EFFECTS FEARED.

Auckland Star, Volume LXV, Issue 162, 11 July 1934, Page 10

EFFECTS FEARED.

INJURY TO INDUSTRY. MANUFACTURERS' DISMAY. RECONSIDERATION URGED. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. Although there is a tone of qualified relief in an opinion passed on the new tariff to-day by the New Zealand Manufacturers' Federation, the organisation predicts that the results will he the immediate closing down of certain factories, the creation of further unemployment and additional "cuts" in wages. The federation asks for reconsideration of the proposals by the Government. The manufacturers appreciate that the Government has been strong enough in the national interest to resist the pressure of certain powerful sectional interests in the direction of an even more drastic general lowering of the tariff. "It is apparent," runs the official statement of the federation, "that the Government dees recognise to some extent the value and national importance of the manufacturing industries, and admits that any such lowering "of the tariff as would injure these industries must be injurious also to the Dominion as a whole. It is difficult, however, to reconcile this view with the fact that so many tariff cuts are proposed which, if enacted, will admit a lately increased volume of imports, which, in turn, must mean a reduction of the demand for corresponding goods made by New Zealand factories and a Consequent reduction in the number of workers who can be employed. ' The logic of' this appears inescapable. "Closing Some Factories."...

"The manufacturers had hopedftthat their industries might be enabled to expand and to employ' -many-• more workers, but as the result of this there will be a contraction, and this will affect all those ■ who • are' indirectly dependent upon-industry, and on the spending power, of. the workers, as well as on those directly concerned. These proposed changes, in the tariff will result immediately in the closing of some factories (where the protective tariff has been, abolished or drastically reduced), and in .other factories heing obliged to put off a substantial number of workers on account of more imported goods and fewer of their own goods being sold. "In other cases it is evident that the effect 6f tariff reduction must be to force a'further wage reduction. This is clear, for instance, in one very large industry in which the ruling rate of net profit is less than 3 per cent on output,?but which has suffered a cut of 5 per cent in the tariff. Obviously, in such a. case a corresponding reduction in price can he effected; only by. means' of a reduction in wages., , , . ,

"The. manufacturers therefore feel that the Government. should-be asked to give' further; consideration ' to ; the effect which-inany :of these- reductions ■would .ha ve._ upon the industries concerned, through in jury or destruction to them, uponithe Dominion as a whole. Interpretation of Ottawa. "Moreover, the .Manufacturers' Federation definitely dissents. from, the view that these proposed reductions are necessary for compliance with'the Ottawa agreement. ;> It is , evident that the New Zealand. ■ Tariff Commission has adopted a particular interpretation of the agreement,. but it. should be distinctly recognised .that this is not by' any means the only possible or reasonable interpretation." In Australia, for instance, an equally competent authority, the Commonwealth Tariff Board, has declared that the. meaning of article •S is something quite different in many respects' from the meaning apparently attached to it by the New Zealand Tariff Commission. It should be carefully noted that, even after these reductions had been made, to comply with the Ottawa agreement, the Australian tariff on British goods was still on the aveiage considerably more than twice as b high as the old tariff in New Zealand, but if this new Australian tariff satisfied all the requirements of Ottawa, it is obvious that the old New Zealand tariff must always have been a long way below the maximum which the Ottawa agreement allows.

"If the terms of Ottawa are satisfied by a tariff twice as high as ours, it is inconceivable that exactly the same formula can require in our tariff any reduction whatever." '