Rt Hon Helen Clark Prime Minister Address at Trans-Tasman Business Circle Lunch

Sofitel Melbourne Collins Street

1.15pm local time (3.15pm NZ time)

Tuesday 12 June 2007

It’s a pleasure to be in Melbourne to address the Trans-Tasman Business Circle. I thank the Circle, especially Chief Executive John Weiss, for hosting us, and for the work you do in promoting relations between New Zealand and Australia.

I also acknowledge Tourism New Zealand as a sponsor of today’s event. Tourism, with almost two million trans-Tasman visits per year, is a vital dimension of the New Zealand-Australia relationship.

This is the first day of the business mission I and Economic Development Minister Trevor Mallard are leading with more than fifty New Zealand companies to Victoria, Queensland, and New South Wales

My visits to Australia normally have a strong federal dimension. But Australia is of course more, much more, than Canberra and the A.C.T. So on this occasion we are especially focusing on the economic relationship we have with individual states, beginning here in Victoria. Close relationships with the states are very important to New Zealand.

Our delegation comprises mainly small and medium-sized enterprises which have a presence in the Australian market, which they want to grow.

It’s from SMEs that our economies are seeing much of the innovation and investment which drives growth and employment. We are emphasising to companies in both countries the importance we see in making sure trans-Tasman business contacts continue to grow and flourish.

We are keen to ensure that Australian counterparts know about the dynamism of our economy, the significance of our latest Budget, and the opportunities for both Australian and New Zealand firms to deepen relationships.

There are now few formal barriers to doing business across the Tasman.

Between us we have a domestic market of around 24 million people, which supports a multi-billion dollar trade, investment, and tourism relationship.

Australia is New Zealand’s largest export market, and we are its fifth largest.

But we can and must do better to explore the full potential of the common Australasian market. That doesn’t mean just selling more to each other – although obviously we want to do that.

It means using our strengths and complementarities to take on the world together.

Exports are of vital importance to New Zealand’s prosperity. Working closely with business, our government is determined to lift New Zealand’s long-term export performance. That’s why 2007 has been designated as New Zealand’s Export Year, as we work to encourage more companies to lift their eyes beyond New Zealand’s horizon.

Our entrepreneurial wine industry is an inspiration in this respect. It has a high value, niche position in global markets, and wine is now our fifth largest export to Australia.

The delegation with me here in Melbourne comprises 15 companies from our food and beverage sector.

They include producers of high-quality meat products, cereals, mineral water, health foods, cakes and confectionery, natural flavourings, oils, health foods, seafood, and even of pavlovas. They are here to learn more about doing business in, and – just as importantly - with, Victoria.

This state is already a significant trading partner for New Zealand. The two-way trade is worth more than NZ$4 billion dollars a year, and it’s almost evenly shared between us.

We are Victoria’s top export destination, and your fifth largest source of imports.

Tourism is an important part of our relationship. In 2006, New Zealand was the second largest source of international visitors to Melbourne, with average annual growth in numbers of around seven per cent.

Melbourne has an appeal to the Kiwi tourist, at any time of the year, just as New Zealand does for Australians. As Tourism NZ say, while the temperatures might have dropped a bit in New Zealand for the winter, the welcome’s never been warmer, so come on over! Defence industry relationships between us are also significant.

This morning I commissioned the new multi-role vessel for the Royal New Zealand Navy at Station Pier. HMNZS Canterbury, a 9000 tonne, $130 million vessel, will significantly boost our defence capability.

It is the flagship vessel in Project Protector, which is providing a major upgrade in our naval capability. Protector, like the ANZAC frigate project, has been important to both economies. It has meant jobs for Victoria and for New Zealand in hi-tech, high-skill manufacturing areas. Some of the companies represented on the project are with us today. This afternoon I will visit the Synchrotron, an exciting project which uses high-speed electrons to create very bright light used in research applications.

New Zealand has contributed financially to the project, which we see as a great example of how we can combine our strengths in research initiatives of global significance.

Overall, the relationship New Zealand enjoys with Australia is the closest we have with any country. It rests on the firm foundations of common values; a comprehensive trade and economic partnership; a defence alliance; close and effective co-operation across many policy areas, ― and of course on many family links.

In the economic relationship we are making progress towards building a Single Economic Market. Led by Peter Costello and Michael Cullen, this process builds on CER’s foundations and is of strong practical importance to business.

The barriers at our borders are almost entirely cleared away. Now our governments are looking behind the border to do away with unnecessary transaction costs companies can face in doing business across the Tasman. We want to reach a point where a company in Auckland can do business in Melbourne as easily as it can in Wellington.

A big work programme has been underway to achieve this, including: making it easier to offer securities in both countries by using the same offer documents and structure; simplifying cross-border insolvency proceedings; making trans-Tasman company registration easier; making it easier to ban directors in one country when they have been banned in the other; looking at the portability of private retirement savings across the Tasman; and considering an Investment Protocol to CER.

These practical steps could take unnecessary friction out of trans-Tasman commerce.

Each aspect of the work programme is subject to a hard-headed assessment of the benefits - in our case - for New Zealand and for New Zealand firms. The SEM has a critical role to play in the competitiveness of our two economies within the world economy.

Enhancing the strength and sustainability of the New Zealand economy is a major priority for my government. We are doing that off the platform of what the OECD recently described as one of the most flexible and resilient economies in the developed world.

We have been enjoying near continuous growth for a decade. Like Australia, average growth rates over the last seven years have been over three per cent. We have a very low level of unemployment, at 3.8 per cent. Our public finances are in good shape, and the signs are that the slight slow-down in the economy last year has bottomed out with growth bouncing back. Growth of 3.1 per cent is forecast for the year to March 2008.

We face some challenges. Action to keep inflation with the Reserve Bank’s target range of one to three per cent has had consequences for monetary policy, interest rates, and thus the strength of our dollar. This has been tough for exporters, but they have also shown extraordinary resilience in these circumstances.

Acting to address the imbalance between the external and domestic sectors of the economy was a key part of last month’s Budget. It breaks new ground in boosting both savings and the potential for business investment.

The Budget’s business tax reform and assistance package directly promotes investment, research and development, skills, and exporting. It includes a cut to the corporate tax rate (to thirty per cent, equivalent to Australia’s rate), and a research and development tax credit of 15 per cent of eligible expenditure.

This is complemented by an increase in our science and research spend, a good part of which is directed at supporting innovation.

A new government-designed savings scheme, Kiwisaver, starts on 1 July with significant incentives for employees to save. Tax credits are provided for employees and employers contributing to the scheme.

The Budget also delivered a major rail infrastructure package to build up public transport and relieve traffic congestion in Auckland and Wellington, and do other essential work on the network.

The Budget reflects our vision for the future of the New Zealand economy, and provides compelling reasons for Australian business to look afresh at New Zealand as a partner for growth.

We want that growth to be sustainable in economic and environmental terms. Environmental sustainability is an imperative in the 21st century. There will be no prosperity without it.

So we need to understand better the ways in which achieving it can become a powerful opportunity, rather than be seen as a threat. Our private sector is already showing leadership in this respect. The NZX Carbon Exchange Working Group has proposed a carbon trading platform, and increasing numbers of our companies are signing up to the CarboNZero programme of one of our Crown Research Institutes, Landcare Research. Countless other companies are undertaking sustainability initiatives, often with significant benefits for the bottom line from improved energy and other resource use.

As well there are the considerable branding opportunities from being part of a credible programme to achieve carbon neutrality. The CEO of the New Zealand Wine Company reports that his company’s CarboNZero status has raised its profile and lifted demand for its wine.

Different countries will take different paths to a more sustainable economy because of different stages of development and of access to different local resources. Naturally, Australia with abundant coal reserves will place more emphasis on the development of clean coal technologies than New Zealand, as hydro and geothermal power generation are more readily available options for us.

I do believe that those who do not take sustainability seriously are likely to face consumer resistance and even trade barriers in the future.

We need to be able to confront credibly the challenge of campaigns like that around “food miles”, with its false and simplistic assumption that distance of itself implies unsustainability.

New Zealand and Australia have a common interest in working to steer this debate into a more rational direction.

And we must work together to share ideas on tackling global warming. New technologies, services, and policies are being developed on both sides of the Tasman and provide many opportunities for commercial, research, and governmental partnerships.

Close partnerships between us are vital in pursuing our shared trade policy interests too. We have worked closely together for a big outcome from the WTO’s Doha Round. Australia’s role as Cairns Group leader has been important, not just for our agricultural export interests but also because farm trade reform is at the heart of the Doha Development Agenda. There have been signs of fresh life in the negotiation, and there may be some chance of pulling together the main elements of a deal by the northern summer break.

Like Australia, we have also been working hard on bilateral and regional free trade agreements. Our joint effort to reach agreement with the ten members of ASEAN, is a sign of the increasing level of comfort and acceptance we both find in the East Asian region.

The character of our own economic co-operation, as expressed through CER, should be seen in the wider Asia-Pacific region as a model for opening up trade.

APEC returns to Australia this year, eighteen years after this country had the vision to propose a process for regional economic co-operation. It has evolved significantly since that first meeting in Canberra in 1989, and now provides a political infrastructure at the highest level to support greater economic integration in the region. We have great confidence in AustraIia as Chair, and look forward to the Sydney Summit as a major opportunity to advance the APEC agenda, including the concept of a Free Trade Agreement of the Asia-Pacific.

Next year marks the 25th anniversary of CER. There have been fundamental changes in both countries since it was inaugurated, but it has endured and evolved as a major driver of growth in our economies.

Our challenge now is to take full advantage of the opportunities of the trans-Tasman economy – not just the opportunities to take on each other’s markets, but also to collaborate more actively with each other in world markets.

Thank you

ends

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