Coronavirus: Australia and New Zealand consider opening borders to create 'Trans-Tasman bubble'

Australian PM Scott Morrison and New Zealand PM Jacinda Ardern met in Sydney last February. PHOTO: REUTERS

SYDNEY - Australia and New Zealand are close neighbours with a shared history as former British colonies, but political relations have often been strained.

In recent years, the two countries have sparred on issues such as climate change and migration policies.

The overall relationship remains strong although proposals to formally bring the countries closer, such as through a shared currency, have been greeted with scepticism.

But all that appears to be changing with the Covid-19 pandemic.

Australia and New Zealand have been among the world's most successful countries in curbing the spread of the coronavirus. This is allowing their governments to explore the possibility of allowing travel between the two neighbours, even while they both remain cut off from the rest of the world.

The creation of a "Trans-Tasman bubble" could boost tourism, trade and business ties. But it could also help to deepen the overall relationship.

As of Thursday (April 30), Australia, which has about 25 million residents, had 6,752 cases and 91 deaths. New Zealand, which has about five million residents, has had 1,476 cases and 19 deaths. Both have introduced strict lockdowns and have significantly reduced their numbers of daily new cases. On Wednesday, Australia had eight and New Zealand just two.

Australia's Prime Minister, Mr Scott Morrison, recently revealed that he and his New Zealand counterpart, Ms Jacinda Ardern, have been discussing the possibility of reopening travel soon, as their battle against the pandemic has had "similar trajectories".

"If there is any country in the world with whom we can reconnect with first, undoubtedly that's New Zealand," Mr Morrison said.

New Zealand's Deputy Prime Minister Winston Peters also this week backed such a proposal, expressing hope that a travel "bubble" between the countries could be created soon.

"We're not going to eradicate (the coronavirus), but we're beating the crap out of it, and so is Australia," he said.

This reciprocal travel proposal is set to boost tourism and trade between the countries.

Until recently, for instance, New Zealand had been the largest source of tourists to Australia for about 20 years. But, in February last year, official data showed that China overtook New Zealand.

The Covid-19 pandemic is now likely to restore New Zealand to the number one spot.

New Zealand could also see a welcome influx of Australian visitors.

The Australian Tourism Industry Council, which represents the national tourism sector, said travel from Australia to destinations such as Europe and the United States was unlikely to resume within the next year. But, it said, New Zealand could fast become an attractive destination for Australians keen to take their first post-pandemic holiday abroad.

"New Zealand is probably going to be the most attractive and most likely international destination to open up for Australia over the medium term," the council's executive director, Mr Simon Westaway, told ABC News.

"There's some good quarantine and customs arrangements in place and you'd think just with some health management over the top, that market could probably open up more quickly."

Business ties could also benefit from the creation of a travel bubble. The two countries already have a wide-ranging, 37-year-old free trade deal.

New Zealand's share of total Australian trade - now about 3.5 per cent - could increase if the two economies both resume full activities more quickly than other countries. Both countries have already begun moving to ease their lockdowns.

The close working relationship between Mr Morrison and Ms Ardern during the pandemic also reflects a significant change from their previous tense ties.

Ms Ardern has heavily criticised Canberra's recent moves to deport all foreigners who committed crimes and were sentenced to 12 months or more in prison - a shift that has led to some New Zealand-born residents who had lived in Australia since they were children being deported.

As recently as February, Ms Ardern said Mr Morrison was "testing" the friendship between the two countries. During a visit to Sydney, she told him: "Do not deport your people and your problems."

But that standoff appears to have been forgotten, at least for now. Since the outbreak of the pandemic, the two leaders have been speaking weekly.

The next significant leap for the neighbours would be a shared currency, which has at times been suggested by various leaders on both sides of the Tasman Sea.

The proposal was last seriously considered in 2012, when a joint study found it was not practical because it would lead to a "loss of autonomy over monetary policy and exchange rate flexibility".

But there may now be greater willingness to reconsider a monetary union, particularly if both countries have shown that they can mutually benefit from operating in a bubble.

Join ST's Telegram channel and get the latest breaking news delivered to you.