AUSTRALIA

The trans-Tasman relationship has been transformed over the past generation.

• The relationship with Australia today has moved a long way from what it was 20 years ago. There is now a high degree of integration of the two economies. Many businesses treat the two countries as a single market. We are each other's largest and most important markets for manufactured goods.

• We effectively have a single labour market. Around 400,000 New Zealanders now live long-term in Australia (about 55,000 Australians in New Zealand). This has political and policy consequences and entails major social security commitments.

• Regulatory and policy processes in many areas are converging. As a result, in some areas the relationship is becoming less like the traditional one of two sovereign nations and more akin to that of countries in the EU where borders are coming down and domestic processes are harmonised. This has implications for New Zealand as we are brought into closer proximity with (and affected by) the Australian federal system.

New Zealand and Australia share common purpose and effort on much of the foreign policy, trade and security agenda

• We have a more traditional relationship in our external relations, although even here working links across the Tasman are extremely close. In practice we operate as a team on a wide range of issues (often with the Canadians, as the 'CANZ' group). A lot of effort goes into coordination.

• The closeness with the Australians can sometimes be a constraint (and we do part company on some issues) but more often it is an asset to us. With joint effort we can get greater recognition of New Zealand perspectives, amongst the plethora of issues on the go in multilateral organisations.

• The areas in which New Zealand and Australia have differences of view are limited but nonetheless important (the divergence in our disarmament policies is currently one).

• We have also worked closely together in defence and security, participating together in many UN peacekeeping operations.

CER has become a model for new-era relationships between countries

• CER has, along with European integration, become an important model for new-generation economic relationships between states. The evolution of CER demonstrates how, once such an agreement is in place, convergence of a wide range of policies and processes is likely to follow. This closeness brings both benefits (eg New Zealand's largest export market by far for some time) and costs (eg constant coordination must be maintained; difficulties of the federal system brought closer to home for New Zealand).

Managing the trans-Tasman relationship is not without difficulty.

• Australia's size and 'middle power' outlook can mean a tendency to overlook the interests of smaller neighbours on some issues. This has been exacerbated by confidence gained from the strong Australian economic performance over the last few years (the apparent impending cyclical slow-down notwithstanding).

• There is a sense within parts of the Australian system that trans-Tasman freedom of travel and the consequent high level of New Zealand migration place us under an obligation and that benefits in the relationship flow mostly to New Zealand.

• While we do not share these perspectives, New Zealand needs to manage them and their consequences, just as we need to maintain an overview of the relationship and its importance to New Zealand. There will be a continuing need for high-level political management of links with Australia, especially in case of any issues or differences.

Security is an area where management of the relationship will continue to be tested

• Australia sees defence links as central to the relationship (reflecting in part the importance attached to defence and security policy more generally).

• There are some differences in our approaches to particular security issues, notably differences over nuclear policy and the weight attached by Australia to its alliance relationship with the US, and the Australian tendency to a significantly more negative assessment of the security environment (reflecting its different geo-political circumstances). Timor reinforced the tendency to take a pessimistic view of the strategic environment. Australia has a tendency (like most Asian states) to see the region in balance of power terms.

• Australian security policy will continue to operate on two levels:
  • deliberate efforts to promote confidence and stability, and support regional and international peace and security through regional processes (including bilateral links, the UN, APEC, and ARF); and

  • continuing to prepare against security threats through development of major combat capabilities and alliance relationships.

  • Regardless of whether we fully share Australian perspectives on the regional security outlook, they need to be recognised in our dealings with Canberra.

What does this mean for New Zealand security policy?

We have interests in common and working with the Australians can contribute to key New Zealand goals

• There is a track record of joint effort with Australia on security issues within the region and further afield. We have many interests in common. Experience in Cambodia, Bougainville and Timor underlines the contribution the defence relationship can make to key New Zealand goals.

• Defence co-operation is also important for wider relationship reasons.

New Zealand has an alliance-level relationship with Australia

• There is a long-held expectation and understanding that each country would go to the defence of the other in time of need.

It is important to be able to influence Australian policy and decisions

• Australian decisions will often affect us (and vice versa). It is important that we have an input if our interests are involved. That will partly depend on whether the Australians see us as a serious player on the issue under debate.

• On security issues there has been a tendency in some quarters to under-rate New Zealand's interest and role. Our efforts in Timor may have prompted some reassessment. Our INTERFET and UNTAET contribution has been appreciated.

• New Zealand statements on defence and wider security issues are read closely in Canberra. In the context of an extremely close bilateral relationship there are expectations that we will show some sensitivity to Australian interests (ANZUS and the Australia-US relationship being the obvious example).

Defence links with Australia are important if we want to maximise the effectiveness of New Zealand defence effort on a limited resource base. Australia has an interest in the capabilities we can provide. These links do not compromise New Zealand operational independence.

• Our defence resources will remain limited. We shall want to get maximum value from our investment. The defence relationship with Australia is central to this. Working closely with the Australians in training and exercising, operations, procurement and capability development offers opportunities to maximise New Zealand defence force effectiveness.

• Australia faces problems of its own in funding the capabilities it needs. New Zealand resources are potentially important, particularly if we maximise commonality between the two forces.

• It is in our interests to take full advantage of potential synergies in the defence relationship. They do not affect our ability to take an independent view on specific issues. Nor do they limit our ability to take independent decisions on how and when New Zealand defence resources will be deployed.

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