April is month for thinking about Australia because it has Anzac Day in it: the day we two countries separately commemorate our joint defeat in Gallipoli. Separate-but-joint defines us.
Each country puts different weights on the “separate” and the “joint”. New Zealand cannot ignore the “joint” even when going its “separate” way in international relations. Australia is prior quasi-domestic issue. Not so the other way round.
We are “separate” in our strategic outlooks, dating back to 1908 but specifically since the mid-1980s when the United States kicked us out of the ANZUS treaty and we developed an “independent” foreign policy which no government now dares abandon. Australia remains in lockstep alliance with the United States.
New Zealand instinctively thinks of the “distance of tyranny” (to reverse Australian historian Geoffrey Blainey’s famous phrase). New Zealanders, despite John Key’s warnings, don’t fret about illegal refugees arriving by boat.
Australia, bombed by Japan in the second world war, worries about tyranny from Asia. The boat people are the visible reminder.
But there is “joint” dimension in the boat people, demonstrated by Helen Clark’s and John Key’s minimalist willingness to take few to help out. The link is to stranded ex-Kiwis in Australia who don’t qualify for citizenship, and thus some social assistance, there.
Since they haven’t paid taxes here, New Zealand taxpayers don’t want to bail them (and Australia) out. That is now friction in the official relationship. But they also illustrate the relationship’s “family” dimension. Half million Australian residents were born here. Families are split between the two countries.
But we have separate tax and social assistance systems and no enthusiasm on either side to harmonise them. Any changes are specific patchups to edge towards the single economic market (SEM).
SEM recognises the “joint” economy: Australian companies and pension funds own large swathes of New Zealand’s economy; Australia is New Zealand’s biggest export market, critical to the manufacturing sector’s health. Each country has real economic interest in the economic health of the other.
But the SEM process veers from slow to halting. That is despite reports – most notably the joint report of the two Productivity Commissions in December – identifying joint benefit in more action. For New Zealand SEM is big. For Australia it is fiddling.
Even the Australian Productivity Commission discounted independent research identifying benefit to Australia in mutual recognition of dividend imputation tax credits.
So, while SEM in concept reflects the relationship’s jointness – the joined-up economies – in practice it often underscores the relationship’s separate nature. We remain “foreign” as well as “family”.
One test will be whether Australia picks up the Productivity Commissions’ recommendation to abolish rules of origin in trans-Tasman trade for all goods with tariffs five percent or lower and cut all remaining third-country tariffs to that level.
A reasonable guess: Australia will see protection of its beleaguered manufacturers as more important than freeing bit more Tasman trade.
Don’t expect quick answer in any case. In theory the two Prime Ministers were to have announced significant SEM initiatives when they met in February. That was why they mandated the Productivity Commissions’ report.
But that has been put off till June. There is an election in Australia in September so action in June is unlikely. The government is near-certain to change and Tony Abbott will need time to get up to speed.
If he wants to get up to speed, that is. Abbott is not known for his eastward focus, unlike his former boss, John Howard, who revived the relationship.
But Abbott also knows economic reform is needed to fix productivity problems. SEM could fit helpfully into that frame. Being nice to separate New Zealand could turn out to be nice to Australia.
Which in turn might underline our jointness – though Anzac Days will remind us not to overdo it. M
Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist. [email protected]
