Developing Tasman agreement at a deeper practical leve

You think Australia is big? Think again. Australia is small.

Smallness was a refrain at the Australia-New Zealand leadership forum on Friday-Saturday — not just about this country but also from the Australian side about Australia.

Hence part of the impetus for the new Australian interest in the past two years in pushing CER, the trans-Tasman free trade agreement, to higher levels of regulatory integration and on to a “single market”.

This interest is not just at government level but to some extent in business which was largely indifferent through the 1990s. That renewed business interest is a large part of the value of Qantas chair Margaret Jackson’s energetic co-chairing of the forum.

The world is changing rapidly and often in jarring steps, technologically, in the rise of new ideologies and movements which threaten security, in a vogue for mercantilist bilateral, plurilateral (multi-country) and regional economic arrangements and in rebalancing of economic power towards Asia.

So it makes sense for this small, largely Anglo block to acknowledge its substantial and growing internal differences but then develop a bigger critical mass and work in unison more.

The point is to convert threat into opportunity. And a large opportunity is on the horizon if the proposed Asean-CER talks lined up with Asean talks with China, Japan and Korea to make a massive “Asean-plus-five” with, in time, potentially the weight of Europe and North America.

Another change that has spurred progress towards a single market is that the international regulatory environment is changing. Big-country action can force “regulation by stealth” on small countries through subsidiaries of multinationals and/or trade. Also, partly because of the cross-border impact single-country regulation has on other countries’ businesses in an interdependent world, there is now some “convergence” of regulatory practice.

Australia is part of this, so there is now less prospect that harmonising regulation will bring heavy regulation to businesses here and reduce their international competitiveness. New Zealand is also less seen from Australia as an international outlier in its past dedication to light-handed regulation.

So harmonisation in a single market is more do-able for both countries.

But the harmonisation work is incremental, arcane and not the stuff of headlines and so below the radar, unseen by most outside the bureaucracy, as some comments at the forum showed. The work programme is practical, not big-picture.

Stir in another factor, also present at the forum. When Australians focus on New Zealand, many see this country’s decision not to join the Australian federation in 1900 as unfinished business.

They vary from puzzled to frustrated: if only New Zealand joined up, they say in effect, all this fiddly stuff would be cleaned up in a trice and an enlarged Australia could focus its attention on other countries which really matter.

This would, of course, be the case for defence, which, unsurprisingly, provoked the only fierce exchange at the forum.

But, as was gently noted, federation might also sort out the Treaty of Waitangi by making Maori simply citizens of the bigger state, which the Brash National party would applaud but at which many others would baulk. Australians would, it was stated at the forum, “respect” Maori as they “respect” aborigines. But that misses the point the hikoi demonstrated: Maori now have a status in the power structure which aborigines do not.

This federation presumption leads readily to a common currency. Surely it is time New Zealand got rid of irritating idiosyncrasies that get in the way of business. It is obvious in Sydney and Melbourne we should have one dollar.

It is not obvious in Wellington and Auckland. A common dollar would mean one monetary policy, driven mainly from Australia, which would seriously constrain fiscal options here. It would amount to a move to confederation, which is a step too far right now — witness the outcry against the proposed joint therapeutics regulatory agency.

Much more do-able is a common border, which the forum pushed and towards which Goff and Australian Foreign Minister Alexander signed up to work.

But even that would mean big changes. One is harmonisation of immigration policies and procedures, a touchy matter here. Another is joint negotiation of trade arrangements with other countries and a joint position at World Trade Organisation talks.

At the very least the mere prospect of a single border might prod the two governments out of their ad hoc, often competitive, approaches to trade deals into at least consultation and at best some sort of agreed strategy or protocol.

At that point the process would gather critics and opponents. Which is where the forum, as it develops, has real potential value — as a place to tease these things through and build practical agreement in this tiny corner of a tough world.

* Colin James was in the New Zealand team at the forum.