The Anzac deal: just how deep might it go?

Anzac Day has just passed, a reminder of a shared military disaster etched in two national memories. How much more will we share 40 years hence?

We will share many relatives. We will likely share more of each other’s economies as politicians work towards a single economic market (SEM). And then we might need a share of Australia’s fiscal loot.

We share a colonial history and some military history, though in Australia most think of Anzac as a name for something distinctly Australian. A recent move to develop a case-by-case joint ready-reaction military capability — a sort of Anzac revival — doesn’t change that.

More important is how much future we will share.

There is a lot we don’t share now: Australia’s close military alliance with the United States versus our looser association, which Helen Clark restored and John Key is riding a little further; New Zealand’s free trade agreement with China; Australia’s siege by asylum seekers; New Zealand’s large Polynesian dimension which makes the indigenous rights declaration a far bigger step here and one that might well, even with Key’s initially disabling qualifications, change our law and custom over time, as Sir Edward Durie and Mai Chen said (more on that in a future column).

Our differences have kept us out of the federation, though public resistance may be softening: a UMR poll found 24 per cent support for a merger.

That probably reflects the spread of our families into Australia: half a million Australians were born here and up to 1 per cent a year go there for higher incomes. That social meshing in part reflects the integration of the two economies through the SEM process.

Key and Kevin Rudd stepped up SEM as a core ingredient in the close personal working relationship they say they are determined on — closer than the already chummy Clark-John Howard cooperation. They clothed that a year ago in matey rhetoric and held a symbolic joint meeting of senior ministers in August at which they adopted seven principles for dealing with SEM issues and set up an officials implementation group charged with working out how to do things, not how to stop them.

They then symbolised it in the fast-track processing of trans-Tasman travellers with electronic passports.

SEM promises — in the words of Michael Cullen who, with Peter Costello, resuscitated it — that New Zealand companies doing business in Australia will eventually find that very much like doing business here and vice-versa.

Rudd’s interest in closer ties comes in part from growing recognition of SEM’s value to Australian companies, pension funds and private equity firms, which have heavy investments here and sell a lot here. When Australia wants more influence in international forums, having New Zealand alongside helps — though Australia’s aim to set up as a standards-setter on therapeutics for the region though a joint agency was blocked by National when in opposition. Discussions are “ongoing”.

Commerce Minister Simon Power, the lead SEM minister, has instructed his officials to focus nearly exclusively on SEM-tagged items. They have a long list to work on, which includes insolvency proceedings, accounting and financial reporting standards, auditing and financial advisers regimes, managed funds, money-laundering, anti-competitive conduct, cross-membership of regulatory bodies and intellectual property law. New Zealand is involved in Rudd’s attempt to get uniform consumer law across its states.

Underpinning this is Rudd’s and Key’s seventh principle: that SEM issues should be guided not by what is in each country’s interests but according to “net trans-Tasman benefit” — whether the Australasian economy as a whole benefits. Power characterises the test as “will it make the trans-Tasman economy stronger and more attractive to international businesses?”

SEM is more a process than an endpoint. But the deeper the meshing, the closer we will get to the point when a common border (a common visa policy, tariffs, biosecurity rules and much else) will come on to the table — and then a common monetary authority.

If we reach that point Australia’s greater wealth (water-permitting) will become even more of a policy challenge than now.

A result of merging the economies has been to concentrate more higher-paid activity in the bigger “home” market. Hence the high westward migration.

The risk is that New Zealand taxes will generate a lot of human capital for Australia, get none of those emigrants’ taxes while they are working but be called on for pensions and health services if they retire to lower-cost, water-rich living here.

Will Gerry Brownlee’s mineral bonanza, plus water, fix that by 2050? If not, a spiral could develop that can be moderated only by getting back some of the fiscal loot.

That would require closer political relations amounting to federation or a form of confederation.

Then Anzac could be shortened to Aac — just as most Australians will have thought of it yesterday. Stone the crows.