Australia to look again at C.E.R.?

Press, 7 March 1983, Page 1

Australia to look again at C.E.R.?

From

G. G. SHAND

of the “N.Z. Herald” in Canberra

A move to renegotiate the Closer Economic Relations agreement and a devaluation look the two most immediate possible effects on New Zealand, after the election of a Labour Government in Australia.

At a press conference in Canberra yesterday, the Prime Minister-elect, Mr Hawke, said it was conceivable that bis Government would want to have another look at the agreement. The fine print of C.E.R. was to have been signed by the Liberal Government last week, but was postponed after objections by the Australian Labour Party. Mr Hawke said he could now make public discussions he had had with the New Zealand High Commissioner in Canberra, Sir Laurie Francis, during the campaign as to Labour’s precise attitude to C.E.R. “One of the first things we will do as Government is to have a look at the Heads of Agreement as drawn up,” he said. “In principle, we are in favour of the Closer Economic Relations agreement (but) it is conceivable, and I don’t want to put it any higher than that, that we may feel some aspects of that may need some further discussions.” Mr Hawke did not spell out the aspects that might be concerning his caucus. However, answering a later question from the “Herald,” he said he thought it would be sensible to meet the New Zealand Prime Minister, Mr Muldoon, “before too long.” “I wouldn’t say it was the

highest priority on my list,” he said, reminding journalists that he did not intend to be a “tourist Prime Minister.” It is believed that Mr Muldoon made an approach late last week to speak to Mr Hawke, should he win. However,'the latter said that as of yesterday afternoon, he had not been congratulated by his Tasman colleague. Mr Hawke’s comments on C.E.R. were in sharp contrast to assurances given to the “Herald” earlier last week over the A.L.P.’s attitude to C.E.R. Sir Laurie said that in all his dealings with the A.L.P. there had been “no suggestion” that a Labour government wanted to alter the agreement. However, seasoned political journalists in Melbourne warn that there is a strong protectionist lobby in the A.L.P. caucus and that the future of C.E.R. should be looked at in that context. Ominously also, it is said the likely Minister of Trade in the Labour Government, and Deputy Prime Minister, Mr Lionel Bowden, is “fiercely protectionist.” Mr Hawke was particularly cagey yesterday in responding to questions about a possible Australian, devaluation. All he would say was that responsible leaders during election campaigns should not comment on currency matters, “nor should they at

press conferences.” Several local commentators are convinced that Labour will be forced to devalue, a move which will almost certainly have to be matched in New Zealand. They point to the increased pressures on the Australian dollar, after adverse trading conditions and the more recent huge outflow of funds — up-to-date estimates put the “run” at more than sAust2 billion — as foreign investors got the jitters over polls indicating a Labour win. Commentators, however, believe that Mr Hawke and his senior Ministers will be reluctant to take any precipitate action on the exchange rate, if only because it would look politically stupid, after assurances during the campaign that Labour would not devalue. More important, they suggest, will be the content of the various reports on the state of the economy which Mr Hawke asked for from Treasury officials only yesterday. “I think he will only do it if those reports are much worse than he believed and he has no option but to devalue,” an economic correspondent told the “Herald” on Saturday. The content of the reports, in particular the true level of the deficit, will be crucial to the shape of Labour’s pro-

gramme for economic recovery. Although Labour’s policies in these areas were at the core of its campaign, Mr Hawke warned before his election that if there was. far less money in the kitty than they had imagined, he would not hesitate to revise policy. Much will also depend on the economic summit of commerce, employers, and unions which he will call in a fortnight to thrash out a consensus on economic recovery. Meanwhile, the likely effects on New Zealand in other areas remain unclear, although the “Herald” has already printed an assurance from the likely Minister of Immigration, Mr Michael Young, pledging that Labour would not tamper with Tasman migration. A.N.Z.U.S. could certainly be affected. Labour is determined to pursue a more independent line on foreign policy and is pledged to achieving a Southern Hemisphere nuclear weapons-free zone. There is bound to be some uncertainty initially in New Zealand and the United States to Labour’s defence approach but one important concession the A.L.P. has made is that its “zone” policy would not preclude the free movement of nuclearpowered or armed vessels through the region.