Prime Ministers Julia Gillard and John Key met for the annual Australia-New Zealand Leaders’ meeting in Melbourne on 29 January. Their meeting was followed by the second Joint Meeting of Australian and New Zealand Cabinet Ministers.

The Prime Ministers re-affirmed their strong commitment to the closest possible relations between Australia and New Zealand, including through an annual Leaders’ meeting. They agreed to conduct further joint meetings of Cabinet Ministers on a regular basis and at least once in the term of each government.

Towards 30 Years of Closer Economic Relations

2013 marks the 30th anniversary of the Closer Economic Relations (CER) agreement. CER and the Single Economic Market (SEM) agenda have brought down barriers to trade, reduced costs for business, encouraged investment and created jobs and economic growth for both Australia and New Zealand.

The Prime Ministers agreed the Productivity Commissions of each country would conduct a joint scoping study [details attached] to identify options for further reforms which might boost productivity, increase competitiveness and drive deeper economic integration. The Commissions will report by 1 December 2012 for consideration by Leaders in 2013.

Stronger Defence and National Security Cooperation

The Prime Ministers welcomed the outcome of the Review of the Australia-New Zealand Defence Relationship, which has been launched today by Defence Ministers. The review outlines a new defence relationship framework that will make it easier for Australia and New Zealand to work together in our region and cooperate on capability development and procurement.

The Prime Ministers announced further steps to deepen cooperation on national security and emergency management cooperation. They agreed:

· to strengthen cooperation against the shared and growing challenge of cyber security through a regular Australia New Zealand Cyber Dialogue;

· that New Zealand would move from observer status to membership of the National Counter-Terrorism Committee, to ensure the closest possible coordination on counter-terrorism policy;

· that New Zealand would move from observer status to membership of the National Emergency Management Committee, in recognition of the strong collaboration between the two countries on disaster management.

The Prime Ministers agreed to continue to work closely together in the lead-up to the Centenary of the ANZAC landings in 2015, and other important WWI centennial commemorations.

Criminal History Sharing

The Prime Ministers agreed to enhance the reciprocal sharing of criminal history information for employment vetting purposes and plan an initial six month trial with Queensland to test how consistent and systematic requests for criminal history checks for employment purposes can be facilitated between Australia and New Zealand. They also directed officials to accelerate the work under way on reciprocal information sharing to support border control and law enforcement, consistent with free movement of people across the Tasman.

Continuing Trans-Tasman Cooperation

Following their agreement in June to establish a joint Australia New Zealand Therapeutic Products Agency (ANZTPA), the Prime Ministers were pleased with progress towards the phased introduction of ANZTPA, and welcomed the inaugural meeting of the ANZTPA Ministerial Council, which will oversee the implementation of ANZTPA.

The Prime Ministers also welcomed progress in streamlining trans-Tasman travel, especially through the SmartGate trial. They welcomed lowering of age eligibility for Smartgate from 18 to 16.

The Prime Ministers underlined their commitment to strong tobacco control measures and undertook to cooperate closely in their efforts to reduce tobacco use domestically. New Zealand will closely follow progress in implementation of Australia’s plain packaging legislation and the countries will look to ensure that no branded tobacco is able to be re-exported from New Zealand to Australia.

In the run up to the site selection decision, the Prime Ministers agreed to continue to promote vigorously the merits of the joint Australia-New Zealand bid to host the Square Kilometre Array (SKA). The SKA will be the most powerful radio telescope ever built and will revolutionise our understanding of the universe.

Climate Change

The Prime Ministers re-affirmed their commitment to pricing carbon as the most environmentally effective and economically efficient way to reduce greenhouse gas emissions. They welcomed work towards linking the Australian and New Zealand emissions trading schemes, including agreement by Climate Change Ministers in December to Terms of Reference which will guide the work of the Australia New Zealand Carbon Pricing Officials Group.

2015 Cricket World Cup

Prime Minister Gillard congratulated New Zealand on its successful hosting of the 2011 Rugby World Cup. Recognising both countries’ passion for sport, the Prime Ministers looked forward to Australia and New Zealand co-hosting the ICC Cricket World Cup in 2015 and welcomed the opportunities this would present for both countries.

Regional and Global Issues

The Prime Ministers confirmed their commitment to see an end to all whaling in the Southern Ocean, welcoming New Zealand’s intervention in Australia’s international legal case against whaling in the Southern Ocean.

Recalling the strong outcomes of the first meeting of the expanded East Asia Summit (EAS) in Bali in November, the Prime Ministers reiterated the importance of enhanced regional cooperation through the EAS, APEC and the Pacific Islands Forum (PIF).

Prime Minister Gillard congratulated Prime Minister Key on New Zealand’s successful hosting of the PIF and committed to support New Zealand in its year as Forum chair. The two Prime Ministers reinforced their commitment to work closely together in the Pacific, particularly on progress towards the Millennium Development Goals, and welcomed agreement to a joint funding arrangement for education assistance to Nauru. The Prime Ministers agreed to expand cooperation on their respective seasonal worker programs in the region.

The Prime Ministers agreed on the importance of strengthening the region's response to the shared challenge of irregular migration. Recognising the efforts of regional partners and international organisations to examine opportunities to better cooperate under the auspices of the Bali Process, Australia and New Zealand agreed to consult on targeted refugee resettlement, within respective quotas, to enhance the region's response to irregular migration. Both countries will engage with the UNHCR to ensure that this approach complements global priorities.

The Prime Ministers agreed to further strengthen maritime surveillance efforts in the Pacific, with a focus on fisheries surveillance, and to work closely together and in partnership with Pacific Island countries to coordinate efforts.

The Prime Ministers welcomed the close cooperation between Australia and New Zealand in supporting Pacific Island countries to respond to and recover from natural disasters, most recently in relation to the 2011 drought in Tuvalu and current flooding in Fiji.

The Prime Ministers welcomed the close cooperation between Australia and New Zealand, together with the Solomon Islands and regional partners, in the Regional Assistance Mission in the Solomon Islands (RAMSI). Both leaders noted RAMSI’s progress on transition, building on the strong leadership and commitment of the Solomon Islands Government to ensure lasting benefits for the people of the Solomon Islands.

Prime Ministers noted also their close ties with Papua New Guinea and PNG’s importance as a neighbour and regional partner. They looked forward to the smooth conduct of elections in PNG and Timor Leste in coming months.

Both countries remained concerned about the continuing deterioration in Fiji’s political and economic situation and its impact on Fiji’s people, and agreed to maintain close consultation on developments, including with other international partners. They reaffirmed the need for Fiji to return to democracy and the rule of law as soon as possible.

The Prime Ministers reaffirmed both countries’ commitment to free and open trade in the face of global economic uncertainty. They called for protectionism to be resisted. The Prime Ministers said all countries must work together to secure global recovery and restore job growth. European Union countries must fully implement commitments to stabilise economies at risk, prevent contagion and, in the medium-term, reduce debt levels and implement necessary structural reforms. The Prime Ministers remained strongly committed to the goal of eliminating tariffs and other barriers to regional trade and investment, including through negotiation of the Trans‑Pacific Partnership.

Strengthening economic relations between Australia and New Zealand

Impacts and Benefits of Further Economic Integration of the Australian and New Zealand Economies - Joint Scoping Study by the Productivity Commissions of Australia and New Zealand

Purpose of the study:

The Governments of Australia and New Zealand are firmly committed to strong economic relations between Australia and New Zealand, including boosting productivity through reducing the regulatory burden on business, increasing competition and encouraging closer economic cooperation, and to strengthening those relations further. The two countries have a long history of working together through the Australia New Zealand Closer Economic Relations Trade Agreement which first came into effect on 1 January 1983 and has involved successive rounds of integration of the Australia and New Zealand economies. This has been highly beneficial to both countries.

At their annual leaders meeting, the Prime Ministers of Australia and New Zealand agreed that, to promote further reform and economic integration, the Productivity Commissions of each country would conduct a joint study on the options for further reforms that would enhance increased economic integration and improve economic outcomes. The Commissions’ final report should be completed by 1 December 2012 in order to inform the next meeting of leaders, expected to take place in early 2013.

With 2013 marking 30 years of the operation of the Closer Economic Relations Trade Agreement, the Commissions’ report will help advise the Australian and New Zealand Governments on next steps in economic integration.

The report should identify specific areas for further potential reform, the ways in which they might be best achieved, the likely impacts of potential reforms, any significant transition and adjustment costs that could be incurred and the time scale over which impacts are likely to accrue.

Scope of report

The Commissions’ report to leaders should provide analysis on:

· potential areas of further economic reform and integration, including identification of the areas of reform where benefits are likely to be most significant, with particular focus on critical issues for business like investment and productivity;

· the economic impacts and benefits of reform;

· any significant transition and adjustment costs that could be incurred;

· identification of reform where joint net benefits are highest;

· the means by which they might be best actioned; and

· the likely time paths over which benefits are expected to accrue.

Methodology

The Commissions should provide an explanation of the methodology and assumptions used in its analysis. The Commissions should also provide guidance concerning the sensitivity of results to the assumptions used and bring to leaders’ attention any limitations or weaknesses in approaches to reform evaluation.

Consultation and timing

In the course of preparing the report, the Commissions should consult and hold public hearings as appropriate. While these consultations would inform the Commissions’ assessment, responsibility for the final report would rest with the two Productivity Commissions.

The Commissions should produce both a draft and a final report. The Commissions’ final report should be submitted to leaders, through the Treasurer of Australia and the Minister of Finance of New Zealand, by 1 December 2012. The reports will be published.