Fran O'Sullivan: PM's visit capitalises on Aussie jealousy

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John Key's pragmatism endears him to Australians corporates as a reminder of former Australian Prime Minister John Howard. Photo / Mark Mitchell
John Key's pragmatism endears him to Australians corporates as a reminder of former Australian Prime Minister John Howard. Photo / Mark Mitchell

Tim Groser shifted to the edge of his comfortable leather seat: "Why don't we launch a 'where the bloody hell are you?' campaign to get more Australian corporates putting new investment into New Zealand?"

The Cabinet wit was typically tossing ideas around while on an Airforce 757 flight to Jakarta for the Prime Minister's Indonesian visit in April.

Was the time finally right for John Key's Government to aggressively market New Zealand to those Australian corporate leaders who were clearly not overly impressed with the Gillard Government's attitude to big business? (My words, not Groser's).

Like Bill English, Groser had been buoyed after hearing a bunch of Australian business leaders talk openly about their clear case of "New Zealand envy" in Sydney the previous week.

The frank admiration for New Zealand's economic policies - which was on show at the annual Australia New Zealand Leadership Forum meeting - had not really been displayed by Australian power-brokers since this country was in the grip of Rogernomics and Bill Birch's labour market reforms.

The Cabinet has since made a strategic decision to capitalise on the improved Australian business sentiment towards New Zealand by "going hard" for more investment. Companies like Heinz Wattie have already scrapped hundreds of Australian jobs in favour of opening new plants in New Zealand to take advantage of lower wages and restrictive labour laws.

This is good news. But typically, Labour still sees it through a "glass half empty" prism as positioning New Zealand like Mexico; a low wage neighbour where Australians can outsource manufacturing jobs in the way United States corporates have outsourced similar jobs to Mexicans.

I wish Labour would also focus on the fact that it is going to take considerable time and investment to build more high-tech growth companies which will spawn high-paid brainy jobs as well as the brawny ones.

The Key Government has now declared game on.

This week, Key got a good reception from Australian businesses as he openly pumped for them to place more manufacturing and investment here. He spruiked New Zealand's lower cost advantages and better regulatory frameworks in speeches in Sydney and Melbourne and in one-on-one meetings with leaders of the four Australian banks and major Australian industrial and energy companies.

One high-profile Australian shamelessly flattered Key by suggesting he should come over and run Australia. Another called for the outsourcing of Federal Government to the Key Cabinet.

It's the kind of sophisticated, corporate brown-nosing that could result in the PM being "duchessed" if he took it too seriously , which I am sure Key doesn't.

One reason why he goes down so well in Australia is that he has adopted former Liberal Prime Minister John Howard's pragmatic style. He will not face allegations of crony capitalism there for promoting new investment (Australian political leaders who live by an "Australia First" motto would expect just this). Although he would be wise to ensure that any subsequent discussions on proposed deals are transparent.

Key's Australian odyssey - like the trip he will make to China later this year for the 40th anniversary of diplomatic relations - is more fundamental to New Zealand's long-term growth than some of the more recent doors he has been opening.

For instance, it is critical that Key's talking turkey conversations with the Australian banks do lift confidence so that they do not switch off the funding taps or raise interest rates in a way which could stymie renewed growth.

The real game is to persuade the banks that New Zealand is on a promising long-term growth trajectory. That they should fund promising new projects and place more of their own operations here. After all, it was just three years ago that some of those banks were actively considering reducing their New Zealand footprint to redeploy funds to the faster Asian growth economies.

Ironically, English was slapped down last year when he baldly told transtasman businesses that New Zealand should aggressively compete against Australia. One businessman said it was as if "English had farted in church".

Back then his straight-talking was drowned out by some of his colleagues who rather fatuously worried that he might be giving offence to Australia. This overlooked the fact that Treasurer Peter Costello had done the same here when he pushed for Kiwis to relocate to Australia to fill holes in that country's workforce.

After years of "big brother little brother" sentiment about the transtasman relationship, it is good to see NZ politicians once again footing it in a competitive fashion.

- NZ Herald

Fran O'Sullivan

A columnist for the NZ Herald

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.

Read more by Fran O'Sullivan

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