- MR GARLAND asked how far the two countries would go on the bilateral relationship. He asked MR TALBOYS if his government would consider some of the more far-reaching alternatives. Mr Talboys said he thought it would. He commented that we had to be clear what was being talked about. If we were talking about a customs union, what did that mean. How would it cope with the problem of investors putting their money closest to the major markets within the customs union. Mr Talboys commented that one of the main problems he saw was the degree of protection a customs union would afford in the case of manufacturing components which New Zealand manufacturers import from other sources. If as a result of a customs union the prices of these components rose, no doubt people would move to Australia owing to the uneconomic nature of industries in New Zealand. Mr Talboys said that he did not believe New Zealanders wanted to be just a farm.
- MR TALBOYS said that he was encouraged by the widespread interest in the general subject of closer economic cooperation. To him the concept certainly made sense. Studies were of course under way at present and they would have to be looked at carefully. MR GARLAND commented that the studies would take the two governments some distance. On the question regarding the competitiveness of New Zealand industries being based on cheap material from overseas, Mr Garland said that there used to be similar fears in those parts of Australia some distance from Sydney and Melbourne. The fears had subsided. In fact the highest growth areas in Australia were outside the most highly industrial regions.
- MR TALBOYS asked whether Mr Garland felt the ASEAN governments were concerned about the implications of closer cooperation between the two countries. MR FLOOD commented that he did not think that was a real problem. If the two countries were stronger through closer cooperation that would be all the better from the ASEAN point of view. MR GARLAND said that he thought closer economic cooperation between Australia and New Zealand would seem to be a logical step to ASEAN governments. This would be particularly so when it was explained to them that it was not a 'shut out'.
- MR TALBOYS reflected that the consequences of not moving on Australia also needed to be thought about within New Zealand. They were not consequences which appealed to him.
- MR BORDER asked about the attitude of New Zealand manufacturers. MR TALBOYS said that on the whole they were reasonably positive.
- MR TALBOYS asked about the political measure of statements in the Australian dairy industry to the effect that they would not put up with free trade with New Zealand. MR GARLAND said that the Australian dairy industry was a changing animal. It had been under some pressure. Moreover, he felt that these kinds of initial statements of concern were always a bit exaggerated.
- MR TALBOYS commented that he felt there was a momentum building up on bilateral economic relations. At the end 'we'll get a towering debate'. He asked for Mr Garland's thoughts on the time-scale, referring to the Australian elections next year. MR GARLAND said that he thought that lots of the problems would be capable of resolution in interim arrangements. He did not think that a lot of time would be necessary. In the event, the EEC countries had needed less time than had at first been expected. MR TALBOYS agreed, commenting that if people felt that they would have the opportunity of arguing themselves out of change they would try to do so. MR GARLAND said that in this situation you could have too long a period-the steam could go out of it. The fact was that Australia and New Zealand were going to be buffeted more in international trade. The MTN had not produced much and economic growth in our traditional markets was not good.
- MR FLOOD said that there was an empirical problem in assessing the actual consequences of a move of this kind. The EEC countries had made estimates of the likely consequences, many of which had in the end proved quite wrong.
- MR GARLAND reflected that there was a need for more exchanges of responsible commentators between the two countries. It would be very unfortunate if Australians got the view that this was a rescue operation. There needed to be more responsible comment on New Zealand in Australia to dispel the notion that any kind of rescue operation was involved. Mr Talboys said that there was an element of the rescue operation notion in New Zealand also in the sense that some people felt that economic integration with Australia would be their salvation. He was concerned to dispel this exaggerated view too.
[ABHS 950/Boxes1221-1226, 40/4/1 Part 20 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]