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The relationship with Australia is New Zealand’s most significant. It is underpinned by geographical proximity, historical linkages, shared outlook, similar social structures and an extensive overlap in economic and security interests.
A feature of the relationship is the level of political engagement that creates a framework for the management of the relationship. The two Prime Ministers have met annually since 1996 in formal talks and less formally on a number of other occasions. Foreign Ministers have met on a six-monthly basis since 1989. CER Economic Ministers, the Ministers of Defence and the Treasurer/Finance Ministers meet at least annually. And there is increasing New Zealand participation in the Australian Ministerial Councils. Connections are similarly strong between parliamentary committees, political parties and many government agencies.
The 1983 Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) is the primary instrument governing trade relations between Australia and New Zealand. CER grew out of frustration with lack of progress in previous attempts to free up trade between Australia and New Zealand. Because of experience with those previous attempts, CER was from the start based on the key principles of comprehensiveness, which meant that everything was included unless it was specifically excluded, and simplicity. This has made it one of the world’s most comprehensive, open and straightforward free trade agreements. There are now no tariffs, quantitative restrictions or industry assistance measures permissible on trans-Tasman trade in goods, which meet CER origin requirements. (Quarantine remains outside CER.) CER also contains no anti-dumping provisions, and trade – which has doubled in real terms since 1983 - is now subject only to the disciplines imposed by domestic competition laws. The introduction of CER has assisted significantly New Zealand’s and Australia’s economic and structural adjustment processes and their drive for increased international competitiveness.
The 1983 Agreement set procedures in place for the removal of tariffs and quantitative measures on trade in goods between Australia and New Zealand and it also set in place the basic framework of the Agreement. Although there was concern on both sides of the Tasman about the impact of the Agreement, after a short period its success was evident. As a result, in the 1988 Review, it was agreed that all tariffs and quantitative restrictions on trade would be removed by 1990, five years ahead of schedule.
The 1988 Review also brought services into the free trade area in the form of a Services Protocol, and deepened the CER Agreement by looking to harmonise a range of non-tariff measures such customs issues, standards and business law. The Protocol on Services to ANZCERTA, which came into force on 1 January 1989, provides for free trade in services based on the concept of national treatment. Each government agreed to treat the providers of services from the other country on the same basis as its own service providers. The Protocol covers all services traded between the two countries, except those inscribed by each government on separate "negative lists." The lists are reviewed periodically, and have been substantially reduced over time. New Zealand now has only two inscriptions and Australia six.
2003 marked the 20 th anniversary of the signing of CER. There were a series of events in both Australia and New Zealand designed to emphasize the continuing value of CER to both partners, most notably, the visit to New Zealand by Prime Minister Howard in February 2003 as well as by former Deputy Prime Minister of Australia (and one of the principal architects of CER) Mr Doug Anthony, for the launch of the joint MFAT/DFAT publication “The Negotiation of the Australia New Zealand Closer Economic Relations trade Agreement 1983”. On 28 August 2003 the annual CER Trade Ministers meeting was expanded for the first time to include six Australian and New Zealand economic Ministers. The 2004 Ministerial Forum (10-11 December) continued the momentum of this renewed and expanded focus on CER, and was the largest meeting in New Zealand of Australian and New Zealand Ministers about CER since its establishment.
In recent years, a number of new Agreements and Arrangements have been added. These include a Mutual Recognition Arrangement, an agreement on Food Standards, an agreement on Food Inspection Measures and the Single Aviation Market.
The Trans-Tasman Mutual Recognition Arrangement came into operation on 1 May 1998. This means that most goods able to be sold in one country can be sold in the other, without having to meet any further sales-related requirements, and people registered to practise an occupation in one country will be able to practise it in the other. This agreement lowers compliance costs for business by enabling them to manufacture to only one standard for the trans-Tasman market. It provides increased opportunities to work in each other’s countries. Five sectors are temporarily exempted, while standards are brought closer together. These sectors are therapeutics, hazardous substances, motor vehicles, gas appliances and radio communication standards. Mutual recognition in the therapeutics sector is being addressed through the negotiation of a proposed bi-national therapeutics regulatory agency. A treaty to establish the Agency was signed on 10 December 2003, with the Agency expected to open its doors in mid-2005. In addition, a temporary exemption is in place for one New Zealand mandatory energy performance standard. The Australian Productivity Commission undertook a review of the TTMRA in 2003 on behalf of the Australian and New Zealand Governments. Overall, the review demonstrated that the TTMRA and Australia’s Mutual Recognition Arrangement (MRA) were working well, contributing significantly to increased trans-Tasman mobility of goods and labour. But the review also proposed possible improvements to the Arrangement, which are now under consideration.
The Australia New Zealand Agreement on Joint Food Standards entered into force on 5 July 1996. It established a joint Australia New Zealand Food Authority (ANZFA) to develop food standards for both countries. This was re-named Food Standards Australia and New Zealand (FSANZ) in 2002 following amendments to the Agreement establishing improved governance arrangements. The Agreement gives New Zealand the ability to influence the setting of food standards in our most significant market. It also gives Australia and New Zealand greater joint influence in the establishment of international food standards. A Joint Food Code was agreed by the Health Ministers of New Zealand and the Australian Commonwealth and States and Territories in November 2000. This came into force on 20 December 2002. Mutual recognition of existing standards applied during the transition period.
The Arrangement on Food Inspection Measures (AFIM) came into operation on 1 December 1997. It reduces compliance costs associated with food inspection. Most New Zealand food items exported to Australia are now treated, for inspection purposes, as Australian domestic product and vice versa.
Work is underway to flesh out further the elements of a Single Economic Market, the broad concept of which was endorsed by the two Prime Ministers on 3 March 2004 (following earlier discussions between Finance Minister Cullen and Treasurer Costello).
Business has often stated that the existence of two taxation systems creates impediments to trans-Tasman trade. To address some of those concerns, Dr Cullen and the Australian Treasurer, Peter Costello, announced in February 2003 the introduction of legislation in May to reform imputation legislation. The reforms were aimed at the problem of ‘triangular taxation’, which occurred where Australians and New Zealanders investing through a company resident in the other country that earned income in their own country were taxed twice on the income. Previously, the income tax laws of both countries only allowed tax paid in their own country to generate imputation credits. From 1 April 2003, Australia and New Zealand have extended their imputation laws to include companies resident in the other country. Investors are now allocated imputation or franking credits in proportion to their ownership of the company.
Our business regulatory frameworks have been brought into closer alignment. The existence of separate regulatory frameworks still gives rise to compliance burdens for companies, especially smaller companies that operate in trans Tasman trade. This is an area of focus for further CER work, as identified both at the 20 th anniversary CER Ministerial Forum in August 2003, and the meeting between Dr Cullen and Australian Treasurer Peter Costello in January 2004. As a consequence, research will be conducted on ways of improving cooperation between New Zealand and Australian competition regimes. This could include improved coordination of authorisation processes, joint decision making on trans-Tasman issues by competition authorities and coordinated/combined institutional frameworks. Policy and enforcement agencies are already working on improved information sharing and exploration of the potential for cross appointments between competition authorities. A Trans-Tasman Accounting Standards Advisory Group has been established to advise respective governments and accounting standard setters on ways to reduce costs and improve efficiency by aiming for a single set of standards. Ministers also agreed to work to mutual recognition and harmonisation in prudential regulation of the banking systems in Australia and New Zealand, while maintaining the safety and stability of both countries’ financial systems. Finally, Dr Cullen and Peter Costello agreed that Australia and New Zealand would jointly negotiate tax information sharing agreements wherever practicable. Negotiations are ongoing with Antigua and Barbuda, the Channel Islands (Guernsey and Jersey), the Isle of Man, the British Virgin Islands, and Grenada.
The recent focus by both countries on innovation, science and research has led to increased cooperation between Australia and New Zealand in this area. Officials are undertaking an agreed work programme of cooperative activities such as promoting opportunities for trans-Tasman involvement in each country’s public/private research centres, preparing a joint response to the industry recommendations which came out of the 2003 CER Business Dialogue and, through regular Federal-level interdepartmental RS&T talks, cultivating an enhanced dialogue on science and innovation policy issues.
There are also a number of examples of concrete cooperation between New Zealand and Australian states on science and technology, reflecting the individual states’ interest in and commitment to investing in their own growth an innovation policies. At BIO2004 in San Francisco, the Australia-New Zealand Biotech Alliance was signed and launched. At present, the ANZBA is essentially a marketing agreement between the states of Australia (primarily Queensland, New South Wales and Victoria) and New Zealand to co-promote biotechnology industry and capability in the international arena. However, it is expected that collaborative projects will be developed in the context of the arrangement in due course. The ANZBA supplements the three individual arrangements signed in the last 18 months by New Zealand with New South Wales, Queensland and Victoria.
On 1 July 2004, NZTE’s provision of $12 million in funding for the Australia New Zealand Biotech Partnership Fund over a four year period went operational. Its objective is to offer partnership funding to New Zealand and Australian companies working together on biotechnology development, manufacturing and marketing, and $1 million of this will be dedicated to ANZBA -specific activities.
On 8 August 2002 the Australian Transport Minister and the New Zealand Associate Minister for Transport signed the ‘Open Skies’ Air Services Agreement. The agreement, negotiated in 2000, and brought into interim effect before the formal exchange of diplomatic notes in August 2003, provides an almost unrestricted market for Australasian airlines, to the benefit of consumers and traders. The 1996 Single Aviation Market Arrangements already provided for virtually unrestricted services between and within each other’s countries, and have been incorporated into the new Agreement. The transition to “open skies” has removed restrictions on the airlines of each country operating services beyond the other country. In addition, foreign investment restrictions on airline investment have been relaxed.
Officials are now also negotiating an arrangement between the two countries to govern understandings reached on the mutual recognition of aviation-related certification in both the Air Services Agreement and the 1996 Single Aviation Market Arrangements. The aim of mutual recognition is to remove regulatory barriers and lower costs for airlines that take up opportunities available under the ASA. Domestic legislation on mutual recognition was introduced to parliament in both countries in 2003 and officials are negotiating a government-to-government arrangement.
Although there is not a formal trans-Tasman investment regime between New Zealand and Australia, New Zealand is the sixth largest source of overall foreign investment in Australia, and Australia is the largest investor in New Zealand. Total New Zealand investment in Australia was $20,846 million as at 31 March 2004, while total Australian investment in New Zealand was $51,318 million at the same date. The 1988 CER Protocol on Trade in Services has accelerated investment flows, and between 1991 and 2002, two way investment increased at an annual average rate of 10 per cent. Over half of Australia’s total investment in New Zealand is Foreign Direct Investment, reflecting the high level of economic integration. Recently there has been significant new commercial investment from Australia in New Zealand’s transport and banking sectors.
In February 2005, the Australian Treasurer Mr Costello and New Zealand Finance Minister Dr Cullen agreed at their annual meeting to investigate the possibility of adding an investment component to CER.
New Zealand enjoys no closer defence relationship than the one it does with Australia and Australia remains our most important defence ally. Successive Australian Governments have acknowledged the importance of the defence alliance relationship with New Zealand and both countries are committed to developing and preserving the defence relationship in the future. This commitment was enshrined in the 1998 Joint Ministerial Statement on Closer Defence Relationship (CDR).
CDR had its origins in the 1991 annual meeting of the defence chiefs of Australia and New Zealand. It was agreed then that the two defence establishments should seek to achieve an enhanced level of complementarity. This process has developed to include commitments to consult in development of strategic guidance and force structure; examine force development options from a trans-Tasman perspective; seek to achieve the highest practical level of inter-operability; and improve coordination on long term planning issues, including contingency plans, resource programming procurement, training and exercises. Interoperabilty remains a key defence policy priority.
Defence Ministers from both countries meet annually. The 2002 talks in Wellington were particularly positive and constructive, helped by the earlier announcement of New Zealand’s Long Term Development Plan that clearly outlined our projected defence capability acquisition projects. Senator Hill and Minister Burton afterwards announced that trans-Tasman defence ties had entered a “new chapter”.
More recently, in 2004, the two Ministers focused, in particular, on the new security challenges confronting the South Pacific. They agreed to encourage regional cooperation in countering terrorist activities, and emphasised, in this context, the importance of timely, coordinated and effective responses on the part of the Australian and New Zealand Defence Forces.
The Trans-Tasman Travel Arrangement (TTTA), which allows New Zealand citizens freely to enter, reside and work in Australia, and Australian residents to receive reciprocal access to New Zealand. Trans-Tasman freedom of movement has become a key element in our relationship with Australia, underlining the essential people-to-people nature of the broader relationship and underpinning the government-to-government relationship and economic growth under CER. There are at present almost 450,000 New Zealanders living in Australia, and some 57,000 Australians resident in New Zealand. Approximately 1.8 million New Zealand and Australian travellers cross the Tasman on short-term visits each year.
Under the Australian Migration Reform Act 1994 all non-citizens require visas to enter Australia. New Zealanders travelling to Australia are classed as exempt non-citizens and are automatically issued with ‘Special Category Visas’ on presentation of a passport and completed arrival card at the point of entry (unless they are of character or health concern). Australian citizens are not required to have a visa to enter New Zealand.
The freedom for New Zealand citizens to enter and to live and work in Australia remains. Rules surrounding eligibility for Australian citizenship and access to social security benefits have however changed.
In support of the large numbers of Australians and New Zealanders visiting each other’s countries, agreements have been negotiated covering reciprocal access to social welfare and health services.
A new Australia-New Zealand Social Security Agreement was signed in 2001 and came into effect on 1 July 2002. The Agreement is limited to the provision of age pensions and severe disability benefits only. Each country now makes part payment for new beneficiaries who have lived and worked in both countries. The combined payment will be comparable to what people would get if they were receiving the age pension or severe disability benefit from the country in which they are living.
The Australia/New Zealand Reciprocal Health Agreement, signed in 1986, allows Australians and New Zealanders making short term visits to each other’s country to receive "immediately necessary" medical care on the same terms as residents of that country. It was amended during renegotiations in 1998 to exclude out-of-hospital (GP) treatment from the scope of the agreement, but still covers access to immediately necessary hospital care for New Zealanders temporarily in Australia (and vice versa). Further information is available from the Ministry of Health.
New Zealand and Australia also implemented on 1 July 2000 the world’s first Child Support Agreement. This Agreement provides for the recognition and enforcement, across the Tasman, of each country’s child support assessments.
Following a Prime Ministerial Task Force in 1999 which identified the need to develop more stable and durable social security arrangements, both Governments decided that payment of social welfare benefits other than for pensioners and the seriously disabled should be the sole responsibility of the country of residence. From February 2001 New Zealanders arriving in Australia are no longer eligible for Australian work place benefits (such as the unemployment benefit) unless they gain Australian Permanent Residency. They are also required to obtain Permanent Residence before they are eligible to apply for Australian citizenship.
Australians are treated as domestic students under the terms of New Zealand’s Education Act. New Zealanders also currently pay the same fees as Australians for access to all levels of the Australian education system, though restrictions apply in respect of New Zealanders’ eligibility for student income support.
Overall numbers of international tourists visiting Australia are holding steady at around 4.7 million (2004). New Zealand remains Australia’s largest source of visitor arrivals, accounting for 838,100 in 2004, an increase of 16.0% on 2003. In the year to December 2004, 834,462 Australians visited New Zealand (36% of total inbound tourists).
On 7 July 2003, the Hon Pete Hodgson and the Hon Dr David Kemp, Australian Federal Minister for the Environment and Heritage announced the formation of an Australia and New Zealand Climate Change Partnership. The partnership strengthens the extensive cooperation that already exists on climate change and helps both countries to focus on concrete ways to address climate change. A work programme is being developed with areas for possible action including engagement with business and local government on technology development, policy design and implementation, measuring and reducing emissions, enhancing climate change science and working together with Pacific Island countries to address regional challenges posed by climate change.
top of pageLand Area - 7.7 million square kilometres Population - 20.1 million (EIU Estimate, January 2005) - Capital City - Canberra - Language - English
Political system - Federal - National government - Coalition of Liberal and National Parties - National legislature - House of Representatives (150 members), Senate (76 members) - Last election - 9 October 2004 - Next election due - 2009 - Head of State - Queen Elizabeth II, represented in Australia by the Governor-General, Major-General Michael Jeffrey sworn in on 11 August 2003 - Head of Government - Hon John Howard MP, Prime Minister
GDP - A$ 779.4 billion (2004) - Real GDP growth - 3.5% (2004) - Exports - A$ 118.0 billion (2004) - Imports - A$ 142.2 billion (2004) - Main export destinations - Japan (18.9%), China (9.3%), United States (8.1%), South Korea (7.8%), New Zealand (7.4%) - Current account balance - A$ -50.7 billion (2004) - Inflation - 2.3% (2004) - Unemployment - 5.5% (2004)
New Zealand Trade (to year ended December 2004) - NZ Exports (Merchandise Trade) - NZ$ 5.7 billion (to June 2004) - Main Exports - Petroleum oils, crude 4.6%, Gold 3.9%, Timber 3.3%, Cheese 2.4%, Refrigerators, etc 1.8%, Live horses 1.6%, Aircraft - NZ Imports (CIF) - NZ$ 7.4 billion (to June 2004) - Main Imports(CIF) - Imports as percentage of total imports from Australia (to June 2005): Motor Vehicles 7.9%, Petroleum oils, not crude 8.4%, Aluminium Oxide 2.9%, Petroleum Oils, Crude 7.1%, Medicaments 2.4%, Computers 1.8%, Records, tapes, etc 1.6%
New Zealand is represented in Australia by:
New Zealand High Commission Canberra, Australia
Website New Zealand High
Commission Canberra [external link]
Australia is represented in New Zealand by:
Australian High Commission, Wellington
The Safetravel website provides a travel advisory for travellers to Australia [external link].
Table 1: Bilateral Comparison of Australia and New Zealand's Economic Indicators
Indicator |
Australia |
|
New Zealand |
|
|||
|
2002 |
2003 |
2004 |
2002 |
2003 |
2004 |
|
GDP at market prices ($ bn) |
A$736.4 |
A$783.8 |
A$824.3 |
NZ$128.0 |
NZ$135.0 |
NZ$144.2 |
|
GDP (US$ bn) |
400.1 |
508.4 |
607.6 |
59.2 |
78.4 |
95.6 |
|
Real GDP Growth (%) |
3.8 |
3.3 |
3.5 |
4.6 |
3.3 |
4.8 |
|
Population (millions) |
19.7 |
19.9 |
20.1 |
3.9 |
4.0 |
4.1 |
|
Unemployment Rate (%) |
6.4 |
6.0 |
5.5 |
5.2 |
4.7 |
4.0 |
|
Exports of Goods fob (US$ m) |
65,099 |
70,597 |
86,875 |
14,518 |
16,835 |
19,583 |
|
Imports of Goods fob (US$ m) |
-70,530 |
-85,852 |
-104,389 |
-14,014 |
-17,227 |
-20,820 |
|
Current Account Balance (US$ bn) |
-17.3 |
-30.4 |
-37.3 |
-1,938 |
-3,339 |
-5,097 |
|
CPI (av;%) |
3.0 |
2.8 |
2.3 |
2.7 |
1.8 |
2.3 |
|
90 Day Bill Rate |
4.7 |
5.47 |
5.42 |
5.7 |
5.3 |
6.7 |
|
10 Year Bond Rate |
5.8 |
5.60 |
5.47 |
6.5 |
6.1 |
6.0 |
|
Total External Debt (US$ bn) |
192.3 |
237.9 |
287.8 |
32.6 |
38.1 |
47.3 |
|
Exchange Rate (av; A$:US$: av; NZ$:US$) |
1.84 |
1.54 |
1.36 |
2.16 |
1.72 |
1.51 |
|
Sources: (a) EIU Country Report ( New Zealand) January 2005, EIU Country Report ( Australia) January/February 2005. |
|||||||
December 1983
Exports to Australia $1,036 million (dollarised in 2001 terms = $2,414)
Imports from Australia $1,572 million (dollarised in 2001 terms = $3,663)
Total Exports $7,840 million (dollarised in 2001 terms = $18,270)
Total Imports
$7,991 million (dollarised in 2001 terms = $18,622)
2004 (New Zealand External Trade Statistics, June 2004)
Exports to Australia NZ$ 5.7 billion
Imports from Australia NZ$ 7.4 billion
Total Exports NZ$ 28.7 billion (excluding
re-exports of $1.12 billion)
Total Imports (CIF) NZ$ 33.4 billion
