Comment
Innes Willox – Chief Executive of the national employer association, Ai Group
More Australian companies sell products to New Zealand than any other market. Yes, China is our biggest market by value, but that sits in the offices of just a few companies; more than 18,000 Australia companies rely on New Zealand customers for sales.
When the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA or CER) was signed in 1983 it was ground breaking and held up as the exemplar for market integration. But like many forty-year relationships, cracks are starting to show and there is a risk that the agreement may wither on the vine if insufficient attention continues to be given to maintaining the regulatory coherence that has been the key to our successful economic integration.
Thanks to efforts from Ai Group to raise awareness of the gradual deterioration of the Single Economic Market that was the ambition when the CER was signed, it has been made a priority at a recent meeting between the two Prime Ministers.
Prime Minister Anthony Albanese and Prime Minister Chris Hipkins have agreed on the continued importance of the Trans-Tasman Mutual Recognition Arrangement and reaffirmed the long-term goal of nurturing a seamless trans-Tasman business environment.
To this end, the Prime Ministers supported a review and modernisation of the SEM agenda, to ensure that it was fit for purpose in facilitating regulatory alignment and greater economic integration during a period of swift economic and industrial change. They noted the importance of officials meeting to take forward priorities under the SEM agenda and implementing the Trans-Tasman Roadmap to 2035.
While political will remains strong for a close economic relationship between Australia and New Zealand, numerous decisions by regulators are undermining the effectiveness of the CER. The decisions are often small but the combined result has been the creation of divergent regulatory schemes fuelled by disjointed standards. This is negatively impacting businesses and consumers, resulting in higher prices and/or reduced product options.
For example, New Zealand families moving to Australia can’t necessarily bring their child’s car seat with them. New Zealand has chosen to follow a European standard, which means that some products on the market follow a standard that doesn’t meet Australian conditions.
Both countries have made public commitments to sign on to international standards; however, we have a unique electrical system which means that our electrical standards must remain local. Despite this, both nations wrestle with electrical product regulatory alignment and Ai Group has made calls for regulators in both countries to work closely to ensure that manufacturers and suppliers can seamlessly provide products without encountering unnecessary technical barriers that only increase the cost to the consumer. The two markets are too small for divergent regulatory schemes and businesses and consumers are bearing the cost.
Regulators often point to particular standards within the text of a regulation, which is why it is joint Australian and New Zealand standards that underpin Trans-Tasman trade.
Over the years, the two standards-making bodies have changed their respective business models. This has led to the charging of participation fees to those New Zealand stakeholders who contribute to the development of standards, which has resulted in the disjointing of standards. This has created the perception that NZ businesses are being unfairly treated in the shared standard-making process. Development of innovative approaches to collaborative resourcing between the standards bodies to reduce costs barriers would go a long way to address this problem.
If we are to maintain the cohesion of our two markets, this regulatory divergence cannot be allowed to continue. After extensive consultation with industry in Australia and NZ, Ai Group has proposed a plan to reform the fundamentals of the trading relationship.
We propose addressing the fragmentation issues by:
Forming an ANZ taskforce of political leaders, industry (Ai Group, BusinessNZ and local businesses from both sides of the Tasman), including representatives of standards bodies and regulators;
Identifying areas where the harmonisation of standards is needed;
Determining the mechanism to decide standards (for example, international ISO or Aust/NZ);
If ASNZ is the standard, then determine how to incorporate Australian and New Zealand voices; and
Inviting NZ regulators to meetings of Australian regulators.
Ai Group Head of Industry and Policy, Louise McGrath, outlined these proposals at the Australia New Zealand Leadership Forum held in Wellington last month.
We need to see greater collaboration among regulators with regular meetings and increased stakeholder engagement. As we mark the 40th anniversary of this world leading agreement, we don’t believe that this market fragmentation is desired by our political leaders or regulators. We need both sides to stop and assess and work together to get the CER back on track.