By GREG ANSLEY
SYDNEY - Finance Minister Michael Cullen has criticised Australian Government incentives to lure New Zealand companies across the Tasman as contrary to the spirit of Closer Economic Relations.
In Sydney to settle Australian corporate nerves on the advent of a Labour Administration in Wellington, Dr Cullen said the use of incentives was a growing problem.
His comments followed a rash of corporate moves across to Australia involving some of New Zealand's most prominent companies.
"I think there is a real issue for the New Zealand and Australian Governments to sort out, which is the use of incentives to attract business away from each other," Dr Cullen said after meeting business leaders yesterday.
"It seems to me it's not really consistent with the spirit of CER to engage in that kind of activity, and probably in the longer term it is in their joint interest not to do that."
Dr Cullen said his Government's efforts to attract new investment would not try to buy transtasman business.
"We're not trying to incentivise to attract business away from Australia, but we are prepared to look at incentives to attract business from outside the region to New Zealand," he said.
Dr Cullen's meetings in Sydney were tailored to the investment community, including a breakfast organised by Salomon Smith Barney, a brief meeting with Citicorp Management, an investor roundtable set up by the National Bank and an address to the Transtasman Business Circle.
He also met Financial Services and Regulation Minister Joe Hockey and the Deputy Governor of the Reserve Bank, Dr Stephen Grenville.
Dr Cullen's message was simple: New Zealand was open for business under a Government that, contrary to popular misconceptions, was, in terms of intervention, slightly to the right of Australia's federal and state administrations.
Dr Cullen also dealt with Australian concerns over the Government's approach to foreign investment and the direction and resilience of the economy.
"I think if we can get across the message that New Zealand hasn't launched off into some extreme, then I think there's a really good chance of strengthening Australian interest in the New Zealand economy over the next year or so," he said.
However, Australian business remains unconvinced over New Zealand's monetary management, with continued concern that interest rate policy has slowed economic growth.
The strength of this belief surprised Dr Cullen.
"There is a very clear Australian perception that the Reserve Bank has been a little heavy on the interest rate pedal, and that this has affected New Zealand's economic performance," he said.
"I can't comment directly on Reserve Bank operations, but I have said one of the reasons for undertaking the review of operation of monetary policy is to draw lessons about how monetary policy can be more effectively managed to avoid excessive volatility in economic measures, which of course includes interest rates.
"But to be fair I think there may be some convergence in the operation of policy over the past couple of years between the Reserve Banks of Australia and New Zealand."
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