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CER A Success Or Failure?

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Fuseworks Media
Fuseworks Media

March 28 marks the 25th anniversary of the signing of the Closer Economic Relations agreement with Australia. One of its architects reflects on progress made and opportunities lost. PAM GRAHAM of NZPA reports.

Wellington, March 26 NZPA - On its 25th birthday the Closer Economic Relations treaty with Australia will be praised as the best free trade deal in the world but history may yet judge it a failure in terms of achieving its founder's vision.

This is the view of Hugh Templeton, the National Party politician who along with Australian deputy prime minister Doug Anthony ran a gauntlet of doubters to initiate CER.

"It is the best free trade arrangement probably ever made," Mr Templeton said.

His point is that though the agreement's achievements have exceeded expectations the vision held when the CER was establish has remained elusive. CER has not become a union along the lines of the European Union or the wide-ranging arrangements that operate between Nordic countries.

"Doug, and I too, was probably thinking at one point that it would end up as a federation," MR Templeton said.

But a trans-Tasman economic union with a common currency became the founder's vision.

Mr Templeton, who dismisses APEC as a talking shop, still believes in it.

CER doubters included then prime minister Sir Robert Muldoon and the new MP for Mt Albert Helen Clark who worried over the prospects of CER in her maiden speech in 1982, as well as members of both main party caucuses.

Mr Templeton has never bought the argument that New Zealand would get swallowed by Australia in a full economic union.

"Why are all these small countries begging to get into Europe?"

Because they benefit from joining into a stronger grouping, he said.

The historical inevitability of a union between Australia and New Zealand has been denied. Neither Australians nor New Zealanders think of themselves as part of a union of two countries, Mr Templeton said.

Before the 1990 election Labour Party politicians talked about taking CER to the next stage but the National Party won and "didn't pick up the Australian thing".

The Australians thought it was New Zealand's job to chase it. Australia looked to the United States. Barriers between Australia and New Zealand increased.

When Labour got back into power Mr Templeton assumed Finance Minister Cullen would move on the issue of a single currency. His advisers had indicated privately that it was possible but Dr Cullen didn't move on the issue.

Mr Templeton sees one central bank between the two countries and other mergers of regulators as a consequence of a full union.

Mr Templeton is left in retirement viewing politics as a "funny game".

"Governments always make the right decision after they have tried every other alternative."

To get ahead after Britain turned to Europe New Zealand had to do two things in his view. Attach itself to the economic engine of its neighbour Australia and develop its own resources. It has done neither well enough.

Mr Templeton said the development of this country's resource base was set back by the sale of Petrocorp by "Roger Douglas and co".

It might have become a New Zealand entity large enough to take on the risk of exploring potential resource-rich areas like the Great South Basin. Privately owned Todd Energy was too small for such risks.

"I went to Muldoon and said you have to drill onshore Taranaki -- there's oil there and the companies aren't able to do it. We did. We also drilled in the Great South Basin but then we stopped it," he said.

"We've waited a whole generation to drill it now."

"Now if we want to step up the development of our resources it is going to be done mainly in co-operation with Australia," he said.

Trade Minister Phil Goff, who is currently negotiating a free trade agreement with China, also sees CER as one of the world's most successful free trade agreements.

"Two-way trade in goods and services has expanded by an average of 9 percent per year up to 2008 to around $24 billion per annum," he said.

Currently work is going into greater harmonisation of economic regulation and renegotiation of the Australia-New Zealand bilateral tax treaty.

Climate change and portability of savings are also topical issues.

The trans-Tasman Business Circle is marking the anniversary of CER with a dinner in Auckland.

Mr Templeton is disappointed with the current foreign policy statements by political parties.

"The problem with most of our politicians is they have no policy. The last few elections they have been putting up pledge cards with about five feeble points on it."

Politicians should spell out "where are we as a nation in the South Pacific and where are we as a nation in the Pacific".

"Both of those questions then come back to how do we organise our relationships first with Australia and then with America," he said.

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