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The Trans-Tasman Relationship: a NZ Perspective

Hon Phil Goff.

Otago Foreign Policy School

Opening address

Minister of Foreign Affairs and Trade, Hon Phil Goff

“The Trans-Tasman Relationship: a New Zealand Perspective”

Friday 29 June


Assistant Vice-Chancellor, Professor Alistair Fox, Australian High Commissioner Bob Cotton, Conference Director, Professor Catley, President of the New Zealand Institute of International Affairs, Sir Kenneth Keith, ladies and gentlemen...

I would like to thank the Otago Foreign Policy School for organising this forum and inviting me to participate in it.

The trans-Tasman relationship is the most extensive and important we have with any bilateral partner.

Our two nations are uniquely close due to geography and to shared history, values and institutions. There are strong economic and family ties between the two countries. In many senses, it would be difficult to find two other sovereign nations who are as close as New Zealand and Australia. It is a sibling relationship with the closeness and the rivalries, the expectations and the tensions this implies.

The conference’s central question is, “New Zealand and Australia: Moving Together or Drifting Apart”? As we begin a new century, our relationship with Australia is in fact characterised by both integration and divergence.

There has been a strong desire to work together but this has sometimes led to unrealistic expectations of harmony of outlook, alignment of views and coordination of policies in all areas.

We set very high hurdles for each other and, occasionally what would not constitute “failure” for other countries in similar situations, is seen as “failure” on either or both sides of the Tasman. Australia is “asking too much” or the Kiwis are not “pulling their weight. ”

These factors however should not be allowed to diminish what is a close, positive and mutually beneficial relationship.

Today, I want to focus on three cornerstone areas in the Trans Tasman relationship – the ability to work and live in each other's countries, economic ties and security cooperation.

Trans Tasman Migration .


The closeness of New Zealand and Australia stems from our common roots as British colonies and the ready movement historically of people across the Tasman. Through the nineteenth century, the two countries followed parallel courses, establishing themselves as leading pastoral economies and modern social democracies, we were islands of British-ness half a world away from the mother country.

Together we emerged in the twentieth century as independent nation-states against a backdrop of world wars and global depression and were further shaped by international trade, rapid technological change and increasingly multicultural societies. In recent decades we have both developed a greater sense of our Asia-Pacific destinies and faced the challenges of recognising the rights and values of our indigenous populations.

Trans-Tasman migration has been a constant factor of our two societies.


There are more than a few examples as the political level. John Christian Watson grew up in New Zealand before emigrating at age 21 to Australia. 16 years later, in 1904, he became Australia’s first Labor Prime Minister.

Australia returned the favour by giving us Michael Joseph Savage, who led the first New Zealand Labour Government into office in 1935. Not to be outdone, we sent over Joh Bjelke-Petersen, though I am not sure all Queenslanders appreciated the gesture. The tradition continues with two New Zealand-born Ministers, John Fahey and Jackie Kelly, serving in John Howard’s government, and Australian-born Matt Robson being in the New Zealand Cabinet.

Over the past 150 years, population flows have gone both ways across the Tasman. In the 1970s however the flow became predominantly one way as our economies began to diverge with Australia better equipped than New Zealand to adjust after Britain joined the EEC. The number of New Zealanders living in Australia doubled from 80,000 in 1971 to around 177,000 in 1981. In the next 20 years it doubled again to the current level of over 400,000.

There are now literally hundreds of thousands of families that span the Tasman.

The magnitude of the interrelationship is evident in the extent of the airline traffic. Airline schedules currently provide around 540 trans-Tasman services and 106,000 seats in both directions every week.

The ability for New Zealanders and Australians to enter, visit, live and work in each other’s country with the minimum of bureaucratic obstacles has contributed strongly to the cross-fertilisation of our two societies and to the success of economic integration.

But the imbalance in migration flows has led to progressive adjustments to the terms of New Zealanders’ access to Australia.

In 1981 the Frazer Government required New Zealanders to hold passports to enter Australia and for non-citizen New Zealand residents to obtain a visa. A further restriction was introduced in 1994 when all New Zealanders were required to hold "Special Category Visas" to enter Australia (though these are issued almost automatically on arrival).

On the social security side, adjustments in 1989 and 1994 introduced waiting periods before new arrivals became eligible for benefits in either country, and an annual reimbursement system between governments.

Through the 1990s the Australians became more and more dissatisfied with the existing social security arrangements. In August 1999 Mr Howard and Mrs Shipley agreed to a thorough review.

That Joint Review was completed in June 2000. It showed the large gap between the two Government's positions.

On the one hand, Australia claimed that New Zealanders were costing its welfare system around A$1 billion a year but was reimbursing Australia only A$150 million towards this cost.

On the other hand, New Zealand felt that Australia was not taking sufficient account of the substantial contribution made to the Australian economy by the New Zealand community, including tax payments of $2.5 billion a year and skills acquired at no cost to Australia.

Business as usual was not an option. Australia was not willing to maintain the traditional ease of access for Kiwis unless New Zealand agreed to pay substantially more.

We looked for a fresh approach that would contain the New Zealand taxpayers' fiscal obligation and at the same time protect Australia from an open-ended responsibility for New Zealand migrants.

We questioned the notion that New Zealand taxpayers should be forking out welfare payments for people living and paying taxes in another country.

The main exceptions seemed to be superannuation, for which people had contributed taxes through their working lives.

Officials were directed to enter into negotiations aimed at securing a new cost-sharing agreement which focused on a cost sharing arrangement for payment of superannuation and disability. Access to other benefits were left outside the scope of the bilateral agreement as a matter for each Government to decide for itself.

The new arrangement preserves New Zealanders and Australians' ability to enter, live and work in each other's country under the Trans Tasman Travel Arrangement.

New Zealanders and Australians continue to be able to move to each other's country with the barest minimum of bureaucratic obstacles.

Entitlements of the large number of New Zealanders already living in Australia are unaffected. This community of 400,000 kiwis will, if anything, enjoy greater certainty about their status in their adopted country.

But while New Zealand has maintained access to other social security benefits for Australians in New Zealand, access to these benefits by New Zealanders living in Australia will be limited to those who meet permanent residency criteria. For those who fail to meet these criteria, assistance will be limited to one-off temporary access to the unemployment benefit if they have been there 10 years.

The equity of this approach falls outside our bilateral Agreement. But I believe it is something Australia will have to deal with further down the track.

The new arrangements represent a saving for the New Zealand taxpayer over the existing reimbursement system and, more significantly, avoid substantial additional costs as high as $350 million per annum and outward flow of currency associated with preserving the status quo.

The new agreement has also removed a significant irritant in the trans-Tasman relations and secured rights to travel and live in Australia on a sustainable basis.

Economic Ties

Our economic ties have bound us closer together. Australia is by far is our most important single export market, taking 21% of our total exports – that is 50% larger than our next most important single trading partner, the US. The economic benefits have risen dramatically under Closer Economic Relations.

Importantly, 40% of our exports to Australia are made up of “elaborately transformed manufactures”, a much greater proportion than to any other country. Australia is also a key market for the export of New Zealand services, and there is very extensive trans-Tasman investment activity. Companies such as companies Fisher and Paykel and Lion Nathan are truly trans-Tasman corporations operating in both countries.

The relationship is two-way. We are Australia’s third largest market overall and its largest market for manufactured goods.

There are numerous other economic ties between us. The open skies policy signed in November last year between the two countries has given airlines from each country access to the entire Australasian market.

We work closely together in the Cairns Group to eliminate farm export subsidies. And combining forces to end the US lamb restrictions into our market strengthened each other's hand to bring about a positive result.

Participation in free trade agreements with other countries has, however, seen some divergence in approach between the two countries.

New Zealand has moved to quickly enter into a closer economic partnership with Singapore and is in the process of negotiating a similar agreement with Hong Kong.

Both countries have expressed a desire for a free trade agreement with the United States, with Australia having determined that a unilateral rather than a combined CER approach has better prospects of success.


Defence

The New Zealand-Australian alliance has been longstanding with a commitment by each to go to the defence of the other in time of need. The Anzac tradition has been forged on battlefields the world over, from Gallipoli to North Africa, from Korea to Kuwait.

Our co-operation has developed further in recent years. The peace settlement in Bougainville resulted from a joint approach. New Zealand's advantage as a small, non-threatening state enabled the signing of the Lincoln and Burnham peace agreements and complemented Australia's ability to contribute substantial resources to maintain the momentum of the peace process.

New Zealand forces served under Australian command in East Timor as part of INTERFET and close cooperation between our military forces has continued under UNTAET. This cooperation has represented the ANZAC tradition at its best.

Both countries make up the International Peace Monitoring Group in the Solomon Islands. Our presence emerged out of last October's Townsville Agreement and the IPMG has contributed to peace efforts.

Australia has traditionally invested a higher proportion of its GDP in defence than has New Zealand which through much of the twentieth century led to criticism. These joint deployments however undercut accusations that somehow New Zealand is a 'bludger' or 'freeloader'.

The Government’s recent capability decisions have been aimed at equipping New Zealand with a modern and appropriate Defence Force that will ensure excellence in the performance of its core functions – particularly in the type of conflict that would be most likely in our region.

Naturally, we perceive our security differently. That is as much a function of geography as anything. New Zealand views security, as last year's Defence Framework notes, in a comprehensive way as a partnership between foreign policy and our defence capabilities.

Australia has tended to view its security as a calculation of threat.

Nevertheless, maintaining a close defence partnership with Australia is emphasised as one of our five key objectives. The recent Australian Defence White Paper similarly acknowledges the value placed on defence cooperation with New Zealand.

With the prospect that regional disturbances could continue, our forces will need to operate together. The reshaping of our defence capabilities to be land based supported by good transport, will enhance this ability to work together because our soldiers will in future have the equipment to match the quality of their training and professionalism.

Indeed, our defence relationship of the future might entail more ambitious co-operation arrangements in which each side, in certain circumstances, could contribute its particular capabilities to a joint force structure – in a sense formalising an existing trend in places such as East Timor.

Future Relationship

Cross pressures promoting both convergence and difference will continue to feature in the trans-Tasman relationship..

There are a number of developments that will bring us closer together.

Economic integration will continue with the deepening of CER, and our mutual need to tackle the challenges of globalisation as smaller, distant, southern hemisphere economies retaining a significant agricultural base.

Evidence suggests there are economic benefits to businesses of both countries from a move towards a single market in goods and services as envisaged by the 1988 CER Agreement that develops common regulatory frameworks.

Closer economic integration with Australia offsets the risk globalisation poses for New Zealand and Australia of becoming a branch line of the world economy. Both countries are better off operating as a single economic entity and CER provides a stronger platform for our economic relations with the wider region.

We have gone some way to harmonise the business environment. The Commerce Amendment Bill, for example, beefs up the Commerce Act giving the Commerce Commission more teeth and bringing New Zealand in line with Australia.
Last year we signed a Memorandum of Understanding on Business Law Coordination with Australia. The MOU promotes similar rules as far as possible between New Zealand and Australia so that business on both sides of the Tasman can operate with greater certainty. There is also some harmonisation on tax being worked on at the moment.
In the area of diplomacy, Australia and New Zealand can, by working together in pursuit of common aims, advance certain foreign objectives more effectively than by operating individually.

We seek similar outcomes in the Pacific, for example. Our response to the Fiji coup was in most respects closely co-ordinated to encourage a return to democracy. We formulated a common policy to impose smart sanctions on the coup leaders, for example, and were at the forefront to bring the Commonwealth into addressing the issues. This type of co-operation will continue in the future.

Differences in Perspective

As our two, increasingly multicultural, societies continue to evolve, national identities are becoming more distinct. Demographics are changing rapidly. Around 30% of New Zealand's populations will be Maori or Polynesian by 2050.

Australia’s middle power aspirations from time to time set it apart from New Zealand in foreign and trade policies. Australia’s close security relationship with the United States will continue to distinguish us in regional eyes and to condition our foreign policies in areas such as disarmament.

Our geographic situations also affect our strategic outlooks and foreign policy orientations.

The prospects for political union may also fade as our two societies evolve as more distinguishable cultural, demographic and political entities. While economic integration increasingly impinges on traditional concepts of sovereignty, it does note require political union.

Few comparable precedents exist in modern times of an independent entity giving up its sovereignty to become a constituent state within a large federation.

It is difficult to see what additional benefits might be delivered by political union that could not be gained by further economic integration.

In the 40-odd years since the Treaty of Rome, for example, Western European nations have retained their separate nationhood, international identity and political structures.

Neither has there been any serious contemplation by Canada to join the United States.

The biggest hurdle to political union is likely to be the innate patriotism and pride in our different and distinct image, as popularly reflected in the sporting contests between our two countries.

Conclusion

New Zealand and Australia are friends, allies and neighbours.

We share the same background, traditions and values that lead us to see the world in a similar way.

Differences in size and location and different influences, however, also create some divergence in perspective. One hundred years ago New Zealand had the chance to join the Commonwealth of Australia. We declined to do so then and I doubt that sentiment in New Zealand has changed significantly a century down the track.

In a globalising world, it makes sense for two countries, which from an international perspective are both relatively small, to work closely together and combine our efforts to promote our shared interests.

There will be ongoing convergence towards a single, integrated Trans Tasman economic market.

There will be reasonable alignment in our regional diplomatic, trade and security policies. Our military forces will cooperate to meet contingencies that both countries see as creating risks. We will maintain wide-ranging public policy and political dialogue to add depth to our bilateral understanding.

Cross-Tasman family links, business and trade connections and sporting competition will provide a firm foundation for people-to-people relationships that are the equal of any other neighbouring countries.

But as the smaller partner in the relationship, New Zealand will continue to relish its independence and right to be different.

Thank you for the opportunity to address the Otago Foreign Policy School this evening.

I wish you a successful conference.

ENDS

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