Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Australia green with policy envy

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Australia's business leaders wish their Prime Minister, Julia Gillard, was more like John Key when it comes to introducing business-friendly policies. Photo / Greg Bowker
Australia's business leaders wish their Prime Minister, Julia Gillard, was more like John Key when it comes to introducing business-friendly policies. Photo / Greg Bowker

No one will have been more surprised than Bill English to sit in a Sydney hotel yesterday listening to Australian business leaders talk openly about their clear case of "New Zealand envy".

Political leaders are frequently feted offshore for policy choices which earn them a pasting at home.

But the frank admiration across the Tasman for English's economic policies is something that has not been displayed by Australian power-brokers since this country was in the grip of Rogernomics and Bill Birch's labour market reforms.

It has certainly been a clear confidence boost for the New Zealand powerbrokers who have been in Sydney for the eighth Australia-New Zealand Leadership Forum.

But the big question is if good policies are truly part of New Zealand's competitive advantage, why aren't we marketing it more strongly?

A concerted push from New Zealand to entice Australian chief executives to better leverage Australia's A$74 billion ($92.7 billion) of assets in our country, open more businesses here and take advantage of New Zealand's greater access to China could create considerable upside for the New Zealand economy.

It might also spur John Key's Government to step up the pace of reform to widen this apparent competitive advantage with Australia while its Government is reform-shy.

The fact that the transtasman paradigm is shifting (it is too early to say permanently shifted) has crept up on the powerful political, business and official constituencies on both sides of the Tasman.

At the Sydney forum, co-chair Rod McGeoch enthused about how New Zealand was "blessed with a Government that is engaged with business in a very positive way to take the country forward on the basis that growth provides jobs and a standard of living".

McGeoch was reflecting the view of the powerful Business Council of Australia which met BusinessNZ on the eve of the forum.

This group, which comprises the country's top 100 chief executives, envies New Zealand's more business-friendly environment with its simpler tax regime and more coherent regulatory environment, while Australia seemed to have reverted to the "dark age of the tension between capital and labour".

Some have been surprised to find that Australia had A$74 billion invested in New Zealand.

Though this is roughly equivalent to one-third of the New Zealand Government's $250 billion total capital assets portfolio.

Australia has not really woken up to just how big its New Zealand investment footprint is.

That fact that Australian chief executives are openly saying they wish Prime Minister Julia Gillard's Government was cut of a similar cloth will not go to English's head.

His feet are far too firmly planted.

But it does mark a turning point in the transtasman relationship where New Zealand has for too long been the less confident partner.

The challenge for English and Cabinet ministers Tim Groser and Steven Joyce - who have been basking in this reflected glory - is to step up New Zealand's competitiveness on the business front while remaining jointly focused (with Australia) on the major opportunities the Asian Century presents.

This is no easy feat.

Joyce believes the main game is getting the two counties on the same side of the table and looking squarely at the opportunities the Asian Century presents.

But he warns it is a "time-limited opportunity".

There is a danger of spending too much time talking about the opportunity and not taking advantage of it.

There was plenty said about the need for Australia and New Zealand to leverage the Asian opportunities and find ways to defuse hostility over Chinese investment.

Suggestions have been made (and seriously considered) that New Zealand and Australia should discuss a common framework for treating Asian foreign direct investment - particularly from China.

Former Australian Treasury Secretary Ken Henry briefed the forum on the thinking behind the upcoming White Paper on Australia in the Asian Century.

There was a general consensus that there has been a decline in economic literacy on both sides of the Tasman in the last decade, and that preparing Australians and New Zealanders for challenges they will have to confront over the next couple of decades will require strong leadership.

Not just from politicians, but also from the business sector.

The fundamental question of whether New Zealand and Australia should be "partners" or "bedfellows" will continue to dominate transtasman debate for months to come.

In the past New Zealand has tended to enter such discussions on the backfoot.

Maybe it's a reflection of New Zealanders' much-vaunted modest temperament compared to the brash cockiness our Australian cousins sometimes display.

But at this year's forum the New Zealanders and the Australians appear to have swapped places.

Fran O'Sullivan was a participant in the New Zealand Leadership Forum.

- NZ Herald

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