It's good to be back in New Zealand.
Although this is my first official visit as Prime Minister, I have already met Prime Minister Helen Clark many times here in New Zealand and in Australia and we have become good friends.
For an Australian Prime Minister, the relationship with New Zealand is always a core priority.
For both our governments, the relationship between our countries is always a core priority.
And so it should be.
Ours is a unique relationship In part because of the history we share, summed up through the word ANZAC.
In part because of the work we do together in the region and the world.
In part because of the sheer depth of engagement with each other.
More fundamentally, this relationship is unique because it goes far beyond the relationship between governments.
The depth to the relationship comes from the extraordinary ties between our business people, our sports people, our academic communities and because of the approximately one million people that travel in each direction every year.
So governments on both sides of the Tasman have to recognise that in the case of Australia-New Zealand relations, we don't run the show.
We are just one strand of the relationship.
But today, when I met Prime Minister Clark, we discussed how we can do more to strengthen our strand of the relationship.
And there were three main topics we discussed.
First, our economic relationship.
Second, our roles and responsibilities with the Pacific Island countries, as we both head to Niue for the Pacific Islands Forum.
And third, how we can work together on the global challenge of climate change.
Even Closer Economic Relations
First, I would like to talk about the economic relationship.
And I would like to do that against the backdrop of the new Australian Government's economic policy approach.
Australia, like other nations, faces tough economic times ahead.
The global economy is going through some turbulent waters - financial market instability; rising oil and food prices; and slowing growth in some major developed economies.
Most recently, we have seen the disappointing breakdown of the Doha Round of world trade talks in Geneva.
At a time of economic uncertainty, an ambitious outcome from the Doha Round would have sent a strong signal that governments around the world remained committed to freer trade.
The challenge for us now is to lock in the progress that was made at the recent Ministerial Meeting and make another push to resolve the remaining differences.
Australia and New Zealand want the same things from the Doha Round.
We both want to secure the reforms on offer, particularly in locking in substantial reform to world agricultural trade.
The Doha Round is too important to let the possible gains slip through our fingers.
In the face of these global economic uncertainties, the Australian Government's response is to make sure we are able to cope with these challenges by:
* responsible economic management to put downwards pressure on interest rates and inflation;
* a major economic reform program, including deregulation to create a seamless national economy; and
* investing in our human and physical capital - to keep us competitive in the long term.
We are also firmly of the belief that the best economic prospects for Australia lie in closer economic engagement with the wider world.
And a central element in that is even closer economic engagement with New Zealand.
This year is the 25th anniversary of Closer Economic Relations agreement between Australia and New Zealand - CER.
CER is one of the world's oldest trade agreements.
It is also widely and rightly seen as one of the most successful.
It has played a vital role in nurturing the vibrant and integrated economic relationship that our two countries enjoy.
Since CER was signed, New Zealand's exports to Australia have grown at an average of 7.7 per cent a year.
Overall trans-Tasman trade has grown at over 8 per cent a year in the last 25 years.
Last year, two-way trade in goods and services was worth 21.5 billion Australian dollars.
CER has helped to forge a trans-Tasman business community of which each of you are members - indeed shareholders.
It is useful to remind ourselves of what the world looked like when the CER was finalised and signed in 1983 by the Hawke Labor Government on the Australian side:
* trans-Tasman relations were recovering from Australia's 1981 re-discovery of the lost art of underarm bowling
* agriculture remained firmly locked-out of the multilateral trading system, with the Tokyo GATT Round having failed to include farm trade in any meaningful way;
* in our region, ASEAN was composed of just five members, serving a primarily political role as a bloc to prevent the spread of communism to south-east Asia; and
* in the wider region, China's economic explosion had not yet begun.
Against this backdrop, Australia and New Zealand signed a free trade agreement that remains one of the most comprehensive, liberal and forward-looking in the world.
The question today, is where to now for Australia, New Zealand and CER?
In global terms, CER has delivered an impressive level of integration, but more remains to be done.
Our Ministers met just last week in Melbourne to discuss the next steps for CER.
The challenge before governments on both sides of the Tasman is to drive forward the creation of the Single Economic Market, building a seamless economy between Australia and New Zealand of more than 25 million people.
That is why we welcome the strengthened engagement from the Clark Government in working with Australia to finalise an Investment Protocol to CER, which we hope will reduce compliance costs for Australian and New Zealand investors.
Australia wants to be ambitious here - our aim is to reduce the amount of screening that currently occurs in relation to investment flows between the two countries.
In addition to the Investment Protocol, we want to conclude negotiations for a new tax treaty.
Australia's Treasurer, Wayne Swan, recently invited the New Zealand Treasury to make a submission to the Australian Government on the mutual recognition of dividend imputation - or franking - credits, which I know is of concern to New Zealand business.
Furthermore, we need to develop a regime which facilitates the portability of retirement savings across the Tasman.
This measure goes to the heart of removing disincentives to the free movement of people across the Tasman by allowing individuals to consolidate their retirement savings.
The Australian Government looks forward to working with the New Zealand Government to complete this work, and then take on the next reform challenges.
The Council of Australian Governments (COAG) is another area where we can do more.
Since being elected last November, the Australian Government has put a lot of effort into getting the state and federal governments to work together more cooperatively through COAG.
One focus has been on harmonising regulatory frameworks.
I want Australia-New Zealand relations to plug into this work.
Wherever possible I want to look at how we can extend to New Zealand the work we are doing in the COAG Business Regulation and Competition Working Group on national regulatory arrangements.
It is all about making it easier for businesses to operate across the Tasman.
The Trans Tasman Mutual Recognition Arrangement, concluded in 1998, shows how much this type of integration can offer.
The Mutual Recognition Arrangement overcame in one fell swoop a number of regulatory barriers to the movement of goods between our countries and people wishing to pursue their occupations on both sides of the Tasman.
I also want our governments to look at how we can expand CER outwards.
The most important of these is our work in negotiating a new trade agreement between Australia and New Zealand - negotiating as CER - with ASEAN, representing ten economies.
The importance of this arrangement is underscored by its economic weight - the ASEAN-CER market would have a combined GDP of 2.3 trillion US dollars, which is more than twice as large as India - at 1.1 trillion US dollars - and nearly three-quarters the size of China's 3.3 trillion dollar economy.
It is a complex negotiation but I hope that the last obstacles can be overcome in the coming weeks when Trade Ministers meet in Singapore.
On an even larger scale, Australia is committed to seeing a comprehensive, region-wide trade and economic agreement spanning both sides of the Pacific, and we welcome APEC's current discussion of an FTA for the Asia Pacific.
As two founding members of APEC, Australia and New Zealand have a stake in taking forward this ambitious goal.
Australia also supports the efforts of the East Asia Summit to deepen integration through its study on Comprehensive Economic Partnership in East Asia (CEPEA).
New Zealand has also been an active player in the so-called P4 grouping - with Singapore, Chile and Brunei - which could provide a building block towards a broader APEC-wide economic agreement.
With a range of regional economic initiatives being discussed and pushed forward, the Australian Government believes that we need to begin to have a debate about how we want our region to look in the decades ahead.
That is why in June I proposed that the region should begin to discuss the kind of regional architecture we want by 2020, what I've termed an Asia-Pacific Community.
We need to make sure that all of the major players are engaged in an open conversation about the region's future - the United States, China, Japan, Korea, Indonesia, Malaysia, Singapore, Australia and others - including India.
And we need to be able to conduct continuous dialogue on any and every challenge we might face - from climate change to economic liberalisation, to security cooperation, to natural disaster management.
As our partner in CER, I am very keen to hear New Zealand's views about this idea.
I have appointed an envoy to visit regional capitals to take soundings about an Asia Pacific Community.
And I have asked him to make New Zealand the first visit in his program to engage the government as well as the business and academic communities.
Our Pacific Neighbourhood
The other important element to our relationship is how we work together with our Pacific colleagues to ensure a stable, sustainable and prosperous region.
Since coming to office, I have urged closer coordination between Australia and New Zealand on our regional policy settings.
My reason for wanting this seamless coordination is simple.
The Australian Government wants a new era of cooperative relations with the Pacific Island countries.
And to achieve that we need to work closely with our partners in New Zealand.
When combined, Australia and New Zealand are by far the single biggest influence on developments in the Pacific.
But with this influence, comes responsibility.
Responsibility to do what we can to promote sustainable economic development in a region that is largely performing poorly against key development indicators including the United Nations' Millennium Development Goals, when much of the rest of the developing world has been improving.
Nearly 18,000 children each year in the Pacific region die in the first 18 months of life, many in the first month after birth.
Maternal mortality rates have worsened in some regional countries over the last 15 years.
About 1,000 women die annually from complications of pregnancy and childbirth.
There is mixed progress towards universal primary education, but the region as a whole is not on track to achieve this.
There are many more examples I could give.
We must work with our Pacific friends and partners to improve these development outcomes.
In March the Australian Government outlined its new approach to the Pacific in the Port Moresby Declaration.
We are committed to a new era of cooperation with the Pacific Island countries, exemplified by the Pacific Partnerships for Development.
The Partnerships will over time cover all aspects of our development relationships with partner countries, including infrastructure, basic health and education, improved public sector management and community based development.
Partnerships are based on a concept of genuine partnership - partnership that recognises responsibilities and contributions of both parties and their mutual accountability for better development results.
We will be listening to our Pacific Island partners, not dictating to them.
They have the ultimate responsibility for the policies and programs which will deliver development to their peoples.
We will be working closely with them to achieve these outcomes.
We will be also be working with other donors, especially New Zealand, but also including the World Bank, the Asian Development Bank, the European Union, Japan and emerging regional donors.
Another ambition Australia and New Zealand share is to deepen consultation with our Pacific Island neighbours on a region-wide economic integration initiative called PACER-plus.
Trade Ministers from the Pacific met in late July and agreed to further consultations on the proposal in 2009.
We hope PACER-plus can provide new energy for closer economic integration in the Pacific.
Our approach to PACER-plus is to have an integrated trade and development assistance approach.
So we will be looking at incorporating capacity building into the agreement.
We will be working closely with New Zealand and the Pacific Island countries to take this initiative forward.
Together with you, the business community, we will be seeking new and innovative ways to collaborate in the Pacific to promote new business and private sector activity, activity that will increase economic and social opportunity for the region's citizens.
Climate Change: the Next Chapter?
As we look at the Pacific, we have to recognise that climate change will be the biggest challenge we face in the decades ahead.
I have described climate change as one of the greatest moral, economic and environmental challenges of our age, and it is therefore fundamental that Australia and New Zealand build on a common heritage of hard work to tackle this menace.
We cannot sit back and wait for others to tackle the problem on our behalf.
We have to be brave enough to realise the imperative of action.
And I would like to publicly recognise the leading role New Zealand has taken on climate change globally.
If we are to influence the global response to climate change, we must also act locally.
And we both have decided to act.
There are several areas where close cross-Tasman cooperation is necessary.
First, on adapting to the effects of climate change, Australia and New Zealand have an important role to play in the Pacific to help our neighbours - especially low-lying atoll nations - deal with the implications of climate change.
Climate change will be the theme of this week's Pacific Islands Forum, where I will outline to Pacific leaders some of the first funding decisions from Australia's $150 million International Climate Change Adaptation Initiative.
Climate change mitigation is also an area where Australian and New Zealand technology and expertise will be in high demand.
As you all know, both governments are also working on the development of emissions trading schemes.
Australia's Carbon Pollution Reduction Scheme Green Paper was released on 16 July 2008.
Extensive community consultation is now underway ahead of the release of a White Paper on scheme design and exposure draft legislation before the end of the year.
In developing our ideas, I have been pleased by the close consultation and collaborative work between our respective policy advisers and scientists.
Such close cooperation has ensured that no barriers exist between our respective schemes that would prevent future linkages, should the Australian and New Zealand Governments decide to make them.
This is no accident. Our governments have cooperated closely to ensure that the schemes can be linked.
As we look to the future, and the international linkages that will be required to reduce both global emissions and the costs of doing so, continued close Australian-New Zealand collaboration will be needed.
In the meantime, there are other pressing challenges, demanding our close cooperation.
Next year, in Copenhagen, the world will seek to conclude a new, landmark multilateral post-2012 outcome.
At Copenhagen, the international community must conclude an ambitious, comprehensive outcome that would see all countries better act on climate change.
Australia and New Zealand are working closely to pool our ideas, strategies and negotiating weights to influence for the better the outcome of next year's conference.
Conclusion
I want to see Australia and New Zealand working more closely together.
I want to see us working more closely together bilaterally, driving towards the Single Economic Market.
I want to see us working more closely together regionally, in a joined-up approach to the challenges of the South Pacific.
I want to see us working more closely together globally, striving towards an outcome for the Doha Development Round, and on the profound challenges of climate change.
Our two great countries remain unique forces for good in the world.
When Australia and New Zealand work together, we can achieve more than the sum of our parts.
The government I lead will play its full part in ensuring that, together, we cooperate even more closely into the future to realise that potential.