ANZAC partners take the next step trade-wise

I have just been in New Zealand and let’s face it, we Aussies can sometimes get a bit of a hard time there unless we can demonstrate some sort of Kiwi connection.

The first time I went there I told a New Zealand friend of mine that I was related (albeit distantly) to Sir Edmund Hillary, the amiable Auckland beekeeper who famously climbed Mount Everest. My friend said: “Do you know how highly Ed Hillary is thought of here? He’s bigger here than Bradman is in Australia! Make sure you make that known while you’re in New Zealand, and also Nepal. That will make up for you being a dreaded Aussie.” So I did and he was right.

But despite this Trans-Tasman teasing, we know particularly on the one day of the year – ANZAC Day – that Aussies and Kiwis really are brothers and sisters in arms. We have a shared history, we’ve been together in the trenches in wartime, we have shared backgrounds and geographically we’re down here together. Our relationship is kept lively by people ties through frequent Trans-Tasman immigration and a fierce, but somehow at the same time, friendly sporting rivalry.

But what is the relationship like commercially across the ditch? From an Aussie point of view, New Zealand is a very significant market, particularly in terms of exporting small- and medium-sized enterprises. New evidence from the Australian Bureau of Statistics shows that there are over 17,000 Australian businesses exporting goods across the Tasman, with many Aussie businesses getting their start there as a springboard into Singapore, ASEAN, the Pacific and beyond.

It’s no small beer though, New Zealand is Australia’s sixth largest export destination and the two-way trade relationship is worth AUS$22 billion (NZ$27 billion) and two-way investment is worth over AUS$93 billion (NZ$112 billion).

From a Kiwi point of view too, Australia matters and matters a lot. According to Gareth Chaplin, the Chief Economist from New Zealand Trade and Enterprise: “Over 23% of New Zealand exports go to Australia, while Australia takes 18% of New Zealand’s imports; what happens in Australia economically is a big deal to us.”

And according to Chaplin, while NZ’s economic structure is very different to Australia, as NZ is not as mining focused, that’s changing too. “We’re getting some action in resources, even in coal, and we’re becoming more integrated in Australia’s resources sector. There’s still competition in agriculture and services but there’s collaboration in resources.”

Of course, New Zealand and Australia are very proud of many firsts in the world – many of which of course, began in New Zealand. Over a century ago, New Zealand and Australia were the first countries to establish votes for women, and workplace arbitration and even lesser known but useful innovations like EFTPOS were also started in NZ (along with bungee jumping).

But even in the world of global trade, the Closer Economic Relations agreement between Australia and New Zealand, signed in 1983, was the first bilateral trade agreement of its kind in the world. CER has been described by Chris Nixon, Senior Economist from the New Zealand Institute for Economic Research (NZIER), as “world’s best practice as far as economic integration goes”.

However world’s best practice is not enough in a dynamic and competitive world. In fact, Australian Trade Minister Simon Crean and his New Zealand counterpart Tim Groser are more ambitious than that. They want closer integration and a Trans-Tasman partnership into third markets, whether it is an ‘Australasian’ clean energy mission to Chile or more collaboration between the two nations and their trade agencies in the ASEAN markets.

“Although New Zealand and Australia have a long history of competition, we also have a lot in common. In the current economic environment, greater integration internationally has the potential to bring significant benefits for our businesses for the wider economy. Our experience of working together, for example in the biotechnology sector in the US, has shown us that we have complementary capabilities that allow us in many cases to collaborate to compete,” the Ministers say.

This unique combination of collaboration and competition mentioned by Simon Crean and Tim Groser is summed up neatly by Chris Nixon as ‘The Kiwi benchmark’. In rugby, Australia has to lift its game as the NZ All Blacks are the benchmark, Australia borrow NZ techniques and technology and even have a Kiwi coach. It’s the same in business. Whether it be free trade agreements, indigenous enterprise or tourism branding, Kiwi innovation keeps Australia motivated and vice versa. But as Nixon adds: “Luckily Australians play Aussie rules as well as league and soccer, which helps hold them back in rugby!”

So knowing when to compete and when to collaborate will keep the relationship strong, and as Ministers Crean and Groser have outlined, it will allow us both to be stronger in global markets.

And when I am next in NZ, I’ll remember to mention the Ed Hillary connection, as soon as my accent hits Kiwi ears.

Tim Harcourt is Chief Economist of the Australian Trade Commission (Austrade).

Thankyou to Gareth Chaplin, Chief Economist, New Zealand Trade and Enterprise and Chris Nixon, Senior Economist, New Zealand Institute for Economic Research (NZIER) for their comments and assistance.

By chance, Tim is also distantly related to the late Sir Edmund Hillary, the great New Zealand beekeeper and mountaineer who conquered Mount Everest. However, Tim has only climbed mountains of economic data in his career to date.