96 Record of Meeting between Commonwealth and State Governments

Canberra, 22 April 1980

Commonwealth/State Meeting on the Future Australian - New Zealand Trade and Economic Relationship, Canberra, 15 April 1980(1)

The meeting was chaired by Dr V. FitzGerald (PM&C)-a list of persons present at the meeting is attached. (N[orthem] T[erritory] was unable to send a representative.)

Dr FitzGerald

  • sketched in the background to the recent Prime Ministerial meeting in Wellington on 20-21 March
  • went through and elaborated on the texts of the Communique issued by the Prime Ministers following the Wellington meeting and the Annex on 'Further Study and Future Considerations'
  • emphasised that there were 2 guiding principles in the negotiations
    • there needed to be mutual benefits overall for both sides. It was recognised that some adjustments would be required and there was a need for commensurate benefits to be derived
    • in all cases there should be equality of trading opportunity (the 'fair go' principle)
  • mentioned that the A/NZ relationship would be on the agenda for the June Premiers' Conference
  • indicated that a meeting of NAFTA Ministers in the second half of July would be reviewing the A/NZ officials' studies
  • emphasised that no commitments had been entered into and that the Commonwealth would not be taking any decisions until full and meaningful consultations had been held with the States, industry bodies and other interested parties.

A summary of the more substantial questions asked by State officials and responses given are set out below.

NSW: Had there been consulations with NZ on export incentives?

Response: The preliminary examination of both Australia's and NZ's export incentives had revealed that they were the comer stone of NZ's industry policy and a major plank in its approach to industry restructuring. The Prime Ministers had agreed that bearing in mind particularly the different duration of their respective export incentive schemes that they should be reviewed when they had almost run out. There were 2 separate questions involved-first, the longer term approach to export incentives and trans-Tasman trade and second, their implications for exports to third countries.

QLD: What consideration had been given to Government purchasing?

Response: Australia already receives preferential treatment in some NZ Government purchasing. NZ typically gives a 10% preference to local manufacturers (cf about 15% in Australia) but administers its policy flexibly. NZ is seeking treatment on the basis of it being, in effect, another Australian State. Government purchasing hasn't been talked about in detail. Australian Departments have a study under way which will be submitted to Australian Industry Ministers in June.

SA: How will the question of special assistance be to Australian firms be handled?

Response: It will not be easy to bring this into the exercise; we want to avoid 'stand-out' departures from the 'fair go' principle-State programs, however, give few examples of such standouts.

VIC.: What is the situation regarding future trans-Tasman trade in dairy products?

Response: There have been a lot of discussions on this matter. Some see potential gains for NZ in the Australian market but if the 'fair go' principle is strictly adhered to (e.g. taking into account the value of NZ's special access to the EC market), Australia may not be so badly off. Australian Ministers had emphasised that they will need to be fully assured that the dairy industries in both countries are operating off the same mark before bilateral trade in such products is further opened up.

QLD: Fruit and vegetables need to be given special study too.

Response: Their sensitive nature is recognised and they will be-as they will be, e.g., wheat and wine. The approach will be to examine the impact of support schemes, subsidies, marketing arrangements etc. and if these have no significant impact on trans-Tasman trade, they will not be the subject of further special study. If, however, there are disparities, then options will need to be examined. The Commonwealth will be looking very closely at this matter-indeed, the Director of the BAE will visit NZ shortly to examine NZ's subsidy and other assistance systems to get to the bottom of them.

TAS.: Expressed special concern that the dairy industry (particularly cheese) and vegetable processing be looked at very closely.

Response: Mr Anthony and Mr Talboys have exchanged correspondence on NZ cheese imports. The objective was that NZ not increase its share of the Australian market but rather share in the growth of the market. Discussions were currently aimed at examining how this might be done.

WA, QLD AND SA: How would the states be involved in meaningful consultations?

Response: Commonwealth officials were under very strict marching orders that the consultations must be meaningful. This was reflected in the Communique and the PM's statement to the Parliament and in the fact that no decisions had been taken up on what form any closer A/NZ economic relationship might take. Full account would be taken of the views and comments of the States, industry and other interested parties. It would be many months before any matters were ready for decision and in the interim, there would be full discussions. Commonwealth Departments and their State counterparts should keep in touch.

Additional formal discussions could readily be arranged if considered necessary. The Premiers' Conference will provide a forum for further discussion-this could be supplemented by officials discussions. States should keep in touch with the State industry bodies.

The States should feel completely free to pass any views or comments direct to the Commonwealth. The ANU proposed to hold a high-level seminar on the AINZ relationship in August. The A/NZ Businessmen's Council had published papers on both trans-Tasman transport and foreign investment and exchange control policies and one on Government procurement would soon be available.

QLD AND NSW: What is the situation regarding poultry/meat?

Response: PI undertook to be in touch direct on this.

WA: Will manufacturing industry be the most sensitive area to NZ?

Response: Neither NZ nor Australia really know how NZ manufacturing industry will shape up under any modified trading arrangements. The studies will focus on the 'fair go' principle. Trade in intermediate goods is a very important matter and close and detailed studies will assess the implications for Australian industry.

TAS.: How will NZ handle import licensing? At present NZ resorts to import licensing not only when a NZ industry is in operation but also when there are prospects of such an industry being established.

Response: There has recently been some evidence of a change in the NZ approach. While its most recent Budget outlined proposed new industry policies, it was a little uncertain at this stage just how far NZ was prepared to modify its policies in the area.

QLD: What consideration has been given to the implications of any closer A/NZ economic relationship for Australia's special relationship with PNG, ASEAN and the South Pacific countries?

Response: Australia is very conscious of this angle and it will be watched closely. Any new package is to reflect an outward-looking approach. The broad thrust is that the increased economic strength of A/NZ would be to the ultimate benefit of all Australia's near neighbours.

QLD: It appears that most benefits will go to NSW and Vic. with their industrial complexes, with other States suffering disbenefits unless action is taken on agricultural products. Can an assurance be given that those industries not receiving special assistance (e.g. fruit and vegetables in Qld) will also be examined?

Response: Anything affecting the 'fair go' principle will be considered in the studies-the entire primary industry sector will be covered.

There is no expectation that the net economic benefits to Australia from any closer association with NZ will be large and for this reason it was therefore necessary to look beyond the narrow economic/commercial area to implication, e.g. politically, culturally and for the free movement of people.

VIC.: Will there be political union between A/NZ?

Response: Definitely not! The subject has never been under consideration.

WA: What will happen with the present limitations on air transport?

Response: The question of civil aviation links had been discussed briefly by the two Prime Ministers in Wellington. Mr Fraser had acknowledged that there was an imbalance in the situation and that Air New Zealand should be granted access to the Australia/North America route. He told Mr Muldoon that he had given instructions that the matter should be resolved as soon as possible. It was noted that Qantas and Air New Zealand had reached agreement on access by Air New Zealand to this route before the Prime Ministers met but that official talks had not yet been held. There was a proposal that a Hobart/Christchurch link be established but final details on this proposal had still to be worked out. A Submission was being put to Australian Ministers and this would need to be considered before any official talks could take place.

QLD: What 'Treasury type' matters are being looked at?

Response: These studies have a much longer time frame than the other studies. There are no immediate issues-recent NZ proposals for the establishment of insurance and finance companies in Australia had been settled amicably. Australia had problems with NZ proposals for preferential treatment for NZ investment propositions.

Dr FitzGerald thanked the States for attending and reiterated that further discussions of this kind may well be necessary when the States and the Commonwealth had progressed their examination of this matter.

[NAA: A1838, 370/1119/18, xvii]