The Reserve Bank's battle with the big four Australian banks over proposed capital hikes was the clear elephant in the room during Jacinda Ardern's meeting with Scott Morrison — but she made a great pretence of not seeing it.
Instead, she spent much time in a media stand-up after their bilateral meeting on the vexed criminal deportees issue, making a virtue of raising it in the face of implacable opposition from both the Australian Prime Minister and Labor leader Anthony Albanese.
But when it came to the single biggest issue with the capacity to throw a large spanner into the works of the bilateral relationship — and the New Zealand economy — Ardern professed it was not of sufficient moment to feature.
"It wasn't raised by PM Morrison" she said. Nor did she raise it. But to a later question during her final stand-up with New Zealand media in Melbourne yesterday, she appeared to concede someone else in the room may have.
Ardern can be frustratingly opaque when she chooses. Reporters talk of how her occasional effortless flannelling — usually through a captivating smile — has them perplexed when they play back their tapes, looking for substantive detail.
This was one such issue.
In Australia this week there have been media headlines aplenty taking issue with the "shock and Orr" approach the business sector believes is impacting on the bilateral relationship through measures proposed by Reserve Bank governor Adrian Orr.
Even The Australian — which is usually measured — ran a piece saying "Investors beware: Reserve Bank of New Zealand governor Adrian Orr — the most feared person in Australian finance — has been visiting Australia to do a few 'things'".
Orr had been in Sydney meeting his counterpart at the Reserve Bank of Australia, Philip Lowe; the chair of the Australian Prudential Regulatory Authority, Wayne Byres; and Australian Treasurer Josh Frydenberg.
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A cartoon accompanying The Australian's piece had the RBNZ governor "dressing for work" with a black undertaker's shroud in the background. "Orr was surely the most feared Kiwi since Jonah Lomu steamrolled an All Black path to the 1995 Rugby World Cup," the columnist wrote.
The capital issue is being debated amid threats from the affected banks of a transtasman battleground. It is reminiscent of the sentiment which built when Air New Zealand pulled the plug on its loss-making Ansett operation in 2001.
Leading the charge is the Melbourne-headquartered ANZ — chaired in New Zealand by former Prime Minister Sir John Key and led at parent bank level in Melbourne by fellow New Zealander Shayne Elliott — which threatened to review the "size, nature and operations" of its New Zealand business if the Reserve Bank implements the proposed changes to capital ratios.
Elliott's declaration of war even went to so far as to threaten that ANZ might "dispose, or cease operation, of the relevant underperforming New Zealand assets or businesses".
Other banks have been less strident. But clearly, any pullback by Australian banks — particularly with their exposure to a debt-laden dairy sector and smaller businesses — could quickly build into a political conflagration and an anti-Australian counter-response by ordinary New Zealanders. Both prime ministers should want to avert that.
Before meeting Morrison, Ardern suggested she had some sympathy with the view of former Prime Minister and Finance Minister Bill English that the banks were scaremongering. But the Reserve Bank's decision to block AMP from selling its New Zealand life insurance business has added to the growing Australian media drumroll that New Zealand (via the RBNZ) is becoming anti-business.
She also suggested that the banks were making plenty of money in New Zealand and that the Reserve Bank — which had yet to make a final decision — was out to protect banking consumers by ensuring banks carried sufficient capital as a safety measure.
This message is not being retailed in Australia, where the banks are plainly tired of being whipping boys (justifiably) for politicians after the revelations in the Hayne inquiry.
They have sucked up the punishment — new rules and fines — meted out to them in Australia. But it doesn't take much to waken Australia's deeply chauvinistic attitudes when it comes to New Zealand showing its mettle.
Ardern has emphasised that the capital decision is one for the Reserve Bank — not for the Government or for politicians.
But on this issue — like the Huawei 5G matter — her Government's attempts to successfully leave these major calls outsourced to the RBNZ and the Government Communications Security Bureau will not really fly without accompanying political advocacy.
They are simply too contentious.
Ardern's "open for business" pitch in meetings with investors and New Zealand business thus sat in an interesting juxtaposition to the major issue impacting the relationship.
She was received like a rock star at the Melbourne town hall, when she gave a polished and thoughtful address on governance. She struck a chord with Melburnians with her values based approach to government.
Her observation (responding to investors' claims that New Zealanders lacked confidence when pitching their start-up ideas) was that New Zealand was "in part an incredibly humble nation".
She should have reached for her hand mirror.
This was not a formal bilateral meeting. But Ardern had a great opportunity to demonstrate leadership with Morrison by fronting the banking issue and the major issues of our time like China and the Pacific.
I hoped she used that opportunity. But her renowned communication skills failed her when it came to telling the media that her Morrison meeting was much, much more than a cup of tea and a chat.