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New Zealand and Australia: three years later: Allan Hawke reflects on his term as Australian High Commissioner in New Zealand.

On 12 February 2004, some six months after arriving here, I delivered a speech to the NZIIA (1) about the role and issues that I would be pursuing during my term. I am grateful to the NZIIA for hosting my last major public address as High Commissioner. It provides the opportunity to reflect on some of what has happened on my watch.

Relationships between trans-Tasman heads of government have been fraught more often than not, and especially where the leaders have shared the same political philosophy. Prime Ministers Fraser and Muldoon illustrate that point. (2) Bob Hawke's and David Lange's relationship, which was also strained, deteriorated further over the ANZUS schism.

Although Jim Bolger and Paul Keating worked together productively on the international stage, Keating held strong views about New Zealand and its direction, believing that it had taken the NZ out of ANZUS as a result of its nuclear policy's impact on the United States alliance, and that New Zealand was attempting to get defence on the cheap. (3)

This is an appropriate juncture to record a telling point that escapes most people--the important part that personal relationships play in the scheme of things. (4) Commentators and analysts almost always overlook this dynamic, yet we know from personal experience the fundamental truth of this. I will return below to the current personal relationships that underpin our bilateral interactions.

I presented my Letter of Introduction to Prime Minister Helen Clark on 5 August 2003. During my first week, I was told about the New Zealand media's preoccupation with any hint of criticism from Australia or Australians. That wise piece of counsel was soon to be visited upon me in no uncertain way.

Early address

On 15 August 2003, during the watershed Pacific Islands Forum meeting in Auckland, I delivered what was supposed to have been a 'Chatham House Rule' address to the Australian Defence Strategic Studies course. (5) A little while later, a sub-editor from the Dominion Post rewarded me with an eyecatching headline 'Once were mates, now rivals' above the accompanying article.

While I never said that, the heading drew attention to my remarks that 'The ANZAC relationship is finely poised on the fulcrum. It can go one way or the other--in defence, in trade, in every way. That assessment will underpin my three year term here as High Commissioner'.

At the end of August, I returned to Australia for a ministerial meeting to mark the 20th anniversary of the Australia New Zealand Closer Economic Relations Trade Agreement--more familiarly known to us as ANZCERTA or CER.

It became clear to me that the annual CER meetings between our Trade ministers, which had served as a vehicle for progressing the trans-Tasman relationship, had reached the point of diminishing returns.

That background led me to push three inter-related initiatives:

* establishment of an expanded dialogue between our ministers for Trade, Agriculture and Industry to replace the annual meetings between Trade ministers;

* the Australia New Zealand Leadership Forum; and

* the Single Economic Market aspiration.

Before turning to these, some observations about the contemporary relationship are worth making.

Contemporary relationship

In essence, the trans-Tasman political relationship is in very good shape, epitomised by the example set by Prime Ministers Howard and Clark. The nature of the Costello/Cullen, Downer/Goff and other ministerial engagements demonstrate the golden era that we have been enjoying at the government-to-government level.

New Zealand has an active involvement with Australian Commonwealth and State ministers in various ministerial council meetings. Our parliamentary select committees often cross the ditch to learn from each other's experience. The Australia New Zealand School of Government initiative will also help the cause.

Trans-Tasman integration is proceeding on a range of fronts, including food and other standards, legal issues and the proposed Joint Therapeutic Products Agency, which we hope will serve as a catalyst for a generic governance model for other such bodies.

New Zealand still regards Australia as its principal ally and its 2005 Budget may take some heat out of the defence debate and associated foreign policy aspects.

In April 2005, Prime Ministers Howard and Clark were at Gallipoli to commemorate the 90th anniversary of the Anzac landing. That pilgrimage served to remind us that our nations have long been bound together by geography, beliefs and interests. Indeed, 'No two nations on earth have shared a tradition of common values like the ANZAC tradition shared by the people of New Zealand and Australia'. (6) I changed this quote to the past tense advisedly. That is because I believe the relationship that we have taken so much for granted may be at risk as the current cohort of Aussies and Kiwis pass on the mantle of leadership, power and influence.

Fundamental divergence

For the next generation, the personal links built backpacking around Europe and South-east Asia are strong--but, do they see Australia and New Zealand as constructive economic and policy partners on the world stage, or just as good blokes and sheilas to share a beer with?

Helen Clark has observed on a few occasions that Australia and New Zealand are embarked on fundamentally different directions and the cultures of our two countries are moving further apart. The way our nations view the world and our place in it is also diverging. These trends, which commenced under David Image, have continued under successive governments, irrespective of their political persuasion. Mike Moore and Chris Trotter are among the commentators who have recently contributed their views to this matter. (7)

Paradoxically, that divergence is not reflected in our economic convergence, the extensive and growing personal links, or the thickening web of structural connections. Everywhere I go, I run across trans-Tasman connections--an anecdotal expression of the extent to which we are intertwined and the significant people-to-people interactions which characterise our relationship. With a population of around 20 million, Australia has one million expatriates 60,000 of whom live in the Land of the Long Lost Vowel. Four million people live in New Zealand, which also has a diaspora of one million, almost haft of whom now choose to call Australia home.

Shared challenge

Harnessing the contacts and skills of our diaspora is a challenge for both nations. In 2005, each week, around 650 Kiwis moved to settle permanently in Australia, offset by 250 coming back the other way. I will leave it to you to calculate the effect on the Muldoon intelligence quotient! (Asked about the tendency for Kiwis to move permanently to Australia, Prime Minister Muldoon commented that it raised the IQ of both nations.)

The difference in the after tax average wage--about A$185 per week--is undoubtedly one of the factors underlying the net 400 movement in Australia's favour. I have not been able to find any detailed information on why they are leaving and continue to be surprised at the lack of debate about the implications for New Zealand.

Over 850,000 short-term visitors now travel each way across the Tasman annually. Australian visitors to New Zealand spent $1.4 billion in 2004, up almost 20 per cent on the previous year.

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 are not! Kiwis often feel Australia takes them for granted, ignores them or patronises them. Even worse, we are sometimes indifferent.

Remarkable quote

John Feinstein's book A Good Walk Spoiled contains a rather remarkable quote. South African golfer Nick Price said:</p> <pre> I don't want to stereotype, but Australians, generally, are very outgoing

and friendly, very opinionated, and usually convinced that they are 100% right in every opinion they have. In that vein, I've learnt that Kiwis really appreciate gratuitous advice from Aussies. </pre> <p>Because the relative importance of the relationship is so much greater for New Zealand, Australians have a constant--if vague--sense that they are continually being outsmarted through not paying sufficient attention to what New Zealanders are up to. The obverse of the coin involves Kiwis obsessing about Australia to the point of paranoia. An illustration of this is my favourite quote from the anti-Single Economic Market (SEM) camp:</p> <pre> The history of trans-Tasman relations is cluttered with the results of Australian hard ball and we lost every game. From underarm cricket to cancelled air landing rights, from the rugby world cup shafting to the stock exchange debacle. How many examples do we need to understand

what is at stake here and how we can expect to be treated in

future?' </pre> <p>We have a bad tendency towards petty point scoring and to talk past each other--a bit like some marriages really!

Ministerial dialogue

The second meeting of the expanded CER Ministerial dialogue was held at Queenstown in December 2004. It involved a detailed exchange on biosecurity issues of concern to both sides and resolved the Wine Equalisation Tax (WET) issue by extending the rebate to New Zealand producers exporting to Australia, on the same basis that applies to Australian producers. Ministers decided to develop an agenda for working more closely together on industry development issues in an endeavour to build globally competitive industry capacity.

The Australia New Zealand Business Councils (ANZBC) raised a range of issues that hamper doing business across the Tasman. Ministers asked officials to record and monitor progress against each item and report back at their next meeting. I have asked the ANZBC heads to articulate business's specific concerns about impediments to trans-Tasman business and to identify, for ministers' consideration, possible solutions.

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

Vexed issue

During the question and answer session at my February 2004 address to the NZIIA, I responded to Sir Michael Fowler that I would do my level best to bring the vexed issue of access to the Australian market for New Zealand apples to a conclusion during my term.

Having brought new meaning to the word 'imminent', I am pleased that the revised draft Import Risk Assessment was released in early December 2005. The rather long gestation period in reaching this stage stemmed from court proceedings (that were finalised on 18 November) and Biosecurity Australia's rightful determination to follow rigorous and transparent science-based processes in order to ensure the risk assessment's integrity. We have not reached the finishing post yet, but we are in the home straight.

I do not think I have ever been accused of subtlety. But here is an illustration of New Zealand's: on 29 November, 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 are 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 under-estimated.

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.

Australia's GDP at US$617 billion is 6.4 times greater than New Zealand's US$97 billion. Together, we are the fourth biggest economy in the Asia-Pacific region and we are slightly smaller than the combined ASEAN nations. Margaret Jackson's introductory remarks argued for closer economic integration so that we might together have a better chance of succeeding on the world stage. Stuart McMillan, from Canterbury University, later offered the interesting observation that 'Australia sees itself as small by world standards when measured against the European Union, Japan and the USA. New Zealand, on the other hand, is not inclined to think of or compare itself in this way.'

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.

Stellar cast

The Forum attracted a stellar cast of Australian opinion leaders, almost all of whom would have read the Sunday Star Times on the way back to Australia. Here is some of what business journalist Rod Oram had to say about the differences between our two nations:

* 'We [New Zealand] have a big primary sector with huge potential for value creation thanks to science. They [Australia] have mineral wealth but with limited upside.

* We have sophisticated niche manufacturers and processors serving global markets. They have large-scale manufacturers serving regional Australasian and Asia-Pacific markets.

* We are highly entrepreneurial and international. They are strongly corporatised with a regional focus.

* Foreign investment buys our existing domestic businesses. Theirs builds new export businesses.

* We have weak unions. They have strong unions.

* We tend to be community-centred. They tend to be self-centred.

* Our foreign policy is independent and multilateral through the likes of the UN, WTO and APEC. Theirs is bilateral and closely tied to the United States.

* We seek relationships with Asia-Pacific countries. They try to impose leadership on the region.

* We are multicultural based on indigenous rights. They are multicultural based on immigrant assimilation at the expense of indigenous rights.'

He went on to say that '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.'

Mirror image

Oram'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. It also considered the question of a common currency, which continues to arise from time to time. Europe has one. The association of African Central Bank Governors are working towards a single currency and common central bank by 2021 and the Asian nations are also contemplating their navels to that end. Some countries are tied to, or use, the US dollar and a few Pacific Islands nations (Kiribati, Naurn, Tuvalu) already use the Australian dollar.

Currency union would remove exchange rate uncertainty and lower currency conversion costs for companies that do business between our two countries. It would increase trans-Tasman trade and investment. So why is it not a given? AS Dr Cullen has observed, 'It's not a common currency that is on the table, it's whether we adopt the Australian dollar?' Prime Minister Clark regards it as a sovereignty issue. And it is certainly not on Prime Minister Howard's agenda.

Three themes

The second Forum meeting in Melbourne on 29-30 April 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; and

* 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 in December 2004 during the six-monthly meeting between our foreign ministers when we signed new advanced passenger processing arrangements.

On 24 November 2005, 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 that New Zealand extends to Australians when they come here. This issue was raised at the first Leadership Forum, following which Foreign Minister Alexander Downer undertook to pursue it back home. The inaugural meeting of our customs ministers and CEOs a few months ago has subsequently borne fruit. The ministers established a high level steering group to address issues such as:

* improving facilitation of trade and travel;

* developing harmonised technologies wherever possible; and

* policy changes to align border processes more closely.

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

The Forum is not intended to be simply another 'Business Council'--its remit is much broader than that and not confined to dealing with bilateral issues or exchanging compliments about each other from our national perspectives.

Single 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 New Zealand has been a more significant beneficiary of the agreement than Australia.

On 30 January 2004, Peter Costello and Michael Cullen set out an ambitious agenda to strengthen CER by pursuing a genuine Single Economic Market (SFM). (8) 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 13 January 2005 report);

* the trans-Tasman mutual recognition arrangements governing offers of securities and managed investment schemes;

* the trans-Tasman 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? and;

* a joint approach to trans-Tasman banking supervision that delivers a seamless regulatory environment--a sub-set of which involves agreement by the New Zealand Reserve Bank and APRA to work together on implementation of the Basel II capital accord for financial institutions in their respective jurisdictions.

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'. The aim is to minimise the differences between us through streamlining, harmonisation, common standards, mutual recognition etc--to get the best regulatory regimes that we can.

Setting standards

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 are 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 3 March, a senior Kiwi businessman argued in favour of broadening and deepening the trans-Tasman relationship. But (here is 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 should not allocate too many resources to the Single Economic Market. A significant proportion of elite business opinion in New Zealand shares that sentiment, seeing the SEM as a backdoor approach to an Australian take over of New Zealand's sovereignty. 'If Australians are better than us at anything, it is screwing the serum', sums up their attitude, and lies behind the orchestrated campaign against the SEM.

Real advantage

Having regard to the rhetoric of the naysayers, it is instructional to look at what has actually been going on. Over the past decade, the growth in trans-Tasman trade has averaged 9 per cent per annum, 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 (eighth). Australia is New Zealand's principal trading partner, taking 21 per cent of its total exports and sourcing 23 per cent of its imports. At the end of March 2005, Australia's investment in New Zealand was NZ$59.4 billion, having grown 24 per cent per annum over the last three years; while New Zealand's investment in Australia was NZ$25.5 billion, up from NZ$15.9 billion three years ago.

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 to us, 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.

Greatest disappointment

My greatest disappointment is that six years from initiation, we have not realised our desire for an Anzac Memorial. (9)

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:

* the only such annual meeting programmed in his diary is the one with New Zealand and

* it was John Howard who initiated such meetings.

John Howard's grandfather fought in the First World War. His father and grandfather both fought ha the Second World War. In the early 1990s, he went to the Western Front and visited the place where his grandfather and father met up accidentally during the Second World War. I believe their legacy has had a profound impact on his thinking and actions. As Opposition leader in 1995, John Howard was heavily involved in 'Australia Remembers', the year long series of events to mark the 50th anniversary of the end of the Second World War.

I suspect that it is these ANZAC links which drive Howard's attitude and approach to New Zealand. History shows us that we should not be sanguine that his successor will put as much effort and political capital into the relationship as he has.

Usual response

Revisiting some of my comments above about the anti-SEM brigade, I have concluded that when Australia departs from the stereotype and takes a real interest, then that is 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 is a will, we have 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 trans-Tasman agenda.

The circumstances behind my desire to complete my public service to Australia and its national interests by becoming High Commissioner to New Zealand are a story in their own right. I hope that my time here has repaid in some small way the faith and trust that Prime Minister Howard bestowed upon me in making the appointment and entrusting me with 'the most important task of maintaining and developing the close and friendly tics which exist between our two countries'.

NOTES

(1.) 'The High Commissioner', NZIIA, VUW Law School, Wellington, 12 Feb 2004. This and other speeches referred to below may be accessed at www.australia.org.nz.

(2.) Denis McLean's wonderfully tided book The Prickly Pair, Making Nationalism in Australia and New Zealand (Dunedin, 2003) sets out the history and dynamics of the bilateral relationship.

(3.) See Paul Keating, Engagement: Australia Faces the Asia-Pacific (Sydney, 2000).

(4.)'An Australian('s) Perspective on International Relationships', Sister Cities Conference, Christchurch, 25 Mar 2004.

(5.) See 'Regional Cooperation in the Pacific: An Australian('s) Perspective', University of Otago Foreign Policy School, Dunedin, 26 Jun 2004.

(6.) A comment by Lt Gen Des Mueller, former Vice Chief of the Australian Defence Force.

(7.) Mike Moore, 'A Tale of Two Countries', in Dominion Post, 13 Oct 2005; Chris Trotter, 'An ever-widening ditch', ibid., 18 Nov 2005.

(8.) 'From CER to One Market', CPA Australia New Zealand Branch, Wellington, 30 Jun 2004; 'The Single Economic Market--what does it mean?', CPA Australia New Zealand Branch, Auckland, 8 Jul 2004.

(9.) 'The ANZACs', University of Canterbury, Christchurch, 21 Apr 2005.

Relationships between trans-Tasman heads of government have more often than not been fraught. But the current political relationship between Australia and New Zealand is in very good shape. The nature of ministerial engagement from Prime Minister down demonstrates that government-to-government contacts have been enjoying a golden era. There are, to be sure, important differences in the way the two countries view and interact with the world. But trans-Tasman economic integration is proceeding on a range of fronts, and the extensive and growing personal links and thickening web of structural connections continue to bring the two countries closer together. The establishment of a Single Economic Market will greatly enhance that process.

HE Allan Hawke has been Australia's High Commissioner in Wellington since 2003. This article is the edited text of an address he gave to the NZIIA's Wellington branch on 6 December 2005.
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Author:Hawke, Allan
Publication:New Zealand International Review
Article Type:Speech
Geographic Code:8NEWZ
Date:Mar 1, 2006
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