Sibling rivalries are seldom quiescent for long, not at least for the junior member. Discussions in New Zealand of the bilateral relationship with Australia are therefore not rare. Even so, there was a feast in 2001. The annual Otago Foreign Policy School dealt with `New Zealand and Australia: moving together or drifting apart?' A little later the NZIIA's National Office sponsored a seminar in Wellington with the same title but the more wide-ranging sub-title, `Where are we going?' Later in the year, too late for this commentary, the Institute of Policy Studies and the Stout Research Centre organised an even more wide-ranging discussion of cultures and minds under the heading of `States of Mind, New Zealand and Australia 1901-2001'.
In the mid-year functions, we were reminded several times that the New Zealand-Australia relationship is not entirely unique. There is an obvious parallel with Canada and the United States, and also less recognised analogues such as Lebanon-Syria. There was, however, no need to look to other sibling rivalries for suggestions of new and possibly exotic lines of discussion. Australia and New Zealand provide plenty of material. We are not in the position of the mid-Westerner seeing the Atlantic for the first time, `At last there is enough of something.' Geography and history guarantee that the Australia-New Zealand relationship will remain a live topic for the foreseeable future. Even those who took a long view and argued that geologically the two countries are certain through Continental Drift to move together found themselves in a debate about whether that was true for all of New Zealand.
The Otago and Wellington events had similar but not identical structures. There were ministerial openings, discussions focused on economic and defence aspects of the relationship, and recognition that the relationship extends across the whole range of policy, and beyond to cultural and personal interactions. The ministerial statements, by Phil Goff, Minister of Foreign Affairs, and by Jim Sutton, Minister of Trade Negotiations, were determinedly optimistic. Goff noted both that there are 540 services and 106,000 seats crossing the Tasman each way each week (although the numbers will have been reduced somewhat in the second half of the year) and that Australia was complaining about New Zealand's defence effort in 1924. Jim Sutton explored the potential of two sovereign countries operating as one economy. The speakers on the economy and business relations included Neville Gibson, Gary Hawke, Tim Hazledine, Murray Horn, and Roger Kerr; John Wood and Paul Cotton added a specific discussion of migration. The defence relationship was explored by Max Bradford, Dave Dickens, Ron Huisken, Dennis McLean, Terence O'Brien, and Hugh White. The wider policy settings were exemplified in the field of research and innovation by Tricia Berman and Grant Ramsay, while Lydia Wevers took the discussion wider with an account of literary relations between Australia and New Zealand. History in the broad sweep or as personal experience was brought to bear by Tom Brooking, Bob Catley, Gerald Hensley and Richard Teare.
The proceedings of the Foreign Policy School will be published in 2002; (1) those of the Wellington seminar are already available. (2) Most of the content will be found to be essentially foreign policy as conceived in the Australia division of MFAT. If the agenda had been constructed through any of the international institutions division, the environment division, or the disarmament and arms control division, we would have got at least Gary Hawke is Professor of Economic History at Victoria University of Wellington. While he directed the Institute of Policy Studies, trans-Tasman relations were always on its agenda. He is the deputy chair of the New Zealand committee of the Pacific Economic Co-operation Council. different emphases. However, sibling rivalries are seldom conducted with equal attention to all aspects of a family and its setting. Furthermore, the key element in the New Zealand-Australia relationship currently is to be found in attitudes towards conflict in Asia. The relevant Australians want to be part of shaping the security environment and have decided that that requires ability to participate in any regional conflict. The New Zealand government wants to participate in the shaping, but has decided not to have equipment for maritime and air strike combat.
Although we can identify a clear principal current difference of view, it helps to have a clear view of the history of the Australia-New Zealand relationship. Tom Brooking opened the Otago School with a discussion of `Together Apart: 231 Years of Troubled Relationship' which discarded myths built on irrelevant references to New Zealand in the Australian federal constitution, and the legal fiction that briefly made New Zealand a dependency of New South Wales. He argued cogently that `romantic nationalism' substituted for analysis. The thesis can be taken further. Even the idea that New Zealand was an extension of the NSW frontier is substantially misconceived. Rather, in the history of the moving frontier of European expansion into the Pacific, New Zealand came after south-eastern Australia. The motivation was from afar, the chronological sequence of NSW and then New Zealand was incidental. Furthermore, while New Zealanders are inclined to emphasise their uniqueness, there was a great deal of variety in the Australian colonies which became states -- from prison camps to Wakefield settlements, from Indian Ocean to the Pacific, from protection to free trade, from labour boards to industrial conciliation, from extensive outback farming to intensive dairying -- and there is not much that can be learned from New Zealand and not from experience somewhere in Australia.
Bob Catley added thoughtful material on how Australia and New Zealand have diverged in recent years. Australia is federal and diverse, but it has changed from Anglo-Celtic to multicultural, and many Australians have no reason to support preference for New Zealand migrants over their relatives. New Zealanders in Australia are not always supportive -- they left the Treaty, welfarism and excessive concentration on rugby. Polls show that the attitudes of Australians towards New Zealand are benign, if marked by condescension. However, opinion leaders see New Zealand as having turned away from integration, in tax policy as well as defence; they also see antiquated anti-Americanism whereas Australians regard the alliance relationship as crucial; they observe re-regulation and welfarism at the cost of incentives.
There is historical substance to this too. The outstanding analysis of the security relationship by Hugh White, former Deputy Secretary of Defence in Australia, was set in a history that is far from entirely shared. Strategic policy thinking in Australia starts with Trafalgar, when the Royal Navy removed its ship and was confident it could defend Australia from Europe. A key date was 1905 when Australians realised that the strategic danger was not European powers' claims on Australia but the threat from Asia. Billy Hughes wanted to go on from New Guinea to Truk and the northern Pacific Islands in 1914 and could not believe that the British intended to allow Japan to advance thousands of miles towards Australia. There is much more than Gallipoli, and New Zealand and Australian views were different.
Instead of looking only through a framework of British colonies in the South Pacific, we could gain much by exploring analogies with Scandinavia, where Nordic Council institutions draw on a common heritage despite some deep historic differences and different contemporary attitudes to NATO and the European Union. We might also note that Australia has developed formulae for redistribution among the states through federal expenditure; in the 1960s, New Zealand would have been a net contributor where it would now be a net beneficiary. This has not gone unnoticed in Australia.
After the ANZUS split, there was a serious endeavour to keep the Australia-New Zealand defence relationship alive. New Zealand would contribute infantry, aircraft, blue-water navy and maritime surveillance, and there was a serious search for convergence with the ANZAC ship project as the apex of the structure. In public and in principle the defence relationship was to be maintained, but it was in fact always a negative in the trans-Tasman relationship. If we had taken more note of history, we would not have been surprised. In the 1930s, the first Labour government in New Zealand led the world in its enthusiasm for collective security through the League of Nations; the ALP was the least enthusiastic of Labour parties. At the time of ANZUS, Australian External Affairs Minister Percy Spender wanted a treaty with the United States, aimed at Pacific security, with no input from the Commonwealth or NATO. His New Zealand counterpart, Frederick Doidge, wanted Britain involved, with nothing conflicting with Middle East and European commitments, and preferred an informal arrangement. In 1969, after Guam, New Zealand refused an Omega station while Australia was deeply into the joint military facilities. There was never a close understanding from which the recent divergence occurred.
The Australians realised that their defence posture did not add up. Either there had to be more investment or fewer commitments. A 10-20 year perspective was adopted. An exhaustive official and ministerial process and a public consultation process were both genuinely analytical and intended to maximise bipartisan support. The result is a policy stance with room for disagreement -- as on the issue of theatre missile defence -- but with solid support for both the core defence posture and the alliance relationship.
The process resulted first in agreement that Australia would need light, flexible deployable land forces with appropriate protection, simply because they are always in use and were needed in the immediate neighbourhood. (This differed from the Canadian case, and there was no formulation in terms of peacekeeping versus defence.)
The next issue was more difficult -- did Australia need high technology air and maritime forces? The answer was eventually affirmative. Some capabilities were needed for protecting land forces. Beyond that, the defence of Australia was a maritime task. All the high-tech force structures were to be suited to the defence of Australia and then also to be available for contributing to regional coalitions to deal with high-level regional issues. The strategy does not contemplate a significant land force in Asia (and so avoids high casualty rates) and it responds to the question of cost. The likelihood of a threat to Australia is small, but it is not zero and the effect would A be great. While there is little risk of a major incident within Western Europe or the Americas, Asia is more dangerous. Over the relevant long period, uncertainty is high, and Australia wants a voice in regional developments in order to look after Australian interests.
That exposition of Australia's position makes very clear the different stance of New Zealand. Claims of a shared colonial past, substantially misconceived, can have no impact compared with divergence from such a deliberate and coherent view. Shared battles may be the strongest force in popular attitudes, but battles are now rare and long-range so that any such influence must inevitably decline. In any case there is an enormous gap between popular attitudes and contemporary strategic thinking.
All alliances can be expected to lose focus in a post-Cold War era. Issues become more diffuse in the absence of a threat, and since the end of the Cold War and the Gulf War we have experienced specific events rather than a well-defined security focus. (It remains to be seen whether terrorism will change that trend again.) Australia and New Zealand agree on a great deal. They support the rule of law and conference diplomacy. They are both small in some contexts and not in others. But the contexts are not always the same for both countries. New Zealand seeks various company on various issues -- there is no choice between `the world' and the `South Pacific' for us. Australia has wider strategic objectives. There is a security edge to Australia's involvement in East Asia and its alliance with the United States may well cause it to view issues like theatre missile defence differently from New Zealand.
The notion of a `strategic entity' is not dead. It was argued that it is inconsistent to say that New Zealand and Australia have different interests but that if Australia were in a scrap we would be there. The latter stance implies a strategic entity. But it is at least questionable. We need to think of overlapping circles rather than coincident ones. Or of parents who support children even when they disagree with them. If we thought Australia were genuinely concerned about a threat to it we would assist, but if we thought Australia were adventuring abroad we would not. We would have had a real problem in East Timor if it had been likely that ASEAN would be opposed, and we were no doubt very relieved that that situation did not arise. While we contemplate the importance of avoiding such choices, we might also reflect that in many circumstances the Australian response to New Zealand's willingness to help is `with what?' This is a question for contemplation, not an invitation to retreat to a shrill and superficial nationalism that in both Australia and New Zealand more often than not produces posturing about differences rather than serious debates about identity.
We can note differences in self-confidence -- Australia Day versus Waitangi Day. But we can go further. Australians are confident about economic futures but apprehensive about security; this is deep in the psyche, having been present ever since Australians began thinking about the threat from the north. New Zealanders are worried about the economy but believe in a benign security outlook. They see New Zealand as a paradise but not as one needing much defence. Hugh White scored the best line in the mid-year discussions -- `Same bed, Different nightmares'.
For the future, we need to rely less on instinctive ideas of mutual interest, and look on the defence relationship as a `normal' one, where agreement is common but where there are always humps to be managed. `Special relationships' are fraught with difficulty.
The 2001 discussions of economic and business aspects of the trans-Tasman relationship tended to focus on two recommendations: continue economic integration as `business as usual' rather than adopt any of the grand initiatives currently on offer, and look at the common strategic position of Australia and New Zealand rather than be fixated on bilateral concerns.
Participants in the debate about the original New Zealand Australia Free Trade Agreement in the 1960s or in the lead up to Closer Economic Relations in the 1970s and 1980s would be astonished by the absence of controversy about them now. Those who feared the destruction of New Zealand manufacturing and subservience of New Zealand to Australian interests were wrong. Their arguments repay revisiting; there was good analysis by people like Peter Elkan, but they allowed too little for the intensity of specialisation which grew in the second half of the twentieth century along with intensified international inter-dependency. Economies were not excluded from leading-edge developments if they chose not to be.
We might, however, also observe that the effects of NAFTA and CER on New Zealand were not dominated by the concerns of elementary textbook material on international trade; most important were the political economy effects of changing policy, commercial and popular attitudes towards the outside world, and the effects of learning on management of production and investment. These points were developed in economic thinking as it evolved in the years after about 1970, but may be seen as `non-economic' by anybody who ceased reading economics in about 1970 or who relies on what was taught as economic thinking in many international relations courses in later years.
There is still room to enhance and reinforce existing processes of integration between the Australian and New Zealand economies. CER is a progressive process, and there is always an agenda of issues where progress is possible -- through patient analysis rather than dramatic rhetoric. We have only recently achieved major integration of the dairy markets of Australia and New Zealand, which is somewhat ironic in view of the way both countries press the issue with the United States and Canada. There are issues around securities law, where it can be argued that we have moved away from rather than towards `national treatment'. The centre of `economic issues' has moved, but some issues can he put in the language of the `free flow of capital', which has had a prime position in trans-Tasman negotiations for more than a decade.
The weight of economic opinion as shown in the mid-2001 seminars was against any dramatic new initiative. There have been arguments about the barriers to trade that result from the mere existence of borders between economies, and there have been arguments for monetary union between Australia and New Zealand. The experiment currently proceeding in the European Union is rightly at the centre of much attention. It is appropriate to ensure that Australia and New Zealand do not delay unnecessarily. Even if, as is likely, the `border effect' between Australia and New Zealand is less than most, it is probably still worth reducing. However, the argument for reducing transactions costs does not lead directly to support for currency union with Australia -- we would have to investigate what would happen to transactions costs and the much larger trade that does not go to Australia. Furthermore, seeking to reduce transactions costs is nearly equivalent to supporting economic integration, and it is probably wise to direct efforts (and resources) to agreements with Singapore and Hong Kong rather than pursue currency union with Australia.
The dominant view of the economic debate is that we should seek the `best' rather than the `Australian. Our future is in our `own hands'; we may choose to adopt constitutional or political constraints which make it more likely that economic decisions are made carefully rather than cavalierly, but tying ourself to Australian decision-making processes is not necessarily (or even often) the best way of achieving that. Who would prefer the Australian GST to ours? Sometimes these arguments seem to imply that there is an external criterion for `good' economic policy that is apparent to anybody of good sense and a little knowledge.
Finding collective answers within a wide range of political preferences is more complex than that. Politicians are sometimes ill-informed and unwise, but trying to take decisions away from them is undemocratic. Nevertheless, there is a powerful political and economic logic, not for seeking union with Australia, but to increase disciplines which foster careful, deliberate and well-informed choices, especially choices which minimise the cost of small size and all transactions costs but which do not prejudice future possible choices more than is necessary.
There was one major worry about whether this conclusion is sufficient. Much was made of the `branch office mentality'. Is New Zealand being condemned to being a backwater as people with skills migrate in search of challenges? There are grounds for such worries, but they do not point towards a closer association with Australia. Many New Zealanders go to Australia, or to Australia first, but it is in relation to the whole international economy (and society) that New Zealand has to provide attractive opportunities if it is to retain its talent. Secondly, Australia is facing the challenge of centripetal forces too. Indeed, the concept of `branch office mentality' is more commonly expressed there than in New Zealand. It is hard to see any mechanism whereby Australia and New Zealand could more effectively respond to these particular challenges together than they can do separately. There is more to be gained by examining how Singapore is seeking to maintain links with its emigrants than there is in linking up with Australia.
Thirdly, while the current challenge is real, it is surely over-rated. It is a modem variant of the worries with which Elkan and others approached NAFTA in the 1960s. There have been previous international concerns. Worries in the past would have had all of the United States concentrated in the north-east by now, but oil and other changes reversed that flow. More than a century ago, railways were going to concentrate the direction of national economies into railway towns. Electricity and motor vehicles ended that scenario. Were we entirely wrong about the de-centralising impact of information and communications technology just because we vastly exaggerated the likely trend towards combining places of residence and employment? The key is surely to make positive adaptations to centralising tendencies, not blindly to oppose what cannot be stopped nor to jump into dramatic changes that in any case cannot be expected to have much effect on the wider change bearing down on us.
Movement of people is a key element in the interaction of any economies. In Europe, much will depend on how readily people can really move among the constituent economies. Australia and New Zealand are unusual in having preserved a great deal of the freedom of movement of people that characterised the international economy before 1914, when citizenship was much less important in conferring rights to public support.
This is especially notable given the importance which controlling the movement of people has had in building the Australian identity. Much of modern Australian society was founded on the principle of keeping people in. Federation owed a lot to a common desire to keep some people out. The Department of Immigration and Multicultural Affairs is a major power, much as the Ministry of Works was in New Zealand, and more powerful in some respects than central agencies because its power rests directly on popular attitudes.
These issues became even more prominent in Australia in the latter half of 2001. In the middle of the year, the focus of attention was on the Trans Tasman Travel Arrangement and on the Social Security Arrangement, which had only recently been negotiated. A powerful case was mounted that free movement across the Tasman had been preserved. Perhaps Europe can do without passports whereas they are needed for trans-Tasman travel, but that is a minor matter, and while in Europe it is true at the border it is not always true for things like registering at hotels. Through the Social Security Arrangement, New Zealand has eliminated a fiscal cost and will in future essentially reimburse Australia only for superannuants who have spent part of their working lives on both sides of the Tasman. (For humanitarian reasons, people with severe disabilities will also be covered.) Australia has set up a filter to judge whether New Zealanders have skills such that they should have residence and access to all Australian benefits.
It can be argued that a Pareto solution was found which left movement much simpler than between Canada and the United States or in practice within the European Union. However, the irritant may not have been removed as fully and durably as this suggests. Much depends on attitudes rather than analysis. Many Australians will still resent the preferential treatment of New Zealand and will not immediately be convinced that all dole-bludging has been stopped. Movement of people will inevitably be more prominent in WTO negotiations in the future, and the preferential nature of trans-Tasman provisions will be highlighted. We should hear less nonsense about New Zealand providing Australia with a cheap supply of skills (which thoroughly confuses private and collective investments and returns) and see more careful management of what remains a highly valuable piece of economic integration.
One of the most under-rated institutions in the trans-Tasman policy relationship is New Zealand's participation in ministerial councils. The Australia New Zealand Food Authority has been treated as a specific case rather than an illustration of a more general point. New Zealand gains from participation in problem recognition and formulation of the parameters within which policy responses are constructed. At the point where general principles are no more than guides to action on specific questions, New Zealand is one voice among many. New Zealand's problem is to ensure that the former gains outweigh the latter costs. As in so much else, it is New Zealand that has to work harder at the relationship.
Ministerial councils work across many conventional areas of policy -- education, transport, and many others as well as health and bio-security. There are seldom sudden bonanzas for either partner. In mid-2001, the Australian Department of Industry, Science and Resources seemed to think that `innovation' had only recently been thought about by economists and that a standard Canberra public sector approach was all that was required. There is a large economic literature about innovation, and we can learn a lot from Soviet experience with centralisation of innovation. But then the New Zealand Science and Innovation Advisory Council has not exploited these areas of learning either. Frequent interaction in appropriate settings increases the likelihood that both sides will become aware of their limitations and the areas in which they have real strengths.
The trans-Tasman relationship is not, and never will be, entirely a policy related one. New Zealand and Australia have different literatures despite similarities between the flowering of the 1890s in Australia with Lawson and in the 1930s in New Zealand with Sargeson. We have similar book-buying publics -- cooking, money, name authors, and local loyalties leading sales in both markets. Nevertheless, what circulates most throughout Australia and New Zealand are a few international authors with Australian or New Zealand links. There are some trans-Tasman people like Ruth Park and Rosie Scott, but there are few of them. There might be more in other artistic fields, like music and film, but there is not a single artistic culture. And the limits to literary and artistic markets are set by consumer choice, not by commercial strategies. A number of failed trans-Tasman ventures testifies to that.
Strength in unity? Or two voices are better than one? Circumstances vary, and perhaps the most general conclusion is only that Australia and New Zealand gain in economic and other diplomacy through speaking separately, but that they have most impact when they understand each other's position, and they then nearly always agree on much more than they disagree about.
It is important to challenge perceptions of bludging or free-riding since once established they would be hard to shift. But not too much should be made of a special relationship, and the time for a Trans-Tasman Community has passed. New Zealand and Australian interests now rest on a wider region rather than in the bilateral relationship.
The immediate challenge is in the defence and security field. Strong alliances occur when countries agree, not when countries agree because they are allies. New Zealand and Australia should pursue mutual understanding rather than a quick elimination of different perceptions of how military force relates to participation in regional strategic deliberations.
Seminars in mid-2001 showed that the trans-Tasman relationship continues to provide intellectual and practical challenges. It benefits from a professional rather than sentimental view of history. The biggest current challenge is the divergence between Australian and New Zealand governments about whether regional strategic interests require preparedness for armed conflict. Economic integration has been beneficial and offers continued benefits but `Australian' is not always `best' for New Zealand. Resources are better directed to common interests in wider regional and international settings than to a new initiative on the bilateral relationship. Trans-Tasman movement of people will probably remain problematic despite the recent agreement on access to welfare payments.
(1.) It can be ordered from Colin Bassett at the University of Otago (Colin. Bassett@stonebow.otago.ac.nz).
(2.) Bruce Brown (ed), New Zealand and Australia -- Where are we Going? (Wellington, 2001).
Gary Hawke is Professor of Economic History at Victoria University of Wellington. While he directed the Institute of Policy Studies, trans-Tasman relations were always on its agenda. He is the deputy chair of the New Zealand committee of the Pacific Economic Co-operation Council.…