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New Zealand country brief

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 occasionally, 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 (2012). 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.

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 647,000 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 and Foreign, Trade and Defence Ministers meet regularly. New Zealand Ministers and government officials participate with their Australian federal and state counterparts in relevant COAG Council meetings, which span the domestic policy agenda and support the Council of Australian Governments (COAG).

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, Solomon Islands (RAMSI) and Afghanistan.

The Australia New Zealand Leadership Forum (ANZLF) is an important annual private sector-led event which brings together a diverse group of leaders from business, government, and community sectors to contribute ideas on developing the bilateral relationship. The meeting examines and debates economic, defence, political and social ties between Australia and New Zealand as well as broader strategic issues of domestic and international significance. The latest Forum was held in Sydney on 27 November 2013, and brought together ministers and business and community leaders from both countries under the theme "CER to Asia: Australia and New Zealand – The Next Thirty Years". The forum was co-chaired on the Australian side by Rod McGeoch AM, Chairman of Sky City Entertainment Group Ltd, and on the New Zealand side by Andrew Thorburn, Managing Director and CEO of the Bank of New Zealand.

The Australian and New Zealand Prime Ministers hold an annual Leaders’ Meeting, as part of a commitment by both governments to the importance of the relationship and an intention to strengthen links further, especially through deeper economic integration. The most recent Australia New Zealand Leaders’ Meeting was held in Sydney on 7 February 2014, and included a joint ministerial meeting.  Joint Statement by Prime Ministers Abbott and Key February 2014

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.

The Pacific-focused Ready Response Force (RRF), initiated in September 2009, was finalised in March 2011, with New Zealand Defence Force personnel stationed at the Deployable Joint Forces Headquarters in Brisbane.

In accordance with the recommendations of the 2011 Review of the Australia-New Zealand Defence Relationship, a framework for closer consultation and engagement on defence has been implemented since 2012.

In November 2012, Defence Ministers agreed to new initiatives to enhance practical defence cooperation including cross-crewing of Navy vessels, New Zealand participation in TALISMAN SABRE 2013 with embedded observers, and increased dialogue on regional security issues through a 1.5 Track Security Dialogue.

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 121 members. 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 Prime Minister (currently John Key, first elected in 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 (Lt Gen Rt Hon Sir Jerry Mateparae, since 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.

New Zealand has a Mixed Member Proportional (MMP) electoral system, based on a German model. 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 121 seats in the current Parliament for the three year term following the November 2011 election. There are 70 electorate seats, including seven representing Maori electorates. An additional 51 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 MMP the opportunity for minor parties to gain parliamentary representation increased. As a result, coalition and minority governments have become commonplace. A referendum on the electoral system held at the 2011 general election returned a solid 58 per cent endorsement of  the MMP system.

New Zealand's National Party was re-elected and came close to winning an outright victory in the last election on 26 November 2011. The party won 59 seats, and with confidence and supply guaranteed by the ACT Party and United Future (which won one seat each), achieved a majority of 61 seats in a 121-seat Parliament. The National Party also secured a looser confidence and supply support arrangement with the Maori Party (three seats). The arrangement allows National to pursue its election platform (such as on partial privatisation of assets) and gives the Maori Party freedom to vote as it wishes. The Opposition Labour Party secured 34 seats, the Greens 14 seats, and New Zealand First won 8 seats.

Murray McCully was reappointed as the Minister of Foreign Affairs. Tim Groser was reappointed Minister of Trade.

The next election is due to be held by late 2014.

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 agriculture sector, which accounts for 70 per cent of exports. Services account for over two thirds of New Zealand's real Gross Domestic Product (GDP), while manufacturing accounts for 12 per cent. In 2012, New Zealand's main merchandise export markets were Australia (21.4 per cent), China (14.9 per cent), and the United States (9.2 per cent). New Zealand’s main sources of merchandise imports were China (16.3 per cent), Australia (15.3 per cent), and the United States (9.2 per cent). 

GDP growth of 2.7 per cent is forecast for 2014.

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 per cent following its adoption. New Zealand is Australia's seventh largest trading partner, eighth largest source of foreign investment and third most important destination for Australian investment abroad. In the March quarter 2013 China surpassed Australia for the first time as New Zealand’s largest market for both imports and exports. On an annualised basis, however, Australia remains New Zealand's largest goods trading and services trading partner and largest source of foreign direct investment and largest destination for outbound investment.

In 2012, trans-Tasman goods and services trade was valued at around $21.2 billion. Australian merchandise exports to New Zealand totalled $7.4 billion, while merchandise imports from New Zealand in 2012 totalled  $7.3 billion) Two-way trade in services amounted to $6.5 billion in 2012.

In 2012 Australia's total investment in New Zealand was A$77.4 billion; while New Zealand's total investment in Australia was A$28 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 (A$44.3 billion), 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 in 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 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) was adopted to establish mechanisms to deal with differences in business and financial regulation that might impede trade and investment. The approach is led by the Australian Treasury and the NZ Ministry of Business, Innovation and Employment (MBIE). 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.

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:

A Trans-Tasman Outcomes Implementation Group, led in Australia by the Department of Treasury, 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:

Updated February 2014