Hon Peter Costello
Bilateral progresses Single Economic Market agenda
Efforts to further the development of an Australia–New Zealand Single Economic Market have been underscored by the annual bilateral between New Zealand Finance Minister Dr Michael Cullen and Australian Treasurer Peter Costello in Wellington today.
"We are determined to maintain the momentum towards streamlining the trans-Tasman business environment. It is vital we do so as the combined Australasian market of 25 million people provides valuable opportunities for all businesses, consumers and investors," said the Ministers.
"Today we are building on our progress by agreeing to:
- start the process for negotiating a revised double tax treaty between the two countries;
- investigate the feasibility of trans-Tasman private retirement savings portability;
- continue work towards a CER Investment Protocol;
- continue to facilitate the coordination of business laws."
The bilateral also included discussions on regional economic developments. Ministers discussed their shared interests in a range of important international meetings, particularly APEC, which Australia is hosting in 2007, and the Forum Economic Ministers Meeting.
Progress so far
At their January 2004 meeting, Finance Minister Cullen and Treasurer Costello established their goal of achieving a single economic market based on common regulatory frameworks. This reflects the ongoing development of the trans Tasman economic relationship beyond the CER Agreement.
The focus of work of the Single Economic Market programme has been across a range of areas including banking regulation, business law co-ordination, competition and consumer policy and taxation. The aim has been to reduce barriers to provide a seamless regulatory environment for business, consumers and investors across the Tasman.
Ministers also reflected on progress that is being made on areas outside their specific portfolios on reducing the impact of borders between the two countries, and streamlining regulation on both sides of the Tasman.
Ministers agreed that measures implemented as a result of discussions so far have amounted to a substantial lowering of regulatory barriers to doing business on a trans-Tasman basis. However, Ministers reiterated that it is important to maintain this momentum.
Ministers noted that legislation is now operating in both countries that increases coordination between both countries' banking supervisors, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ).
The Reserve Bank of New Zealand Amendment Act and Australia's Financial Sector Legislation Amendment (Trans-Tasman Banking Supervision) Act both came into force in December 2006.
This legislation further aligns the two financial systems.
"This shows the world the way ahead in the regulation of business with cross-border operations," the Ministers said.
"The two Acts require APRA and RBNZ to support each other and consider the impact of their actions on financial system stability in the other country when performing their regulatory responsibilities. APRA and the RBNZ will also be required to consult each other on these matters."
The new legislation reflects the high degree of commercial interdependence of the Australian and New Zealand banking markets. It enables the regulators to afford the banks more flexibility in how they structure their businesses within the trans-Tasman market, which is expected to bring compliance cost reductions and efficiency benefits.
Ministers are pleased with the progress being made on banking issues by the Trans-Tasman Council on Banking Supervision and announced that further work is continuing on integrating crisis management arrangements for financial institutions operating in either country. As well, Ministers endorsed the work of the council on further investigation of barriers to the seamless provision of banking services.
"These actions further reinforce the stability of our countries financial systems."
Mr Costello, Dr Cullen and New Zealand Revenue Minister Peter Dunne today discussed updating the 1995 double tax agreement between the two countries. The Ministers noted the importance of facilitating cross-Tasman investment, which substantially benefits the economies of both nations.
"We expect to be in a position to commence negotiations for a new tax treaty shortly."
The decision follows the release late last year of New Zealand's "International Tax Review: a direction for change".
The document indicated that, while a measured approach to change would be important for New Zealand, lower withholding rates could both increase New Zealand's attractiveness as a destination for foreign investment and reduce tax barriers to offshore investment from New Zealand. Treasurer Costello today welcomed the direction for change signalled in the document.
Consultation with business and other interested parties on the possible changes outlined in the discussion document, which also include wider reforms to New Zealand's international tax rules, is currently taking place in New Zealand.
Retirement savings portability
As part of the bilateral, Dr Cullen provided an update on the introduction of the KiwiSaver work place saving scheme. Ministers discussed the feasibility of allowing people to take private retirement funds with them when they cross the Tasman to work.
Ministers have agreed to set up a trans-Tasman working group to examine issues around portability.
"The officials working party will look at the portability of retirement funds during a person's working life. This would benefit a wide range of people who find themselves working on either side of the Tasman during their working life.
"Benefits could include the ability to transfer savings across the Tasman, thereby supporting trans-Tasman labour mobility as well as providing the ability to streamline small and administratively expensive accounts in both countries," Ministers commented.
CER Investment Protocol
Australia and New Zealand are negotiating a CER Investment Protocol.
The two Ministers discussed progress to date and agreed that work towards concluding an agreement should continue.
"Australia has tabled an ambitious market access offer and New Zealand will respond in due course."
Business law coordination
Following signing of a new Memorandum of Understanding on Business Law Coordination at their 2006 meeting, the Ministers noted progress has been made across a range of issues. New Zealand Commerce Minister Lianne Dalziel joined them in the discussions.
Progress has included cross-border company recognition, cross-border insolvency provisions, mutual bans on disqualified company directors and information sharing between trans-Tasman competition and consumer regulators.
"We are making things easier for trans-Tasman businesses and the significant gains that can be made through process and system changes. This includes such changes as removing duplication for companies around the registration process through information sharing between the New Zealand Companies Office and the Australian Securities and Investment Commission."
Alongside this change, Australian and New Zealand financial reporting standards setters have agreed an integrated approach in relation to strategic planning, participating in international standards-setting processes and standards preparation and approval.
Ministers have also agreed to examine ways of bringing together the patent application processes of both countries. They also discussed the importance of mutual recognition of court proceedings and enforcement of judgments on both sides of the Tasman.
The Ministers also discussed the importance of the mutual recognition of occupations with increasingly mobile workforces globally. Particular occupations Ministers identified as important to the trans-Tasman business world were financial advisers, auditors and insolvency practitioners, particularly with work on the regulation of these professions in New Zealand currently underway.
"Both countries will undertake further work this year on mutual recognition in these areas.
"We want to achieve a situation where businesses face a single set of regulatory procedures whether they operate in Auckland or Sydney.
"We are confident the measures we are taking will make it much easier for businesses to seize opportunities in the trans-Tasman market and so bring wider benefits to investors and consumers," concluded the Ministers.
New Zealand contact: Mike Jaspers, press secretary to Dr Cullen, 04 471 9412 or 021 270 9013 [email protected]
Australian contact: Renae Stoikos, press secretary to Mr Costello, +61418 568 434