THE PRESS WEDNESDAY, DECEMBER 26, 1979. Debate about Australia

Press, 26 December 1979, Page 10

THE PRESS WEDNESDAY, DECEMBER 26, 1979. Debate about Australia

More than two months before the Prime Ministers of New Zealand and Australia meet tn Wellington it is already clear that nothing final about the economic relationship between the two countries is going to be decided at that meeting. About the only option that has been ruled out altogether is political union, in which New Zealand would become one or two states of the Australian federation. The idea has been rejected on both sides of the Tasman. A justified fear is not. however, that major and radical steps will be taken, but that nothing will happen at all at the meeting. The recent restrictions placed on certain clothing imports from Australia will not be read as a sign of good faith or good will. The widespread view : among some New Zealand exporters that Australia changes the rules when New Zealand exports make inroads .into the Australian market will not help •either =,Aet there are more fundamental reasons why little or no progress is to be expected from the Wellington talks. They lie in the debates about the trading relationship being conducted in the Governments and the industries of both countries. In New Zealand it is an even more fundamental problem. While the economic strategies of the present Government are directed towards trading, and more open trading, the old debate about the place of manufacturing. the amount of protection it should have, whether it should be directed towards exporting, and to which markets, continues in the Government. among manufacturers, and among the public. To call it a debate may be too kind. Much of it is more simply an affirmation of long-held principles The question that New Zealanders should be asking themselves is what sort of a society or what sort of an economy thev want.

Is there a future for New Zealand as an isolated country, one that retreats into itself and uses its manufacturing mostly to substitute for imports” How far can New Zealand travel down that road? Can this cure the economic ills nf the country? If that path represents a solution to the country’s problems then it should be pursued with vigour. The other side of the debate is that New Zealand is a trading nation and that the cure for the country’s ills lies

in increased exports. The attractions of exports of manufactures are that they are not as vulnerable to price variations as exports of agricultural produce. Besides that the country has not been able, for some years, to pay for all its imports, and the costs of development from its agricultural exports. These are important questions to resolve. Can New Zealand really decide on where its trading relationship with Australia can go until it resolves the direction of its own policies?

The question of closer links is not one for the present Government alone. One of the regrettable aspects of the consideration given to the relationship between New Zealand and Australia has been the absence of involvement of the Labour Paries in both New Zealand and Australia. Fortunately Mr Rowling and the Australian Labour Party Leader. Mr Hayden, will meet early next year to discuss that subject among others. Some of the findings of the public servants studying aspects of closer links should be made available to them before they mee‘

New Zealand manufacturers in particular are stopping some of the debate getting off the ground. Many show' no Erasp of the fact that there is a strong belief in Australia that f he New’ Zealand-Australia Free Trade Agreement can go no further. In some statements hv manufacturers a predilection for staying with N.A.F.T.A comes through. While this may be understandable if they are doing well under N A.F.T.A., they have to take into account the strong possibility that the present trading relationship with Australia will not last forever. There have been indications in the past that trade between New Zealand and Australia could become more restrictive. Nor can the possibility be discounted that more restrictive moves in trade by Australia would spill over into other aspects of the relationship such as the free movement of people between the two countries. New Zealand and Australia may not be better off closer, but they should not stay apart because of a false assumption that nothing will change. If there is one single lesson to be read out of the moves in trade between the two countries it is that they cannot take one another for granted.