Dear Colleague

The Trans Tasman Political Newsletter reports giant strides towards the goal of a single economic market will be taken by NZ and Australia in the next few weeks.

A pact on the portability of retirement savings, a joint investment protocol; and moves towards a common border are likely. In his talks with Treasurer Wayne Swan in Brisbane this week Finance Minister Bill English expects to finalise the agreement on savings portability.

This might take 18 months to be enacted, but will enable thousands of Kiwis who have worked in Australia to bring billions sitting in pension funds on the other side of the Tasman back to NZ.

English says the chances of an agreement being signed are "promising," though some technical details have to be ironed out.

The pact will lead to a big boost in the savings pool. The investment protocol will smooth capital flows across the Tasman, possibly freeing Australians from restrictions in NZ's overseas investment rules.

Trans Tasman understands officials are also making steady progress towards a common border, following the mandate delivered to them by John Key and Kevin Rudd.

An announcement on an action plan, with roadmarks, is likely to be made when John Key is in Canberra on August 18. The goal is to remove border controls on flights between both countries, by removing the need for passport, quarantine and immigration checks. This would be an enormous boost to the tourist industries on both sides of the Tasman.

To create a common border, policies across passport, quarantine and immigration controls will have to be harmonised, or aligned. Australia sees NZ as a "soft touch" on immigration, with a high rate of illegal migrants from the Pacific. Bio-security is equally sensitive.

Other steps involve monitoring passenger movements by linking airline reservation systems to law enforcement, immigration and customs databases, which will trigger alarms over "interesting" passengers in advance.

Trans Tasman believes Local airlines operating across the Tasman on single aviation licences will be favoured ahead of foreign carriers such as Emirates. The longer-term strategy is to have local airlines use domestic terminals, to free up space in crowded international terminals. Foreign carriers flying the Tasman will be treated as international flights requiring the full range of border controls.

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