Business divided over common Tasman currency

May 16th, 2004

Business divided over common Tasman currency; keen on common company tax, regulations

A business poll attracting 138 responses in 24 hours found opinion split down the middle on the benefits of a common trans Tasman currency or stock exchange.

But 78 per cent of manufacturers in the north favour a common trans Tasman company tax rate with 72 per cent support for a common regulatory framework.

"The closeness of the survey results on the common currency came as a surprise," said Bruce Goldsworthy, Manufacturing Services Manager for the Employers & Manufacturers Association (Northern).

"Opinion on the benefits of a common trans Tasman currency is split evenly between those who argue it would create a larger currency trading base thereby reducing volatility, while those opposed say it would cut New Zealand's competitiveness in Australian markets.

"With New Zealand's manufactured exports to Australia worth $5 billion a year, any potential loss of competitiveness should clearly be the subject of intensive study.

"Smaller exporters across the Tasman will find no comfort that large companies with operations on both sides of the Tasman could this week be deciding whether New Zealand adopts the Australian currency.

"Our sme exporters to Australia are more at risk than larger companies which have options over where they locate.

"Several respondents said they did not want our fortunes locked into Australia's mineral commodity trade, and that our two economies and Government policies were too different.

"Some businesses said a common currency would see us lose our ability to 'trade on the differential' between Australian and New Zealand costs of imported components and raw materials.

"The greatest road block to doing more business across the Tasman is summed up as 'Australian prejudice against buying from New Zealand.'"

"A surprise obstacle identified was expressed as 'getting paid by Australians. They've all got shackle marks on their ankles; their payment of accounts is abysmal'.

"Other major issues were Australian scale of production and freight.

"The overwhelming tenor of the responses on the common company tax rate said we need ours to be equal or lower than theirs to encourage both Australian and New Zealand investment here. But if an Australian headline company tax rate came with the rest of Australia's compliance and tax regime, no way.

"The 50 per cent support for a common stock exchange cited the benefits of greater access to capital, but we 'need imputation credits available in either country'. Those opposed said it would result in a loss of New Zealand identity or was not important to them.

"The 72 per cent supporting a common regulatory framework said it would remove duplication especially on labelling, packaging and transportation, while the 27 per cent opposed feared we would end up adopting Australian compliance costs which in many cases are even worse than ours."

Comments: Bruce Goldsworthy tel 09 367 0948 (b) 09 522 2723 (h)

The Employers & Manufacturers Association (Northern) survey asked yes/no questions on the four issues: For your trade with Australia do you favour a common company tax rates; a common stock exchange; a common currency; and common business regulations. Also asked was: What is the single biggest issue holding back your trade expansion to Australia?

The poll was taken on Wednesday, May 12th and open for only 24 hours, resulting in a 14% response rate.

ENDS

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