KEY POINTS:
Half of New Zealanders want a common transtasman currency, says a poll issued last night in Australia.
The UMR poll reveals 49 per cent of New Zealanders favour a shared dollar, against 41 per cent of Australians.
That is a dramatic change since 2000 when only 29 per
cent of New Zealanders supported such a change.
But Prime Minister Helen Clark warned today that a common transtasman currency would mean New Zealand adopting the Australian dollar.
"The convergence of trying to bring the two together could be quite rough on the smaller party," she said.
Miss Clark said an Anzac dollar had never been on offer and it had always been clear there would be one currency - the Australian dollar.
Former Australian deputy prime minister Tim Fischer says any common currency between Australia and New Zealand should be called the Zac, not the Anzac.
"Zac would stand for Zealand Australia Currency merged, and it is inevitable that would be what the term Anzac would default to over a short period of time," Mr Fischer said.
"More importantly, the term Anzac has a very special connotation for Australian and New Zealand relating to Gallipoli and all, and this should not be lightly tampered with."
Mr Fischer says a joint currency would help two-way tourism.
"The quickest route to a merged currency would be simply to lock in that New Zealand would get one-quarter of the profits arising from note printing, called seigniorage, from a merged currency," he said.
The issue has been debated for years, but shot back into the limelight after National Party leader John Key suggested last week it was an idea that should be explored.
Finance Minister Michael Cullen attacked Mr Key then, and repeated his opposition last night, saying New Zealand would lose control of monetary policy if the Kiwi dollar was abandoned in favour of a joint currency.
He was backed by National Bank chief economist Cameron Bagrie, who said: "We would have to be insane to do it."
The poll result was revealed at the Australia New Zealand Leadership Forum in Sydney.
The annual two-day forum, attended by 80 leaders in their fields, tries to develop economic and other links between the two countries.
Dr Cullen said the poll should have asked whether New Zealanders supported the adoption of the Australian dollar, as the Howard Government had already made it clear it would not abandon its currency in favour of an Anzac dollar.
But Mr Key - who is also at the forum - pledged to raise the issue again at today's economic debate.
Supporters of a joint currency say lower transaction costs in transtasman trade and the removal of currency uncertainty between New Zealand and its most important trading partner should contribute to increased trade and enhanced economic integration.
But opponents say full currency union would mean the end of an independent monetary policy, loss of economic sovereignty, and a reduced ability to insulate ourselves from any shocks that might befall the Australian economy.
Inflation
Inflation in Australia was 3.3 per cent to last December. In New Zealand, it was 2.5 per cent to March 31.
But New Zealand's interest rates are higher. The official cash rate is 7.5 per cent, against 6.25 per cent in Australia.
Mr Bagrie said New Zealand would be "giving up a lot for getting nothing in return".
"Our currency will be dictated by Australian conditions, by what the Reserve Bank of Australia does, by hard commodity prices such as gold, tin and coal which Australia exports but we don't."
UBS New Zealand economist Robin Clements agreed that having a joint currency would make New Zealand too dependent on what was happening in Australia.
"If exporters here now are complaining about the dollar, and homeowners are complaining about interest rates rising because Auckland house prices are going up, how will people feel when it gets painful because Sydney house prices are going up?"
There were benefits for companies moving into Australia, but the two economies would have to be far more closely integrated before it could make sense.
"The conditions aren't there for it, and I don't think it's a sound argument."
Mr Clements and Mr Bagrie were surprised the level of public support was so high, and said the way the question in the poll was worded could have influenced the replies.
"If it asked, 'Are you prepared to have monetary policy run by the Reserve Bank of Australia?' you might get a different answer" said Mr Clements.
In the UMR poll, 70 per cent of those surveyed are positive about Australia.
But they are concerned about the hollowing-out of the NZ economy, and 62 per cent feel the permanent movement of New Zealanders to Australia is bad for New Zealand.
At a pre-forum press conference Australian Foreign Minister Alexander Downer said the increasing amount of investment by companies across the Tasman showed the trans-tasman relationship was working.
Australian companies have invested about $A40 billion ($44 billion) in New Zealand, and New Zealand companies have put about $A22 billion into Australia.
But the UMR poll suggests New Zealanders are not comfortable with the Aussie buy-up - 52 per cent of those polled believed the increasing Australian ownership of New Zealand companies was bad.
- Additional reporting Claire Trevett, NZPA