Twin watchdogs on short leash

Although proposals to get transtasman competition watchdogs working more closely have the backing of Business New Zealand, Air New Zealand says they do not go far enough.

A study into the competition regimes on either side of the Tasman by the Australian Productivity Commission has shied away from backing the creation of two identical watchdog organisations for New Zealand and Australia.

Instead, it recommends measures to bring the Australian Competition and Consumer Commission and the New Zealand Commerce Commission together gradually.

These include harmonising laws on competition and consumer protection policies, formalising dialogue between the two Governments and enhancing their co-operation. 

"Issues relating to full integration are complex, involve substantial matters of sovereignty and extend into the economic and judicial heartlands of the two countries," the commission said.

While partial integration had more merit, the related costs were still too high at this stage.

Business New Zealand chief executive Phil O'Reilly said the outcome was a good one.

"Just because the aim is a single economic market, it doesn't necessarily mean there has to be a single piece of law or regulatory framework for each area," he said.

"It's all about saying if you want a single economic market, what's the best, most cost-effective way of getting there, and in this case two separate regimes with better co-operation between them is a good outcome."

O'Reilly said similar studies were needed to keep the momentum going towards a single economic market.

"We don't think there's any room for complacency here. We support more studies of this kind in different areas of the two economies to identify areas where some sort of common framework would be of value."

Company listing rules, reporting protocols and accounting rules, and issues relating to telecommunication regulation were areas he suggested examining.

Air NZ said it would like to have seen bolder recommendations from the commission. General counsel and company secretary John Blair said the proposals were a step in the right direction, but were over-cautious.

He said both countries were probably limiting the scale and scope businesses could grow to to enable them to compete better internationally.

"We continue to constrain business development by forcing them to operate in unnaturally restrictive markets and, given the geographic disadvantages we have, that exacerbates that disadvantage."

Last year, Air NZ pumped $23 million into its unsuccessful bid to form an alliance with Australian airline Qantas.

Blair said under a single regulator the company would have saved about half those costs.