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ANZAC money could be on the cards

Published: 12:23PM Thursday April 05, 2012 Source: ONE News

A shared currency for Kiwis and Aussies is being discussed again.

The chairman of New Zealand's productivity commission told TV ONE's Breakfast programme today that the leaders of New Zealand and Australia are having "another kick" at the idea of a shared currency.

Murray Sherwin said a joint dollar is part of a raft of proposals the NZ Productivity Commission has just released and asked for feedback on.

"The proposal comes out of the meeting between the two Prime Ministers in January, and we have the 30th anniversary of CER (Closer Economic Relations) coming up, the CER was a very big step in terms of integrating with Australia", said Sherwin.

When Prime Ministers John Key and Julia Gillard met in January, they reaffirmed a strong commitment to "closest possible relations" between the two countries and agreed the productivity commissions should study options for further reforms.

Sherwin told Breakfast there are several positives that could come from sharing a currency with Australia.

"It takes out the transaction costs if you're involved in trade on both sides of the Tasman. You're in one currency, it makes it easier for people to move backwards and forwards, it allows trade to flow more readily. That's the up side," he said.

"Successful and fast growing economies tend to be those that are better integrated with the rest of the world."

Sherwin said Australia is New Zealand's biggest trading partner, and both nations should look at how to make trade more effective.

The downside

But Sherwin said things could get complicated when there is a difference between performance in the two countries.

"Currencies move around, driven by the forces that are on the economies concerned - so in Australia's case, it's driven a lot by hard commodity prices, so that's why the Australian dollar has been so strong of late," he said.

New Zealand's economy is also moved by commodity prices, he said.

"In our case it's probably more likely to be dairy prices that move our currency around. It's fine if they're moving in the same direction and both commodity prices are moving in the same direction but not if there is a divergence."

He said even in Australia now there is tension between commodity and non-commodity states with the minieral-rich Western states booming while the seaboard side struggles.

The Productivity Commission is seeking feedback on its proposals.