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Bridging the Big Ditch

Written By: - Date published: 10:04 am, August 20th, 2009 - 22 comments
Categories: australian politics, uncategorized - Tags:

Mr Key is off in Australia this week promoting further measures to bind the two countries into a single economic market, and slash red tape on trade, investment and business, and to shape the two economies into a force that can team up to position themselves for the world after the global economic crisis.. Well at least that is the rhetoric. So far the only detail we have on the table is a nice, but ultimately cosmetic offer, to put trans-Tasman travel on a domestic basis.

There is of course a real merit and benefit for both nations to continue down the path of closer integration. The total NZ economy would the equivalent of adding a component just a little larger than State of Victoria to the Australian Federation, and there are many opportunities for the two economies to gain synergies from each other. We are different, but that would bring strength to the relationship if we build on them constructively.

It’s also often forgotten that the Australian Constitution still has an inactivated provision to include NZ in the Federation, and ultimately that is the goal we should be aiming for. If we are going to snuggle up even more intimately with the Aussies, we should be armwrestling a ring and a trip down the aisle out of them. We’ve been a defacto couple since CER, but in many ways that’s left NZ on the back foot, with Australian business and investment gaining far more from access to NZ than the other way around.

Yet previously Key appeared to reject the critical element of any true partnership, the need to properly and openly share our finances.

Mr Key said New Zealand needed to retain its fiscal independence in case of an economic catastrophe, such as an outbreak of foot and mouth disease.

Only then could there be an enormous correction in currency to try to offset “economic carnage”, he said.

“As an example, you’ve seen in Ireland at the moment the challenges that they’re having where they’re part of the European Union, the currency’s the Euro and they really can’t get the currency depreciation that they need to kick-start their economy.”

Herald

A very ironic argument, given that NZ has been hurting its exporters with an overvalued dollar all this year, and Mr Key’s govt has been umoved to do anything about it. But worse still it sends a message to the Australians that we still aren’t really serious about the relationship, that we want to play the field with them, but we don’t trust them enough to make a real commitment.

Mr Key said he wanted to achieve a seamless business environment in which a company in Melbourne could do business in Auckland as easily as it could in Sydney. Herald

Note how Key has framed this in terms of an Australian company coming over here to do business, and not the other way around. Effectively he’s spruiking off NZ as a good place for big Aussie companies to come and do business. While there some examples of Kiwi business doing well over the Tasman, the overall record is a very poor one. And won’t get better until the Australians are prepared to give us some respect. I recall years ago my father returning from a business trip to Melbourne and declaring, with some real feeling, over dinner, “Those bloody Aussies treat us Kiwis like we treat the Cook Islanders!”.

This must be our next step up in the world. Its time we mustered the confidence in our own identity as a people, as a nation, to step up to full political unity with the Australian Federation. Until then our big brash Aussie cuzzies will cheerfully shag us on the side, but never take us seriously.

22 comments on “Bridging the Big Ditch”

  1. Mikaere Curtis 1

    This must be our next step up in the world. Its time we mustered the confidence in our own identity as a people, as a nation, to step up to full political unity with the Australian Federation.
    I’ll give that a big sidestep, thanks.

    The last thing we need is to have an Australian Federal Government dictating how we should run out own country. I understand the benefits of closer economic integration, and can see an argument for a join ANZAC currency (but not adopting their one).

    But seriously, do you really think we compatible politically ? How do you see Te Tiriti being treated under this arrangement ? What of bi-culturalism ? The Aussies are hardly known for a nuanced, complex understanding of the plight of their own indigenous population, and this would put at risk *decades* for peaceful development of a raft of initiatives to bring Maori out of colonisation-driven poverty. We’re not there by a long shot, but you can hardly argue that the Australian government has any value to add, can you ?

    Talk to anyone who works for a large Australian-owned/dominated company. Except for Vodafone (where for years NZ Vodafone has helped sort them out), the story goes pretty much like this in far too many cases:

    1. The Aussies think NZ and AU are exactly the same
    2. Aussie company does much more turnover than the Kiwis, so obviously they are doing it better
    3. Aussies start calling the shots and because the markets are different, the Kiwi company starts losing market share
    4. Conclusion, Kiwis aren’t any good at this, lets start selling/asset stripping or similar.

    I’ve even seen it happen when the Kiwis are doing significantly *better* than the Aussies.

    And you want to import this paradigm across our entire economic and political system ? Luckily, our politicians can see the dangers, even if you can’t – chance of happening = zero.

    • Lanthanide 1.1

      This appears to be what has happened to Fujitsu IT. They bought out Infinity Solutions and put it under control of Fujitsu Australia. Fujitsu Australia imposed their accounting and customer tracking systems on top of Infinity, and my partner who was a mid-level manager at the time went from doing 1 week a month of administration to 3 weeks, with no actual improvement in productivity whatsoever, just jumping through administrative paper hoops. Simply because the kinds of customers Oz dealt with were contracts in tens of millions of dollars, and they expect Fujitsu NZ to use the same systems, when dealing with contracts smaller than 10k, or often time & materials work on an as-needed basis.

    • RedLogix 1.2

      And you want to import this paradigm across our entire economic and political system ?

      Which was precisely my point. The paradigm you deplore is ALREADY here and not likely to go away anytime soon. Far from seeing any ‘dangers’, John Key is talking about ‘stripping away red tape and barriers’ to make it even easier for the big Aussie companies to come here and continue exactly what you are rightly identifying as an issue.

      Yet NZ is larger than the State of Victoria. In the long run there is no reason why NZ should not be an equal partner, standing on equal terms, in a larger Australian Federation. The only other way path would be to turn inwards, cut ties with Australia and isolate ourselves… and I don’t see that happening either.

      Or we can do nothing, carry on resentfully whining about the way the Aussies treat us, and wonder why we keep on getting screwed.

      • Mikaere Curtis 1.2.1

        Uh-huh. So, if the problem is the Aussies screwing us, the solution is to become Australian so they can not only screw our businesses, but they can do it to our political system, our education system, our health system…

        Your idea of equality is to become a state under the federation. My idea of equality is to be a country at the UN just like Australia. Are you sure you’re not a troll ?

        @Lanthanide: Bang on, and it’s near impossible to do anything about because HQ in Sydney or Melbourne don’t want to hear what our problems are.

        • RedLogix 1.2.1.1

          Bang on, and it’s near impossible to do anything about because HQ in Sydney or Melbourne don’t want to hear what our problems are.

          Ok so you’ve picked the ‘whine about it’ option. What’s going to change if we just keep on with the status quo?

  2. Bill 2

    Integration from above. Never a good idea.

    I didn’t think that would need saying on a leftish blog.

    Remember internationalism and how it sits in opposition to globalisation?

  3. grumpy 3

    Buggered if I know where you learnt your economics. Those self interest parties who complain that the $NZ if overvalued are simply wrong. All year it has been undervalued!

    A low dollar only suits those exporters who cannot compete without the help of a low dollar and low real wages. The only way living standards in NZ will improve is when our exporters trade in such a way that their businesses are viable at high exchange rates so that real wages become wothwhile.

    • George D 3.1

      Indeed. Those selling in; AUD, USD, JPY and EUR all manage to export properly, despite having very strong currencies.

      Only if we’re trying to be Vietnam do we need a weak currency.

      • RedLogix 3.1.1

        My point had less to do with whether the NZD is over or undervalued, but that with a floating currency it is the market, not the govt, that really determines it’s value.

        Arguing that NZ needs to have and independent currency in order to manipulate it for local purposes is a pretty weak argument. If we follow that line then logically Southland could have it’s own local dollar to suit it’s own purposes too. It begs the question as to what basis do we issue independent currencies?

        On the other hand I can point to a global trend towards currency unions, and to idea that at some point in the future a truly globalised earth might well use just one common currency of fixed value. At that point all the arguments about over or undervalued currencies, all the parasitical trading and speculation in currencies, all the devious, damaging manipulations fall away and become irrelevant.

  4. Turn off the TV 4

    Full integration would mean that the Reserve Bank would be unable to set the interest rate (or whatever other levers on the economy become available in the future) at a level that suits us; the interest rate would be set at a level which suits the Australian economy.

    If our economies are at different stages of the cycle, it would cause all sorts of problems for us.

    We already have this problem to a small extent, within NZ. What is an appropriate rate for Southland may be totally different to Auckland. Extending that to include Australia would make the problem much worse.

    And that’s just interest rates. I’m sure we can come up with many other parts of life which would be dictated by what suits Australia. The price of carbon, the release of GE organisms, use of coal for electricity, involvement in foreign wars (Iraq?), the use of their undemocratic FPP electoral system, and god knows what else.

    • RedLogix 4.1

      Full integration might be a long term goal, but there are plenty of intermediate steps (some of which we have arguably already taken) along the way. There is no reason to think that we could not negotiate a path to retain the degree of self-determination we are comfortable with. The Australian States do maintain their own State Legislatures and their own particular character even after more than 200 years of integration.

      Assuming that NZ would suddenly become totally subsumed and vanish overnight into some amorphous Aussie maw is a strawman argument.

  5. RascallyRabbit 5

    How naive can you be?!

    “Mr Key said he wanted to achieve a seamless business environment in which a company in Melbourne could do business in Auckland as easily as it could in Sydney”

    This is called gamesmanship it would hardly be beneficial to announce in Melbourne that they want an Auckland company to do business as easily in Sydney as they can in Christchurch…that would go down well to Melbourne business audience.

    Advocating the introduction of the Australian dollar because it won’t be anything else despite what people may think about a potential “ANZAC” currency – would also be counter-productive, not only would we have a higher-value currency that we would have no control over but the 80% of New Zealand trade that isn’t done in Australian dollars would be even more expensive! Wow that will be a real kick-start for struggling exporters….

    As for a full political union and becoming a state of Australia, you do a sincere diservice to the 160+ years of New Zealand history including the two occasions where invitations to join the Australian federation were declined for many of the same reasons that Mikaere Curtis. Im sure all New Zealand nation builders past and present would love that idea….

    I honestly can’t believe this sort of thing would be advocated on the standard or by any left leaning individual, if this had happened 25 years ago, you would end up with a less comprehensive ETS, we would also have been involved in the Iraq War, have never had the chance to have the nuclear-free policy gone by lunchtime, had the decision to send SAS troops to Afghanistan taken out of our hands long ago and had a Prime-Minister that was affectionately described as practically Texan…all the while maligning minority groups even more than we do here and passionately celebrating a day where 11 ships full of convicts weighed anchor at Port Jackson.

    I say get a good strong Single Economic Market but New Zealand should retain as much sovreignty as it possibly can for as long as it can and as for Aussie business doing better here than we do over there – simple solution for us, don’t get bitter get better!

    • RedLogix 5.1

      I honestly can’t believe this sort of thing would be advocated on the standard or by any left leaning individual,

      And I honestly don’t see this as a left/right wing issue. What I do see is that we are already pretty much a Single Econmic Market as you advocate, but one in which most of the advantages accrue to the Australians, while at the same time we have little or no opportunity to exert any political leverage or accountability in the other direction.

      Nor do I think it useful to simply assume that New Zealand as an identity would vanish. Tasmania, the smallest and least influential member of the Federation, retains it’s own character quite different to the rest of Australia. (Having lived and worked there back in the 90’s I was pleasantly surprised just how similar it felt to living here in NZ… quite different to say Queensland or NT.)

  6. felix 6

    Nah, when he says things like “a company in Melbourne could do business in Auckland” he really means an Auckland company doing business in Melbourne.

    Same as when talks about wages.

  7. George D 7

    Australians at every level of society barely notice New Zealand. It very rarely gets in the news for any reason, apart from when something stupid/funny happens in NZ. When they do think of New Zealand, it is as as a country of snowy mountains and sheep.

    New Zealand might be having difficulty, but it has little to gain from a union with Australia.

    • RedLogix 7.1

      Australians at every level of society barely notice New Zealand.

      Aucklanders barely notice Southland. Good reason for Southland to cede from NZ? (OK so more than a few folk living south of the Bombay Hills would fervently agree, but that doesn’t make it a good idea.)

      On the other hand NZ as a member of the Aus Federation would be the second largest State. Likely to be ignored? Is Victoria, currently the second largest State ‘barely noticed’? I don’t think so.

      There are pros and cons to political union with the Aussies, but I’m not hearing anything much more than echoes of NZ’s cultural cringe.

      • RascallyRabbit 7.1.1

        Why is New Zealand the second largest state in this new federation?

        NSW, VIC and QLD all have more people (7m, 5.3m and 4.41m respecitvely) vs. NZ 4.3m

        The well documented “wage gap” also means that all these states have economies far larger than NZ’s while the next state in the queue: WA with a population about 2m less than NZ still has an economy roughly 70% the size of NZ’s.

        New Zealand’s “voice” in this new federation would lie probably on a par or even less than WA’s current voice given that we are both isolated; but as WA accounts for a good percentage of the Aussie resources boom and holds many of the barganing chips in the Sino-Australian relationship they would probably (just) shout us down….

        No matter what way its spun I don’t think joining the Australian federation is a good idea for New Zealand.

        Although I see this afternoon that an ANZAC style expiditionary force is being investigated to be set up – so maybe we are only a few more steps away…

        • RedLogix 7.1.1.1

          Yes you’re right. We are almost exactly neck and neck with QLD, in both population and GDP terms. I was going from memory on out of date information. But it’s not a big gap up to VIC.

          And it scarcely changes my point does it? NZ would not be a ‘barely noticeable’ addition, in population, economic or political terms to the Australian Federation.

  8. Olwyn 8

    There seems to me to be problems either way: with close economic ties and being a separate country from Australia, we do not have senate representation to support our interests as states do, on the other hand, NZers and Aussies have quite different views on where their national interests lie, so that NZ might not settle very comfortably into being a state of Australia. People frequently bring up differences with regard to race issues, completely overlooking the fact that something like a fifth of Maori live in Australia, while you rarely see an Aborigine face on this side of the ditch. In Aus the unions are stronger and more confident that they are here, and there is more of a broad equality among citizens, though I doubt Dr Brash will take this into account in his attempts to find ways for us to catch up with them economically.

  9. lprent 9

    It is an interesting train of thought. Our economies are intertwined to a degree that would have seemed impossible when CER was put into place in the early 80s.

    I need to have a think on it

  10. Zaphod Beeblebrox 10

    NZ would finally have half decent cricket team representing them and the the All Wallabies might be able to find a decent lineout jumper.

  11. ChrisW 11

    It would certainly help close the wage gap with Australia. The Aussie minimum wage is AUD 14.31 / hour or NZD 17.45 – that would be a 40% wage rise for those on the NZ minimum wage of NZD 12.50 / hour.

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    The biggest trade deficit for seven years shows the Government can’t be so complacent about the economy and must take action to diversify and encourage exports, says Labour’s Finance spokesperson Grant Robertson. “The biggest driver has been the fall in… ...
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