Coming back to New Zealand after a few years on the other side of the ditch, I’ve noticed a couple of funny things.

I’ve always supported closer economic relations with Australia, and thought we were well on the way. But preparing to return, I found my Australian super scheme and health fund took some hits in terms of taxation, levies and ability to cash out, because I was returning to New Zealand. Why should that be, I wondered, given the CER partnership?

At Sydney airport I pondered the Kiwi travellers lumped into a separate queue from the Australians – surely CER should mean all ANZAC passengers being treated the same?

Then at the rugby sevens in Wellington I was astounded to hear the crowd boo the Aussie team when it wasn’t even playing against a Kiwi side!

I guess these are pointers to the fact that the closer relationship has a way to go.

The relationship’s on the radar because of this week’s Clark-Howard and Cullen- Costello meetings aimed at moving us beyond CER and towards a single economic market.

CER has been great for trade. Tariffs and restrictions have gone. Manufacturing ‘rules of origin’ are getting less restrictive. Wrinkles in agricultural trade are being worked out. The free movement of goods is progressing well.

Free movement of people isn’t happening so fast – integrated passenger processing and border security are some way off, and Kiwis arriving in Australia don’t necessarily appreciate being lumped into a separate queue – but it’s a work in progress.

Thinking back to the debates when CER was first mooted, it’s hard to understand why there was any opposition. It makes sense to pool consumer markets and remove impediments to trading, working and travelling across our borders, and I think most Kiwis and Australians now fully support CER.

But what do they think about the next step – a single economic market? It’s starting to happen already, though with less fanfare than with CER. Trans-Tasman business laws, rules and practices are being harmonised to create a system where being a company here is equivalent to being a company in Australia and vice versa.

In some areas there’s an orderly, mapped- out progression towards a single system. In other areas it’s more untidy – keeping differences, but within a cooperative framework – for example with competition laws. That’s OK too – there’s nothing wrong with a bit of patchwork. This week’s Clark-Howard and Cullen-Costello meetings could create some more patchwork – with the integration of banking regimes.

Most New Zealand banks are Australian- owned, and our rules say overseas-owned banks must be incorporated here – they can’ t be ‘foreign-controlled’ and can’t let key operations be outsourced overseas. The Reserve Bank justifies this by saying that a failure within an Australian-owned banking chain could cause havoc for a sizeable chunk of our economy, and it requires safeguards to retain key systems and management in the local bank. These might be costly for banks and therefore their customers. The question is whether the Reserve Bank’s concerns could be addressed by some other mechanism that could help the banking system to arrive at the best practical solution for customers and shareholders on both sides of the Tasman.

This week’s bilateral meetings could bring a decision on these safeguards and on the extent to which our banking regimes will be integrated.

The important thing here, as with all the rules and practices under consideration, is to consider what’s best for New Zealand – and that doesn’t mean focusing on sovereignty alone. Pre-CER concerns about sovereignty proved groundless because CER negotiations focused on what was best for New Zealand in a pragmatic, practical way. That’s how a single economic market can be advanced too.

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