A new trans-Tasman defence relationship?

Authors

Gary Hawke
New Zealand Institute of Economic Research

In Brief

The fourth bilateral meetings of prime ministers Rudd and Key in Canberra at the end of August can now be seen in some kind of perspective. Any pay-off lies in the future and has to be worked for.

Much of the immediate attention was focused on the defence area. The wording of the joint statement by the prime ministers is intriguingly opaque. The list of items to which 'both governments would bring sustained focus to making new progress' includes:

'ongoing close defence relations to promote common regional security objectives, including, exploring possible opportunities to enhance our joint operational capabilities reinvigorating the ANZAC spirit.'

That has been translated by some commentators into a new ANZAC defence unit of some kind, which seems at best premature.

The agreement has salience because of the recent Australian Defence White Paper and the progress of the New Zealand Defence Review 09 towards publication of a White Paper in early 2010. The public consultation phase is well under way and so are both formal and informal discussions among officials and the relevant policy community.

Defence co-operation between Australia and New Zealand has opportunities and benefits. In particular, there is a high level of congruence of New Zealand and Australian interests in understanding developments in the Pacific and in preparing for possible reactions. The older tradition that Australia was concerned with Melanesia while New Zealand was concerned with Polynesia has disappeared as interdependence has grown in the Pacific as elsewhere and as Fiji has shown how the two areas are intimately linked. Academic specialists will reflect that both population pressures and reconciling tradition and custom with modern international notions of state-citizen relations are more difficult in Melanesia, and New Zealand cannot isolate itself from them.

There are differences between New Zealand and Australia even in the Pacific. New Zealand continues to give more importance to the Pacific Forum and to careful consideration of Pacific interests as defined in the island communities. It wishes to participate in small-state diplomacy rather than facilitate the leadership of a middle power. But there is a high level of convergence of interest which will assist trans-Tasman co-operation.

That is not true of the Asia Pacific region. Both countries agree that in the medium-term future to which defence reviews must relate, America’s dominance of the region will diminish. It will remain significant, but be in the region by invitation rather than by expectation. Regional affairs will be dominated more by Asians, especially by China. Australia sees considerable risks in this scenario, and its White Paper declares the government’s intention to structure its armed forces so as to be a significant medium power as the future unfolds. At the same time it continues to rely on the extended nuclear deterrence provided by the US.

While the New Zealand debate continues, it is likely to be more optimistic about the region. The New Zealand Defence Force will probably be structured to permit New Zealand to participate in Asia Pacific management of security affairs rather than to operate independently. New Zealand will neither want to share in Australian preparations to repel threats from the region, nor to stand aside from the region and exploit agreement with Australia in the Pacific while indirectly facilitating Australia’s strategy in the Asia Pacific region.

Reconciling ‘joint operational capabilities’ with ‘reinvigorating the ANZAC spirit’ could be challenging.

Tensions in the defence area are unlikely to be swamped by quick successes in economic relations. The improved travel arrangements across the Tasman announced by the prime ministers will be appreciated but are essentially minor and do not remove the underlying tension about the level of protection needed at a combined border. They do not even promise to be at the forefront of available technology. Extending exemption from review of higher levels of Australian investment in New Zealand is self-interest dressed as international agreement. Other elements of agreement, such as a joint food standards treaty and collaboration on scientific initiatives is simply revival of an existing agenda by discarding some political obstacles. ‘Cooperation between the Australian Productivity Commission and any future New Zealand Productivity Commission’ is surely payment not with a post-dated cheque but with an undated promissory note of indeterminate duration.

Nevertheless, there is real substance in the ‘Joint Statement of Intent: Single Economic Market Outcomes Framework’. First, it establishes a joint Trans-Tasman outcome implementation group of senior officials chaired by the Australian Treasury and the New Zealand Ministry of Economic Development. Secondly, among a list of familiar principles such as not requiring persons in Australia or New Zealand to engage in the same process or provide the same information twice, regulatory approval of goods and services operating in both jurisdictions, and regulated occupations being able to ‘operate seamlessly’ between the two countries, there is an apparently simple statement:

‘Outcomes should seek to optimise net Trans-Tasman benefit.’

Successfully persuading policy designers and regulators to use a trans-Tasman benefit test rather than a pair of national benefit tests has the potential to create a third generation of CER (closer economic relations) benefits.

Trans-Tasman relations are now led by an Australian prime minister who does not see himself as constrained by the past and by a New Zealand prime minister who is largely free from a small brother/larger brother need to assert autonomy. Whether long-term gains can be garnered depends greatly on managing short-term political disputes. The first may well be in defence and security affairs rather than development of the single market.