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Factba.se: Australia DFAT Country Briefs - New Zealand
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COUNTRY BRIEFS


GENERAL INFORMATION

New Zealand comprises two main narrow and mountainous islands, the North Island and the South Island, separated by Cook Strait, and a number of smaller outlying islands. The total land area is approximately 268,000 square kilometres (about the combined area of Victoria and Tasmania). Its maritime EEZ is roughly 430 million hectares, the fifth largest in the world. The capital, Wellington, is situated on the south-west tip of the North Island and is about the same latitude as Launceston. The Southern Alps, containing glacial systems, which have retreated and formed wide glacial valleys and inland lakes, extend the length of the South Island. The Southern Alps include New Zealand's highest mountain, Aoraki Mt Cook (3754 m). The highest mountain in the North Island is Mount Ruapehu (2797m), an active volcano which erupts frequently, most recently in 2007. Not far from the mountain is Lake Taupo, the largest lake in New Zealand. New Zealand has a cool temperate climate, strongly influenced by oceanographic factors.

New Zealand has a population of around 4.4 million (2010 estimate) people. New Zealand's rate of natural increase is about 1.0 per cent per year. Australia is a major destination for New Zealand migrants and tourists. Traditionally, most inward migration has been from the United Kingdom, Australia and Northern Europe. In more recent times, a growing number of migrants have come from the Pacific island countries, particularly Samoa, Cook Islands and Niue, and from Asia.

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BILATERAL RELATIONS

Australia and New Zealand are natural allies with a strong trans-Tasman sense of family. Migration, trade and defence ties, keen competition on the sporting field, and strong people-to-people links have helped shape a close and co-operative relationship. Hundreds of thousands of Australians and New Zealanders cross the Tasman each year as tourists, for business purposes, or to visit family members. Over 500,000 New Zealand citizens live in Australia, while there are around 65,000 Australians in New Zealand. Freedom of travel is facilitated through the Trans-Tasman Travel Arrangements of 1973, which allow Australians and New Zealanders to visit, live and work in either country without restrictions.

While New Zealand chose not to join the Australian federation in 1901, it maintains close political contact. At a government-to-government level, Australia's relationship with New Zealand is the closest and most comprehensive of all its bilateral relationships. Prime Ministers hold annual formal talks, as do Treasurers, Trade and Defence Ministers. Foreign Ministers meet biannually. Ministers and government officials from both countries participate in meetings and conferences on a wide range of issues: health, education, transport, justice, quarantine and many others. New Zealand ministers and senior officials participate, with their Australian federal and state counterparts, in many of the Council of Australian Governments (COAG) meetings which span the Australian domestic policy agenda.

In recent years, both governments have stated the importance of the relationship and their intention to strengthen links further, especially through deeper economic integration. The tone of the bilateral relationship remains very positive following recent high-level visits to New Zealand by Prime Minister Julia Gillard (twice; 15-16 February 2011 and for the Christchurch earthquake memorial service on 18 March 2011) and Governor-General Quentin Bryce AC, reinforced by our two countries' shared experience of natural disasters and efforts to help one another. Australia's swift and generous response to the Christchurch earthquake was warmly appreciated in New Zealand at a popular and political level. Similarly, New Zealand was the first to offer help for the Queensland floods and New Zealand donated NZD4 million to Queensland and Victorian flood appeals and sent a team of rescue workers to assist.

During her visit to New Zealand on 15-16 February 2011, Prime Minister Gillard became the first foreign leader to address the New Zealand Parliament and met with Prime Minister John Key and Cabinet Ministers and the Governor General, Sir Anand Satyanand. Prime Ministers Gillard and Key issued a joint statement which reinforced our shared views and commitment across a range of bilateral, regional and global issues, including:

-- agreement to develop a joint framework for crisis management cooperation to include annual consultations and a joint crisis management exercise aimed at enhancing our ability to provide reciprocal assistance;

-- commitment to further advance the Single Economic Market agenda;

-- collaboration on a CER-ASEAN Integration Partnership Forum to share lessons learned from Australia and New Zealand's experience of the Closer Economic Relations Trade Agreement and Single Economic Market (CER or ANZCERTA) with ASEAN.

CER is at the core of the Australia-New Zealand economic/trade relationship. In addition to its direct role in removing barriers to trans-Tasman trade, CER has provided a foundation upon which a web of complementary agreements have been built, including on the movement of people, mutual recognition of standards, taxation, government procurement and aviation. These have represented important cumulative gains in the increased integration of the two economies. Much of the recent focus has shifted to advancing the Single Economic Market, which has the objective of allowing businesses to conduct operations across the Tasman without regulatory duplication.

Australia and New Zealand cooperate closely in the international arena and in regional bodies, such as the Pacific Islands Forum, APEC and the ASEAN Regional Forum. The Australia, New Zealand and ASEAN free trade agreement, AANZFTA, entered into force on 1 January 2010. Both Australia and New Zealand cooperate closely in pursuing WTO goals, notably through participation in the Cairns Group - a coalition of 19 agricultural exporting countries seeking the liberalisation of trade in agriculture. New Zealand has made valuable contributions to security in areas of high priority to Australia, notably in East Timor, Bougainville and Solomon Islands (RAMSI) and Afghanistan.

An important annual bilateral event is the private sector led Australia New Zealand Leadership Forum (ANZLF) which met for the seventh time in Auckland on 8-9 April 2011. The 2011 Forum brought together Ministers and leaders from business, government and academia to discuss key issues affecting the Australia-New Zealand bilateral relationship as well as our role in the region. There has been strong Ministerial representation at recent Forums. Rod McGeoch AM (a senior figure in Australian business) and John Allen (CEO of the New Zealand Ministry of Foreign Affairs and Trade) co-chaired the 2011 Forum. The date of the next Forum has yet to be announced.

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DEFENCE RELATIONS

Defence relations between Australia and New Zealand are close and longstanding. Formal expressions of our security partnership are found in the 1944 Canberra Pact and 1951 ANZUS Treaty. The ANZUS Treaty remains in effect between Australia and New Zealand, notwithstanding the United States' suspension of its ANZUS security obligations to New Zealand in August 1986 in response to New Zealand's anti-nuclear policy.

Australia's bilateral defence relationship with New Zealand is underpinned by the Closer Defence Relations Agreement (CDR). The 1991 (revised in 2003 and again in 2008) CDR provides a broad strategic framework for the bilateral defence relationship. A key objective of CDR is for both countries to work together effectively in combined and joint operations. A range of defence engagement activities supports the development of interoperability, particularly for operations in our region.

At bilateral talks in February 2011, Defence Minister Stephen Smith and his New Zealand counterpart Wayne Mapp commissioned a review to determine how to strengthen strategic cooperation and priority setting for ANZAC engagement, with a joint report due by 31 July 2011. The Pacific-focused Ready Response Force (RRF), initiated in September 2009, was finalised in March, with New Zealand Defence Force personnel to be placed at the Deployable Joint Forces Headquarters in Brisbane.

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POLITICAL OVERVIEW

Government

New Zealand is a parliamentary democracy in the Westminster tradition. Its executive arm of government is drawn from its legislature, which currently has 122 members. The Prime Minister (John Key, elected November 2008) is the Head of Government and must have the confidence of the House to govern. HM Queen Elizabeth II is the Head of State, represented by the Governor-General (Sir Anand Satyanand, since August 2006). Former Chief of Defence Force Sir Jerry Mateparae has been announced as New Zealand's next Governor-General and will be sworn in on 31 August 2011.

Parliament is summoned, prorogued or dissolved by the Governor-General. The Government's term of office is three years. It is compulsory to enrol to vote but voting itself is not compulsory.

Government in New Zealand differs in several ways from the traditional Westminster model. With the abolition of the Legislative Council (Upper House) in 1951, the New Zealand Parliament became unicameral. The most profound change occurred in 1993, when a referendum, held in conjunction with the general election, supported a change in the electoral system from First Past the Post (FPP) to Mixed Member Proportional (MMP), modelled on the German system. The first MMP election was held in 1996.

Under MMP, voters are given two votes - one for a local MP (an electorate vote) and one for a political party (a party list vote). Maori may choose to be on either the General or the Maori electoral roll. There are 122 seats (an overhang of two seats) in Parliament for the three year term following the November 2008 election. 70 members were elected on the basis of general electorate votes, and 52 elected from party lists. The party list seats are allocated to political parties in order to ensure that the total representation of those parties in Parliament reflects their percentage share of the party list vote. With the introduction of this proportional electoral system, the opportunity for minor parties to gain parliamentary representation increased. As a result, coalition and minority governments have become commonplace.

Recent political developments

New Zealand's National Party came close to winning an outright victory in the fifth election under the MMP system on 8 November 2008. They formed government in coalition, via confidence and supply arrangements, with the ACT Party (which won five seats), the Maori Party (five seats) and United Future (one seat). With National's 58 seats, this provided a clear majority of 69 seats in a 122-seat Parliament. Labour secured 43 seats and the Greens nine seats. Since the election, one Labour MP has left the party and now sits as an independent. Former Maori Party MP Hone Harawira resigned his seat on 20 May.

Murray McCully is the Minister of Foreign Affairs and Minster for Sport and Recreation (and the Minister for the Rugby World Cup). Tim Groser is Minister of Trade and Minister responsible for International Climate Change Negotiations. Ministry positions provided to the minor parties (two for ACT, two for the Maori Party and one for United Future) are all outside Cabinet.

Mr Phil Goff has been Labour Opposition Leader since the November 2008 election, with Annette King as Deputy Leader.

The next election is to be held on 26 November 2011.

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ECONOMIC OVERVIEW

New Zealand is a small open economy. Following a comprehensive reform program that began in the mid-80s, the New Zealand economy is now largely deregulated, and more internationally competitive. The production base has diversified to include a range of elaborately transformed manufactures, while maintaining a large export-oriented agriculture sector. Services account for over two thirds of New Zealand's real Gross Domestic Product (GDP), while manufacturing accounts for 19 per cent. In 2010, New Zealand's main merchandise export markets were Australia (23 per cent), China (11 per cent), the United States (9 per cent), Japan (8 per cent) and the United Kingdom (4 per cent). New Zealand's main sources of merchandise imports were Australia (18 per cent), China (16 per cent), the United States (10 per cent), Japan (7 per cent), and Germany (4 per cent).

The New Zealand economy grew strongly between 1999 and 2004 (averaging around 4.0 per cent) but started to slow from 2005. New Zealand went into recession in mid 2008, which was prolonged by the onset of the global economic crisis. According to NZ Treasury analysis, the NZ economy contracted by 2.1 per cent overall in 2009 but is now in modest recovery, after experiencing three consecutive quarters of economic growth. Positive export performances have greatly assisted New Zealand's emergence from recession, with Asian demand for key exports such as forestry, dairy and meat rallying in recent months.

The nascent recovery of the New Zealand economy during the second half of 2010 failed to eventuate due to flat consumer spending and the Canterbury earthquakes. Rebuilding Christchurch was a major objective of the New Zealand Government's 19 May Budget. NZ Treasury estimated the overall cost of the earthquakes at NZ$15 billion (eight per cent of GDP), with direct costs to the Government of around NZ$8.8 billion. The Budget established a separate Canterbury Earthquake Recovery Fund appropriation of NZ$5.5 billion over six years to cover infrastructure, policy and emergency response costs.

The Budget has trimmed funding for social and savings programs inherited from the previous Labour-led Government and "reprioritised" existing funding in Government agencies, with NZ$5.2 billion of savings to existing expenditure identified over the next five years. NZ$4 billion of those savings will be redirected to new spending in: health; education; and national infrastructure projects such as Ultra-Fast Broadband, rail, schools, and highway and electricity networks. The remaining NZ$1.2 billion will be used to reduce the Government deficit over the next four years. Changes were made to Government social programs such as KiwiSaver, Working for Families and interest-free student loans. The NZ Government's estimates for economic growth over the next four years are positive based on projected boosts to the economy by the Rugby World Cup, rebuilding in Christchurch and continuing high commodity prices. They forecast growth at 1 per cent of GDP in 2011, 1.8 per cent in 2012, soaring to 4 per cent in 2013 before dropping to 3 per cent and 2.7 per cent in 2014 and 2015 respectively.

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RUGBY WORLD CUP - 2011

The Rugby World Cup will take place in September-October 2011. The exclusion of Christchurch as one of the venues following significant damage to its infrastructure during the 22 February earthquake has disrupted preparations. Originally the "Wallabies" were to be based in Christchurch for the World Cup, but they will now move around the country.

Large numbers of Australians are expected to visit New Zealand over this period. The Pacific Islands Forum in Auckland in 2011 is timed to enable Leaders to attend the opening ceremony of the World Cup, which includes the first match between New Zealand and Tonga.

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CHRISTCHURCH EARTHQUAKE

A shallow magnitude 6.3 earthquake occurred 10km south-east of Christchurch at 12:51 on 22 February, 2011. This followed a deeper 7.1 magnitude earthquake that occurred in the region on 4 September 2010. Christchurch has continued to be affected by aftershocks, including a succession of strong aftershocks on 13 June 2011. This included two aftershocks measuring 5.7 and 6.3 which caused minor injuries and further damage to buildings and infrastructure.

The February earthquake killed 181 people and the combined earthquakes generated a total of 344,364 claims from New Zealand's Earthquake Commission. Damage to Christchurch remains significant, particularly in the CBD and eastern suburbs. A smaller cordon remains in force around parts of the Christchurch CBD, and a large section of the CBD is likely to remain under curfew for some time. Before the 13 June aftershocks, the New Zealand Ministry of Civil Defence had approved the demolition or partial demolition of 323 buildings in Christchurch, a large number of which are classified as heritage buildings. Power has largely been restored outside the CBD cordon area, but Orion Energy has cautioned that power cuts are expected during winter. The waste water system remains severely damaged, and residents have been asked to reduce water use. Community sanitation facilities are still in use.

Christchurch Airport has opened the first stage of its new terminal building with integrated check-in for both domestic and international flights, a new foodcourt and retail outlets.

Christchurch's recovery from the earthquakes was setback by a series of strong aftershocks during 13 June 2011. The strongest was of a magnitude 6.3 on the Richter scale. There were minor injuries and additional damage to many buildings, as well as to infrastructure in the Eastern suburbs. Christchurch Airport was re-opened quickly after the last of the major aftershocks.

All welfare centres have now been closed, but the Ministry of Social Development continues to provide Recovery Assistance Centres around the city and an earthquake helpline that provides information and emergency financial support remains in operation. In addition, a number of community hubs have been established around Christchurch. These are citizen-initiated efforts to assist local communities. Hot shower facilities are available in six locations around the city.

A Royal Commission has been established, chaired by Justice Mark Cooper, and will provide recommendations relevant to the construction of new buildings in the Christchurch CBD, which are expected to be announced later this year. Austrade is maintaining a register of Australian businesses as potential suppliers to the Christchurch rebuild, and will host a meeting later this year to discuss the opportunities which may exist for Australian businesses to supply skills, resources and technologies for the rebuilding of Christchurch and the restoration of essential infrastructure and services.

Australian response

The Australian Government donated A$5 million to the New Zealand Red Cross earthquake appeal. The WA Premier also donated A$500,000 to the New Zealand relief fund.

The overall Australian assistance effort involved over 750 personnel, including

-- About 500 police officers [from NSW, Qld, Vic, WA, SA, Tas, NT and AFP], including general police and 50 experts assisting in the identification of bodies.

-- About 220 search and rescue personnel.

-- A 75 bed medical field hospital involving twelve support staff.

-- A 24-person Australian medical team from Queensland consisting of emergency doctors, nurses, surgeons, anaesthetists and support staff.

-- Twelve ambulance peer support personnel from Ambulance Victoria.

-- Two temporary accommodation experts from Victoria to provide advice.

A temporary Australian 'Christchurch Consular Centre' at the Copthorne Commodore Hotel in Christchurch was established shortly after the earthquake and operated to assist with longer-term consular and other crisis-related issues until 14 April 2011.

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

The economic and trade relationship between Australia and New Zealand is shaped by the Australia New Zealand Closer Economic Relations Trade Agreement (CER or ANZCERTA), which came into effect on 1 January 1983. ANZCERTA created one of the world's most open and successful free trade agreements and two-way trans-Tasman merchandise trade has increased at an average annual rate of around 8 percent following its adoption. Based on trade in goods and services during 2010, New Zealand is now Australia's eighth largest trading partner and third largest investment market. Australia is New Zealand's principal trading partner (ranked number one for both exports and imports), largest source of foreign direct investment and largest destination for outbound investment.

In 2010, trans-Tasman goods and services trade was valued at around $21.3 billion. Key Australian merchandise exports to New Zealand (total value of $8.0 billion) included: medicaments (incl veterinary) ($351 million); computer parts and accessories ($324 million); passenger motor vehicles ($253 million), printed matter ($217 million) and refined petroleum ($201 million).

Merchandise imports from New Zealand (total value of $7.2 billion) included: crude petroleum ($1,418 million); non-monetary gold ($566 million); alcoholic beverages ($318 million); cheese and curd ($249 million) and paper and paperboard ($246 million). Two-way trade in services amounted to $6.1 billion in 2010.

Two-way investment between Australia and New Zealand stands at over $107 billion. New Zealand is the third largest market for Australian investment abroad, with Australia the largest investor in New Zealand. Over half of Australia's total investment in New Zealand is FDI, reflecting the high level of economic integration. Australian investment in New Zealand includes the banking, insurance, building, infrastructure, telecoms, energy and retail sectors.

Single Economic Market (SEM)

The last major Review of ANZCERTA (1995) focused on advancing "third generation" trade facilitation issues including eliminating remaining regulatory impediments to trade. The Australian and New Zealand Governments decided to take a strategic approach to shaping and guiding a Single Economic Market (SEM) approach to harmonise the two economies to enable business, consumers and investors to conduct operations across the Tasman in a seamless regulatory environment.

An across-portfolio approach (including with State Government treasuries) has been adopted to establish mechanisms to deal with differences in business and financial regulation so they do not create barriers to trade and investment. The approach is led by the Australian Treasury and the NZ Ministry of Economic Development. The key focus is on reducing transaction costs, lessening compliance costs and uncertainty, and increasing competition. In this context, the need to comply with international standards and evolving international regulatory standards and regimes is recognised.

Work on the SEM continues across a broad range of areas, including accounting standards, insolvency procedures, financial statements, anti-money laundering, anti-competitive conduct and consumer law.

During their meeting in Canberra on 20 August 2009, the Australian and New Zealand Prime Ministers committed to a Single Economic Market Outcomes Framework setting out principles to accelerate regulatory harmonisation and alignment in order to stimulate business and create jobs.

The principles of the framework include:
-- persons in Australia or New Zealand should not have to engage in the same process or provide the same information twice;

-- measures should deliver substantively the same regulatory outcomes in both countries in the most efficient manner;

-- regulated occupations should be able to operate seamlessly between each country;

-- both Governments should seek to achieve economies of scale and scope in regulatory design and implementation;

-- products and services supplied in one jurisdiction should be able to be supplied in the other;

-- the two countries should seek to strengthen joint capability to influence international policy design;

-- outcomes should seek to optimise/maximise net Trans-Tasman benefit.

A Trans-Tasman Outcome implementation Group meets each quarter to oversee and report on work to accelerate regulatory and business law harmonisation under the SEM.

TTMRA

The Trans-Tasman Mutual Recognition Arrangement (TTMRA) for Goods and Occupations came into effect in 1998 and substantially reduced regulatory impediments to trans-Tasman trade. The two basic principles of the TTMRA are that:

-- any good that may legally be sold in Australia may be legally sold in New Zealand, and vice-versa; and

-- a person registered in Australia to practice an occupation is entitled to practice an equivalent occupation in New Zealand and vice-versa.

Streamlined trans-Tasman Travel

The Prime Ministers of Australia and New Zealand have also committed to reducing remaining barriers at the borders to ensure that people and goods can move more easily between the two countries, including through effective air links. The objective is to end duplicative processes and create more streamlining, creating a "one-stop shop" for trans-Tasman travellers and freight.

The two Governments have in place a program to:
-- complete a joint feasibility study to examine the alignment and integration of automated passenger clearance systems (SmartGate) for Australian and New Zealand passport holders;

-- complete a joint feasibility study to investigate the possibility of implementing a new streamlined passenger clearance model (pre-clearance options);

-- improve bio-security screening and passenger processing both sides of the Tasman;

-- work collaboratively with the 'Airports of the Future' research project by Queensland University of Technology and Brisbane Airport Corporation in relation to the range of trans-Tasman facilitation options to examine further streamlining opportunities using transferred x-ray images.

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Last Updated: June 2011

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