Shaping our future family

This country's relationship with Australia is of very long standing, indeed, one of the most sustained in modern political history.

In colonial times, the links between places such as Dunedin, Invercargill and Melbourne were almost as routine as catching a bus into town, and trade as well as social links were maintained port to port.

But it has always been and will always be a relationship of differing scales: New Zealand benefits to a greater degree from Australia than Australia does from us and, although we rejected the opportunity a century or so ago to become a state of the island continent, in many respects that status is symbolically close to what we actually are.

The free exchange of trade and people has deeper roots than this, and after more than 25 years of the 1983 Closer Economic Relationship, seems to be very secure.

The fact that the Government felt it justified to put out its very best welcome mat for Australian Prime Minister Julia Gillard this week is indicative of a realisation that such a relationship needs constant reinforcement and reassurance, at least from the New Zealand side and, increasingly we are glad to note, from Australia's.

Whereas Australia could probably get along quite well without us, we would find it very difficult if the position was reversed, especially now, but that does not mean New Zealand needs to be a supplicant at Canberra's door.

So far, the chief benefits of the relationship have been ease of trade and financial investment.

Within the past decade or two Australian companies have come to dominate our supermarket services, our "big-box" mall traders, and the media, while reinforcing their long dominance in banking and insurance.

The proposed increase in the bilateral investment scrutiny threshold will have little immediate direct impact on the lives of the majority of citizens here, although it may be good for business and that may in turn lead to more job creation.

But, as critics have noted, it will make it much easier for Australian-based entities to buy larger holdings in strategic New Zealand assets, especially if the Key Government is able to proceed with its identified asset sales.

And if the proposed Transpacific Partnership Agreement succeeds (it is a form of free trade agreement) then the numerous parties to it, including the United States, are bound to expect similar terms.

There are risks, in other words, to our economic sovereignty, which at least for some of our political parties is untenable.

"Foreign ownership" is certain to be one of the issues upon which the November election will be fought.

On the other hand, the threshold arrangement will also make it easier for Australian entities to invest in productive New Zealand companies, which are often starved of capital, meaning job creation possibilities and the payment of New Zealand taxes.

Opposition leader Phil Goff made an odd choice by criticising the protocol on the grounds that Australian-owned banks "take $2.5 billion in dividends out of this country".

But the banks also pay large numbers of local investors interest, provide loans for businesses and housing, and generally contribute substantially to the local economy.

Furthermore, individuals have choices in New Zealand when it comes to banks.

Would Mr Goff and the Labour Party have it otherwise? Most people probably have other hopes of the relationship, which are not, perhaps, quite yet what they could be - and it is far too early in Ms Gillard's prime ministership to expect substantial change.

The streamlining of transtasman travel and job opportunities is one area where further progress should be made (after all, 600,000 New Zealanders live and work in Australia and growing numbers of Australians are choosing to live and work here), and Ms Gillard hinted in her speech in Parliament's debating chamber yesterday that it would be.

Other advances such as a common currency and a customs union are unlikely, even in the near future for they are beyond political acceptability at present.

Prime Minister John Key is pressing for a single economic market - a kind of monetary European Union - and Australia increasingly is coming to accept the concept, to judge from Ms Gillard's comments.

The former Liberal government initiated single-market talks with the Clark government but progress halted on the issue of a common border, with New Zealand's lax border security being cited as the main sticking point.

It seems now the Gillard-led Labor Party wants to resume negotiations, at least to the point of having a customs union.

It is a step too far to expect much more.

Without a doubt, a common external border, common citizenship and currency, and arrangements that would permit goods and people to move freely as if both were one country - without surrendering independence - remain well below the risk-averse horizon of current political leadership, on both sides of the Tasman.