Australia, NZ progress bilateral economic interest
Hon Dr Michael Cullen
Minister of Finance
Hon Wayne Swan
Treasurer of the Commonwealth of Australia
17 July 2008 Joint Media Statement
Australia, NZ progress bilateral economic interests
The first formal meeting of New Zealand Finance Minister Michael Cullen and Australian Treasurer Wayne Swan in Wellington today acknowledged 25 years of Closer Economic Relations and discussed the shared goal of a Single Economic Market (SEM).
The SEM is a long-term strategic objective and a priority for both New Zealand and Australia. A range of related activities are already in progress, as well as a range of supporting technical work.
As well as reviewing a number of significant SEM achievements so far and discussing future development opportunities, Dr Cullen and Mr Swan made several SEM-related announcements.
A new arrangement on private retirement savings portability between Australia and New Zealand will be settled by October this year. Both countries will then undertake the necessary steps to allow the transfer of retirement savings between complying Australian superannuation accounts and KiwiSaver accounts.
Australia and New Zealand will progress negotiations on an Investment Protocol that aims to encourage investment in both countries. The intention is to conclude an agreement in early 2009.
Negotiations are progressing well for a new tax treaty between Australia and New Zealand. Officials expect to conclude negotiations by the end of this year.
A treaty on Trans-Tasman Court Proceedings and Regulatory Enforcement Treaty is close to finalisation, and the New Zealand and Australian Governments will sign it on 24 July in Christchurch at the Standing Council of Attornies-General Meeting. This will benefit businesses and individuals on both sides of the Tasman by resolving legal disputes more effectively and at lower cost
Substantial progress has been made across an extensive range of issues under the Memorandum of Understanding on Business Law, in particular the entry into force of the Treaty on the Mutual Recognition of Securities Offerings.
Agreement to consider proposals for the mutual recognition of imputation and franking credits.
The Ministers also took the opportunity to discuss challenges currently facing the New Zealand and Australian economies including the global financial crisis, rising global food and oil prices, and to share experiences on these matters. Dr Cullen and Mr Swan also discussed New Zealand and Australia’s mutual interests and engagement in regional and international arenas such as APEC, the Pacific Islands Forum and the IMF.
A particular area of interest for both Ministers was climate change and the progress Australia is making towards designing and implementing its Carbon Pollution Reduction Scheme. The Ministers agreed on the importance of New Zealand and Australian officials maintaining close contact to maximise prospects for future compatibility and harmonisation of the Australian and New Zealand systems with each other and with other future emissions trading schemes.
Further background information for reporters that seek some more context
More portable superannuation savings…
As part of the bilateral
ministerial meeting, the Ministers discussed the findings of
the trans-Tasman retirement savings portability working
group, which had been tasked with providing options for
improving the portability of retirement savings between
Australia and New Zealand.
The current rules do not permit the transfer of savings from accounts held in Australian complying superannuation funds to KiwiSaver accounts, and movements in the opposite direction would, under standard KiwiSaver rules, require member tax credits to be withheld. These impediments make it difficult for individuals to consolidate their financial affairs on trans-Tasman migration, impeding labour market mobility.
The working group has advised the Ministers the two retirement savings systems are broadly compatible, although there are relatively minor details that need to be resolved before portability arrangements could be implemented.
The Ministers agreed with the working
group’s recommendations and will undertake the steps
necessary to achieve retirement savings portability.
Retirement savings portability is an issue that will only increase in importance over time and dealing with it now will help support the free flow of labour across the Tasman.
An investment chapter for CER…
Dr Cullen and Mr Swan are pleased to announce that Australia and New Zealand will progress negotiations on an Investment Protocol that aims to encourage investment in both countries.
Negotiations will be held with a view to concluding a CER Investment Protocol by early next year.
A new tax treaty…
Following the announcement of the renegotiation of the long-standing Double Tax Treaty between Australia and New Zealand in January this year, officials have met on several occasions. Both Ministers agreed that the Double Tax Treaty is an important part of the SEM architecture and that priority needs to be attached to updating the current Treaty.
Dr Cullen and Mr Swan, who were joined today in their discussions by the Minister of Revenue, Hon Peter Dunne, noted that the negotiations are progressing well and that officials expect to conclude negotiations by the end of this year. Businesses on both sides of the Tasman have strongly supported modernisation of these treaty arrangements.
A trans-Tasman Treaty on Court
Both Governments have agreed to implement the final recommendations of the Working Group which has been reviewing existing trans-Tasman co-operation in court proceedings and regulatory enforcement. A Treaty to record that agreement has been negotiated and will be signed in Christchurch later this month.
The Treaty will promote a
more coherent legal framework for
co-operation in civil court proceedings, which will:
- Benefit businesses and individuals involved in legal disputes across the Tasman through helping resolve trans-Tasman disputes more efficiently, effectively and at lower cost;
- Improve regulatory enforcement between the countries; and
- Contribute to the success of CER and SEM initiatives.
The reforms will also increase the effectiveness of each country's regulatory rules in which both countries have a strong mutual interest. Civil penalties, and criminal fines in a range of certain areas deemed to be of mutual interest (such as securities offerings made to the public), will be enforceable across the Tasman. This will:
- Reduce incentives for people to move themselves or their assets to the other country to put them beyond reach of a regulatory regime; and
- Avoid enforcement gaps in trans-Tasman initiatives.
Business Law Coordination
Dr Cullen and Mr Swan, joined by Commerce Minister Lianne Dalziel, noted good progress across a range of projects to streamline the environment for trans-Tasman businesses.
The Ministers welcomed the completion of the legislative processes enabling the joint initiatives on mutual recognition of securities offerings and managing cross border company insolvencies to come into effect.
The Ministers also noted the Australian Business Number and Business Names project, which encourages firms to use a single national business name and number. This project has the potential to simplify trans-Tasman businesses’ contact with, and reporting obligations to, government agencies. The two Governments are looking forward to close collaboration on this project and the Standard Business Reporting project, especially the alignment of reporting definitions for businesses that report to both Governments. Both Ministers noted continuing trans-Tasman collaboration will amplify the influence both countries have in relevant international forums especially those related to standards.
Also noted was the significant advancement in consumer law issues such as aligning product safety and trade measurement systems. New Zealand’s involvement in the Australian Ministerial and officials groups as Australia develops a national approach to consumer policy and law will enhance the potential for greater trans-Tasman consumer law harmonisation.
The Ministers commended the positive initiatives of the Trans-Tasman Accounting and Auditing Standards Advisory Group (TTAASAG), including its endeavours to maintain our influence on international accounting and auditing related issues through cooperation on New Zealand and Australian representation on international accounting and auditing bodies, and the proposals to establish a regional network on financial reporting.
The Ministers also discussed the upcoming work programme, with particular focus on the work on considering ways in which patent examination resources can be more effectively utilised on a trans-Tasman basis, New Zealand’s work on auditor regulation which is intended to enable the mutual recognition of auditors on a trans-Tasman basis, and the work arising out of the Australian move from a state to a national approach to consumer policy.