Fran O'Sullivan: A common border serves joint future


Forging a joint destiny for Australia and New Zealand in the 21st century is all about "flying domestic".

The 70 Australasian power-brokers gathering at Government House today have a one-off opportunity to present a big vision that might actually mean something to the ordinary punter.

All the high-meaning debate, worthy proposals and endless iterations of business law harmonisation issues will not count for much if the two countries continue to be divided at the border. It is incrementalist stuff and is already underlined by major disputes on issues such as harmonising banking prudential rules.

The time has come to draw a circle around Australia and New Zealand and form a common border. All the rest will then naturally fall into place.

Think about it as a virtual wall - stretching across to Perth on the Indian Ocean, up to Darwin by the Coral Sea, out to Auckland on the Tasman Ocean, on down to Stewart Island on the Southern Ocean - out around Hobart and back up to Perth.

What does this mean in security terms?

In the burst of pre-summit publicity, security has not received much play.

This is an area where Australia, facing Muslim Indonesia to its north and vital sea lanes to Southeast Asia and beyond, has serious concerns. NZ has Fiji to its north; Chile to its east; penguins down south (maybe that's why the Antarctica programme head is part of the conflab).

If our virtual wall is to be effective it must imply union - New Zealand and Australia's Customs officials, defence personnel and intelligence services working together to ensure a terrorist can't come in through Christchurch Airport, hop on a domestic flight and arrive in Brisbane through a back door.

It means if the border is threatened, say in Australia's Northern Territory, then NZ's defence forces will automatically treat the threat as one to the common border.

This then implies the need for a frank conversation about which part of the overall equation - Australia or New Zealand - is best placed to supply particular force capabilities to defend the common whole.

Beyond the border, it's a different matter. Australia can play deputy sheriff, New Zealand the regional constabulary - that's a matter of inclination. The same applies to business and the economy.

Take the common currency debate.

"Flying domestic" means you don't change currency when you move from one country to the other, as you're not moving outside the common border.

Doomsayers would say that means only one central bank: New Zealand's economy could shift into a recession if an Australian minerals boom pushed up the value of the currency and depressed returns from agricultural commodities.

Well, it could. But there are mechanisms to deal with that. And this is where the 70 power-brokers need to do some real thinking.

Might that single central bank - or some other body - devise support mechanisms for New Zealand if there was, say, a seriously negative asymmetrical effect. After all, Ireland robbed the Germans blind at the EU for years. It might actually be the answer to all that debate about getting New Zealand back into the top half of the OECD growth stakes, or, at the least, parity with Australians' incomes.

Negotiating trade deals beyond the common border implies the two countries working as Sam, Tea, Anzac - or whatever acronym gets dreamed up - with our real competitors in the outside world.

Common tax rates (Australia's corporate, NZ's personal) get easier. The other technical stuff follows.

And a common border has one major advantage.

It will ensure the continuation of cheap fares across the Tasman.

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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