To understand Australia's attitude, ask a Mexican

By COLIN JAMES

Australia is dispatching troops, planes and ships for George Bush's war. This country has offered the SAS, fullstop.

Yet again the two nations are diverging in a relationship of critical importance to business.

There is another familiar fact: apart from companies with business here, New Zealand doesn't seriously matter to Australia, except when things go wrong. Then the veneer of politeness peels off.

The ferocious abuse that followed the Ansett debacle is explicable only by an underlying contempt. A "mate" would have tried to be more understanding. When the chips are down, Australia will see to its interests ahead of joint interests.

Example: In January Australia launched a bid for a bilateral free-trade treaty with the United States without telling New Zealand, even though this country was already seeking one and had been trying to interest Australia in a three-way deal, or a five-way deal also involving Chile and Singapore.

Example: In February, Helen Clark, under heavy pressure, signed away the right of New Zealanders to automatic permanent residence in Australia, and with that, automatic rights to welfare, despite rational arguments that the benefits to Australia of a supply of educated people who on average earn more and pay higher taxes than native Australians outweigh the costs of social assistance to those who don't.

Example: Last month, as part of a tax deal with the US, a rule change was proposed for the Australian Stock Exchange which would have the effect of stripping the top off the Stock Exchange here.

Example: Australia maintains a ban on New Zealand apples, even though science has discredited the excuse for it, fireblight.

Example: Despite brave words last year of progress in the offing on a range of policy matters that impede free business across the Tasman, principally disadvantaging businesses here, talks proceed excruciatingly slowly.

And that's just one year's haul.

This is the fate of the smaller in an unequal match. Australia matters far more to New Zealand than this country does to Australia.

All the ritual things are said in Canberra when protocol requires. There has also been a great deal of business-smoothing harmonisation of administration since CER, the free-trade agreement, was signed in 1983. The Australia-New Zealand Food Safety Council both harmonises rules in a fraught area and saves money for both countries.

And occasionally this country does figure as an important market - for example in Gold Coast tourism, hence last month's desperate fence-mending by Brisbane Lord Mayor Jim Soorley after Labor Queensland Premier Peter Beattie had heaped ordure on New Zealanders over Ansett.

But otherwise Canberra's economic preoccupations are almost entirely with North America and Asia. We offer only modest prospects. Which means, as former Canadian Prime Minister Brian Mulroney said here in July of his country's relationship with the United States, nearly all the running must be made from this side of the Tasman. Ask a Mexican and you will get the same answer. That means (a) doing things the Australians want; (b) not doing things the Australians don't want; and (c), when we want business policies harmonised, doing most of the adjusting.

Commerce Minister Paul Swain has taken item (c) to heart, aligning competition law with Australia's.

But Governments have repeatedly transgressed (a) and (b) by reducing defence spending as a percentage of GDP during the 1990s and, since 1999, disbanding the Air Force fighter wing and canning a military upgrade of the Orion surveillance aircraft.

Moreover, even when New Zealand does make the running, this is not a once-for-all-time affair. The eager Mr Swain might well find himself wrong-footed and having to reverse on competition law.

He will be fine if Kim Beazley's Australian Labor Party wins the election because it does not intend major competition law change.

But John Howard's governing Liberal-National Coalition is promising to reshape its competition law.

And what happens if Mr Howard does not see out the whole of a third term and Treasurer Peter Costello steps up?

Our Trade Minister, Jim Sutton, says Mr Howard "has proved to be a friend of New Zealand".

But Mr Costello is hard-nosed.

He might turn out dismissive or unfriendly, as was Mr Howard's Labor predecessor, Paul Keating, who pulled the plug on the single air market in 1994 and forced Air New Zealand into Ansett. Mr Beazley is also no friend of this country.

For business what does the election hold?

There is no great difference on macroeconomic policy between the Coalition and Labor. The Coalition would like to cut taxes a little and Labor to spend a bit more. There is little room for either.

The difference would be in micro policy. A re-elected Howard Government would push on with modest deregulation, including of the labour market, and even more modest asset sales.

A Beazley government would emulate the Clark Government and more. There would be no more micro reform or asset sales. But there is one exception: Labor would abolish individual employment contracts and curtail workplace agreements.

That would make the Australian labour market more regulated than here.

Also, both parties have pragmatic attitudes to genetic modification, untrammelled by the sensitivities to indigenous peoples and Greens that have tied the Government here in political knots.

* ColinJames@synapsis.co.nz