US-China trade war escalates

The on again, off again trade war between the US and China is escalating, with more tariff threats from both countries.

Trump aims to hit China as tit-for-tat tariff war erupts

A top U.S. trade adviser said China has underestimated President Trump’s resolve to press ahead with tariffs, in comments that undercut the chances of settling a looming trade war between the economic superpowers.

The threat of a growing trade conflict with China hit financial markets hard, with Beijing vowing a firm response after Trump on Monday said he would implement tariffs on an additional $200 billion of imports from China if Beijing went ahead with reprisals over an initial set of U.S. tariffs.

White House trade adviser Peter Navarro, a sharp critic of Chinese trade actions, said China has more to lose from any trade war.

“The fundamental reality is that talk is cheap,” Navarro told reporters on a conference call, again accusing China of “predatory” trade policies.

When it comes to stoking a major trade war talk could be quite expensive to both countries, and potentially to others including New Zealand.

The threat of new tariffs against China pits the world’s two largest economies against each other and looks set to disrupt global supply chains for the tech and auto industries, two sectors that rely heavily on outsourced components.

In total, Trump has now threatened up to $450 billion in Chinese imports with tariffs, including another $200 billion in Chinese goods if Beijing retaliates after the step Trump announced on Monday.

Mounting concerns over the U.S.-China dispute sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.

The Dow Jones is still trading in the US Tuesday and is currently down 1.18% for the day. That isn’t a drastic drop.

This could all have significant impact in this part of the world – From the Aussie to soybeans and cars: what’s at risk in a trade war?

The Aussie dollar takes a thumping, soybean prices swing and German carmaker shares are stuck in reverse.

Countries with open economies reliant on global trade are most at risk when disputes over international commerce hit.

The Australian dollar ticks those boxes. Australia counts China as its biggest trading partner and its currency is heavily correlated to global growth. Many investors see the currency, known as the Aussie, as a better global trade bellwether than the Canadian dollar, which has been buffeted by negotiations over NAFTA, the North American trade pact.

This week, the Aussie fell to its lowest level in 13 months, and the positioning of options signal more weakness ahead.

If Australia is badly affected that must have an impact here. New Zealand is also at risk directly with US and Chinese trade upheaval.

EU to start trade talks with New Zealand, Australia

The European Union has announced it will open trade talks with new Zealand and Australia in June.

Reuters: EU agrees to start Australia, New Zealand trade talks

European Union countries cleared the way on Tuesday for the bloc to begin free trade talks with Australia and New Zealand in a drive to forge new alliances as trade tensions with the United States increase.

The European Commission, which negotiates on behalf of the 28 EU members, said EU trade chief Cecilia Malmstrom would visit both countries to open talks in June before negotiators convene in Brussels in July for a first round of discussions.

The EU forecasts that ambitious and comprehensive agreements could boost its exports to the two countries by a third in the long term, although there are caveats about opening up EU markets to farm produce such as butter and beef.

The bloc is the third largest trade partner of both Australia and New Zealand.

Trade Minister David Parker: EU and New Zealand to start free trade talks

A free trade deal between New Zealand and the European Union (EU) has taken a major step forward with the announcement overnight that the EU’s Foreign Affairs Council has approved its negotiating mandate.

Trade and Export Growth Minister David Parker has welcomed the news, saying it opens the way for a free trade deal with one of the largest economies in the world that will boost jobs and incomes.

“Credit must go to Prime Minister Jacinda Ardern whose strong advocacy for New Zealand’s interests during her recent trip to Europe helped tip the balance,” David Parker said.

“It is also an endorsement of our strong backing for the talks as the next priority on our extensive free trade agenda, that includes the CPTPP, the Pacific Alliance and RCEP.

“These negotiations offer significant economic gains for New Zealand and the EU. They are an example of like-minded countries working together at a time when the world faces a rising tide of protectionism,” David Parker said.

“The EU is our third largest trading partner, with two-way trade worth more than $20 billion. Even excluding the UK, our trade with the EU is worth about $16 billion annually.

“Our recently-announced inclusive and progressive Trade for All agenda aims to benefit all citizens – an approach in line with the EU.

“At the start of negotiations, we’ll be releasing a package of information outlining our negotiating priorities for this agreement and how we will be engaging with New Zealanders as negotiations progress,” David Parker said.

A good step in the right direction with the EU on trade, but with 28 countries involved it will take some time to negotiate and approve, if successful.

The Antipodes, and having the feet opposite

I sort of find this interesting but it’s not really relevant to anything. A bit of geographical and language trivia.

New Zealand (and Australia) have been referred to as The Antipodes, because we are roughly on the opposite side of the world to Britain. The word antipodes actually means ‘direct opposite’. Origin (Oxford):

Late Middle English: via French or late Latin from Greek antipodes ‘having the feet opposite’, from anti ‘against, opposite’ + pous, pod- ‘foot’. The term originally denoted the inhabitants of opposite sides of the earth

No part of New Zealand nor Australia are directly opposite Britain.

Ten years ago I wrote:

If you sail out into Biscay Bay
And anchor on the edge
Drill like crazy finding maybe
Biscay Bay Antipodes

The Bay of Biscay is to the north of Spain, and some point there happens to be the opposite side of the planet to Dunedin. The antipodes of most of New Zealand lies across Spain. None of Australia lines up with an opposite land mass.

What I find most interesting about this is how little of the Earth’s land mass lies opposite to land. Not that this means a lot in the whole scheme of things.

If you dug a hole straight down and ended up in China you would have to be in the southern half of South America, in Argentina or Chile, which seems odd as they all border the Pacific Ocean. But the Pacific covers about a third of Earth’s surface, is nearly a half (46%) of the total sea area and is larger than the whole of the planet’s land mass

General details here:

Aussie cricket coach Lehmann resigning after all

A couple of days ago there were reports that Australian cricket coach Darren Lehmann would resign in the wake of the ball tampering scandal while in South Africa.

Yesterday, after the scandal escalated with confirmation that sand paper rather than sticky tape was used, and the tamperer, the captain and the vice captain were all given lengthy bans, Lehmann was cleared of being involved and said he would stay as coach.

SMH: ‘I need to change’: Tearful Lehmann looks to New Zealand as model

Tears welling in his eyes, head cricket coach Darren Lehmann has pledged that the Australian team will change and so will he.

The Australian head coach has overseen a team with a hard and uncomprising edge that has been pilloried around the cricket world and at home, even before their crash last Saturday to an all-time low.

On Wednesday, there was softness as Lehmann stressed that the “human side” of the ball-tampering controversy needed to be understood, pleading for the culprits to be given a second chance.

The crying shame of it all is that it has taken such a terrible episode, tarnishing careers and changing lives, for Lehmann and what is left of the side to look themselves in the mirror.

The coach has endorsed an attitude of stretching the limits of what is considered acceptable, content to win ugly if that is what it takes. Headbutting “the line”, as they liked to say. It was an approach that was the poisonous foundation for what took place at Newlands.

That is all over. Winning, suddenly, isn’t all that matters. They are putting a line through the line.

“I need to change,” Lehmann said.

“We need to change how we play and within the boundaries we play. Obviously previously we’ve butted heads on the line but that’s not the way to go about us playing cricket moving forward.

“We have to try and win the public back now and play the type of cricket that they expect us to play. We have to look at how we go about that, as a coach and support staff and playing group, and make the game better for everyone to play and enjoy watching us play.”

But a day later Lehmann has announced he will stand down after the fourth and last test against South Africa (that starts tonight).

SMH:  Darren Lehmann quits as coach of the Australian cricket team

An emotional Lehmann announced on Thursday that the fourth Test against South Africa would be his last in charge.

He said he had made the decision to resign after watching Steve Smith’s gut-wrenching press conference in Sydney as well as Cameron Bancroft fronting the media in Perth.

“The feeling is that Australian cricket needs to move forward and this is the right thing to do,” Lehmann said.

“My family and I have copped a lot of abuse over the last week and it’s taken its toll. Life on the road means a long time away from our loved ones and after speaking with them at length over the last few days, this is the right time to step away.

“I’m ultimately responsible for the culture of the team and I’ve been thinking about my position for a while. Despite telling media yesterday that I’m not resigning, after viewing Steve and Cameron’s hurting, it’s only fair that I make this decision.

“This will allow Cricket Australia to undertake a full review into the culture of the team to begin to implement changes to regain the trust of the Australian public. This is the right thing for cricket.”

I think this was inevitable. Lehmann is ultimately responsible for the ugly win by any means culture that had re-established itself under his guidance.

It will be a tough test for the Baggy Greens, without their captain and vice captain, without both their opening batsmen, without their two best batsmen. And with a coach rocked by the scandal and how it played out this week, and a team in upheaval.

There were awful scenes from the airport as Steve Smith left South Africa. He has disgraced himself but didn’t deserve to be treated so poorly.

It will be interesting to see the attitude the South African team takes on to the pitch, and how the crowd will treat the Australians in the outfield. They may wish they were in the outback.

Australian cricket cheating – interim aftermath

Cricket Australia has just announced that they have stood down captain Steve Smith, vice captain David Warner and ball tamperer Cameron Bancroft for the rest of the South African tour. As the tour  is just about over one could wonder if this is just an interim step. News reports coming in say “heavy sanctions to follow”.

SMH: Smith, Warner and Bancroft sent home, heavy sanctions to follow

Steve Smith, David Warner and Cameron Bancroft will be sent home from South Africa after being reported by Cricket Australia and they are facing “significant sanctions,” CA’s chief executive James Sutherland said.

It will be another 24 hours until the penalties against players are handed down due to an ongoing investigation but Sutherland indicated CA would come down hard.

He said it had been established that only three players had prior knowledge of the ball-tampering episode. He also denied that coach Darren Lehmann was resigning.

Despite news reports that coach Darren Lehmann would resign that hasn’t happened (yet), the investigation found that he was not in on the ball tampering scheme. That may clear him of direct involvement, but it raises questions about his authority and the team culture if players tried to cheat without his knowledge.

There has been a big rift in the team over this.

SMH: Players turn on David Warner as ball-tampering crisis rips team apart

The ball-tampering crisis that has brought Australian cricket to its knees turned nuclear on Tuesday night with players turning on David Warner amid claims that the deposed vice-captain may never play for his country again.

The deposed vice-captain removed himself from the team’s WhatsApp group in the midst of the unprecedented drama. Warner and Steve Smith, who were both facing losing their leadership roles as well as having bans imposed for their part in the cheating plot, walked through Cape Town airport surrounded by hordes of television cameras and reporters.

Fairfax Media reported exclusively on Monday night that Warner had emerged as the central character in the affair, with suggestions he was the primary figure behind the ill-fated decision for Cameron Bancroft to use a piece of yellow tape to try and alter the condition of the ball during the third Test.

Sources close to Warner had denied that he was the instigator, saying the whole team were aware of the plans, including Australia’s fast bowlers. Their belief was that if one or two players were to go down over the controversy, then all should.

Senior fast bowlers Mitchell Starc and Josh Hazlewood, as well as the team’s most capped player, Nathan Lyon, had distanced themselves from knowledge of the ploy soon after Smith’s claim after the day’s play on Saturday that the decision had been made by the “leadership group”.

The major disharmony between Warner and others in the team has led to suggestions from prominent figures within the game that he may never play for the country. Sources say that players do not want to set foot on the field with him again.

Warner had previously been the team’s appointed ball manager in the field, but after gaining attention for wearing a bandage over his hand and fingers in Port Elizabeth in the previous match, the task was then left to junior team member Bancroft, who was deemed less likely to go under the microscope of the operators of the local television broadcaster’s 30 cameras.

This is serious embarrassing for cricket in Australia. Smith and Warner would appear to have stuffed their careers, and also the future of Bancroft.

And this will hang over the team for a long time.

In wake of cricket cheating Australia capitulate, captain suspended

In the wake of the ball tampering cheating scandal the Australian cricket team has been under barrage from scathing criticism from around the world, not the least from their own country.

The Australian Sports Commission:

The ASC condemns cheating of any form in sport. The ASC expects and requires that Australian teams and athletes demonstrate unimpeachable integrity in representing our country.

Given the admission by Australian captain Steve Smith, the ASC calls for him to be stood down immediately by Cricket Australia, along with any other members of the team leadership group or coaching staff who had prior awareness of, or involvement in, the plan to tamper with the ball.

This can occur while Cricket Australia completes a full investigation.


Yesterday team captain Steve Smith admitted being involved in planning the ball tampering with a ‘leadership team’ but said he would not stand down. After pressure and a change of heart he and vice captain David Warner “have agreed to stand down for the remainder of the test”

A letter from Cricket Australia:

This (and more scathing criticism, including from past Australian captains) will have no doubt been on the minds of the team still involved in the third test in South Africa. With the series level 1-1, Australia were in a difficult position. Chasing 430 runs in the last innings they got to 57 before losing a wicket (the cheater Bancroft was run out), but from there the team capitulated, losing all ten wickets for fifty runs to be all out on 107, to lose the test by 322 runs.

From Cricinfo:

Tim Paine: “it’s been a horrible 24 hours and I’d like to take the opportunity to apologise to our fans. From a cricket perspective, today was extremely disappointing, the way we folded in that last 45 minutes. It’s been a real challenge for us, we need to turn ourselves into the cricket team we want to be.”

The Man of the Man is Morne Morkel: “I’m a little emotional at the moment, but what an afternoon of cricket. We asked the guys to give it all. I was hoping I could deliver something special. For me, the best thing was to keep working hard on my fitness and hope to get the opportunity. I got the nod and knew I needed to put my hand up as a senior bowler.”

Aniket : “Deliciously fitting that in a match (and series so far) marred with unsavory behaviour and abuse/sledging, a fast bowler who has never felt the need to mouth off/give ugly send offs under the guise of aggression wins the man of the match award. “

Following the match the ICC has suspended Smith (but not Bancroft): Smith suspended by ICC for fourth Test, Bancroft escapes ban

The International Cricket Council has suspended Steve Smith for a Test match over the ball-tampering furore in South Africa, ensuring that Tim Paine will continue to lead the disgraced team for the final leg of the series in Johannesburg.

The crisis confronting the Australian team yesterday forced Smith and David Warner to sensationally stand down from the captaincy and vice-captaincy for the rest of the third Test as Paine took over.

Hours later, the ICC announced that it had found Smith guilty of being “party to a decision to attempt to change the condition of the ball in order to gain an unfair advantage”. He was also fined 100 per cent of his match fee. Cameron Bancroft, who used yellow tape to tamper with the ball on Saturday after a plot devised at the lunch break, was spared a ban.

ICC chief executive David Richardson laid the charge against Smith, describing his conduct as of a “serious nature that is contrary to the spirit of the game”.

“The decision made by the leadership group of the Australian team to act in this way is clearly contrary to the spirit of the game, risks causing significant damage to the integrity of the match, the players and the sport itself and is therefore ‘serious’ in nature.”

As captain, Steve Smith must take full responsibility for the actions of his players and it is appropriate that he be suspended.

Bancroft received three demerit points, one less than Smith and one short of the amount that triggers a suspension, and was fined 75 per cent of his match fee.

Bancroft was put in an invidious position by Smith and other senior players, but is lucky to have escaped a ban.

But the pressure continues for more drastic repercussions.

SMH: ‘Zero tolerance’: Steve Smith’s Rajasthan Royals contract in jeopardy

The Telegraph: Australia’s cricket elite demand dismissals of Steve Smith and David Warner to save Baggy Green status following ball-tampering scandal

Australia’s cricketing aristocracy rounded on their Test side in the wake of the cheating scandal which has convulsed the nation.

“It’s hard to see how Steve Smith can continue as Australia captain and it’s hard to see how David Warner continues as vice-captain,” said former fast bowler Jason Gillespie.

There was also incredulity from Michael Clarke, Smith’s predecessor as captain, about how Cameron Bancroft had been leant on to do the dirty work.

“I can’t believe they have got the young kid playing in only his eighth Test to do that. As a leader, you can’t ask somebody to do something that you’re not willing to do yourself. You can see that Smith is shattered.”

Simon Katich, the former opening batsman, argued that James Sutherland, Cricket Australia chief executive, had no choice, after Smith’s acknowledgement that the entire “leadership group” had been complicit in tampering, to sack the captain, as well as coach Darren Lehmann and vice-captain Warner.

“This was premeditated and calculated, and those guys are in charge of Bancroft behaving the way he did. I love Steve Smith, but he has made a serious error and I think it is going to cost him the captaincy of Australia. If Cricket Australia condone blatant cheating, then the message they send to the thousands of kids who aspire to wear the Baggy Green is far worse than a few guys losing their jobs.”

Former captain Allan Border was clear that Smith should be prepared to lose his job on a permanent basis.

“If the ICC and the Australian board decide that Steve Smith is free to play in the fourth Test, I would be comfortable with that. But equally, if he has to pay a penalty for his leadership in going down this path, I would be just as comfortable.”

So the cheating scandal looks far from over – it will never be over, it will be remembered for a long time. And the Australian team has to somehow prepare themselves for the fourth test.

Aussies caught and admit cheating in cricket

This is seriously embarrassing for Australian cricket.

ODT (Reuters): ‘We cheated’ Smith sorry but won’t resign

Australia captain Steve Smith says he is embarrassed and takes responsibility for the actions of his side after they were charged with attempting to change the condition of the ball in the third test against South Africa on Saturday, but he will not be stepping down as skipper.

Smith detailed an orchestrated effort from the team’s “leadership group” to use sticky tape to pick up hard granules from the pitch and rub these against the ball to try to alter its condition and get it to swing.

Opening batsman Cameron Bancroft, 25, the most junior member in the side, was the player tasked with implementing the plan and he has been charged by the International Cricket Council (ICC), which could lead to a one-match ban and a 100 percent fine of his match fee.

“It is not what we want to see in the game, it’s not what the Australian cricket team is about. Being the leader of the team I am incredibly sorry for trying to bring the game into disrepute like we did today.”

But it clearly was what the Australian cricket team was about.

Smith said it was the first and last time the team had hatched such a plan and while he would not name the other conspirators, he said head coach Darren Lehmann was not involved.

The team leaders would execute a plan to cheat without the coach being involved? If true, that’s remarkable.

“The leadership group knew about it, we spoke about it at lunch,” Smith said. “I’m not proud of what has happened. It’s not in the spirit of the game, my integrity and the integrity of the team has been damaged and rightfully so. It’s not on and it won’t happen again, I can promise you.

“The coaches weren’t involved, it was purely the players and the leadership group who came up with this. A poor choice, our actions are deeply regrettable.”

This is seriously damaging to Smith and to Australian cricket.

Cricinfo: Desperation drove Australia to cheat – Smith

A match and series slipping away and a ball that could not get past the bats of South Africa’s batsmen drove Australia’s captain Steven Smith to an orchestrated attempt to cheat by tampering with the ball, a task carried out by the team’s youngest member Cameron Bancroft with the use of adhesive tape to try to pick up some rough earth from the Newlands pitch.

“We saw this game as such an important game, not that other games aren’t important as well, but an opportunity. We’ve seen the ball reversing quite a lot throughout this series and our ball just didn’t look like it was going to go. That’s a mistake on our behalf again. It’s such poor actions and deeply regrettable and certainly won’t happen again under my leadership I can promise you.”

Their tour of South Africa has already been controversial over abuse between players.

South Africa 311 and 238 for 5 (Markram 84, De Villiers 51*) lead Australia 255 (Bancroft 77, Morkel 4-87, Rabada 4-91) by 294 runs

This series was already a bubbling cauldron of toil and trouble. Not surprisingly, the addition of Cameron Bancroft’s underpants to an already putrid mix could have results as unpredictable as eye of newt and toe of frog. Certainly it resulted in a stink on the third day in Cape Town, where half-centuries from Aiden Markram and AB de Villierspushed South Africa’s lead towards 300 and rendered Australia’s task for the remainder of this Test very difficult indeed.

The test series is drawn 1-all, with Australia under pressure in this third test, and they have no put themselves under considerably more pressure.

Trade war possible between Australia and US?

Donald Trump’s threat of steel and aluminium tariffs has sparked concern around the world, amongst allies as well as with trade competitors. Australia is showing some concern after earlier being assured of an exemption, with no clarification forthcoming from the US.

It looks like Trump makes things up as he goes, risking making major messes that may be difficult for his officials to clean up.

ABC News: Donald Trump promised Malcolm Turnbull Australia would be exempt from trade tariffs

Donald Trump “emphatically” promised to exempt Australian steel and aluminium from US tariffs during a meeting with Prime Minister Malcolm Turnbull last year, it can be revealed.

The ABC understands the promise was witnessed by high-ranking officials on both sides of the meeting, which was held on the sidelines of the G20 meeting in Hamburg, Germany, in July 2017.

Among those in the US delegation who saw the undertaking first-hand were US Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and Whitehouse Chief Economics Adviser Gary Cohn.

On the Australian side were Finance Minister Mathias Cormann and the Deputy Secretary of the Department of Prime Minister and Cabinet David Gruen.

This revelation explains why the Australian Government has been stunned by Mr Trump’s declaration last week that the tariff regime will be enforced, and subsequent statements by Mr Ross that country-specific exemptions are unlikely.

Sources have told the ABC Mr Trump’s promise was emphatic and that he instructed Mr Ross to work out the specifics to “make it happen”.

The Prime Minister and the Australian delegation was “absolutely certain” that a deal had been struck during the Hamburg meeting.

Trusting trump may have been naive. Turnbull govt considering a ‘trade war’ with the US over steel and aluminium imports

LABOR has pledged support for the Turnbull government if it joins a trade war against United States President Donald Trump.

Prime Minister Malcolm Turnbull discussed trade with Mr Trump in Washington last week but was given no assurances Australia would be affected badly by his trade policy.

In fact, the ABC reports Donald Trump “emphatically” promised to exempt Australian steel and aluminium from US tariffs during a meeting last year.

Australian Trade Minister Steve Ciobo at the weekend telephoned US Commerce Secretary Wilbur Ross but was unable to get any clarification. That was because at that stage even senior members of the Trump administration hadn’t been given the details of the President’s plans.

Mr Trump’s move move could ignite a trade war, with Europe already threatening to put levies on American goods. This could push up interest rates, rock the stock market, and add to global economic uncertainty.

Mr Trump is being told by many sources, including British Prime Minister Theresa May, who telephoned him at the weekend, that the tariffs would hurt America’s allies such as the United Kingdom, South Korea and Canada.

It appears that Trump doesn’t care about what US allies think of his proposed tariffs.

RNZ:  NZ to seek exemption from Trump’s steel tariffs

New Zealand will not be making any threats of retaliation against Donald Trump’s plan to put tariffs on imports of steel and aluminum, Trade Minister David Parker says.

However, New Zealand would not be adding its voice to the criticism, with Trade Minister David Parker saying New Zealand will not be making any threats of retaliation.

“We wouldn’t be responding by the threat of trade retaliation ourselves, which I see has been the response of some countries,” he said.

“But we would certainly be advocating on behalf of the New Zealand steel industry that these tariffs if introduced [would] not apply to them

“We are of course a traditional partner of the United States, so we would be submitting to them that they shouldn’t be catching New Zealand steel exports in a regime like that if they introduced it.”

It’s hard to see That trump would care about steel trade with New Zealand.

Ardern speech to Australia-New Zealand Leadership Forum

Today in Sydney New Zealand Prime Minister Jacinda Ardern gave and address to the Australia-New Zealand Leadership Forum Luncheon:

Prime Minister Turnbull, Ministerial colleagues, Australia New Zealand Leadership Forum co-chairs, business leaders.

Thank you for the warm welcome, your time here today, and your commitment to the success of the trans-Tasman relationship.

Can I start by thanking Prime Minister Turnbull for your hospitality. We look forward to reciprocating in New Zealand, where I know you already have a connection. You know someone has a true appreciation of our home when they speak so fondly of humble experiences like climbing Mount Pirongia.

I want to also acknowledge the New Zealand delegation who have joined me – Ministers, but primarily business leaders.

What we will be reflecting on today is a legacy of work in our trans-Tasman relationship that has been driven by politics and pragmatism – and by the energy of those working in a business environment who saw ways we could and should work together.

My hope is we’ll see even more of this work, going forward.

I want to touch a bit more on that idea of ‘legacy’, though, for a number of reasons.

First, because at times of change it can be a good way to remind ourselves where we’ve got to and some of the things that remain enduring and constant.

We are clearly going through a bit of change at the moment.

At the most immediate and obvious level, one of us has seen a change of government.

That in itself should not prompt any concern for this audience.  But around the world we’re also seeing some rather more ominous changes, and with them a sense that some of the reference points we’ve relied on for decades are coming under a bit of pressure.

These are some of the things you will have heard about during today’s panel sessions from our Foreign and Trade Ministers.

They are also things that Prime Minister Turnbull and I have been speaking about this morning.

But make no mistake.  The strength and success of the trans-Tasman bond is one of the things that will remain constant and enduring.

For anyone under the age of 50, the modern economic relationship between New Zealand and Australia has been in place our entire working lives. The idea of trading, travelling, living or working freely on either side of the Tasman is now so natural as to be instinctive.

That’s true whether you’re “Shayne”, the kiwi dive instructor in Queensland; “Elliott”, the Aussie snowboard instructor in Queenstown, or even just someone called “Shayne Elliott” who works at a bank…

A 2015 McKinsey study described us both as the two most “connected” countries on the planet.[1]  But having been that way for so long, it can be easy to forget that it hasn’t happened by accident.

This is the second reason I wanted to focus on the trans-Tasman legacy.  Because it forces us to remember the very deliberate efforts and investments that have been made over the years to get us to where we are.

From the CER trade agreement of 1983 all the way through to the science and innovation treaty signed only last year, this has been the product of many hearts and hands: from the business community; academia; sportspeople; Māori and indigenous communities, and of course governments.

…from both sides of politics, I might add.

Yesterday, I attended Bill English’s valedictory speech in Parliament.  Bill and I may have disagreed on many political and policy issues, but one thing we instinctively agreed on was the fundamental importance of the trans-Tasman relationship.

The evidence is overwhelming.  Our two-way trade exceeded $24 billion last year.   Australia takes around 20% of our exports and provides 13% of our imports.  It’s our largest source of tourists and capital.  It’s our only formal military ally and home to our largest diaspora.  More than 600,000 Kiwis call Australia home.

By almost any measure, Australia is New Zealand’s indispensable international partner.

My government absolutely gets that.  And previous governments got it too.

But we also know that we’re absolutely building on the legacy of others.  That would include, for example, Sir Michael Cullen, who launched the Single Economic Market agenda nearly fifteen years ago, alongside an Australian Coalition Treasurer, Peter Costello.

Cullen and Costello served in the governments of John Howard and Helen Clark:  a male Liberal PM from Sydney and a female Labour PM from Auckland.  They too forged an excellent working relationship, which included the start of annual Prime Ministers’ meetings.

I mention that not only to emphasise that the trans-Tasman project is not a Labour party legacy. Nor is it a Coalition or National Party legacy.  It is an Australian and a New Zealand legacy. Something I am keen to strengthen.

My government and I absolutely get that.

We also understand that, for all the asymmetries, and our tendancy to undersell ourselves, New Zealand also matters quite a bit to Australia.  We’re your seventh largest trading partner and fifth largest market for services exports.  We’re one of Australia’s largest investment destinations and a significant source of capital in our own right.  Two-way investment totalled over $150 billion in 2017.

And headline trade stats only tell part of the story. We’re also disproportionately important to Australian exporters – particularly small and medium-sized businesses.  More than 18,000 Australian firms export to New Zealand; nearly double the number that export to the US, and triple those that export to China.

We’re also (still) each other’s largest source of foreign tourists, with an estimated 47,000 flights carrying nearly 7 million passengers each year back and forth across the Tasman.

Put simply, this means we each underpin a lot of jobs.

But those flight movements also reflect that we’re coming together in population terms.  The 600,000 kiwis and 80,000 Aussies who’ve made the jump across the ditch now represent a trans-Tasman family of nearly three quarters of a million people.

And they make a real difference.

At one level this could be seen in the fact that Kiwis living in Australia are more likely to be in full time work, have a higher weekly wage, and pay more in taxes than their Australian citizen neighbours.  You may hear me mention that a lot, as one of those lesser told stories.

But at another level it’s in the things you can’t measure that really count: whether it’s teaching our kids; coach our sports teams; growing our food; looking after our sick; or even running our banks.  Kiwis and Aussies are doing that, for each other, in both countries, every day.

These are the people who are building the trans-Tasman legacy which we inherit.

And whatever the media tendency to focus on the odd point of difference, I think the overall sentiment has been clear for some time.

In the ten years that Sydney’s Lowy Institute has conducted its annual “thermometer” poll of Australian attitudes towards other countries, New Zealand has consistently ranked as the country most warmly regarded by Australians.  As we are already at 85%, I imagine the only way we could hit 100% would be to concede on the pavlova, and allow you to claim Crowded House.

This brings me to the final point I wanted to make about our legacy. Having acknowledged where we’ve got to, and who’s got us there, the only thing next is to look to the future.

I know that Australia will remain a central focus of my government’s agenda.  This is as much about being an engine for productive growth that delivers jobs as it is about being a source of valuable policy ideas.

For in addition to Australia’s enviable record of uninterrupted economic growth, your model of competitive federalism provides us with access to an excellent policy incubator.

The New Zealand business representatives here will know that my government has an ambitious agenda to improve the wellbeing and living standards of New Zealanders through sustainable, productive and inclusive growth.  And we are in the market for good ideas and opportunities on  how to best deliver that.

By sustainability, we mean budget sustainability – running sustainable surpluses and reducing net debt as a proportion of GDP.  And we also mean environmental sustainability.  This is essentially about walking the talk of a clean, green, carbon-neutral New Zealand. This will be language you’ll hear us use a lot, as we look to do our part but also support our Pacific neighbours on the climate change challenge.

It also means future-proofing our economy, preparing our people for the fact that 40 percent of today’s jobs will not exist in a few decades.  

This in turn ties into our second objective of delivering productive growth.  The eventual goal is for everyone to be earning, learning, caring or volunteering, so that everyone in our communities has a role that is both valued as well as dealing with social isolation. 

For now, our focus has been on the “earning and learning” piece.

Our “fees free” tertiary education policy will be key to addressing skills shortages, helping those at risk of displacement by economic change to retrain, as well as addressing New Zealand’s longstanding productivity challenge.

The other part is lifting our game in R&D, to two percent of GDP in ten years.  This will involve increases in both public investment as well as incentives for business. And we’ll be studying closely the approaches that Australia has taken.  

Of course we’ll also remain committed to generating prosperity through trade.  You will know the early challenges we faced on assuming office with the imminent conclusion of the CPTPP.  But you will also hopefully know how successful we’ve been in resolving those, in some cases drawing on helpful Australian policy examples.

This brings me to the third part of our agenda, which of course is about ensuring that all New Zealanders have an opportunity to share in the economy’s success.  It’s a major part of the agenda, drawing in our targets around health, housing, reducing child poverty and introducing a living standards framework for measuring our progress. 

Here too, Australia provides a huge array of examples that we’ll be looking at closely, from tax to fair pay agreements; regional development to city design, education to innovation and R&D.

My government is also ambitious about building on our connections WITH Australia – including through our world-leading Single Economic Market agenda.

In our discussions today, Prime Minister Turnbull and I reflected on the great progress that’s been made over the last 18 months, and indeed over the last 14 years.  

But we also discussed some emerging areas that could be ripe for focus over the year ahead.

  •   In the science and innovation space, you’ll have heard Prime Minister Turnbull  talk about the concept of a “trans-Tasman science and innovation ecosystem”.  And I know Ministers are actively exploring new opportunities under the science and innovation treaty. Prime Minister Turnbull and I agreed today to establish a new trans-Tasman cyber security research initiative, which will be co-designed by the Ministry of Business Innovation and Employment and Australia’s C.S.I.R.O..
  •  Prime Minister Turnbull and I are committed to further improving  the trans-Tasman travel experience.  I acknowledge that the Australia-New Zealand Leadership Forum is calling for New Zealand to follow Australia’s lead and remove departure cards this year.  I will be talking to my Ministers of Statistics and Customs with a view to advancing this. In fact, I have already started that conversation on this bug bear.
  • I am also really excited about the new collaboration between our Maori and indigenous businesses.  In this I acknowledge Traci Houpapa and Warren Mundine, who’ve been appointed co-chairs of the Maori/Indigingeous working group within this forum.

    Last month my Minister for Maori Development warmly welcomed a delegation of Australian indigenous business people to New Zealand.  Prime Minister Turnbull and I discussed the possibility of building on the success of that initiative by committing to support a joint Maori/indigenous business mission to ASEAN before the end of the year.

  • Prime Minister Turnbull and I have also agreed to collaborate on implementation of electronic-invoicing.  This will improve efficiencies for business and deliver significant savings for both countries.  It’s been estimated that even a 15% adoption of e-invoicing could deliver annual savings of around $500m in New Zealand and $3 billion  in Australia.  Building on Australia’s recently introduced e-invoicing standard, we’re confident that this work will address a major cost for SMEs from incompatible accounting systems.

New Initiatives

I talked earlier about how, for most Australia and New Zealand SMEs, their first experience of exporting is across the Tasman.  Our economic integration creates a space in which SMEs on both sides of the Tasman can dip their toes in international waters. That generates real jobs for Australians and for Kiwis.  I want to understand the experience of SMEs in the trans-Tasman market.  What works for them and what doesn’t?  How can we make it even easier for our SMEs to make that leap into exporting?  And what is it about the trans-Tasman market we could use to help our SMEs succeed in the wider world?

Prime Minister Turnbull shares those same questions on the future of SMEs, and today we agreed to commission work that will give us some of the answers.

We want to set up a work programme to investigate ways to boost the flow of business and experts from SMEs across the Tasman. Given 75% of New Zealand SMEs export to Australia and more Australian firms export to New Zealnd than to any another country, there is huge potential for both our countries in making it easier and speedier for SMEs to do business across the border.

I see this as the next step in CER.

Small and medium sized businesses play a crucial role in driving the growth my country relies on, so it makes sense to me to make it easier for those firms to do business with our closest neighbour.

Prime Minister Turnbull and I want to that ensure our trans-Tasman economic architecture remains fit for purpose in the 21st century.

We know that the digital economy will be a key driver of innovation and growth, with immense potential to boost productivity and competitiveness and connect people who would otherwise be excluded.  It’s why both our countries are working on digital economy strategies.  I want to ensure our digital policy is of the highest standard, representing the commercial reality in which our businesses operate.  Just as conventional businesses can operate in a single trans-Tasman market place, it is imperative that digital businesses can do likewise.

That’s why Prime Minister Turnbull and I have have also, today, agreed to jointly commission a review of our policy and regulatory frameworks to ensure that they are creating an environment in which trans-Tasman digital trade is as open and facilitative as they are for conventional trade.

Both Prime Minister Turnbull and I believe that we can learn from one another’s work on smart cities, including in the areas of infrastructure, cities policy, and driving the take-up of smart technology.

The Australia-New Zealand Leadership Forum too is an essential part of it all of this.  This model, of business and government from both sides of the ditch coming together to share ideas on how we can maintain our place as the world’s most connected and successful economic relationship is exactly the model we want to emulate.

We know you share our ambitions, because you care deeply about our people.  Before the election, many of the concerns underpinning our agenda were heard as often in the boardroom as in the smoko room.

We also know that you have great ideas about how we can achieve our goals, for the benefit of New Zealand, Australia and the trans-Tasman economy.

It’s no accident that you are joined here today by a significant number of senior ministers.  We are here to discuss our present and future collaboration.

If you’ll indulge me in a small rugby analogy – and because I was diplomatic enough not to mention the word “Bledisloe” during my speech, I know that you will – it’s like we are locked in a great rolling maul: furiously energetic; sometimes fast, sometimes slow; a bit messy, with different players coming and going, and completely incomprehensible to outsiders.

But those in the mix know exactly what they’re doing – and we’re moving steadily forward toward a distant try line.

New Zealand and Australia.  Business and government.  We are each bound together.

And the more we work together, the more likely we are to succeed.

Kia ora koutou katoa.


Possible pressure on business tax plans

In October Jacinda Ardern said that the Government would consider lowering the company tax rate for small to medium business owners. NZH:  Jacinda Ardern to consider tax breaks for small businesses as minimum wage is set to rise

Prime Minister-designate Jacinda Ardern says she will ease the pressure of higher wages on small- to medium-business owners, including looking at a lower company tax rate.

As part of its deal with New Zealand First, the incoming Government will raise the minimum wage from $15.75 an hour $16.50 next year, and then to $20 by April 2021.

The increase is raising concerns in the business community and among farmers about meeting higher costs.

Speaking to Radio NZ’s Morning Report, Ardern said she wanted a tax working group to look at how Australia’s stepped tax regime operates.

“They have a slightly lower corporate tax rate for companies and businesses that have lower turnover. I’m interested in how we can ease the burden on small businesses in particular.”

In Australia, companies with turnover of less than $10 million a year pay a lower company tax rate.

“This is me foreshadowing that I do have a genuine interest in how we can support those who create jobs in New Zealand,” Ardern said.

“In large part, our small and medium enterprises – well over 40 per cent of our new jobs – are coming from our SMEs. I want to do all I can to work in partnership with them.”

But after Donald trump significantly lowered business tax rates in the US there could be pressure to lower all rates here if New Zealand is to remain competitive.

Stuff: Has Labour’s tax agenda just been Trumped?

Cutting tax for big business is probably the last thing Labour wanted to be on the agenda of the newly-established Tax Working Group.


The group will also consider a “graduated” company tax rate that would see big businesses pay tax at a higher rate than smaller firms.

But United States President Donald Trump’s decision to slash company tax in the US from 35 per cent to 21 per cent could be a spanner in the works, putting New Zealand under pressure to lower its company tax overall.

John Milford, chief executive of the Wellington Chamber of Commerce, says New Zealand’s 28 per cent company tax rate already stood out against the OECD average, which he puts at 22 per cent.

“It’s certainly overdue for another review.”

In Britain, company tax is 19 per cent and set to fall to 17 per cent by 2020.

Australian Finance Minister Mathias Cormann​ has promised to reduce Australian company tax from 30 per cent to 25 per cent by 2027, explaining Australia needed to be “internationally competitive”.

That in particular would put pressure on the New Zealand business tax rate.

Revenue Minister Stuart Nash is keeping advice he has received from Inland Revenue on the impact of Trump’s tax reforms under the lid for now.

But the Australian Treasury has warned that the US changes could come at a cost to the rest of the world that might include “reduced foreign investment, lower GDP and real wages”.

The Tax Working Group is being asked to look at improvements of the tax system to see whether it operates ‘fairly’.

The Working Group will report to the Government on:

  • whether the tax system operates fairly in relation to taxpayers, income, assets and wealth
  • whether the tax system promotes the right balance between supporting the productive economy and the speculative economy
  • whether there are changes to the tax system which would make it more fair, balanced and efficient, and
  • whether there are other changes which would support the integrity of the income tax system, having regard to the interaction of the systems for taxing companies, trusts, and individuals.

Under Objectives in the Terms of Reference for the Working Group:

  • A system that promotes the long-term sustainability and productivity of the economy

The Working Group should consider in particular the following:

  • Whether a progressive company tax (with a lower rate for small companies) would improve the tax system and the business environment

With New Zealand’s tax rates being higher than average, after the US cut in business tax rates and a commitment by Australia to lower their business tax rates, the Working Group should be considering the long term sustainability of New Zealand’s business tax rates.