As the world’s most remote advanced economy, and with limited resources and low visibility in international financial markets, New Zealand would see benefits in closer integration with Australia, which the two countries’ Productivity Commissions have just been commissioned to explore. From the Australian Productivity Commission’s website (Joint Australian/NZ commissioned study):

The Australian and New Zealand Productivity Commissions have been asked to jointly study the options for further reforms that would increase economic integration and improve economic outcomes. The study is due to commence shortly, with a final report submitted to both governments in December 2012.

I can’t wait for further details. Will the Commissions consider currency union and even fiscal union, by which New Zealand would become a state of Australia, an opportunity it had but passed up in the 1890s? It appears our new federal speaker Peter Slipper supports this option, based on this 2006 report in the Sydney Morning Herald (Push for union with NZ):

AUSTRALIA and New Zealand should work towards a full union, or at least have a single currency and more common markets, a federal parliamentary committee says.

It wants a closer relationship between the six Australasian colonies that formed the Commonwealth in 1901, and the errant one that chose to go it alone.

The committee chairman, the Liberal Peter Slipper, said the world had changed since then.

Other MPs on the committee include Malcolm Turnbull, Nicola Roxon and Daryl Melham. Their report said: “While Australia and New Zealand are of course two sovereign nations, it seems to the committee that the strong ties between the two countries – the economic, cultural, migration, defence, governmental and people-to-people linkages – suggest that an even closer relationship, including the possibility of union, is both desirable and realistic.”

Any move to closer relations with New Zealand should only take place after a hard-headed assessment of Australia’s national interest. Given New Zealand’s relatively poorer economic performance, any fiscal union would no doubt see large transfers of money across the Tasman.