Seeking opportunities and facing challenges: Murray McCully gives an overview of New Zealand's international priorities for 2016.

• Author: McCully, Murray
• Position: Essay

New Zealand's relationship with Australia is vital to its economic prosperity. Ties between the two countries, both at a governmental level and people-to-people, are close. They face similar opportunities in the Asia-Pacific region--and similar challenges. New Zealand and Australia have much to gain from peace and stability in this region. In the wider world New Zealand is playing its part as an elected member of the Security Council, and has worked assiduously to make the council more effective. It has also continued to work with its partners in the Pacific to make the region more resilient and sustainable.

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New Zealand has no more important partner than Australia. It is New Zealand's largest economic partner. New Zealand audiences know why Australia matters, but I suspect the significance of the New Zealand market is not fully recognised in Australia. That reflects the reality that New Zealand is 'only' Australia's fifth largest export destination. Yet it should be appreciated that we are especially important to some big sectors of the Australian economy. Seventeen thousand Australian businesses export to New Zealand each year. That compares to 8000 exporting to the United States and 5000 exporting to China. New Zealand is Australia's single largest export market. What that indicates is that New Zealand is especially important to Australia's small-and medium-sized enterprises, across all states and all sectors.

Tourism is booming in Australia, just as it is in New Zealand. Most visitors are coming from New Zealand. New Zealanders are the largest source of inbound visitors to Australia, with more than 1.2 million visiting every year.

Australian businesses and shareholders have roughly A$100 billion invested in New Zealand. New Zealand has A$55 billion invested in Australia. This is a product of the single economic market that governments on both sides of the Tasman have worked to progress for more than three decades.

There are around 550,000 New Zealanders living in Australia. We can argue over who owns Crowded House, Russell Crowe and Quade Cooper. But we think of the chief executives of three of Australia's four big banks as New Zealanders. It is not only the New Zealanders at the big end of town who are making a difference. Most New Zealanders in Australia are pulling their weight. For instance, they earn more than the average Australian--and therefore pay more tax. It may surprise to know that more people are currently moving to New Zealand from Australia than going the other way. The movement of people reflects the free-flow of goods, services and capital, and is good for both our countries.

We are both Asia-Pacific nations, with regionally focused outlooks--and for good reason. Some of our major exports, such as dairy, wine and meat, are in high demand in Asian economies. To put it plainly, we sell the products that the emerging 'middle classes' in Asia want. By 2020 the number of 'middle-class' consumers in Asia is expected to triple to 1.75 billion people. This presents a massive opportunity for both New Zealand exporters and also our tourism operators.

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But our focus on the Asia-Pacific region goes beyond trade and extends to political and security considerations. Instability in the region now affects New Zealand's interests more directly than ever before. The regional organisations designed to build political, security and economic co-operation, such as APEC and the East Asia Summit, are vital for New Zealand. These organisations build the region's collective sense of well-being, trust, and resolve to address challenges to regional stability and prosperity.

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