Getting more matey with the big Oz

It’s not a good look, National Australia Bank’s manoeuvre to skim hundreds of millions of dollars off the New Zealand taxpayer.

Regardless of the eventual Supreme Court decision years into the future, after the tax lawyers have drunk their fill from this brimming trough, the billions the Australian banks have denied the tax system, legally or not, are not the mark of good citizenship of this country.

One of the core principles of a good tax system is that it is fair. That requires everyone to pay a fair share. Every dollar of tax the banks have not paid is a dollar New Zealand businesses and individuals have had to pay. (More on the tax system here next week.)

Small wonder Kiwibank is gaining market share beyond its expectations.

The good news is that Kevin Rudd takes a different view from the banks’ boards.

And that is positive news for the prospect of a single economic market and the elimination or softening of the grit in the gears of personal and business dealings with Australia.

When John Key fronts in Canberra on Thursday with seven other ministers for a cabinet-to-cabinet hui — leaving Tony Ryall as acting Prime Minister here — he expects to have some hard news to announce on the agenda he and Rudd set in March.

Top of the list will be something on easing travel formalities across the Tasman. It won’t be “domestic” but it is said to be better than now. There may be word on a lift in the threshold above which Australian investments here are subject to scrutiny — in March Key and Rudd committed to a new protocol and the Key government’s more relaxed attitude is a contrast with Michael Cullen’s discomfort. There may be something on access to Australia for New Zealand apples, an eight-decade-long point of contention.

There’s plenty more going on: rejigging the rules of origin under which goods qualify for tariff-free trans-Tasman trade, a “comprehensive tax treaty” (which will have to await the two countries’ tax reviews), a joint bid for a major international radio frequency network project, an update of the food standards treaty, getting a compromise on the joint therapeutic goods authority which Ryall blocked in 2007 (and now is mired in the Canberra bureaucracy) and joint trade promotion in other countries — “stronger together”.

Simon Power has picked up Lianne Dalziel’s programme on harmonising financial services, insolvency, criminal court cooperation, business reporting and securities law and cooperation between competition watchdogs. New Zealand eyed up drawing on Australia’s Productivity Commission as a model for — and maybe contributor to — regulation improvement here.

All this is geared to the single economic market under which, it is hoped, eventually doing business in each other’s country will be the same as doing business at home. Australia is still working on a single market within Australia. New Zealand officials and ministers are part of that project, given new impetus by Rudd last year and out of which has come a single consumer law for Australia, on which this country has a memorandum of understanding.

The single economic market was first mooted 20 years ago. Cullen and Peter Costello put their Treasuries’ weight behind it and thereby rescued it from moribundity in the trade and secondary ministries. Rudd and Key have lifted it another notch, to their own departments. In addition, they get on well.

Officials say that has added impetus. It has also given oxygen to the Australia New Zealand Leadership Forum of businesspeople, officials and assorted others, initiated in 2004 to deepen the bilateral contacts. Rudd sent six ministers to last year’s one in Wellington and is sending five, including himself, to this year’s in Sydney on Friday and Saturday.

Rudd goes further. He rings Key before G20 meetings — the grouping of 20 leading economies — and represents New Zealand’s views there.

He has been very supportive of New Zealand with the United States, so United States officials have told our officials — a stark contrast with John Howard, who explicitly kept New Zealand out of free trade negotiations.

He seeks collaboration in the Pacific in security, aid and development. There is talk of developing Anzac contingents for some peacemaking and peacekeeping. CDR, the closer defence relationship — talked about but left derelict for 20 years — might now get some traction.

Why does Rudd bother?

For two reasons.

One is that Australia has huge investment in this country and New Zealand is a significant source of profits and foreign exchange earnings (and not just for rapacious banks). It makes sense now for Australia to advance the single economic market where 10 years ago most of the driving was from this side.

The second is Australia’s pretension to being a middle power in Asia. Having New Zealand under its wing, or at least alongside, fluffs up Australia’s feathers.

New Zealand has its uses — not just as easy pickings for tax jugglers and their lawyers.