One dollar

Once again the prospect of a common currency for New Zealand and Australia is being promoted. It ain’t gonna happen, at least not in the foreseeable future.

Opposition Leader John Key said last week that the idea should be looked at again, then Treasurer and Deputy Prime Minister Michael Cullen rubbished the idea. All of this was in the run-up to the Australia New Zealand Leadership Forum, an annual gathering favoured in particular by neo-conservatives and leaders of big business.

Miraculously, just as the conference was beginning, a new poll was released showing that 49 per cent of New Zealanders favour a shared dollar, up from 29 percent in 2000. 41 per cent of Australians also support the idea.

For the second time in a week I suspect a study is promoting questionable results. Here’s why:

Australia has made it clear that any common currency would mean New Zealand abandoning the NZ dollar and adopting the Australian dollar instead (as Prime Minister Helen Clark has just reminded people). When Kiwis talk about a common currency, they mean a new one. So, if the survey question had asked, “Do you favour adopting the Australian dollar instead of the New Zealand dollar,” I doubt that it would’ve had 49 percent support. Actually, I doubt it would’ve had 29 percent support.

If New Zealand adopted the Aussie dollar, NZ would lose all control over monetary policy. Interest rates, for example, would be set in Canberra, and New Zealanders would have to put up with it, regardless of economic conditions here.

The countries, despite their similarities, are very different. Australia sells minerals and similar commodities, for example. Our inflation rate to last December was 2.5 percent, while it was 3.3 percent in Australia. Our interest rates were also much higher.

The main result of adopting the Aussie dollar is that New Zealand would become, in effect, a vassal of Australia, and it would then probably be inevitable that New Zealand would become part of Australia. There are some in both countries who want this to happen, though they’re minorities. New Zealand can, in fact, become part of Australia at any time, should it choose to do so, as I’ve discussed before.

But right now, there’s no compelling reason for New Zealand to adopt the Aussie dollar, and certainly no need for us to become part of Australia. No matter how much big business and neo-cons might want—and benefit—from a common currency, it just won’t get the backing of New Zealand voters if it means abandoning the Kiwi dollar and adopting the Aussie dollar.

That won’t change no matter how many times the Opposition brings it up or how long they keep it on their wish list. It’ll only change if and when there’s a reason for ordinary Kiwis to want it to happen. You can bet your bottom dollar that won’t happen any time soon.