New Zealanders living in Australia are so commonplace that Aussies generally only notice them to mock their vowels.  This is very annoying to those Kiwis, who have been known to commiserate with Tasmanians on the subject of being ignored.

So, when the Australian Prime Minister Kevin Rudd talked of “reinvigorating the spirit of ANZAC” during this week’s summit with his Kiwi counterpart John Key, it was tempting to wonder whether this meant New Zealand would now appear second in Australian ANZAC Day parades, rather between New Caledonia and Norway, as has been known to happen all too often.

For Australians living in New Zealand, however, it is a completely different story.  Next Monday morning, all over the country, expatriate Aussies will arrive at work mentally prepared for the no-win situation created by every Wallabies vs All Blacks clash.  If the AB’s win, they will get a riotous shellacking from their gloating Kiwi colleagues. This could last for anything up to a week and will quickly become very tedious.

And if our boys in black don’t do the business, the Kiwi-side Okkers will be targets for a particular brand of glowering nastiness from some of their workmates, because New Zealand still needs to grow up about our neighbours across the Ditch.

As Mike Moore used to put it: “The Aussies are our best friends, even if we don’t like them.”

By placing the relationship with Australia very firmly near the top of his agenda for economic revitalisation, John Key – a politician known for liking anybody – has taken a refreshingly positive step this week towards making the friendship work.

Equally refreshing is Rudd’s apparent enthusiasm for the initiative.  New Zealand Governments repeatedly find Australia looking the other way.  For once, there seems to be willingness to look in our direction.  The Single Economic Market Outcomes Framework laid out this week also suggests this is more than flirtatious glancing, although whether they’ll respect us in the morning remains the unspoken question on even the most enthusiastic Aussie-phile’s lips.

That’s because the inevitable calculus of the Australia-New Zealand political relationship is simply this: Australia wants it, Australia gets it.

From the battle over New Zealand apple importation – almost a century old and before the World Trade Organisation for a ruling – to the infamous fax that cancelled the trans-Tasman open skies agreement in the mid-1990′s, through to Canberra’s current unwillingness to licence AXE, the New Zealand-owned rival to the Australian Stock Exchange, there is plenty of evidence that Australia holds the whip hand.

And where New Zealand has gone it alone, particularly in its independent foreign and defence policy, a powerful class of senior federal bureaucrats keeps alive the memory of such perfidies so that New Zealand is always cast as the supplicant in Australian eyes.

As their former Prime Minister Paul Keating once put it, New Zealand is “all take and no give”.

Mind you, he’d just had a tongue-lashing from the then New Zealand Finance Minister, Ruth Richardson, about Australia’s complete lack of interest in making imputation credits attached to company dividends recognisable in both countries’ tax systems.

Some 15 years on, that hardy perennial is not about to be fixed.  Among a long list of things that are firmly on the agenda for “substantial progress” by the end of this year, the Rudd-Key statement merely “notes New Zealand’s strong interest in the mutual recognition of imputation credits”.

That’s diplo-code for “forget it” and the fact that it’s there is testimony only to New Zealand’s “water dripping on stone” approach to progress in some areas.

“You’ve got to keep saying it, otherwise if you don’t say it, they’ll say ‘you didn’t say it’,” says one long-time Australia-watcher.

This week’s breakthroughs on trans-Tasman travel protocols, however, prove that the dripping water approach can work. The issue has been on the agenda forever and at last there is substantial movement, all the more remarkable for the border protection traditions of both countries.

As island nations, Australia and New Zealand’s biosecurity precautions strike citizens from the joined-up parts of the world as downright odd.  Finding a way to keep those checks in place while whisking the masses through the Arrivals halls on both sides of the Tasman has required a lot of fresh thinking.

Australia has also always been a tad paranoid about outsiders.  Until recently, New Zealanders were the only people who could travel there without a visa. By comparison, New Zealand seems happy to let in pretty much anyone with a nice enough smile.

Also significant is the “deliberate move from consideration purely of national benefits in policy development, to consideration of the net trans-Tasman benefit”.  While this was arguably what the 1983 Closer Economic Relations Agreement was all about, its restatement in terms of a change of emphasis is strong evidence of new vigour in the trans-Tasman relationship.

That’s particularly important for Key, who has identified catching Australian living standards by 2025 as a primary aim for his Government, and one way of doing so is to be as much a part of Australia as possible.

Perhaps Key hopes that some of what Australia has – with its more ruthless and mercantilist politics and commercial life, a far less purist approach to economic policy in the last 20 years, and much higher growth rates – will rub off on New Zealand too.

That’s where relaxing investment screening thresholds could be significant.  It may indicate new willingness to find ways to get around Australia’s age-old argument that relaxing the foreign investment rules for New Zealand would place it in breach of its strangely restrictive obligations to Japan under the 1977 Treaty of Nara.

Elsewhere, a bureaucratic nirvana of actionable policy items has been laid out: a common tradmarks register, cross-membership of one another’s competition watchdogs, a common business number system, to name but a few.  A New Zealand version of the Australian Productivity Commission seems almost inevitable and the two would work together.

Other work is afoot to make the regulatory systems of both countries as alike as possible to make it easier to do business, create jobs, and project into the wider world together.

To businesspeople, officials, and politicians who see the Australia-New Zealand relationship in big picture terms of economic opportunity, productivity improvement, and global competitiveness, the agenda is clear.

However, in both countries – in suspicious New Zealand with its fine tradition of cringing defiance and in Australia with its tradition of big neighbour insouciance – the politics are not easy.

What happened in Canberra this week was a promising fresh start.  What it produces will require not only hard yakka, but plenty of patience yet.

(BusinessWire)