ANZAC Ministers agree to take on the world (and Trump)
By Richard Harman (author)
In public, they won't admit it.
But it is now clear the New Zealand Government is developing a strategy to combat the kind of response that Donald Trump has unleashed in the United States and Nigel Farage has unleashed in Britain.
And it is invoking the spirit of ANZAC to make its point.
Simply, the Government now has a programme to sell the advantages of globalisation – in particular, free trade agreements --- but at the same time looking for a much closer economic relationship with Australia which would effectively treat the two countries' economies as one.
At a high-powered conference in Sydney on Friday there was much talk about the need for both the Australian and New Zealand Governments to convince the electorate at large of the virtues of the Trans Pacific Partnership.
The venue was the Australia – New Zealand Leadership Forum which attracted a heavy representation from the Governments and business leaders of both countries.
Politicians (speaking under Chatham House rules) made it clear that they believe business needed to play its part in winning the globalisation information battle.
For his part, Trade Minister Todd McClay, who has beefed up his own office's public outreach on trade -- a move that is expected to be echoed soon within the Ministry of Foreign Affairs and Trade – argued the benefits of globalisation and trade liberalisation which he said had clear, tangible benefits.
He doesn’ find it surprising that there should be criticism of free trade in what he euphemistically described as “some countries” because they have not really recovered from the Great Financial Crisis.
“But it is imperative that New Zealand ahs a strong voice internationally around trade because we are a trading nation,” he told POLITIK.
“if the world closes its borders and puts into play greater trade protections and restrictions then New Zealand will be harmed.
“So it is important that New Zealanders understand that we need the support of them to understand that trade is important to us.”
Behind the closed doors of the conference, there was a much more frank discussion about the way the trade debate in both countries has been framed. It was clear that the two Governments believed that the trade debate had failed to get through to workers how much their jobs depended on trade. And with that, there was a call on business to join the debate or potentially lose the benefits that trade agreements provided.
But globalisation goes both ways, and it was Finance Minister Bill English who suggested to the conference that New Zealand was ready to welcome the participation of international construction companies to work on the country’s huge infrastructure backlog.
Only last week English released a forecast that new Zealand would need to spend $100 billion on infrastructure by 2026.
That release has been incorporated in a joint Australia- New Zealand Infrastructure “pipeline” forecast launched at the Forum, and English is unshamed that it is intended to attract more large-scale international contruction companies to New Zealand.
The idea is that the companies would see Australia and New Zealand together as a big enough market to justify moving “down under”.
“There’s a lot of investment in infrastructure needed,” said English.
“New Zealand, and to a lesser extent, Australia, has a history of low productivity in these industries, so the infusion of offshore skills, management and technology into our industry is pretty important to us."
Asked if the welcome for the infrastructure construction companies would extend to having them get involved in housing construction, English's answer was a simple”yes”.
"We've had some Australian interest in the New Zealand market, but they need a bit more certainty about what the nature of the transaction is and what sort of transaction they can expect to see over the next four or five years,” he said.
“That's becoming quite a bit clearer as the Auckland Unitary Plan gets in place and we get our transfer process up and going and a bit more forward signalling.
“We can see some real scope.
“We need businesses turning up who have got experience of scale and significantly higher productivity processes."
But one key New Zealand participant in the Forum, the New Zealand Council for Infrastructure Development CEO, Stephen Selwood, said setting out an infrastructure intention list was all very well but what was also needed was some indication of how it was going to be funded.
“If you want to deliver that list of projects then you really have to address the funding issues,” he told POLITIK.
“There’s really only two ways you can raise revenue; either through user charges or by taxes.”
He said a third option was by what he called value creation --- in other words by bringing in private developers such as through public-private partnerships.
“But that is effectively a form of user pays,” he said.
However, he said that we needed to get more creative with that option because we could not keep going back to taxation all the time.
And he said it was urgent these issues be sorted out.
"In Auckland, it is mission critical," he said.
There was much talk within the tourism stream at the Forum about making the two countries a single market. This was particularly true of tourism.
As one prominent tourist operator said in the closed session, tourists who came to one country invariably also went to the other. But frequently they found they needed two visas, and other entry requirements differed between the two.
So why not one visa?
“A lot of people talked about the difficulty of marketing Australia and New Zealand together because of the difficulty of two visas being required,” said Forum co-Chair and Auckland Airport CEO, Adrian Littlewood.
“People were saying not only should we have single visa but should we have a single passport foundation which does away with paper entirely which says that we have different rights of entry which are held in the cloud and make that entry into our two countries as simple as possible.”
In the closed session, there was discussion about the security inplicaitons of this.
One trans-Tasman tourism operator asked why that should stop the proposal; why should it not be possible to sort out the tiny percentage of security risks to allow the majority of tourists entry.
Littlewood said that the proposal acknowledged that New Zealand Australia were two sovereign countries sand that would need to be protected.
They may be separate sovereignties, but they are, according to a McKinsey study presented to the Forum, the most closely linked economies in the world.
Perhaps no-one symbolises the nature of the ANZAC partnership better than Australia’s Treasurer, Scott Morrison, whose grandfather came from New Zealand and who himself at one stage headed a New Zealand Government entity (Office of Tourism and Sport) and who is an unabashed admirer of the Key Government.
That admiration apparently extended across a wide range of Australian delegates at a private dinner on Thursday night before the Forum opened, with much discussion of the political success of the Key Government.
That seems to be a theme in Australia with Key meeting with the New South Wales Liberal Government earlier this year and giving them a talk on his own political success.
Morrison believes New Zealand can offer Australia a lot.
"New Zealand has gone from strength to strength under the Key Government, and they provide a real guide for our Government, now with a majority but a cross bench in the Senate which we have to work constructively with,” he told POLITIK.
“For all of the Key Government, they have worked well as a Government where they don't have a majority in the Parliament which is how the New Zealand system tends to work but I think there are some really good lessons for us in how John Key and Bill English have been able to continue the pace of economic reform but do it in a more consultative way with a series of other political parties which are not necessarily political fellow travellers.”
Morrison faces a major challenge getting the Australian accounts into some sort of fiscal order.
And for that, he is going to need Senate support even though the past few weeks has seen a welcome boost to coal and iron ore prices.
He says he is cautious about those price increases.
“The reason why we are so cautious about them is that we can’t allow the terms of trade improvement to be seen as an excuse or to give rise to complacency about dealing wit the serious budget deficit that we have got --- we’ve got to get the budget back into balance; we’ve got to do that to arrest the debt.”
And it's the fact that the Key Government has done exactly that and that our businesses are starting to grow which seems to have put a new gloss on New Zealand’s image in Australia.
In the closed sessions, Australian business people talked about New Zealand's willingness to innovate, and it's enthusiasm to try new ways of doing things.
At the same time, New Zealand has stopped banging on about the usual complaints about tax imputation and other issues and instead is now trying to persuade Australia that the two countries should work on the issues they agree on.
The result is a new kind of trans-Tasman relationship, a sort of return to the spirit of ANZAC.
Business NZ CDEO, Kirk Hope, agrees with that characterisation and says that the Forum has become a lot more positive with a focus on how Government and the private sector can collaborate.
Perhaps it's Trump; perhaps it's the nature of the two Governments, but it does seem that there is a new urgency across the Tasman to get on with the job of trying to make it in a potentially hostile economic world; a sort of more grown up approach.
(The Australia New Zealand Leadership Forum invited POLITIK to Sydney to cover the Forum)