TARIFF REDUCTION.

Auckland Star, Volume LXIV, Issue 42, 20 February 1933, Page 8

TARIFF REDUCTION.

DAIRY BOARD SCHEME.

MANUFACTURERS INDIGNANT.

"DRAGGING OTHERS DOWN."

The following statement on the Dairy Board's tariff suggestions was issued by the New Zealand Manufacturers' Federation to-day: — The New Zealand manufacturers deeply regret that the outburst of the Dairy Board compels them to speak plainly, but they wish the tanners to understand that their criticism is directed, not against the farmers, but against the board which has allowed the farmers to drift into their present position. The dairy industry appears to have drifted blindly into a predicament that threatens to be ruinous. The British market is suffering from a glut of butter imports. The importation of butter into the United Kingdom from 1927 to 1931 was:— THOUSAND CWT. Foreign. Empire. Totals. 1P27 'MS» 2829 5S1!) KiliS 34511 2057 0113 l-)2!t 374.-. Hd.-i.-J 081)7 11130 3751 3070 CS22 1031 4071 4000 SO7l New Zealand's exports of butter alone increased: From (1929) 10.13 thousand cwt. To (1932) 2155 thousand cwt. Meanwhile Australia's shipments in the same three years were more than doubled—from 87,000,0001b to 185,000,0001b. Tlie result has been a disastrous glut in the British market. Who is to blame? The only body in New Zealand responsible for watching the situation, forecasting supply and demand, and guiding the dairy industry is the Dairy Board. Unfortunately, the Dairy Board has hopelessly failed in its duty to warn and guide the dairy industry. Now, in panic, the Dairy Board has issued a manifesto calling upon the Government to take action against New Zealand's manufacturing industries so that they may share the disaster into which the dairy industry itself has drifted.

"Costs Not the Difficulty."

Of what earthly use to the dairy fanners of New Zealand, facing ruin through a glut in the British market, could be a reduction in the New Zealand tariffs? Ninety-eight per cent of imports from Britain used in farming are already absolutely free of Customs duty. It is true that the artificial high exchange has, in effect, constituted a special tax of 25 per cent on all imports, both British and foreign, and both imports which are free of Customs duty and imports subject to the tariff. But since, of all imports from Britain used in farming, 98 per cent are free of Customs duty and subject only to the new 25 per cent exchange, if farmers wish to reduce their costs they should attack the exchange which is adding to their costs rather than the tariff which is not. ' Nevertheless, it is clear that costs are not the difficulty -with the dairy farmers to-day. They and their competitors have created such a glut of butter in the British market that their industry cannot be made to pay, even with, all the protection and subsidies which New Zealand dairy farmers Jiave been granted to offset their costs. They have received a preference of 15 per cent under the British tariff; they have received a subsidy of 25 per cent through the medium of inflated exchange; they have received a subsidy to relieve them of their rates; they have received a subsidy to assist them in the purchase of fertilisers; they have received assistance from the rest of the people of New Zealand in a dozen forme; aiid the only result is that to day they are in a wbrse plight than ever before. . The Local Market. To any sane man it must be obvious that if any industry produces more goods than the market can absorb, that industry is bound to suffer heavy losses unless some new market can be found to take the surplus. The British market is glutted with butter. The only other market available to the New Zealand dairy industry is the New Zealand market itself. Probably 100,000 New Zealanders are unemployed to-day; and the destruction of our moderately protected manufacturing industries would add scores of thousands more to the ranks of the unemployed. If New Zealand dairy farmers want a better market at their very doors, they should support New Zealand manufacturing industries, which, if enabled to expand, can abeorb more and more labour, afford a livelihood to more and more New Zealanders, and thus increase more and more the demand for butter and other farm products in New Zealand. Ottawa Agreement. It is believed by some that the Ottawa agreement was broken by the inflation of exchange against Britain—in other words, by placing an exchange tax on all British imports. It is now suggested by the Dairy Board that the Ottawa agreement can be mended by reducing the tariff on those classes of British imports which are subject to Customs duty. But how would Britain's position be restored if the Customs duty was removed from half her exports to NewZealand (only about half are subject to duty at all) while the exchange tax of 25 per cent remained on all British imports, including those which have never been taxed under the tariff? The behaviour of the Dairy Board resembles that of a drowning man who blindly clutches at anyone else who happens to be within reach, dragging him also down so that they drown together. Because the dairy industry is threatened with disaster through overproduction or over-exportation of butter, that is surely no reason why the other industries of New Zealand, the manufacturing industries and their tens of thousands of workers, should be dragged also into ruin. The question now is not that of saving the dairy industry, or the manufacturers, or any other section, but of saving as much as possible of the economic life of New Zealand.