Foreign and Family: the Australian Connection

Sensible Sovereignty or Niggling Nationalism?

Colin James’s paper to the New Zealand Institute of International Affairs Major Foreign Policy Issues Seminar, Wellington, 21 February 2006

New Zealanders of a certain age need no reminding of Australian cricket captain Greg Chappell’s infamous order on 1 February 1981 to brother Trevor to bowl underarm to ensure New Zealand batsman Brian McKechnie could not hit a 6 off the last ball to draw a one-day cricket match.

Two recent events commemorated the twenty-fifth anniversary. Within a day or two of 1 February New Zealand put its case to the World Trade Organisation sanitary and phytosanitary committee against Australia’s blocking of New Zealand apples, which apple-growers would equate with underarm bowling. And on 1 February itself the Trans-Tasman Business Circle, a big-company grouping, hosted a plush commemorative lunch in Auckland of the incident, describing it as “the defining moment in trans-Tasman sporting history”.

Of course, it was not the defining moment of anything. But since 1981 underarm bowling has been the image New Zealanders have evoked whenever they feel put upon or outmanoeuvred or dismissed or belittled by Australia or Australians. And they often do: that goes with asymmetry, which is a major delineator of the relationship.

That asymmetry is of size, interests and perspective.

Australia has five times the people, six times the economy and 29 times the landmass. The Australian Financial Review recently noted that significant numbers of Australians do come east and commit themselves here. But far more New Zealanders migrate to Australia than vice-versa and we should be unsurprised at that. It has a parallel in the migration within New Zealand to Auckland in earlier decades. The bigger smoke offers more scope and/or better wages.

The fact that people do cross-migrate in large numbers illustrates something else about the relationship: our familiarity. We are, in reality and metaphorically, family. Thus the Trans-Tasman Business Circle will also commemorate the underarm bowling incident in Sydney, on 3 March. We are at least cousins, at times brothers/sisters and, in our colonial beginnings and constitutional, legal, religious and cultural baggage, twins — though, as Management Magazine put it in 1989, “non-identical twins”.

But one is bigger than the other: in landmass, in population, in natural resources, in wealth per capita — and (maybe in consequence) also in self-regard and in self-promotion. Australians want to win more than New Zealanders and that “want” often translates into “need” — hence the underarm ball. If the two are brothers/sisters, one is the elder and bigger.

And the bigger needs the smaller less than the smaller needs the bigger. That means, naturally, that Australia will pay less attention to New Zealand than New Zealand to Australia. This goes for historical writing, news media attention, economic and business interaction and government-to-government relations. Australia seldom notices New Zealand except for curiosities or nuisances and when it wants or needs something in its own interest. CER was born of Australian worries about New Zealand’s economic security and its wish to secure its eastern flank. Since the main initial objectives of CER were achieved, New Zealand’s experience in trying to advance second-generation issues has been akin to pushing on the end of a piece of string: the string moves only when Australia chooses to pull on the other end.

This is not reprehensible. When New Zealand pushes on the string, it is to advance New Zealand’s interests. And there are times when Australia pushes and New Zealand doesn’t pull — or pulls much less than Australia would like. Banking regulation appears to be a case in point if news reports are correct: Australian Treasurer Peter Costello has not got the harmonised regulation he sought, despite warning he would turn his energies to other things if blocked on that. The joint therapeutics agency agreed by the two governments has been sunk (or at least delayed) by a majority of parties in the New Zealand Parliament. That may curtail a promising line in regulatory cooperation through the creation of new joint agencies, a particularly apt option for highly technical matters.

The simple fact is that the two countries’ interests, at least as perceived by governments, voters and lobbies (even if not by dispassionate observers), do not always align — in fact often don’t align. The interplay among those three groups of interest-holders, both within and between the countries, is complex and varies from issue to issue.

There is, in other words, an asymmetry of interests.

This asymmetry has been perhaps most persistently illustrated in negotiations for a “single economic market”. This idea had wide currency in the late 1980s and early 1990s. Politicians, bureaucrats, academics and business leaders speechified, wrote and conferenced optimistically of deepening CER by tackling second-generation issues, such as quarantine, business, competition and securities law, tax, border processes, a single aviation market, product and service standards and professional qualifications. Some early progress was made, on mutual recognition of standards and qualifications and reduction of “inscriptions” on services, for example. And then it got hard. Some of it went bad, notably an underarm bowling incident of Paul Keating’s in which Australia cancelled the single aviation market by fax only days before it was due to come into effect. Periodic attempts to rekindle ambition and momentum, notably after John Howard’s accession in 1996, Michael Cullen’s meeting of minds with Peter Costello in 2003 and the establishment of a government/private Australia New Zealand Leadership Forum in 2004 (which rediscovered the single economic market) had mixed success, as I have traced in a chapter for the Institute of International Affairs 1990-2005 book. (1) The complex constellation of interests on each side have seldom meshed enough since 1990 to make real progress.

Drill down a bit more. Who wants and who needs a single market? Businesses which operate in both countries and between them. What do they need for their Australasian operations? Common investment and capital-raising rules, common competition rules, common standards and labelling, common business incorporation rules, common quarantine rules and practices, common enforceability of court decisions — that is, the ability to operate in one country in pretty much the same way as they operate in the other and under common rules — or, if not common, at least harmonised or, if not harmonised, at least compatible or mutually respected. In other words, such real (as distinct from theoretical) impetus as there is for progress towards a single market comes from those who stand to gain bottom-line benefit. And, by and large, interest fades upon delivery or denial of the benefit sought.

But drill down a bit more. New Zealand is Australia’s largest manufactured exports market but takes only a twentieth of its total exports. Australia is New Zealand’s largest export market (predominantly for manufactured exports) but around four-fifths of New Zealand’s exports go elsewhere. Both countries would gain from a single market. But ultimately they would both lose if the common or harmonised or compatibilised rules made them less competitive in other markets — and this is a more compelling argument for New Zealand than for Australia because, despite the changes made by the Clark government, New Zealand ‘s business rules are less prescriptive and so less intrusive. That was a significant defect in the Australian proposal for common banking regulation.

So for New Zealand at least the point of greater integration with the Australian market is greater competitiveness in the wider world. In some cases, just making a bigger “home” market may help deliver that higher competitiveness but that critical mass argument does not clinch all arguments. The single economic market is not an end in itself — unless the real objective is de facto federation in all but the politics and that is off any realistic agenda.

That highlights the third asymmetry in the relationship, the asymmetry of perspective.

We see the world and each other differently. We have since at least the 1890s. Some think the difference trivial, a sort of niggling nationalism of the least desirable kind, which costs us economically and in international respect — a sort of small child’s determination to inflate difference in order to inflate ego. But that view is blind to the fact that we are different, that there are real bases for the “non-identical twins” having different perspectives.

The “non-identical twins” found themselves in lands structured by very different geologies, climates, resource bases and longitudinal position — and with very different indigenous populations and, later, significantly different immigration patterns. So they grew apart, especially when railways made internal travel in each country swifter than sailing ships, which had been indiscriminate among ports in each country. They were united in empire for much of the pre-1965 era and communicated, if at all, through London — or rather, each communicated with London and largely ignored the other. Only with cheaper jet travel, which, like ships, link cities in each country as easily as cities within each country, did the easy intermingling of the pre-steam era return. That was an important driver in bringing the countries into closer government-to-government contact.

And that contact brought into sharper relief the differences of perspective, especially on security matters, on which the non-identical nature of the twins is most obvious.

We in New Zealand are more of the Pacific. We fear invasion less, we value multilateralism more than Australia and Australians and value alliance with the United States less. We have smaller military ambitions and so spend less on the military. From the New Zealand side, Denis McLean, despairingly, has catalogued these differences of security perspectives in his book The Prickly Pair. Hugh White, in sadness, has from the Australian side delineated the divergences.

White drew this conclusion in 2001 in what I think was a seminal paper on the modern relationship. He said Australia must abandon the attempt to tie New Zealand into its bid to “retain its place among the significant air and naval powers of Asia”. New Zealand’s policy under Helen Clark made “a lot of sense”, given New Zealand’s belief that “conflict will be limited to lower-level operations such as peacekeeping”, its greater focus on the United Nations, greater focus on the southwest Pacific and absent sense of a direct threat, though he was personally saddened by Clark’s approach and said there would be “consequences”.

But that conclusion led White not to pessimism but to optimism: “It does not mean that our defence relationship is doomed. Indeed, frank acknowledgement of our differences may strengthen it… Australians can stop worrying about New Zealand getting a free ride. Most New Zealanders do not even want to be on our bus… New Zealanders can now stop worrying about being bullied by Australia. We can now understand that you want to go your own way and we will not try to stop you. Meanwhile, we still have a lot in common and a lot to work with. We need to recognise the differences between us and work around them.” And in fact there is growing recognition in Canberra and more broadly in Australia of the peacemaking and peacekeeping contribution and the buildup of the army, even if New Zealand has relegated the air force and navy to adjuncts of the army. There is a lot of scope for cooperation and a lot of cooperation.

The underlying point is that, while we are non-identical, we are still twins — or at least brothers/sisters or at least cousins. Helen Clark made this point by implication in her response to Australian High Commissioner Allan Hawke’s observation in 2003 that the relationship could “go one way or the other”, closer or further apart. Clark said the relationship was “maturing”. “We probably relied for a long time on the old ANZAC tradition but there’ll come a time when the experience of having shared battles and wars together won’t be one that anyone remembers. So we have to have a modern relationship and I think that is what the High Commissioner is getting at… It is important to put a lot of time and effort into keeping the relationship up to date and keeping political leaders, business leaders, leaders at all levels in touch with each other. Actually we agree on far more things than we disagree on but there are some obvious areas of disagreement.”

Boil this down. Australia remains New Zealand’s most important foreign relation. But it is also family. That both smoothes and complicates management of the relationship.

It is made still more complicated by the fact that in one sense the “family” is growing but so, too, is the “foreign”.

More and more make their home in the other country, thus intensifying the direct personal and family linkages. Much is made of the interchangeability of our film stars, musicians and other celebrities and notables. We claim each other’s where we can and want to. We are definitely in that informal sense “family”, even if we make rude jokes about, and inflate our stereotyped views of, each other. It is not just the most important relationship in foreign policy, security and trade terms. It is also our closest and will be for a very long time.

But the “foreign” is growing, too. New Zealand has, particularly since the 1980s, become more distinctly a sovereign and separate nation. Helen Clark’s refusal in 2001 to subsidise New Zealanders’ call on Australian government benefits and other social assistance and her agreement that they would have to become Australian citizens to qualify for that assistance was in part an assertion of sovereignty. On the other side, after John Howard goes the next generation of Australian leaders will have little or none of his sense of a fraternal past and less of his sense of inherited bonds beyond the inescapable fact that we are two predominantly European societies on the edge of Asia and in or on the edge of the South Pacific. So it would be unwise to presume an enduring sentiment that might offset the asymmetries, particularly the asymmetries of interest.

The challenge in managing the relationship will be to learn how to manage a “foreign” relationship, with all the distance that implies, while not losing, in those dealings, our sense of “family”.

With that in mind, there are some considerable challenges.

In security matters we have a mutual interest in a stable, peaceful and economically viable, or at least workable, South Pacific. But the edginess over the Solomons and over the appointment of Greg Urwin as South Pacific Forum Secretary-General showed we have different perspectives on the Pacific even if the general objectives are closely similar. The balance of military power in north Asia will highlight the alliance-versus-multilateral difference. Australians will continue to wish we would buy into their high-tech approach to military affairs, increase our spending and junk the anti-nuclear policy. The fact that we don’t, while no longer a cause of fury, is also not an encouragement to Australia to stretch a point on other matters for us. And the muslim dimension may similarly challenge us at times, given Australia’s proximity to Indonesia and greater wariness of refugees and distrust of New Zealand’s open approach to visa-free entry for tourists.

Still, there is much on which we will be able to cooperate comfortably, not least in peacekeeping in the Pacific and Asia. Australian military men on the ground do value New Zealand military men on the ground.

We have differences on environmental matters, particularly on climate change. But it seems unlikely so far that those differences will generate tension between us unless it begins to affect economic interests — for instance fish stocks.

We will also be able to cooperate comfortably on much in the multilateral trade arena. Our interests closely coincide. There are also the parallel talks on CER-ASEAN freer trade. But Australia has shown little interest otherwise in joint trade deals and, when it comes to bilaterals, national interest rules. The trick for New Zealand in that sphere will be not to give away too much to China if we get an agreement first.

As for the single economic market, the challenge will be to take whatever steps can be taken without undermining international competitiveness. There is also an internal management job to be done to dissuade interest groups and political parties here from sabotaging what gains can be made, not least in setting up joint agencies which offer considerable gains in access to a much wider pool of qualified experts to make highly technical decisions. Failure to dampen that sort of niggling nationalism may result in diminished Australian interest in a single-market project which in any case offers relatively smaller gains for it. Australia has bigger game to chase. (And so, for that matter, does New Zealand.) It is near inconceivable that a common external tariff or common currency will be on the table within the next 10 years.

Perhaps of more importance over the next five or 10 years will be things that go on under the radar. Exchanges of policy initiatives and New Zealand ministers’ membership of the federal-state ministerial councils are well established. The biotechnology alliance and the contribution to the synchroton project in Victoria are examples of growing cooperation in science. The Australia New Zealand School of Government is an intriguing academic enterprise, unique in the world in its structure. There is great scope for cooperation in the arts.

That informal or semi-formal dimension to the relationship has a lot of potential. Might it not become a more prominent dimension than business matters?

So what do we have? In my chapter for the Institute of International Affairs book I summed up thus:

The “maturing” relationship, as Helen Clark called it, is of two asymmetric independent, sovereign nations with divergent demographic profiles, different perceptions of their strategic interests and different economies — with much in common in their histories and cultures and closely meshed business activity and a high level of joint governmental activity but no prospect even of a customs union, let alone a common currency, a common border or more fancifully, political union. Though the two societies still intermingle easily in most informal dealings (except in sport and except for sibling ribaldry and rivalry), a new realism, recognising difference rather than assuming congruence, has entered the two countries’ official dealings with each other. Both countries have bigger trade fish to fry in Asia and elsewhere and Hugh White’s admonition to acknowledge differences, work around them and focus on what is held in common seems a useful pointer to the likely future development of the relationship.


(1) All references in this paper are footnoted fully in the chapter, so there are no references here.