UPFRONT Pace Quickens on SEM?

Australia’s re-election of John Howard’s Liberal coalition has prompted government officials on this side of the Tasman to put renewed effort into the push for single economic market (SEM). But some wise heads and experienced trans-tasman traders are nervous about moves to hurry the process along at political level.
Finance Minister Michael Cullen is considered almost obsessive about SEM and wanting to stitch our economy closer to Australia’s.
Officials in Wellington believe window of opportunity exists to hasten SEM. They see Howard and his Treasurer Peter Costello as politicians who still place some store by the spirit of ANZAC. If, however, the process takes too long or New Zealand doesn’t show enough interest in bending to Australian demands they may, encouraged by bloody-minded bureaucrats in Canberra, turn off the talks and turn their backs on SEM.
The Ministry of Economic Development wants business leaders more involved in the process. But some business leaders are sceptical that New Zealand will gain many new economic advantages from further economic integration. In fact, they see the potential for leaving New Zealand economically worse off. There is some concern that officials will give away too much because politicians like Cullen, and possibly Brash if he takes National to power, believe SEM is essential to New Zealand’s economic survival.
Some business leaders argue that they are working satisfactorily with Australia now and that there is no pressing need to do more than take case-by-case approach to solving market access issues. It is easier to do business in New Zealand than it is in Australia. Why would New Zealand want to embrace Australia’s often complex and badly drafted regulatory environment to gain some marginal access advantages?
Kiwi businesses often find it difficult to do business in Australia at personal level. Australians are hard bargainers. Officials encounter this reality when they try to negotiate with their often intract-able counterparts in Canberra. Australia’s often uncompromising approach to doing business encourages many New Zealand exporters to find trade opportunities in other markets.
The New Zealand Government’s hand-ling of trans-tasman bank ownership regulations is being held up as an example of officials’ and politicians’ willingness to bow to Australian pressure.
The Australia New Zealand Leadership Forum earlier this year called for accelerated work on SEM. It called for progress on common border and talks about how to enhance skills in both countries. But the move to increase the tempo, broaden the scope of and deepen the SEM work programme won’t be quite so easy if government officials genuinely try to work more closely with business on the issues.
There is already high degree of integration between New Zealand and Australia. The issue is how much further and faster should New Zealand now go? If it is easier to do business in New Zealand why not capitalise on that? The drive to minimise restrictions and integrate rules, regulations and standards may have New Zealand effectively becoming state of Australia without the constitutional or economic subsidy advantages of being state.
There are increasing calls to identify exactly what advantages will accrue to New Zealand from SEM. Sceptics suggest there have been too many generalisations about the advantages and not enough input from managers at the competitive coalface.
Auckland, suggested at least one business leader, could look like Adelaide in five or 10 years’ time with not head office of any significant enterprise in sight.