Finance Minister Michael Cullen has made waves on both sides of the Tasman with his suggestion that Australians and New Zealanders should enjoy reciprocal citizenship rights. After a decade of practically free trade in goods and labour between the two countries, it takes a suggestion such as that to attract attention to the unfinished business of closer economic relations. One frequent Australian speaker on the subject regularly invokes the possibility of complete union to make an audience sit up and listen. Dr Cullen's suggestion, in a speech at Melbourne, falls not far short of de facto union.
It is difficult to see how the two countries could grant full citizenship rights to each other without adopting identical health, education, welfare and superannuation entitlements and equalised taxation. Inevitably, the standards of benefit would be set by the larger economy and it becomes difficult to see how or why New Zealand would remain an independent state. If its major decisions about social consumption came to be made largely in Canberra, New Zealand could quickly find public spending growing ahead of the capacity of its economy. The consequences would be mounting taxation or deep Budget deficits and public debt. Either way, it would spell economic decline.
Harmonious taxation, surely an essential element of reciprocal citizenship, could hardly figure in Dr Cullen's thoughts. His Government has raised the top rate of income tax against the Australian trend. With the injection at last of GST, Australia is said to be already contemplating further reductions in income tax rates. The New Zealand Government, meanwhile, seems disinclined even to match a lower company tax rate across the Tasman. Visions of reciprocal citizenship would be a blessing if they removed that discouragement to investment.
But the Finance Minister seems not to be looking past the long-standing problem of welfare payments for New Zealand residents in Australia. About 400,000 New Zealanders live there, perhaps 20,000 of them on the unemployment benefit. As Dr Cullen points out, they contribute much more in tax to the Australian Treasury than they withdraw in welfare payments. In many cases the skills they are contributing to the Australian economy were acquired at the expense of New Zealand taxpayers.
A proper reconciliation of costs between the two countries would be a horrendous task. It would be easier, suggests Dr Cullen, to recognise that in a sense reciprocal citizenship already applies. When citizens of one country take up permanent residence in the other, they seldom bother to change their nationality. They have no need to. They qualify for their adopted country's benefits in any case.
Australia, which has just imposed a two-year residence qualification before migrants can claim many of its benefits, nevertheless wants compensation from New Zealand. If that is the price this country must pay for an integrated transtasman labour market, so be it. But in Melbourne Dr Cullen made some forceful arguments against the Australian claim. Let's hope those arguments were heard through the bemused reports in Australia of his reciprocal citizenship suggestion.
It is telling, though, that the larger notion of complete union has arisen so frequently, at least in this country lately. Too often it is seen as a salvation from our economic limitations. It is not. If it were, it could only be at a cost to the Australian taxpayer and that would not ensure us a welcome to the federation. While we might be a net beneficiary of the federal Treasury we might also suffer a much greater drain of people, skills, industry and services to the metropolitan centres of a single Australasian economy.
Better that we retain independent sovereignty, to fashion a competitive economy as best we can and tailor our social infrastructure to what the economy can afford. Establishing reciprocal citizenship rights with Australia is a little too much.
<i>Editorial:</i> We'd rather retain sovereignty, thanks
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