Speech: The Australian New Zealand Relationship and NZ's Future
David Shearer
Australia New Zealand Leadership Forum, Sydney
13 April 2012
I’d first like to acknowledge the Chairs of Forum, Jonathan Ling from New Zealand and Rod McGeoch from Australia, and Julie Bishop, Deputy Leader of the Australian Opposition.
I also acknowledge Ministers from the New Zealand and Australian governments.
I met yesterday with Prime Minister Julia Gillard. She reiterated her commitment to our trans-Tasman relationship. That commitment is welcomed across the New Zealand Parliament.
I’d like to start by talking about the significance of the New Zealand Australian relationship in relation to New Zealand’s future.
New Zealand and Australia are uniquely close – we share common values, traditions, history and institutions.
Our economic relationship is central to both countries and has been a focus of this forum since it was first held in 2004.
It is a solid foundation for a relationship that few other countries can claim.
That was on display for all to see during the Queensland floods and the Christchurch earthquakes.
I know that all New Zealanders deeply appreciated the generosity of the Australian people in the aftermath of the Christchurch earthquake.
The offers of Australian search and rescue, medical staff and police were gratefully received – and were welcomed with a spontaneous standing ovation when they arrived into Christchurch.
Today as the result of effort and goodwill on both sides of the Tasman we are now economically closer than we have ever been.
Our close connections will continue.
Our bipartisan approach in New Zealand to the relationship has also endured.
The fact that this forum began under a Labour Government in New Zealand and a Liberal one in Australia – and has continued when political fortunes were reversed is testament.
But what will the relationship deliver?
There is some concern that the relationship agenda is delivering increasingly marginal returns.
The challenge I believe for us as leaders and for this Forum is to consider how the future of this relationship is best served.
To that end, this is the right time for the Australian and New Zealand Productivity Commissions to be looking at this very issue.
A single economic market, for example, is an aspiration that clearly deserves further analysis.
I look forward to their report later this year and also would welcome your thoughts on this.
For my part, the future of our on-going economic relationship cannot be separated from New Zealand’s economic future.
Our trade relationship with Australia is strong. Australia is our largest trading partner. New Zealand is Australia’s fifth largest.
In the job-rich manufacturing exports, there is a closer symmetry with New Zealand as Australia’s largest market and Australia as ours.
But a growing economic differential has a real impact on New Zealand.
In particular, many of our highly educated young people are attracted by higher wages and better economic opportunities in Australia, whether that is in business, science or academia.
We have a world class education system in NZ, but exporting our talent is clearly not in our longer term interests and presents a real challenge for how we respond.
Australia’s vast mineral wealth is part of its current and future success.
New Zealand cannot directly replicate that.
Instead our challenge is to design a future where we harness our talent and innovation the way that other like-sized countries have done.
Singapore, Denmark, Finland, and Israel do not have the advantages of New Zealand’s land mass, resources and climate, yet they are world leaders in innovations based on their education systems.
Our competitive advantage lies in our clean green image – that includes the way our agriculture is produced, marketed and sold to increasingly discerning international consumers.
But as good as New Zealand is at it, there’s a ceiling on how much butter and beef, meat and milk you can make off New Zealand grass.
You hit the limit a long time before you get to be as prosperous as Australia.
We have to look for new opportunities. We have to leverage off our existing natural advantages.
But we also need to seize opportunities that will not only keep our talent onshore, but create a place where talent wants to live.
I believe that our economic viability is linked directly to our ability to produce new and innovative products and solutions.
That type of economy in turn will better generate the jobs that will keep our young and talented people in New Zealand.
It’s not a question of either agriculture ‘or’ high-tech. We should be and can be doing both. We are having some real success with the top 200 high-tech companies which generate $6.5 billion, nearly 80% exported and growing at around 4%.
But we must do much better at commercialising ideas and ensuring the value stays in New Zealand.
In this light, trade with Australia has frequently been important for the growth of many smaller innovative companies.
NZ’s small size means new companies have a limited local market in which to test ideas before taking them to export in order to grow and Australia has been an extension of a more familiar environment.
We need to preserve and expand those opportunities for New Zealand companies.
Growing this economy is a challenge I have dedicated myself to.
I want to conclude by touching on your earlier discussion of Australia’s White Paper on the Asian Century.
Economic dominance is shifting from west to east. And it’s moving into our neighbourhood.
Asia’s share of the global economy has more than doubled over the past 60 years.
Hundreds of millions have been lifted out of poverty.
It was the resilience of the Asian economies, in particular China, that sheltered New Zealand and Australia from the excesses of the global financial crisis.
Such a historical and fundamental shift opens new opportunities for those nimble and astute enough to seize them.
New Zealand has moved quickly with free trade agreements – in particular with China and we are now negotiating with India. It is, again, an area of bipartisan endeavour.
Those agreements have opened doors for New Zealand products and have grown our trade throughout Asia.
At the same time, issues about land ownership, or general ownership of the economy, immigration, national identity, cultural links and heritage are increasingly coming to the fore.
The purchase of 16 New Zealand farms by the conglomerate Shanghai Pengxin has caused anxiety in New Zealand.
It was compounded when the High Court successfully upheld a challenge from a group of farmers in a competing bid ruling that the deal did not bring sufficient benefit to New Zealand. We are still waiting for the Government’s response.
The partial sale of NZ’s energy companies, the absence of details around the Trans-Pacific Trade Agreement and other events raise fears that our sovereignty is being undermined.
Of course New Zealand needs foreign investment. We welcome investment that helps build our country and develop our economy.
For me, the overriding principle of that foreign investment is that we have to be sure that it brings real benefit to our country. That is particularly the case around profitable farmland which New Zealanders are sensitive about.
There needs to be certainty around investment rules. The rules to tighten the ownership of farmland, for example, need to be explicit and set out the conditions under which foreign investment might succeed.
There also needs to be – to the fullest extent possible – transparency and communication around agreements and their negotiation.
We cannot underestimate – and nor should we – the fears people have about loss of identity and sovereignty.
And in New Zealand where our environment and agricultural land is so essential to us, this will always be the case.
The fact that this anxiety coincides with the global financial crisis should not come as a surprise.
Australia’s White Paper is a valuable exercise.
Turning a blind eye to these pressures will cause longer-term headaches.
If we don’t discuss these challenges openly and on our own terms, they will be forced on to us.
If we fail to consider these possibilities they will eventually bubble to the surface in increasingly unpredictable and uncontrollable ways.
That is in no one’s best interest.
I am convinced that New Zealand must preserve its historic and competitive advantage, at the same time as expanding our opportunities.
Our economic viability is directly linked to preserving our assets and our natural advantages.
In fact you could say that the issue around farm land ownership in New Zealand is symptomatic of a broader concern about economic sovereignty.
New Zealand and Australia are engaging with Asia in slightly different ways.
The challenge will be whether the closeness we have experienced under CER can be adapted to serving our increasing engagement with Asia.
On the one hand, even collectively Australia and New Zealand only have a combined population of 25 million. There may be opportunities to pool resources. I have yet to see the mechanisms through which this might occur.
There is considerable scope to learn from each other’s experiences at the same time as accepting differences in approach.
There is an opportunity here that we all see.
As our Productivity Commissions look at the future of the trans-Tasman relationship, I hope they also take the opportunity to look at the impact of the Asian Century.
Thank you.