English makes most of Australian connection

Finance Minister Bill English. Photo / Mark Mitchell

SYDNEY - New Zealand wants to hold tighter to Australia's economic coat-tails to boost its long-term recovery from the global financial crisis, Finance Minister Bill English told business economists in Sydney.

Promising economic orthodoxy but wide-ranging reforms, Mr English said Wellington intended to further open its market to transtasman business and investment, and wanted to push exports to Australia beyond the 25 per cent of total overseas sales they made up at present.

Major proposals will be discussed in Brisbane today in talks with Australian Treasurer Wayne Swan, including the final stages of a deal allowing New Zealanders to bring Australian superannuation savings back home with them.

New Zealanders are believed to hold much of the A$13 billion in unclaimed savings of people who have left the country at present held in Australian superannuation funds.

Today's talks will also include proposals to significantly open the door to Australian investors, and the potential to co-operate on the fraught development of greenhouse emissions trading systems in both countries.

Further moves embrace the creation of a new economic policy adviser modelled closely on - and linked to - Canberra's Productivity Commission, and the use of Australian state government experience in tapping private capital for major infrastructure projects.

Wellington is also keeping close watch on Canberra's review of its taxation system for any changes in the tax mix that would impact directly on New Zealand, especially any reduction in corporate and income tax.

"New Zealand is open for more business," Mr English told the Australian Association of Business Economists.

High on the agenda is the proposal to enable retirement savings to cross the Tasman as workers from both countries returned home, seen as a key move in further freeing trade and the movement of people between New Zealand and Australia.

Under present proposals, New Zealanders' super savings amassed under Australia's employer-funded compulsory superannuation scheme would be lodged in KiwiSaver accounts until workers reached 65 years.

"We're pretty confident of getting agreement," Mr English said.

Mr English said any agreement would ensure that people could not exploit the differences in transtasman taxation - 15 per cent in Australia, 30 per cent in New Zealand - but indicated a better deal for Kiwi retirement savings may be in the wind.

"[Bringing Super home] is highly voluntary and we'd like to ensure that New Zealanders who bring their money back are going to get at least as good a return - otherwise they're not going to bring it back."

Mr English said Prime Minister John Key and counterpart Kevin Rudd had also "taken steps" to solve an impasse on transtasman investment that has blocked a new deal for the past three years.

Wellington has offered a deal that would significantly lift the threshhold at which Australian investment - running at about $87 billion - would face foreign investment scrutiny.