Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Australasian love-in but rocky marriage

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Hard-nosed Aussie PM unlikely to focus on NZ demands

Tony Abbott and John Key seemed to be on the same page at the Commonwealth parliamentary offices in Sydney yesterday. Photo / AP
Tony Abbott and John Key seemed to be on the same page at the Commonwealth parliamentary offices in Sydney yesterday. Photo / AP

Tony Abbott's acclamation of John Key as a "not just a brother but a soulmate" resonated with an 800-strong turnout in Sydney yesterday for what was to all intents an Australasian business love-in.

It is a marked commentary on just how much New Zealand's reputation has strengthened within Australian elites that their Prime Minister could openly praise Key's prime ministership by saying, "I know many of you would like him here," and not raise even one voice in faint protest.

"He is a truly exemplarly leader for his country - his inspiration and example is welcome on this side of the Tasman ..." and so it went on.

But realpolitik Aussie-style meant that New Zealand media-driven expectations - that the Abbott Government should in fairness lighten the blanket restrictions preventing many Kiwis from accessing Australian social security, or that it should intervene in the market to push Australian supermarket chains into reversing their decisions to block New Zealand producers from supplying product for their home brands - were bound to be met with disappointment.

Abbott is hard-nosed.

The New Zealand expectations were just not realistic for what is still a relatively new Government facing huge fiscal constraints and a business sector that has lost the confidence to get its collective wallet out to start reinvesting in Australia's future.

Abbott's response that New Zealanders effectively had privileged access to the Australian labour market was tempered by the Liberal Cabinet decision to adopt Labor's proposal to allow New Zealand students who had lived in Australia for 10 years to gain access to government funding for tertiary education.

Key indicated the New Zealand suppliers (like Talleys) could complain to the ACCC (Australia's competition authority) or make submissions to a government inquiry on competition.

These bilateral irritants overshadowed the media conference.

But the business audience lapped up Abbott's decision to invite New Zealand into the G20 meeting in November (what he has flatteringly termed the "G21" ) which will be the most powerful grouping of world leaders ever hosted in Australia. Another plus was the invitation to New Zealand business leaders to take part in the planning for the July "B20" in Sydney which will be preceded by an Australasian Business Week where Kiwi and Australian companies will showcase their businesses.

The long-standing bugbear of mutual recognition of imputation credits will be referred to the work programme for Australia's tax reform white paper.

So, at a substantive level progress is being made in the transtasman policy work programme.

But this is also election year here.

It is indeed true that Australian business elites had become mightily frustrated over the past couple of years as concern mounted over the policy stagnation in the Rudd/Gillard/Rudd era. Abbott - who shared an intimate dinner with Key on Thursday night to talk fraternal party matters - did his "brother Prime Minister" a favour by making his admiring comments at a luncheon filmed by New Zealand television networks.

His subsequent explanation that when he said on election night Australia was "under new management and open for business", that he had New Zealand in mind (due to the policies implemented by the Key Government to get the economy back on track after the global financial crisis) will not have done Key any political harm either.

But alas for Key, much of his domestic news coverage has focused on the perceived lack of fair play in the transtasman relationship: the tax-paying Kiwis living in Australia who have been locked out of a suite of social benefits since 2001, and the decision by two Australian supermarket groups to block New Zealand producers from supplying product for their home brands.

It is instructive that this perceived inequity underlined the first question thrown by New Zealand media to Abbott at a joint prime ministerial press conference.

Bill English's reforms may not have been as dramatic as those of the Rogernomics period. But they are being followed. Not just by the Abbott Government but by the Australian bureaucracy and business leaders.

Abbott seems determined to mimic the fiscal discipline in New Zealand where the size of the Government's share of the economy has dropped from 35 per cent to 30 per cent.

But he faces difficulties getting support for major policies because of the composition of the Australian Senate.

His rhetoric that the challenge is to turn the historic bonds into even stronger economic bonds to be one seamless market economy is a positive for New Zealand.

The contrast between the deep funk in Australian business and the confident nature of the New Zealand business delegation was palpable. And quite extraordinary given the openly patronising approach to New Zealand by some Australian business leaders when the transtasman single market movement got under way a decade ago.

- NZ Herald

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