Celebration of the 25th Anniversary of Closer Economic Relations (CER)
Statistics
It’s a pleasure to be in Sydney tonight at the Trans-Tasman Business Circle’s dinner in celebration of CER’s 25th anniversary.
I’d like to acknowledge the presence of the Australian Parliamentary Secretary for Trade, John Murphy, and also former NSW Premier Neville Wran.
I’d also like to recognise the High Commissioners for New Zealand and Australia, John Larkindale and John Dauth respectively, as well as John Weiss the Chief Executive of the TTBC and John Allen, the New Zealand co-chair of the Australia-New Zealand Leadership Forum.
The Circle does an outstanding job in supporting and promoting this very special relationship
We gather tonight to mark a significant anniversary, and to hail the vision of those who made CER possible. I want to recognise in particular those present from government and business who have helped realise this closer, vital, economic relationship.
And I want to acknowledge that CER enjoys very strong bi-partisan support on both sides of the Tasman. As Doug Anthony himself will recall, the Australian election in 1983 interposed itself between the conclusion of the Treaty on the one hand, and its signature on the other. Moreover, the election saw a change of government. But the Agreement survived, and prospered in Australia as it did in New Zealand.
The Australia–New Zealand relationship is indeed a special partnership, in the words of Prime Minister Rudd it is “as close as it gets”.
2008 marks the 25th anniversary of one pillar of that partnership: the Closer Economic Relations framework.
Today, the value of removing barriers to trade is taken for granted but back in the early 1980s when we were both more protectionist in trade policy, the decision to move towards CER was bold.
25 years on, CER has delivered major gains to New Zealand and Australian exporters.
Bilateral trade has grown by 9% a year on average – more than both our countries’ individual growth rates combined.
Today, CER is regarded as “the world’s most comprehensive, effective, and mutually compatible free trade agreement”.
The CER economy provides New Zealand businesses with scale they could not achieve in New Zealand: a single regional domestic market five times the size of the New Zealand market by itself.
New Zealand companies can therefore create businesses of greater scale, from which they can expand more successfully elsewhere in the world. Nuplex, Pumpkin Patch and Heinz-Wattie are classic examples.
The CER economy also provides Australian companies a chance to export, and invest abroad, by getting their training wheels on in the New Zealand market before taking on Asia and the rest.
AUSTrade recently reported that more than 17,000 Australian businesses exported to New Zealand in 2005-2006, almost double any other destination.
For first-time exporters in rural and regional Australia, CER has allowed many local businesses to go global for the first time. This has been very important for wages and employment prospects in regional Australian economies.
As Minister for Statistics, I’m pleased to say the numbers back this up; bilateral investment stands at nearly $100 billion, and bilateral trade in goods and services at around $24 billion each year.
CER and the move towards a Single Economic Market also impact on my portfolio as Associate Minister for Social Development and Employment. In many ways, the closeness of the Australia-New Zealand relationship means that trans-Tasman issues are effectively ‘domestic’ issues for both of us.
Migration between New Zealand and Australia has always been a hot-button political issue (and the subject of reversible jokes in both directions) but the fact is that the free flow of people has been a key factor in the integration of our economies and the broadening of our bilateral relationship.
The flow of people has enabled us to better develop our human and financial capital, to share knowledge and skills, and to realise the full potential of CER.
Think of it this way: Businesses wanting to take advantage of the increased scale and scope CER offers are likely to spend a lot of time visiting their new market. In fact, almost 2 million short trips are made by New Zealanders and Australians across the Tasman each year. Even just taking into account travel by Trans-Tasman Business Circle members, that’s a lot of business done and relationships forged.
This freedom of movement is made possible by arrangements between our governments, which allow New Zealand citizens and Australian residents freedom of movement to enter, reside and work in the other country.
Those same businesses, once they are established across the ditch, are likely at some point to send over senior managers to oversee the company’s extension.
And when those businesses look to establish deeper investment in the other country, they will be assisted by the addition of an investment protocol to CER, which was discussed by Dr Cullen and Mr Swan at the annual SEM Ministers’ meeting in Wellington last week.
The real strength of CER, then, is that it has become much more than a traditional trade agreement.
With the barriers at our borders almost entirely cleared away, our governments are now looking behind the border to do away with unnecessary transaction costs companies can face in doing business across the Tasman.
Looking forward to the next 25 years, the Single Economic Market process that has emerged from CER is a significant opportunity to address the transaction costs of doing business across the Tasman and enhance New Zealand’s international connectedness.
It’s a dynamic process with the capacity to take on new agenda items as opportunities arise or circumstances require, and to tick them off.
This dynamism is particularly important given the rapid evolution of business models and flows of skills and capital in the global economy.
Of particular interest to business leaders here today will be our work to enhance the trans-Tasman business environment to make it easier for you to work between countries, including:
- Working to align the New Zealand and Australian approaches to financial reporting to help streamline accounting operations.
- The signature yesterday in Christchurch by New Zealand Commerce Minister Lianne Dalziel and Australian Attorney-General Robert McClelland, of a Treaty to provide a legal framework to help resolve trans-Tasman disputes with greater efficiency and at a lower cost.
The future of our Single Economic Market will also focus on using our strong relationship with Australia regionally and internationally in the international trade arena and on other international issues. For example, we are both closely involved in lowering barriers to regional trade through APEC and the negotiations underway for an ASEAN-Australia-New Zealand Free Trade Agreement.
We also have a strong shared interest in international climate change. At their meeting last week, Dr Cullen and Mr Swan agreed on the importance of New Zealand and Australian officials maintaining close contact to maximise the future compatibility of the Australian and New Zealand emissions schemes, with each other and with other emissions trading schemes.
As you can see, there’s a huge amount of work going on to contribute to the development of a Single Economic Market between Australia and New Zealand.
And that’s the strength of CER. 25 years ago, both our governments recognised that we are stronger together than alone. Today, we are just as committed to working even more closely in dealing with the challenges of tomorrow and to working with business to that end.