The Australian and New Zealand Productivity Commissions identified about 20 policy initiatives to promote beneficial economic integration between the two countriesHowever, removing one of the largest barriers for business - double taxation - was not among them.
"This is fundamental to economic growth of this country. It should be at the level of non-negotiable for future discussions," Mr Mason said.
It was widely understood that removing the tax barriers was opposed by Australian officials.
Mr Mason believed there was research and opinion on the issue, essentially blocking any moves.
Double taxation meant that returns on investment for New Zealand companies operating in Australia were significantly less and discouraged investment.
At a time when the Government wanted businesses to expand and bring back dollars to New Zealand, maintaining the double tax regime was counterintuitive, he said.
New Zealand businesses were closely held, meaning investment decisions were felt in the pocket of owners.
"If it is affecting your pocket, you have a different view on returns than a bunch of independent directors sitting in Wellington, making decisions."
Growth in income could come only from selling goods and services to other economies.
"Otherwise, we are churning the same dollar," Mr Mason said.
BusinessNZ chief executive Phil O'Reilly said the study did not contain any "big bang" solutions.
"This is not surprising, given that many significant issues have already been resolved through decades of co-operative work while other potential directions, such as a currency union or a customers union, have been discarded."
The joint work by the productivity commissions added value to the ongoing dismantling of barriers between our two economies, he said.
But like Mr Mason, Mr O'Reilly was disappointed the double taxation of company income had not received more attention in the interim report, as it was the largest unresolved issue for business in both countries.
Companies based in Australia or New Zealand, with operations in the other country, had their profits taxed twice, since neither country recognised the other's system for offsetting tax credits.
"This is a sharp disincentive to transtasman business and is an obvious issue for the productivity commissions to address. Hopefully, this issue will feature in the final report in December."
Research commissioned by BusinessNZ, outlining the scale of double taxation, had been made available to the commissions. The study found that a system of mutual recognition of imputation and franking credits would bring significant net benefit to both economies over time, Mr O'Reilly said.
The draft document released by the commissions concluded that Closer Economic Relations (CER) initiatives had benefited both countries over the past 30 years. Barriers to integration remained, particularly regulations affecting services trade and investment. Tackling those was important but would be challenging, notwithstanding the similarities between the two countries, the commissions said.
New Zealand Productivity Commission chairman Murray Sherwin said CER had been a successful venture but there was more that could be achieved.
