Isn't New Zealand meant to be easy?

The Australian Constitution isn’t bedtime reading. But as we host Prime Minister Luxon in Australia this week, it’s worth noting that New Zealand was named as a potential state leading up to Federation. While that never eventuated, it is a permanent reminder that our two countries are close: historically, geographically, culturally and economically.  

The Trans-Tasman Mutual Recognition Arrangement (TTMRA) came into effect in 1998, built on previous systems which had been in place before. Under the TTMRA, goods produced in or imported into Australia may be sold in New Zealand and vice versa. Likewise, a person registered to practise an occupation in one country is entitled to practise an equivalent occupation in the other. 

This underlying principle is expressed succinctly as follows: “If it’s good enough for one country, it’s good enough for the other.” 

This framework has been an essential component in the implementation of Australia’s most successful and enduring free trade agreement, the 1983 Australia New Zealand Closer Economic Relations Trade Agreement (or CER). Two-way trans-Tasman merchandise trade has increased at an average annual rate of around eight per cent since its adoption.  

Australia and New Zealand also committed to establishing a process called the Single Economic Market (SEM) agenda in 2004, designed to create a seamless trans-Tasman business environment. The SEM agenda identifies innovative, low-cost actions to reduce discrimination and costs arising from different, conflicting or duplicate regulations or institutions in either country. 

For over 40 years these arrangements have encouraged greater trans-Tasman economic integration.  

• 18,716 businesses export to New Zealand each year, making it a market for one in three Australian exporters. 

• Our trade interactions are very dense. Exporters to New Zealand make on average 116 individual transactions per year, much higher than the average of 36 for other markets 

• The average value of an Australian export to NZ is approximately $4600. It is a highly accessible export market for SMEs, and those businesses who are export curious. 

• New Zealand is Australia’s third largest destination for foreign direct investment.  

However, acronyms can only do so much. There is a risk that the benefits of these various agreements may wither on the vine if insufficient attention is given to maintaining the regulatory coherence that has been the key to our successful economic integration.  

Over a 9-month period, Ai Group has collected examples from members of the various impediments to the movement of goods between the Australian and New Zealand economies.  

We found divergences in regulation, standards (including the loss of many joint Australian and New Zealand standards) and attestation (certification and labelling) that impede the movement of products in sectors such as electrical appliances, gas appliances, lifting systems (cranes), hot water systems, building certification (CodeMark), building products (fibrous cement panels), plumbing products, waste-water systems, cosmetics and galvanising. 

What does this look like on the ground for our businesses? 

For the electrical sector, changes to requirements for test certificates in New Zealand has led one of our members to remove product lines from the New Zealand market due to the resultant increased in costs of regulatory compliance.  

The gas appliance sector is particularly concerning as drift and divergence was found in regulations, standards (loss of jointing), certification and labelling – it could be called a TTMRA free zone! We found that even the composition of the gas is different between both nations.  

In the water and waste-services sector Ai Group found that unique Australian and New Zealand standards require differing sizes for toilet pans for the disabled. Ai Group’s member must manufacture a product for New Zealand that differs to Australia. This has meant that as the product run is so small for New Zealand, consumers do not benefit from the innovation in the product lines found in the Australian product. 

The regulation of medicines and personal care items varies considerably, and products such as tampons, sunscreens and disinfectants are treated quite differently. There is even a permanent exemption under TTMRA that applies across pretty much all formulated chemical products such as used in cleaning products. 

These examples confirm our fears that there has been an unacceptable level of drift in the application of the TTMRA since it was established. The two markets are too small for divergent regulatory schemes and businesses and consumers are negatively impacted with higher prices and/or reduced product options. 

How did this happen? Well, slowly and painfully, with thousands of micro decisions by many hard-working people on both sides of the ditch. 

We can point to decades of joint announcements from Prime Ministers and leaders of all persuasions acknowledging the importance of the relationship and the need to continue to address barriers that compromise our ambition for a single economic market. There is no shortage of high-level support, no nefarious plan to create barriers to trade.  

The challenge for regulators and officials is to remember the rules we’ve agreed to, not just when sitting in the audience of yet another annual Leaders Meeting, but every day with every decision.