Queensland is poised to change its trade rules tomorrow in a move New Zealand has labelled a "little bit crazy".
Brisbane city Photo: 123rf
Urgent Trans-Tasman talks have taken place, but the policy - to favour local bidders for public contracts over all others, with a weighting of up to 30 percent - looks set to go ahead.
Executive director of lobby group Export New Zealand Catherine Beard said the policy was not good.
Catherine Beard Photo: Business New Zealand
"This policy's a really bad policy, it's going to make it really hard for New Zealand exporters to compete in the Queensland market," she said.
She said although outright retaliation by New Zealand was one option, it would be "not the best look".
The 'Queensland First' policy:
- Gives local suppliers (within a 125km radius of the work site) a weighting of up to 30 percent on any tender lodged for a significant procurement
- Requires at least one local or regional supplier and one other Queensland-based business to be invited to quote or tender for every procurement offered
- Requires the use of local subcontractors and manufacturers on infrastructure projects above $100 million
Economic Development Minister Simon Bridges has written to Queensland's state government about the policy, but has refused to release the letter to media. Queensland said it had briefed the New Zealand High Commission and was preparing a reponse.
Trade Minister Todd McClay's office would not say what legal advice he had over whether Queensland's move was legal under New Zealand and Australia Closer Economic Relations (CER).
Mr McClay told the ABC this month the policy was a "bit crazy". He held urgent talks with his federal counterpart and afterwards did not rule out retaliation against Queensland exporters.
Neither minister would comment.
"It's definitely a genuine concern," Brisbane economist Gene Tunny said.
"I'm a former Australian Treasury bureaucrat and this sort of thing, it's just hard to fathom why Queensland ... is making difficulties for the federal government in the trade arena."
Federal Trade Minister Steven Chiobo called it a "dumb and disastrous" policy that jeopardised huge trade with not just New Zealand, but also Chile, Japan, the US and Korea.
In a column last week in Brisbane's Courier-Mail he demanded Queensland's Premier Annastacia Palaszczuk dump it.
"Since declaring she will 'no longer be bound by free trade agreements', the Premier has said trade 'doesn't make any sense' ... The Premier is trying to ride a protectionist wave sweeping parts of the world, but in the process she risks wiping out Queensland jobs and businesses," Mr Chiobo wrote.
His office told RNZ it had not had any recent contact from Queensland and expected the policy would go ahead.
Ms Palaszczuk singled out New Zealand when she first signalled the move in July, with an argument that state taxes should fund jobs in Cairns and not Christchurch.
Instead, pressure could be applied at the World Trade Organisation level, where Australia was keen to join a procurement deal that New Zealand was already a part of, she said.