In this together: Will Covid-19 bring unity for New Zealand and Australia?

The Covid crisis has suddenly created the sense that Australia and New Zealand share a global advantage but it’s shocking how much the two nations still ignore and disdain each other says Australian journalist Laura Tingle. By Jane Clifton.

When journalist Laura Tingle was researching how Australia and New Zealand each battled through their respective 1980s currency crises, she asked some New Zealand officials from the time what lessons they’d taken from Australia’s experience the previous year.

“They just looked at me as though … ‘What do you mean?’ It was as though they didn’t even consider there might be anything to learn from what Australia had gone through.”

These devaluation emergencies were twin watershed events that helped shape each country, the policies they gave rise to still a bedrock of both economies. But at the time, they sparked no discernible exchange or even curiosity.

Tingle, award-winning chief political correspondent for Australian state broadcaster the ABC, says she’s been shocked how comprehensively the two countries ignore and even disdain one another, despite being the most closely economically tied nations in the world. They have a unity and cohesion “the European Union could only dream of.”

“Yet most people in both countries know nothing about it, and haven’t been that interested.”

Tingle says the pandemic will probably change that, and to give mutuality a nudge, she has written an extensive analysis in the scholarly Australian journal Quarterly Essay rather provocatively titled, “The High Road: What Australia Can Learn from New Zealand”.

She says she hasn’t set out to hold up New Zealand as an exemplar, so much as draw attention to the many little-regarded commonalities between the countries, and the ways each country could fill its experience gap based on its neighbour’s travails.

Transtasman bubble

Prime Minister Jacinda Ardern’s global profile has helped pique Australian interest in New Zealand affairs, but Tingle says both countries need to realise that the Australian-New Zealand bubble is their most logical and accessible route through the post-Covid challenges. She says there’s a case for the two countries to see themselves “in the light of a new exceptionalism”.

“Suddenly, the tyranny of distance that had always worked against us, and the relative success of our governments in dealing with a crisis, created a sense that we may share a potential global advantage: the Australia-New Zealand Bubble.

“No underlying idea has propelled the discussion forward in Australia in the past 40 years so much as the idea of opening ourselves to the world. We talk of greater ties with our region, yet overlook the neighbour who is closest to us historically.”

Perhaps our commonality is perversely invisible for being so obvious. Close to 15 per cent of New Zealand’s population is estimated to live in Australia, and 70,000 Australians live here. The Closer Economic Relations pact is old news, in force by 1983, as is the (till now) open border, though these were world-leading trading agreements in their time.

But Tingle says the degree of alliance in areas such as professional qualifications and medical standards is globally unsurpassed as far as she can see. Australian federal and state ministers frequently meet New Zealand ministers – not something seen between many other countries, yet so normal here it barely rates a media mention.

Tingle finds it hard to get over the degree to which the countries overlook the common yet separate struggles they’ve had to rebuild after Britain cut the apron strings of trade to join the European Common Market. At times, they even helped each other. Yet psychologically, these experiences are viewed as entirely separate stories.

“Little New Zealand,” says Tingle, “perhaps the only place in the world that has suffered isolation and the tyranny of distance more than Australia, has repeatedly jumped out of its comfort zone and changed direction harder, faster and for longer than Australia has done in the past half-century. Long before Australians noticed Ardern, its leaders were deregulating the economy more radically, cutting tax rates further, standing their ground for a more independent foreign policy against the United States and against the French over their nuclear testing in the Pacific.”

Tingle traces how New Zealand began to forge its own foreign policy path, from the anti-nuclear policy that fractured the Anzus alliance in the 1980s, through the “non-aligned” trajectory of the Helen Clark administration, and up to the growing divergence between Australia and New Zealand over relations with China.

Too beholden to China

New Zealand has looked on horrified as China blocks a growing list of Australian exports in retaliation for Canberra’s call for an inquiry into Covid-19’s origins. And Australia has looked on horrified as New Zealand, by its lights, has merely looked on. Tingle says Australia was much quicker to comprehend the risks of becoming over­dependent on and too beholden to Chinese trade.

“Early on, we were like you, saying, ‘How much stuff can we sell to those people?’ But then it became clear that China was also a menacing presence.”

Ardern’s statement during the election campaign that the Government would seek to rebalance the relationship with Beijing, reducing its dependence on Chinese trade, was the first concrete sign of a reconvergence over Sino-Anzac diplomacy. Relations with Canberra have been increasingly tense over the issue in recent years. By some estimates, the severity of the rift was approaching the import of the disagreement over anti-nuclear policy in the 1980s.

During this Government’s previous term, then-Foreign Minister Winston Peters repeatedly promoted a retreat from China-facing trade and regional diplomacy in favour of more work with the US. Yet the rest of the Government stayed emphatically silent, leaving Peters’ advocacy to cause anxiety and considerable anger in business, trade and diplomacy circles, as they feared he was endangering exports.

In Australia, much stronger signalling along those lines over several years from Canberra is read as necessarily “standing up to China”.

“China does not respect weakness, and if you show it, it can come at a cost,” Tingle says.
She points out the likelihood of President-elect Joe Biden continuing the US’s low-trust attitude towards China.

She says Australian administrations have been pointed in expanding their focus towards other countries in the region, notably Japan and India. A key transtasman difference is that Australia sits in a highly strategic place geographically, whereas New Zealand is effectively tucked away below the fray.

Australia’s trickiest exposure is its coal exports. A Chinese embargo would cause severe economic pain – even though Australia accepts it’s a sunset industry, anyway.

Tingle says the challenge for Australian governments is to persuade voters that the massive employment provided by the coal sector can be transferred to sustainable-energy jobs. The potential for renewables is there, but politically it’s a tough sell, which politicians wish not to face until they have to.

Tingle finds a further convergence – though not a happy one – in the two countries’ experiences with the free market.

She says both nations struggle to make the free-market model work because their populations are too small to foster adequate competition.

A recent study by the New Zealand Productivity Commission notes that workers “work longer hours for less reward than workers in most other OECD countries”. Tingle points out New Zealand’s labour productivity, or output per hour worked, “is about 40% below the average OECD benchmark. Since 1996, there has been no sign of this catching up to the top half of the OECD. Instead, the gap has increased. A range of reasons are given for this, including the small domestic market and lots of low-tech firms servicing local markets and therefore not being subjected to the pressures of a globalised market that has been transformed by technology.”

Australia is years ahead of New Zealand in trying to address distortions and dominance in a range of sectors, notably banking and supermarkets, which it has tried to regulate more heavily in recent years. Electricity, technology and many other sectors suffer from high concentration of allied interests, even within Australia’s population of 25.7 million.

From time to time, the idea is even floated of “hero” companies – along the lines of Fonterra – with politicians urging Australia to make a virtue of monopoly giants that could become global heavy hitters.

Tingle says the ethos is still pro-free market.

“You can say, ‘But this isn’t working for customers’, but the people who explain these things say, ‘Well, there might only be one gas pipeline, but the gas that goes down it is owned by all these different companies.'”

Hare and tortoise

As Tingle distinguishes the countries’ different responses to the fork in the road that was global deregulation, it’s more a story of the fast road versus the slow road.

When the currents of global reform turned tornado down-under, with both countries in currency crises in successive years, the newly elected Labour/Labor governments chose very different routes through the turmoil.

As is well-trodden history here, New Zealand was bustled during the Lange administration into the “Rogernomics” deregulation and state asset sell-off by a new finance minister who knew in advance exactly what deregulation he had in mind, but was careful not to tell too many people about it, even his own political colleagues. He moved rapidly and used momentum and supporters within business and key public-sector control departments as his battering ram, leaving Labour’s traditional supporters, not least the unions, gawping in his wake.

In contrast, Tingle says the new Labor Government in Australia didn’t have a set plan, but never dreamt of leaving the unions out of the loop. Steeped in union advancement his whole career, Prime Minister Bob Hawke had the opposite problem: hostile scepticism from business, based on the turmoil of the previous Labor Government under Gough Whitlam.

Where New Zealand Finance Minister Roger Douglas wowed business from the get-go, Hawke and Treasurer Paul Keating were regarded with deep suspicion. Tingle said the critical difference between the way the two governments handled the subsequent economic reforms was that Australia took the workforce and business into negotiations and made the changes gradually, whereas New Zealand’s “crash-through” approach left many in society behind.

Startlingly, the deregulation that took our new Government between July 1984 and March 1985 to implement was phased in over five years by Hawke and Keating.

“The extent and speed of change would be impossible to explain to the Australian population,” Tingle says.

She found a feature of New Zealand’s approach was the existence within the Reserve Bank and Treasury of powerful like-minded individuals who also believed in this decisive overturning of the Muldoon era’s protectionist, command-economy tenets. Over time, these officials spread through other departments, and a new orthodoxy was established.

However, Tingle says New Zealand’s public sector retains admirable independence and still provides a consistent stream of advice to ministers in all decisions. This is in contrast to Australia’s tendency to politicise ministerial offices to the extent that officials’ advice is downgraded.

Media scrutiny

Tingle says from John Howard onward, there has been a conscious effort in Australia for politicians to overstep media scrutiny as well. By the superficially democratic technique of having “stand-up” press conferences throughout the regions, giving local journalists equal opportunities, governments have cleverly diluted the querulous nature of Canberra’s press gallery. As the regional journalists are likely to be less focused on the ins and outs of national policy struggles, ministers are less likely to be asked searching questions, she says.

There’s also a habit of briefing selected journalists in advance of an announcement so the policy is reported as told to the journalist, but without any balancing coverage from affected sectors or groups. This gives the Government a clear landing-strip for its announcements.

It’s also most common for announcements to be made “blind” – without letting the media see any details or background papers in advance, even for a few minutes – again with the purpose of making reporters less able to be probing while they’ve got the minister in front of them.

Tingle believes this has contributed to Australians being more strongly factionalised than Kiwis, a situation shorthanded as “culture wars”. Tingle portrays Rupert Murdoch’s empire as a shadow looming over the media landscape, perpetuating hardened “tribes” of opinion. Sky’s programmes are particularly effective at entrenching polarised views, she says. “Anyone who expresses a view is automatically assumed to be motivated by hard ideology and partisanship.”

She says part of the culture wars is a widespread campaign to discredit and defund the ABC – as is under way in Britain, with regular challenges to the BBC’s stewardship, particularly on the question of impartiality.

Funding pressure has brought staff cuts at the broadcaster. Tingle was, she says, “rightly” pulled up by her bosses for her recent tweet linking the loss of a journalist colleague to the views of the current Prime Minister. She broke the ABC’s rules about social media content. But she says the efforts in various quarters to undermine independent journalism in Australia are so blatant that “no one even pretends it’s not happening”.

Laura Tingle’s in-depth essay, The High Road: What Australia Can Learn from New Zealand, is available from November 30 as an ebook at quarterlyessay.com

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