view of our former Prime Minister, I regard this as a brain exchange and of mutual benefit to Australia and New Zealand.

At the political level a matrix of formal connections underpins the scope of trans-Tasman engagements today. There are annual meetings between the two Prime Ministers and six monthly meetings between Foreign Ministers. The NZ Finance Minister & Australian Treasurer meet annually, as do Ministers of Customs, Defence, and the CER ministers. CER Ministers include trade, agriculture and commerce, reflecting the range of economic issues that are now on the agenda.

The depth of political connections is also demonstrated by the invitation to New Zealand Ministers to participate in many of Australia’s State/Federal Ministerial Councils. Our respective Parliaments also continue to take a proactive interest in CER and the value of trans-Tasman cooperation. You will be familiar with the range of recent reviews including most recently the inquiry on CER and New Zealand by Australia's Joint Standing Committee of Parliament on Foreign Affairs, Defence and Trade.

In addition, the annual Leadership Forum has become an increasingly important trans-Tasman institution. It provides the occasion for senior business leaders on both sides of the Tasman to discuss how business to business links could be strengthened based on independent analyse and political commentary and enables these issues to be raised directly with Ministers.

So people to people relationships – personal, commercial and political – are the foundation for the CER relationship.

Where we came from
There will be no one on this room who would disagree with the proposition that New Zealand’s economic relationship with Australia is vitally important. The economic facts have been well rehearsed and you will be familiar with them.

Formal trade relations between Australia and New Zealand started as far back as 1922 when we signed our first trade agreement. A new agreement, called the Australia New Zealand Trade Agreement was signed in 1933 which regulated formal trade relations between the two countries by giving preferences and some special rates of duty. It remained in place for thirty years before being replaced by the New Zealand Australia Free Trade Agreement (NAFTA) in 1966.

By the late 70s, however, it had become clear that NAFTA had reached its capacity to expand trade – it had got down to arguing about access for the like of a few more tons of peas and horsehair brushes! Both sides recognised that the global environment was changing and that a new trade model was needed; one that not only opened up bilateral trade but which also would better position the manufacturing sectors of both countries to face global competition.

The Australia New Zealand Closer Economic Relations Trade Agreement, ANCERTA or CER was signed in 1983. Its design was unique as it sought to achieve total free trade in goods without establishing a traditional customs union. Free trade was achieved well within five years and was a significant contribution to driving restructuring of the manufacturing sectors in both economies and building their international competitiveness.

The agreement was soon extended to cover services (1988) and went on to expand beyond its original trade access mandate, to embrace a host of other arrangements. These included, among several others, the Australia New Zealand Government Procurement Agreement, the Trans Tasman Mutual Recognition Arrangement (TTMRA), the Joint Accreditation System of Australia and New Zealand (JAS-ANZ), the Memorandum of Understanding on Business Law Coordination, Food Standards Australia and New Zealand, the proposal yet to come into effect on a joint therapeutics regulator, and more recently the Treaty on Court Proceedings and Regulatory Enforcement, which I had the pleasure of recently signing here in Christchurch alongside the Australian Attorney-General, Hon Robert McClelland.

The willingness by both governments to proactively grow CER in this pragmatic, organic way has resulted in recognition by the WTO that CER is the "world’s most comprehensive, effective and mutually compatible free trade agreement."

When other jurisdictions look at CER in its broader construct they soon realise that it is not merely a traditional trade agreement.

The Trans-Tasman Mutual Recognition Arrangement (TTMRA) – an arrangement between the Australian States, the Australian Federal government and New Zealand – is a case in point.

The TTMRA is one of the most advanced regulatory mutual recognition arrangements in the world for goods and professional services. It provides as a general rule (and yes there are exceptions) that if a good can be legally sold in one jurisdiction it can be legally sold in the other regardless of domestic regulatory requirements; and if you are registered to provide an occupation in one jurisdiction you are entitled to register in the other without further examination. The Arrangement supports market to market access, and essentially removes one of the most common behind-the-border regulatory constraints our exporters face in other jurisdictions.

In recognising the equivalence of regulatory outcome, the TTMRA is more advanced than the EU mutual recognition model which is based on harmonised approaches.

Single Economic Market
The success of CER led both governments to actively support the goal of a seamless trans-Tasman business environment, or Single Economic Market (SEM). The commitment to this agenda was first articulated in 2004 at the annual meeting between Treasurer Costello and Finance Minister Dr Cullen.

There has been considerable public discourse since then on the end goal of a Single Economic Market. One tax regime? A single currency? But I think that is to presume what cannot be determined now, especially when Kiwis think a single currency means an ANZAC dollar and the Aussies think it means letting us adopt their dollar. I prefer to think of the SEM as a process rather than an end point – one that identifies constraints to integration and addresses them.

The initiatives under the broader SEM agenda can be grouped under four headings:

• Reducing the impact of borders –residual trade issues;
• Improving the business environment through regulatory coordination:
• Improving regulatory effectiveness by finding ways for regulators on both sides of the Tasman to operate more efficiently
• Supporting business opportunities through industry and innovation policy cooperation.

The MOU on Business Law Coordination, the next platform for deeper regulatory coordination, has to date been the centre piece of the SEM agenda. Notably both governments recognised that a single approach would not suit every area; that a 'horses for courses' approach would be more efficient and more cost-effective. Coordination should not necessarily mean the adoption of identical laws, but rather finding ways to deal with any differences so they do not create barriers to trade and investment. This can be done through unilateral coordination as each side seeks to reform its domestic legislation, bilateral undertakings, and where necessary legally binding bilateral commitments.

The MOU also explicitly recognises the trend towards increasing international convergence of financial market and business regulation, and the benefits of coordinating to influence evolving international regulatory standards. We have:

• brought New Zealand’s corporate insolvency regime closer into line with the Australian regime;
• recently signed a Treaty on Mutual Recognition of Securities Offerings. One company prospectus will now do for both countries.
• the New Zealand Commerce Commission and the Australian Competition and Consumer Commission have entered into a general cooperation agreement to facilitate investigations of common interest and they now have a cooperation protocol for merger review. Australia has legislation that provides for higher levels of cooperation and information sharing and a similar Bill has just been introduced here.
• The Trans-Tasman Accounting and Audit Standards Advisory Group (TTAASAG) is advising our respective standard and oversight bodies on how to establish a single set of trans-Tasman accounting standards and how to maximise the two countries' influence in the development of international accounting, auditing and assurance standards. TTAASAG is a good example of why and how we can cooperate in international fora. This work will support the alignment of our approaches to financial reporting.

Both governments have also recognised that effective law coordination requires a coordinated underlying legal infrastructure. The recently signed Treaty on the Court Proceedings and Regulatory Enforcement is a significant step in this regard.

Next steps:
Looking forward, new elements of the SEM work programme which Dr Cullen set out at the Leadership Forum in July, include committing to establishing an arrangement between the two governments to allow for the portability of retirement savings across the Tasman. This will allow retirement savings held in the Australian Superannuation Guarantee Scheme or the New Zealand KiwiSaver Workplace Savings Scheme to be transferred between each other.

We have begun negotiations to conclude an Investment Protocol – which will address the one unfinished dimension of CER. On the tax side we are taking a look at the current levels of non-resident withholding tax under the Double Taxation Agreement. And we have opened discussions on the issue of the double tax impost associated with the treatment of imputation and franking credits between the two countries.

On the broader regulatory reform front - when Kevin Rudd was in New Zealand a couple of months ago, he said that his government is encouraging the state and federal governments to work together more cooperatively through the Council of Australian Governments (COAG) process. One focus of the COAG reform agenda has been on harmonising Australian domestic regulatory frameworks. New Zealand has been invited to participate in this work being done by the COAG Business Regulation and Competition Working Group. We have already joined in the groups looking at food regulation and credit reform and are looking at the possibility of involvement in other areas.

As we look back we can see that key institutional platforms have been responsible for driving this deeper engagement between our two countries.

Looking forward New Zealand and Australia have much in common as we seek to respond to new global concerns including climate change, environmental degradation, high oil and food prices, and not least the current global financial crisis.

In the area of climate change, where we are ensuring that our respective emission trading schemes (ETS) are compatible, we will want to ensure that the GHG emission measures and reduction methodologies, as well as environmental management claims are fully aligned.

Can we do more in the area of innovation?
New Zealand and Australian firms are collaborators as well as competitors in Australasian markets and internationally. John Allen, the New Zealand Co-Chair of the Australia-New Zealand Leadership Forum recently challenged Australian and New Zealand businesses to take better advantage of the developing single economic market. The public sector is leading the way.

We have invested jointly with Australian Governments in the Synchrotron and we are supporting Australia’s international bid to build the Square Kilometre Array radiotelescope. We have expanded our investment in the Australia New Zealand Biotechnology Partnership Fund to encourage commercialisation of biotechnology by Australasian business and researchers. And we have continued to work with Australian governments on small business policy and innovation policy.

More recently New Zealand made a submission to the Australian review of their innovation system highlighting strong trans-Tasman innovation connections and proposing areas for strengthened co-operation. We both face similar innovation challenges including the availability of venture capital, the need to strengthen management capability, focussing on the strengths of our economies and ensuring that innovation is based on robust research and evaluation.
The New Zealand government will work closely with Australian counterparts to address these issues so that businesses on both sides of the Tasman are as innovative, productive and globally competitive as possible.
So in a nutshell that's the past 25 years, along with some thoughts about what might be the next platform for engagement with Australia. I hope that I have highlighted for the students and academics present that there are rich pickings for research both now and into the future.

CER which stands witness to the strength of our enduring relationship is now only one element of a multi-faceted relationship that has evolved from the way we deal with each other to the ways together we can deal with the world. It is a relationship where it is easy to see that the sum is greater than its constituent parts, and that is why so much can be gained by delivering quality research and analysis to support its future development. This Research Centre will be a valuable resource in its own right, but will also strengthen NZ Inc's capacity alongside Victoria University's Australia New Zealand School of Government.

So again congratulations to Canterbury University and the NZ Institute of International Affairs and thank you for the important work that you will be undertaking which will enhance this most important of relationships.

And again I congratulate you on bringing together these exceptional panels to lead what promises to be a stimulating and rewarding debate on setting the research agenda.

Have a great day.

ENDS

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