CUSTOMS TARIFF

Press, Volume LXX, Issue 21213, 11 July 1934, Page 12

CUSTOMS TARIFF

New Scale.of Duties EFFECT OF COMMISSION'S REPORT Reduced Protection for Many Industries The changes In the New Zealand customs tariff proposed ny the Government after consideration of (he report el' the Tariff Commission were placed before the ITc-bkc of Representatives last evening' by the Minister for Ctis'oms (the lit. Hon. J. G. Coatcs). Of 44!) i'crus in the tariff schedule 105 lire affected by the Government's proposals. Protective duties (as they affect the British prefcren'ial tariff) are abolished for some items and rrdisced for other.!. Very few are increased. The industries; chiefly affected by reduced protection concern (among others) motor-car bodies, radio sets, soap, boots and shoes and leather manufactures, glass botiicv, stationery and paper, furniture and upholstery, leather dressings and polishes, baking powder, biscni's, confevtioncry and thtco'a'.cs and cement. Cigarettes, pianos, and musical instruments, fancy and sports goods, jewellery and engines for tractors are to be admitted at lower rales of duty. More protection is given porcelain enamelled east iron baths, gas meters, and ground or crushed maize. Higher excise duties arc to be charged on tobacco, while revenue duties, both customs and excise, arc alio imposed on cigarette papers.

The Main Changes Summarisim; Ihe changes proposed, Mr Coatos state.: The Government, has decided to make a number of alterations 111 lli:> tariff, the chief of which, so fee a j they affect the British preferential tend', are: Protective duties abolished: Certain stock foods. Electric cooking and heating appliances. Nails, n.e.i. Iron and steel pipes and iitlinys therefor. Linseed oil. White lead in oil. Motor-car bodies. Radio sets in cabinets. It has bout decided that radio sets et foreign manufacture are to be charged at 115 per cent if imported butt up, whether in cabinets or not. Oniy the parts not built up are to be admitted at the old general tariff rate of 25 per cent. Reduced Tariffs Protection has. been reduced; From 25 per cent, to 20 per cent.:— Preserved and dried milk. Sap. Hatj, caps, and millinery. Boots and shoes. L athrr manufactures. G-as; boltLs. S ation. ry and paper, manufactured. 0.l engines. Galvanised iron manufactures, metal of"C3 furniture, etc.: Fr.ra 25 per cent, to 15 per cent.:— Tinware. Furniture and upholstery. From 20 per cent, to 15 "per cent.:— Paints and varnishes. Biscuits. Frem 20 per cent, to 10 per cent.:— Eaidng powder. " 'taster pulp :-heels. Metal and stove polishes. Leather dressings and polishes.

tured in New Zealand. As honourable members are aware, on the last two occasions en which there was a perioral revision of the larui a comim.--suai was set up to report to the Gov - ennnent. O'.vmj to the changes that take place in manu.acurin.'; and Imiltn« conditions, both in ana cut ot the Dominion, it is necessary that liieic should be a periodic review, or what may in other words be called a "tariif The last tjenera! revisions took place in l!)2l and lf)2i', :o that in the ordinary course anothc r revision could not have tony bc«.n postponed. The Ottawa Agreement Under the Ottawa agreement of 1932 New Zealand, in '--amnion wi.h the other Dominions, w,,s committed to hold an enouiry j.Uc . i" tariff, and, it necessary, to revise • '•. in accordance with cvrtain cxphts ;y stated principles. Our undertake; I was mat pn>tceiion aeainst Unit ■< iCine'dom products should be at or ii I only to industries which are er ;onaUy assured of sound eppo-', i,.ties for success," and, l'ui-ihcr. t at protection should be on a leve'' to enable the United Kingdom producer to compete "on the basis of the :"kiti\c cost ot economical and efficient production.' Those are the Ottawa word:-. But it will, I am .sure, bo ir-ivrr.,n!ly conceded that, apart at together from any Ottawa ectnmitments, they are words that state precisely the principles which, in our own ititeiests and from our own viewpoint, should govern the consideration of the tariff. Sugr:er.;i(us have from lime to lime been made in certain quarters in this country to the effect that undue delay ensued in carryiti'.; out New Zealand's part of the; Ottawa agreement. These sur: ", r c.-,lions are absolutely without foundation in fact. The truth of the mailer is that the detailed tariff revisions which wc undertook ro make, and the removal of the surtax from United Kingdom floods, were carried thrciiMh this Parliament on the lirst day on which the British Government agreed that we cculd make those details known. On my return from Ottawa the House was Riven immediate opportunity of putting the agreement into effect. Parliament assembled four days after mv return; and, indeed, at. that sta-jo we held up the revision of the tariff for a week or so, after we were ready, and at the cabled request of the British Government. It is true (hit some dclnv occurred before the ccrr.mie'don of euiiuiry was set up, but v.'lr 1 was the reason [or this? A;;.-iin, it wn ; ar the explicit request of the British Government, which was anxious that its manufacturers should have every opportunity cf presenting ;:irir ea-". Y>. t in spite of these plain facie, the chn-'c ol delay, of "not playine. the tsame," and .so on, has been repented by a few oersons for the sake of controversy. Hcnourable members, and the coun'rv i-ietierallv, v , ill see hew baseless the einr-e is.

."Uixcelliuiecus Ilcduclicns: Wooden deors: From .'3O per cent., or 4s a doer to 25 per cent. ' Confectionery and chocolate: 27-', per cent, to 20 per cent. Apparel: From 271 per cent, to 25 per cent, or 20 per cent., according to kind. Whole maize: Frern 2s per cental to Is 6d per cental. Jams, jellies, and preserves: From 2d per lb to Id per lb. Vinegar: From Cd a gallon to 3d a ga'len. C meat: From Is per cwt Io fid per cwt. Matches, wax and wooden: Is petgross of boxes to fid per grass of boxes, with corresponding reductions for larger containers. The following reductions have been made in revenue duties: Reductions from 25 per cent, to 20 per cent..: — Carpets. Fancy goods, sporting requisites, jc-w.:-llery and platedwarc. Tobacco pipes, pouches, cigarette holders and cases. Other reductions:— Toilet preparations: From 3.1 per cent, to 2a per cent. Pianos and other musical instruments: 20 per cent, to 10 per cent. Ungincs for tractors: 10 per cent, to free. Cigarettes: 32s Dd o thousand to 25s (id a thousand. Chief Increases The protective duties iiave been increased for.--Ground or crushed maize: From free to 2s per cental. P.jrcclain enamelled cast iron baths: From 20 pc.- eerd. to 2a per cent. G : i L i meters: From free to 10 per cent. Increase.; have also been made in revenue duties for:---Cigarette papers: From 2.1 per cent, ad valorem to 1 Id for each GO cigarette papers. Motor vehicle chassis and trucks: From 10 per cent, to 15 per cent. Altogether, Hie New Zealand customs tariff includes 4-lfJ items: of these, some 314 are not touched by the recommendations of the commission nor by the proposals of the Government. In some form or other, the remaining 10,1 items are brought under consideration. Government's Op.'nion Mr Coatcs'y full statement was as fullows:--The complete overhaul of New Zealand's customs lariff is one of the nai.n tasks which the attention of Parliament v.; to be directed during the session. For reasons that, are well understood there is no alternative but. to ask the House to give formal consent at. once to the resolutions so thai the new rates of duty may operate without prior notice; but, while this is so, Ihe Government has no intention or forcing the pace or of avoiding the fullest discussion, and facilities will be provided accordingly. The revision of the customs tariff is always a difficult matter on account of the complexity of the interests involved. It affects all classes of the community—for example, primary producers, manufacturers, employees, trade, and consumers- generally. It r ecesciitatcs the amassing of an enormous amount of detailed info'-maliou concerning the nnjiy lines of g00d.5 that arc imported into or manui'ac-

Work of Commission Praising the work of the members of (.!:" commission, Mr Coatcs states: — They discharged their undertaking with infinite earo an I capacity. In-cidc"iilaJlv--ui'id in so controversial a matter this is a r.otcworlhy feet tbcy were able to bring down a unanimous report excepting on grain and moloi- vehicles. The former includes wheat and flour, and to those and io motor vehicles I £ hull refer in due course. The recommendation-; of the commission are accepted by the Govcrnr.icn!.—Mini, is to say, truy are accepted not, finally and in all de!ads as submitted, hut as the: basis of the Government's decision-: and our view has been that only (; n tlv; clearest and most ' übsiaiitia.l ground should there be any d-parturo from the lesfer of the rc-oir.ir.i n .'a'ir-ns of the commission. Having raid Una much, and lost (hero bs. any mi'-under:-'.ru:di,vi, I should remind l he lIou:v- tint the com-nh:-.-,t-u v; ,-; set up. in the words used m the forma.! instrument, oi' its appointment,— "To enquire Into the customs I arid' of New Zealand, and Io recommend Lor consideration by the Government tny alterations theriin. .." Thc:;a words make clear the nature of I he responsibility thai was cutrus'ccl to the tnembeis of the tend' cemmission. They were to enquire and to recommend. Final responsibility for altering the tarff was not conferred upon the commission. It was retained by the Government—it was retained, that is to say, by Parliament. New Zealand has not adopted, and we do not propose to adopt, the procedure that, lr.ai been followed in certain countries, whereby control of tariff rates is vested in a tariff board. Our view is that final responsibility should remain with the legislature. And it is in accordance with that view that, we brine, to Ihe House the report of the Tariff Commission and the recommendations of fhc Government thereon. Tariff and World Conditions A significant paragraph in the early part of the report of the Tariff Commission reads:—"The recommendations in the present report arc based on the assumption that the present wort), depression, and the trading restrictions arjsing peculiarly out of it, will pass, and that world economic life and international trade, will be restored in substantially the same form, and governed by subsbant.ially the same principles, as prevailei before the depression." I quote this not to call it in question or to provoke a debate on it, though if is a paragraph which .could i'.ruvitle ample material for useful (lis-

cussion, but I mention it to illustrate the fact that there are factors of pressing importance which must be "taken into account, when we are considering these mat tor.-', and factor:-; which by the nature of things could not have be'-*p within the contemplation of (lie Tariff Commission when it \v;;s sitlin:,'. It is impossible to consider the tariff without flavin;; regard 1o world conditions and the alterations which have taken place during recent years in the cominei'ci;! and economic policies cf th'; United Kingdom and other principal tradin;; nations of the world. The most slrikine. characteristic is the development of a policy of nationalism based on the idea of more self-suf-ficiency. With this object in view, one nation after another has adopted devices by which trade is regulated to a much greater extent than obtained before: tin: period of world depressien. The world is in a state of fin::. Changes of perhaps far-reaclrne; nature are lakiny plr.ee before our eyes. Tsvory day Ihe probability of res!orin c .; (ho old pro-war world ltoivs more remote. It is an inescapable fact lint we are moving on towards a new order. As i.o precisely wliat. tlia.t ordor will be, none of us can hon'estly pretend to be dogmatic. We can only do our best to keep ourselves informed of the 1 rends and to keep in .step with developments. I'ariors to Consider Vc-r the purposes of the Tariff Comnvssion's r.'pari, it wiv-. of cours", impossible that it should foretell the I'uluro course of events. It could not, any more than any of us can, safely assume that this or that change will bo permanent. Instead, it did the useful and honest thin%<. as I have shown in the cuio!.di<i:i from its report, of making perleeily clear and explicit to iiself and In ethers tire assuinption ea which ihe report is based. ; ml it i. the simple assumption that ini: rna'.lonal trade will return to substantially its former or edition. It is well that this assumption should lie made clear. And it is important to say that its corollary is that, to the. 'extent Ihat if does not prove to be warraided. we may. and indctel mud m some: instances, review some specilis eeccmmendaliooe. .Ae.sin. in savin:; this, I mai-.e it clear thai, e.sceot to th'e e..trnf. that can lie clearly siiov. n 10 be warranted, we will adhere* to tin:' recommendations of the corn misi.ion. New- »a!aed, although a country with a relatively small population, lias a very larre external trade:, upon which it is vitally dependent, to discharge it; ee.-'ernal obligations and to carry on its national life The tariff, therefore, neesl be considered not only from the point of view of encouragin':! production lor local consumption, but also of devoiopmcf markets abroad for our exportable surplus. Another and very important matter which must be borne in mind when our tariff is under review is live revenue required to carry on the government of the country. Aspects of Treatment Tile main aspects of our iisea! poie:v can therefore be dealt with under tour head-: I. The development of local industry. 11. The maintenance and ;. xten-i m of market.; for our products;. ll.'. The enceurasenient of iulre-Eui-pJie trade. IV. Thi.* cb'yinin,; of revenue. In at lea. t two important re.-p..c'.s Ihe present revision of the* tari!T is undertaken under conditions different Jrorn lko.se which existed when precious alterations have taken place, viz fa) The Ottawa Agreement of 10:;:!; <b. the world-wide depression in trade and industry f.heou:;h which practically all nations are now passing; and <e)" 'he necessity of obtaining new markets for our exports and maintaining e.xistiii:; markets. These factors are n'-resrardv taken into consideration when reviewin;: the whole problem.

policy of quotas or quantitative regulation. It is possible that. New Zealand may yet be driven, as a result of action taken by other countries, to adopt the last-named policy in dealing with its import trade, but in the meantime the most satisfactory method suitable to New Zealand by which assistance may be Riven to industries is by nieans of the tariff. 1 Industries to be Protected j I now propose to deal with the question whether assistance by way of tariff protection should be given; to anv industries, and, if so, the industries "to whicli such assistance should; be accorded. Owing to the higher cosls of production of many articles in New Zealand than in ihe United Kingdom, and most other countries which send goods to this Dominion, it is clear that" if some tariff protection is not given many industries will be unable, under existing conditions, to operate on a satisfactory basis even when allowance is made for the advantage received by such Industrie through freight, etc., from abroad. When it is ri. membered that in the. protected industries of the country the number cf persons engaged and the value of production are so large it will be seen that it is advisable that certain industries should receive protection. Generally speaking, it may be stated that only those iudiu-.l.ries which are reasonably roiled to our conditions should be iirelected. In determining such industries Ihe following points should receive consideration:— i.-ii The market, available. iij i The number of persons employed or likely to be employed, and tin.-" amount of capital invested. (c) Whether local raw materials are utilised and to what extent. id) The proportion of the facte"'; cost which is due to the wages oi (. liipleyers. icl The advantages enjoyed bv local industries through freight and other charges en finished hnpoiged competing articles. if) Whether the industry manufactures a full range of artieic-: in a ••la; . required to meet the public demand. .•-,) The frequency of chang.es in Ihe naiuie <if the article produced. ih) Whether the industry has operated succe,,.fullv under protection. iii Whether there is reasonable competition from outside New Zealand. iji The- extent to winch vested interests have arisen under existing tariff's. With re: peel lo llie:e matters. I would offer the following observation.-: 7»l:ukct Available It does not. seem likely that in Ihe near future any considerable market will be found outside New Zealand fo the products of our secondary industries. Hence, generally speaking, the market will be limited to the local demand. It is obvious that where there is only a small demand for an article it would not, except in very e:.ci ptional cases, be icouomie to assist the manufacture of such an article bv a protective duly. It. is impossible to state in advance what would b- the limit <>f demaml wm ranting protection in i very ca.-.e or (vi n in any group of ease,;, 'ibis mu t be ill cided in each ca e on it.» incuts. Number of Employees and (. apilal Invested 'l'he number of employees likely to be engaged in any iridu.Sry is, ol cour.se a very important (actor m determining whether protection should be granted lo that industry. This )- especially Ihe ease at. the pres-nt time, owing to the existing largo uumb.r ef unemployed, it mil's however, Ic borne in mmd that the mere fact that an industry might employ a large number ef pcr-gius is not. in itself, a warrant for the granting of protection at an abnormally high rale. for example, protection has for some year-, been granted to the motor-body buildin; 1 industry at a relatively high rale, and yet. during the last, six years only I 0: per cent, of the bodies )or motorcars used in the Dominion have I een re.anutac: urtd locally. This is. due, inter alia, to the frequent, change, in model and design of motor-car bodies making efficient production j n New Zealand impossible. It is understood that the position with respect to this industry has beep accentuated by the recent changes in design of motor-ear bodies. Another point of importance in tin:, connexion is the cost to the community of the tariff encouragement. If, for example, in an industry utilising imported materials Ihe total of the wages paid to the employees in that industry during any period is less than the amount of duty that would hi.ve been paid if all the goods (including those made in New Zealand) had been imported, it is clear thai, unless there are some other special reasons, protection should not be accorded to such an industry. This appears to be the position with respect to the linseed-crushing industry. The question as to the amount, of capital required to provide nuchinery and plant is also ot great importance, especially where fhe market for the product is limited.

The policy of the Govei :mv nl with reference to the tariif may be stat.-d as under:—

I: IXvciopnvnt of local industry:- - <1) To accord prolretion onlv (r> those industries regarded as r;ui'< ib!<> to New Zealand;

(2) To Rr.ant protection only to the extent necessary to enable local inausfries to function efficiently; (3) To f.ivc effect to the Oltawa Agreement so far as it relates to the New Zealand tariff;

f4) To give employment to our people.

(5) To keep down costs of living and costs of production.

(B> To admit raw materials for primary and secondary industries at as low a rate as possible. 11. To use the tariff for the purpose of maintaining and extending markets abroad for our products. Iff. To encourage intra-Empirc trade. IV. To obtain revenue. I now proceed to refer to these factors in greater detail:—

I. Development of Local Industry Notwithstanding objections which may be raised, it must, I think, be recognised that New Zealand has now reached a stage of industrial development where regard must bo had both to the primary industries and to those secondary industries which are conducted on an economic basis. So that a general view may be obtained of the extent of production in New Zealand and the relation between that of primary and of secondary industries, the following figures are quoted: Value of Production for Year ended March 31, 1033. £ Agricultural, pastoral, dairyin;;, poultry, and bees 'primary industries) ~ 52..100,000 Mining, fisheries, and forestry . . . . .1,G'00,000 Factory production (secondary industries) . . 17,700,000 Building and miscellaneous 10,000,000 Total .. .. £03,1)00,000 In these figures the production of butter factories, cheese factories, meat freez-r: r ; works, etc., is included with the primary industries, and also the value of the agricultural and pastoral products used by the secondary industries. The total value of the production of secondary industries, including the cost of materials used by them and shown above under the production of primary industries wa.s about £27.000.000 for the year 1032-32. The figures of secondary-industry production include those of certain sheltered industries such as newspaper production, gas and electricity production, which are not subject, to competition from abroad. There are, of course, other industries outside this category, and the Questions arise as to the means by which and the client Io which as.sistan.ee, if any. should be accorded to them. Assisting industries Various methods have in the past been adopted in different countries to assist their industries—for instance, tariffs, subsidies, embargoes, and, more recently, quotas or quantitative regulation of imports. Hitherto in New Zealand the method of assisting industries by means of subsidies or embargoes has been adopted to only a vvvy limited extent, and there "are strong objections to both these courses. The granting of subsidies is open 1o the objection that, if there are many such industries and if they are on a large scale, the amount of taxation required Io provide the subsidy would be a heavy burden on the revenue. Further, if this system were generally adopted, many difficulties might arise as to the amount of subsidy under varying conditions and the allocation of the subsidy, whether, for instance, ii. should be paid only to efficient units or to all units irrespective of efficiency. There is another point that deserves consideration, and that is the reaction of other countries to such a policy. In the Government's view the adoption of such a policy generally would not be in the best interests of NewZealand, and should be limited to exceptional cases. With respect to embargoes, these are open to the objections that they tend to create internal monopolies by the elimination of com-; petition from abroad, and that they may provoke retaliation by other] countries affected. The only other i principal substitute for tariffs is the

Use o£ Local Raw materials

The advantage received by mi industry by freight and other chan.es on competing imported goods is also a matter for consideration. Wlrrc goods are bulky or heavy I his advantage is often sufiieicnt protection for the local industry—for example, tariff protection li: s never been accorded to ordinary budding bricks, yet they arcnever impelled. It. is considered that n similar advantage exists with respect to lire-bricks, fireclay, and soda crystals. Kiinge of Articles Manufactured It is important that where an industry receives protection it should manufacture a full range of the articles to which such orolection is accorded and for which there is a considerable demand. The best illustration that can be given of this is the woollen textile manufacturing industry. This industry has received protection for many years with respect to all articles containing wool, except, certain unions, linings, etc. With Hie exception of. silk mixtures, the industry has, I understand, generally speaking, adopted the policy of manufacturing only all-woo! products. Notwithstanding this, the Government is advised that during the ycrrs 192". to 1032 fabrics made from wool mixed with other materials and known as "woollens'' or "worsteds" were exported from the United Kingdom to New Zealand to the following extent:— £ 1020 .. .. ISKIOOO 1.02.9 .. .. 213.000 1920 ... .. 105 000 103.'; .. .. 14-!. 000 1932 - .. ' .. 158,000 This means that, although the industry received protection tor these products, they have not met the public demand by manufacturing thern. In.

The production of raw materials in New Zealand is the result of the employment of labour and capital. The extent' to which such raw materials are uilised by an industry is therefore a point for consideration in determining whether protection should be accorded to it. Illustrations of such industries are those manufacturing cement, boots, clothing, etc. The woollen industry is. to an extent, also one to which this applies, but if is worth mentioning th.-.l the purchase of wool by the local woollen-mills during the last few vears accounts for only about' 2\ per cent, of the total New Zealand clip. If the proportion of the total labour cost to the factory cost of an article is relatively low, this is a factor which must be borne in mind when considering whether protection should be granted. Among industries in which kbour cost is relatively small are those manufacturing white-lead and Iron and steel pipes. There are, of course, other reasons for the action which is proposed with respect to particular products—e.g., white-lead and linseed oil are the chief bases from which 1 lie trade: man makes his paint. Again, iron and steel pipes are required for large developmental work, and it is considered that protection • hereon sbruld, it required, follow the establishment' of a basic iron and steel industry.

my opinion, an industry, to justify the retention of protection for goods, must be prepared to make any classes ol those goods lor which there is a considerable local market and which can be manufactured on an economic "it"will be remembered that in 1027, with a view lo enabling these fabrics to be manufactured, the duty was taken off raw cotton and cotton yarn of British origin. The Government is of opinion "that if protection is to be maintained en textiles of this nature manufacturers must be prepared to make them. If. after the expiry ol a period of, say, two years, the manufacture has not been undertaken on -i satisfactory basis, the Government considers that the question of withdrawing the protection with respect to those goods should then be gone into. It. is. of course, recognised that it may in; more satisfactory if the manufacture of these products were undertaken bv firms other than those engaged iii the manufacture of pure woollens. The general point to be made,_ however- and its reasonableness will be evident—is that. when protection is "ranted there is an obligation on local enterprise to take advantage of Ihc opportunity thus given: it must, withm a reasonable time, "deliver the goods," and this is the sine qua non of the continuance of protection. Frequency of Changes It. i. clear that in n country like Mew Zealand, where industries are more or less limited in scope, articles wiih respect to which there arc frequent changes in design .or construction as a result of scientific- or industrial development in other countries -ire not usually suited for economic production here, and hence do not warrant protection. The moter-ear body building industry falls within this catcVi'h'>re an industry, notwithstanding that it has received protection in the pas!, has been ur.able to operate on a proiHablc basis, this is prima facie a reason why protection should not be continued. Competition frrmi Out.-idc New Zealand The Government recognises that it is only bv competition either internal or external that the public can be assured that, prices will be kept at a proper level. It is, of course, generally desirable that where there is an efficient, local industry jt should receive protection from unreasonable competition from combines or trust? operating outside New Zealand. It. is likely thai if the local manufacturer I wore driven out. of business the price of the article to the consumer might be considerably raised. It is a matter of history that many industries carried on in New Zealand to-day have come into existence under the shelter of larifTs devised for revenue purposes. This is not of itself any argument for or against the continuance of protection, but the vested interests created must, suoject to the Ottawa Agreement, be considered in determining whether or not protection should bo granted. i:\trnt of Protection | 'J'he view of the Government i:- that I protection should be granted to local i Industrie.; only to the extent necessary [ >o enable them to function coonomicjallv and efficiently. Broadly speaking. II he rate of protection should be deter- ! mined bv considering the rnanufac- ' tared cost and selling-prices of New i Zealand-made goods in relation to the I landed cost of imported competing articles under norma! conditions. So far as articles manufactured in the. United Kingdom are concerned, the question is. atfected by art'ele !', of the OtI i.Ywa Agreement. With this 1 propose ! to deal hereafter. ! Among the factors to bo taken into 1 consideration in fixing the amount of i protection on any class of articles arc the extent to which imported raw mai It rials are used and the advantage aojeniiug to the industry by freight and 'other charges on imported finished goods as compared with the freight. "tc.. on raw material:,- used in New Zealand and Ihe distribution charge s in the Dominion on the locally made : gOOd/. Fffect of Ottawa The articles, of the Ottawa Agreej nif-nt which affect the aspects of New ! Zealand tariff policy with which I am ! now dealing arc numbered 7 and 0: j Article 7 is as follows: | "His Majesty's Government in New i Zealand undertake that protection by : tarifrs shall be afforded against United | Kingdom products only to those industries which are reasonably assured of :cund opportunities for success." It will be seen that the policy embodied in this article is outlined above for determining the industries to which protection should bo granted, and it is unnecessary to enlarge further upon it. Article 8 of the agreement is as follows: — "His Majesty's Government in New Zealand undertake to institute an enquiry into the existing protective duties, and, where necessary, to reduce them as speedily as possible to such a level as will place the United Kingdom producer in the position of a domestic competitor—that is, that the protection afforded to the New Zealand producer shall be on a level which will give the United Kingdom producer full opportunity of reasonable competition on the basis of the relative cost, of economical and efficient production." Production Costs The Government recognises that, owing to the numerous factors affecting the question, it is not possible to compare production costs in two countries on a purely arithmetical basis. The production costs of different manufacturers, even in the same country, are not always compiled on lines admitting of satisfactory comparison. It is also a fact that the articles concerned are not always directly comparable, and differ in certain details. Prices of raw materials also fluctuate. These and other factors must be borne in mind when any comparison of costs is being made. As is pointed out by the Tariff Commission in its report, the various articles of the agreement

'ould receive a generous interpretation. In other words, they should be considered from a practical point of view, with a view to giving the United Kingdom manufacturer a reasonable opportunity of competing on this market and at the same time to enable cflicicnt and economic industries in the Dominion to operate satisfactorily. It must be understood, however, that, nr. the chief factors for consideration under article S are the production costs, the only industries to which the provisions of this article can be applied arc those which supplied to the commission the necessary information. Any other modifications proposed are based on other considerations. I should perhaps direct attention to article 0 of the agreement, which is as follows: "His Majesty's Government in New Zealand undertake that United Kingdom producers shall have an opportunity of putting forward their views in connexion with the enquiry referred to in article 8 hereof." It is evident from the report of the commission that the provisions of this article have been carried out. Employment It is particularly important that at the present time every opportunity through' industrial activities should be explored for the employment of our people consistent with the carrying on of industries which are likely to assist in (lie recovery of the Dominion. It is, of course, not. in general of advantage to this or any other country that an industry should be fostered by tarifi protection where the direct and indirect, cost of that protection is greater than the benefits likely to be derived by the community.

Ccsts of Living- and Production Owing to the depressed conditions through which we are passing it is even more essential now than formerly that a determined effort should be mach to reduce costs of production and costs of living. It is only necessary to refer to the dairy industry and other primary industries to recognise the necessity for this course. The I a riff, as proposed, makes very considerable reductions in this respect. There is a matter m this connexion, to

which, the Tariff Commission has drawn attention—viz., the burden ot the tariff on the bui;aing industry. Jt is important both for town and country that building costs should be reduced as far as possible. The measure now before the House provides tor important changes along these lines. it is the view of the Government that raw ' materials for the primary and secondary industries of the counfrv should be admitted either free ot dutv or at as low a rate as possible. If therefore, goods ere manufactured in New Zealand which are the raw materials for other important industries, it is essential that, they should be available at the lowest possible cost, and that tariff protection, where required, should be kept at a minimum. 11. Markets Abroad As I have already indicated, the use of the tariff for the purpose of maintaining and extending markets for our products is one oi great importance at the present time. Great changes have taken place in international trade during the last few years. Before the de-. prcssion tariffs were the chief means by which countries regulated their imports. Now, however, control is exercised by means of quotas, embargoes, licensing systems, exchange controls, and other devices, as well as by tariffs. This is due to the development of intense nationalism, which is a feature of the policies of some of the principal nations of the world. Some countries especially debtor countries, finding it almost impossible to get their goods over the high tariff walls in other countries, felt forced, by way of reprisal and in an e.'.'ort to reduce their consequent unfavourable trade balances, to impose higher duties on imports, or, where the- z were ineffective, to resort, to the more drastic methods'already mentioned. The tendency towards relf-sufficicncy is particularly evident with respect to agriculture" in certain European countries. According to information available on the subject, it seems that the most recent tendency is towards the negotiation of agreements which aim at b.-'ianeing the trade between :ouniiie3. Illustrations of this will be found in the India-Japan textile agreement. France has recently granted special quotas to countries granting corresponding facilities to French exports; fiction 'along similar lines appears to have been taken in Belgium, Italy, Germany, and other countries. Some system of exchange control, exists in Germany, Czechoslovakia, and other ! countries. The most important so fatas New Zealand in concerned is the 1 alteration which has taken place in the trade policy of the United Kingdom. NecJ for Effort It seems mat to maintain and develop her overseas markets this Dominion must give serious consideration to its position. Whether or not the new policy is theoretically sound is of minor importance. As many of ihe great trading nations cf the world have embarked on this system, there appears to be no alternative but that New Zealand, to preserve and extend her external trade, should mould her policy accordingly, in my view New Zealand should make a"strong effort to enter into negotiations with olher countries, especially the highly industrialised countries which oiler possibilities for the dispo;,al' of our primary products. To do this we shoul 1 be prepared, subject to the Ottawa Agreement, to reduce foreign tariffs, or to adopt quotas or other regulative devices in return for concessions for* our products. It is admitted, of course, that the carryingout of such a policy cannot be achieved in a short time. Negotiations of this nature are necessarily difficult and involved, but. in view of the outlook for seme of our primary products (particularly dairy products) it is essential that the matter should be dealt with immediately. Jt is therefore proposed lo pursue 'ihe policy indicated above. As honourable members are aware an r.ri angement was made last year with the Government of Belgium under which concessions on certain of our primary pro .nets were made by that country in return for reductions in the New Zealand tariff on certain of their goods. In this connexion it must be remembeicd that under article 10 of the Ottawa Agreement, New Zealand has undcrtaKen to preserve the existing margin of preference on United Kingdom products where the margin does not exceed 20 per cent, ad valorem (or its equivalent) and where the margin exceeds that figure not to reduce it below 20 per cent, without the consent of his Majesty's Government m the United Kingdom.

Most-favoured Nation Where reductions have been proposed in the British preferential tariff the Government does not, generally speaking, intend, except for some special reason, to reduce the general or foreign tarilT below the rates at present levied, so that they may be in a position to pursue negotiations with foreign countries alone the lines indicated above. Another matter that will require consideration is the most-favoured-nation trade arrangements with foreign countries to which New Zealand is a party. These arrangements have recently been subjected to a certain amount of criticism, and it may, in the light of the altered trading policies of other countries, be necessary to review the position in so far as these trade arrangements arc concerned. In this connexion reference should be made to the importation of Japanese goods into New Zealand, and the steps that arc being taken in the United Kingdom and elsewhere to deal with this matter. The view of the New Zealand Government is that the problem is one which is most suitable for negotiation between the two Governments. An important matter for consideration here is article 12 of the Ottawa Agreement under which any preferences granted to the products of the United Kingdom are automatically granted to the non-self-governing colonies, protectorates, and certain mandated territories. 111. Intra-Empirc Trade This brings me to one of the most important matters with which I propose to deal —the encouragement of trade within the Empire. It is the settled policy of the Government to pursue every practicable avenue to increase trade between New Zealand and the other units of the Empire, especially the United Kingdom. During the last 30 years this Dominion has accorded substantial tariff preference to the goods of Empire countries. For a Jong period this preference was on a voluntary basis so far as New Zealand was concerned, and was extended to all units of the Empire. Now, however, the practice is for preference to be arranged by means of definite trade agreements between the respective units of the Empire. In 1922 New Zealand made a trade treaty with Australia which was replaced laat year by a new agreement. In 1932 an agreement was made with Canada which provides for tariff concessions by both countries. In the same year, as members are aware, an agreement was entered into at Ottawa under which, for the first time, a definite tariff arrangement was made with the United Kingdom, some of the provisions of which extend to the non-self-governing colonies and protectorates. There is also a reciprocal agreement between this Dominion and the Union of South Africa. Other Dominions have adopted to a greater or lesser extent a similar policy. In the light of the existing circumstances it would appear that this Dominion's policy should continue to be moulded along these lines.

Limits of Success There are, of course, limits to the extent to which Empire trade can be fostered by means of tariff preferences. The interests of our own people, especially those of the primary and secondary industries, must be considered. At the present time New Zealand extends such preferences on a very wide range of goods. Generally speaking, »nd except for certain imoorlant revenue items, it. may be said that where preference is not granted the goods concerned are of a class not commercially produced within the United Kingdom or are essential raw materials required by the industries of New Zealand which it is desirable should be available at the lowest possible cost

It is obvious that in many cases, if duties were imposed on such materials or if the duty thereon were increased, it might be necessary to grant the local industries increased protection to enable them to compete with imported finished articles. There is another side: —and a very important one—to these agreements—viz.. the extension of markets for our products in Empire countries. The advantages we received under the Ottawa Agreement are too well known to require recapitulation, and I do not at present propose to go into details. The agreements with Canada and Australia have, on the whole, proved satisfactory and they have provided means for the disposal of our products in those countries. Australian Agreement There is one point in connexion with the Australian agreement to which attention should be directed. Many witnesses who appeared before the Tariff Commission pointed out that, with respect to certain goods exported from New Zealand to Australia and not specially mentioned in the agreement, higher rates of duty were charged than those on similar goods imported from Australia into New Zealand. Provision is, however, made in article 9 of the agreement under which neither country can request the other to admit any lines of goods at the rate applicable in the country of export. If the request is not complied with within three months, the country making the request can impose on the goods of the other country a rate of duty not greater than that charged in such country under its British preferential tariff. It is the intention of the Government to take advantage of every opportunity of extending the policy outlined above by making trade agreements with other self-governing dominions. Certain preliminary negotiations have already taken place, but it is not possible at present to give details of these. IV. Collection of Revenue An important object of the New Zealand customs tariff is the collection oi revenue. The amount received during the iast financial year was approximately £6,485.000. This formed about 3G per cent, of the total taxation revenue of the Dominion. Generally speaking, it has been found necessary to retain revenue duties at their present level. In some cases, however, it is considered that the existing rates of duty are having an adverse effect. It is proposed in such cases to make reductions which it is hoped will have the effect of increasing the revenue. After a consideration of the increases and decreases made in the rates of dutv, and the probable increase m trade due to the stabilisation of the tariff and the improved conditions generally, it is estimated that the effect of the modifications on the items affected will be an increase in the revenue of about £90,000. Currency Fluctuations The relation of fluctuations in the currency of various countries to tariff protection is one of the matters that have been receiving the consideration of the Government. It is generally recognised by economists that when the currency o'f a country is depreciating an advantage accrues to manufacturers in that country, but that, sooner or later, after the exchange has been stabilised, internal conditions adjust themselves to the influence of external conditions. Some factors which enter into production costs undoubtedly adjust themselves more slowly than others, and it is impossible to say when complete adjustment has taken place. It is evident, also, that the prices of imported raw materials, plant, etc., and of many local raw materials immediately tend to respond to the effects of exchange modifications. From information supplied to me I am satisfied that in the majority of cases raw materials form at least 50 per cent, of the total factory cost of goods manufactured in New Zealand, and so far as the manufacturer s I costs are increased by the influence of I the exchange on such materials his advantage to that extent is immediately lost. ! When these conditions, following depreciation of the currency, have been in operation in a country for some time it is impossible to say with any degree of accuracy the extent ot the adiustment which has taken place. Hence it is considered impracticable to deal satisfactorily with the question by means of a tariff, particularly in a comparatively low tariff country like New Zealand.

Conversion Rale There has been a considerable amount of controversy as to the basis that should be adopted for the conversion for duty purposes of values not expressed in New Zealand currency. As a matter of principle, I agree with the view of the Tariff Commission that values for duty should be assessed in the currency of the country levying duties. For our purposes, however the question is a practical one. As will be seen from the report of the commission, the evidence and data received and the calculations and determinations made by them were based on the existing system. It is therefore proposed at present to retain this system. If the values were to be calculated in New Zealand currency, it would, generally speaking, be necessarv to reduce the rates of duty by about 20 per cent. Authority Granted to Minister Exception has from time to tim'e been taken to the powers of interpretation and decision granted to the Minister by Parliament under various customs acts. If thes'a powers did not exist, the only other tribunals to which recourse could be had would be the courts. This was the position before 1907, and, as a result of the position thus created, th'e administration of the tariff was rendered more complicated. It was found also that Keneral exemptions in the tariff were interpreted to cover . goods that were not intended to come under those headings when the legislation was passed. At present many of the tariff items are stet out in general terms. If the powers granted to the Minister were not retained, it would be necessary in many cases to embark upon a far greater enumeration of articles in the schedules than there is at present. Every item in such an enumeration might form the subj'ect of court proceedings, and, when on'e considers the rapid and complex changes which take place both industrially and commercially, it can be realised that to revert to the former position would be a retrograde step. In my opinion, Ihc existing system has, on the whole, worked very satisfactorily, and it has reduced to a minimum the delay and uncertainty in the clearance and classification of goods. The Tariff Commission in its report sets out at length and in unmistakable terms its conclusion that the present system should be retained. Time to Dispose of Stocks It is usual when reductions are made in customs duties to afford importers time to dispose of stocks of goods upon which duty at higher rates has been paid. If this were not done it would mean that merchants holding such stocks would be placed at a disadvantage through having .to compete with goods admitted at the lower rates of duty. Where the reduction in duty does not exceed about 5 per cent, ad valorem it. is not considered that the matter is of sufficient importance to warrant this sp'ecial action, but in other cases it is proposed thai, except in special circumstances, the lower duties or exemptions should not take effect until November 1, 19:14. Surtax and Primage Except in special circumstances, it is not considered satisfactory that customs duty should be levied by way of general imposts such as surtaxes t.nd primage. As honourable members will recollect, it was agreed at Ottawa that the primage duty at present imposed would be abolished as soon as revenue conditions permitt'ed. The Government has given full consideration to this matter, but it is regretted that it is not at present possible to dispense with the revenue thereby received.

As regards the surtaxes, these, ss honourable members are aware, have been abolished so far as the United Kingdom and non-self-governing (o)onies we concerned, in accordance with the Ottawa Agreement. The result is that the bulk of our cluU-

Tiinlier The Tariff Commission's report includes the following paragraphs in.rer lation to the timber industry:— r"This industry is important to New Zealand, and employs a very large number of persons. Owing to reduced activity in the building trade through the existing economic conditions, the consumption of timber in recent years has been greatly diminished. We nave investigated the production costs of a great number of mills and find great disparity in these costs, not only.m different districts, but in those of mills situated in the same district. The evidence shows that the production costs in some countries exporting timber to New Zealand are on a much lower scale than those in this country." After stating some of the causes which appeared to them to account for these higher costs, it proceeds:— "These and other facts give the commission cause to doubt whether the industry can be regarded as. an economic one from the point of view of the needs of the Dominion tor lower timber costs. In view, however, of the amount of capital invested m the industry, the number of persons engaged therein, and of the importance of the industry to transport organisations, the commission could not, under the existing conditions, recommend a drastic reduction of the existing duties." . .. The main recommendation was that the existing duties on rough sawn timber should be reduced by 3s 6d a hundred superficial feet, and those on dressed timber by 6s 6d a hundred superficial feet. , After full consideration of the sudject, and bearing in mind the number 01 persons engaged in the industry ana the amount of capital invested therein, the Government recommends w Parliament that the tariff on timber be retained as it is in the present tariff without alteration. Tobacco Tobacco is essentially a revenue Hem; the amount of duty collectea thereon during 1933 was more than £1,600,000. The protection to ° e granted to the grower and manufacturer must be considered in relation to revenue. The commission, in us report, draws attention to the relatively large loss of revenue due to tne protection nominally granted to tne grower on leaf tobacco, and it is evident that the rate is too high. in* Government proposes to reduce tnis protection by Is per lb, and, so that tne revenue may be safeguarded, to ado .an equivalent amount to the excise duties. . . it The position for cigarettes is that « was found some years ago that revenue was being lost through the admission of tobacco suitable for tne manufacture of cigarettes at the same rate as ordinary pipe loba co. '» meet this difficulty it was decided in 1921 to impose on fine cut tobacco a rate of duty approximating that on cigarettes. Experience has since shown that this is inefWtiv<\ an-i it has been ■iried to abolish this distinction in tobacco duties ana to substitute a special duty on cigarette papers at tne rates of lid and l.Jd for every w papers under the British preferential and general tariffs respectively. At the same time it is intended.to reduce the import duties on cigarettes by Id a packet of 10 and to provide for a corresponding reduction in "? e excise duties. The protection, as sucn, granted to the manufacturer, is considered to be satisfactory, and it '» not proposed to make any reduction therein. The making of c'S art -" t ' papers in New Zealand is not ic gardeel as an industry suited to tni. Dominion, and it is intended to "»" pose an excise duty thereon at V) same rate as that under the El'ius" preferential tariff.

able imports arc not now liable to ti • 1 surcharge. It is proposed, in thetnJ?" 1 time, to retain the existing■ SS** 1 i.,r llio pui'po.;o ol 1 ments with other countries "as 0 ",* 5 " I done last year jh connexion "wiihTl s % agreement with" Belgium. a th » | Motor Vehicles I As an item in the tariff schedi.i K motor vehicles have a number/T, 1 special features: The customs tsV?* I lion derived from them is of (£*' 1 portance from the viewpoint 1 1 revenue; they are a class of manuW I ture in which we give an especialds" I gree of British preference. In passtol" I it may be mentioned that of the num 1 ber of our motor vehicles imported ft 1 percentage from the United Kingdom i! I 1929 was 15 per cent.; in 1930, 21 b» I cent.; in 1931, 65 per cent.; in ifo, 1 83 per cent.; in 1933, 75 per cent A) 1 though they are not made in NewZea I land, we are concerned in the qiies I lion of body-building and also in th« 1 more substantial question of assembling I cars. All of these considerations have 1 been borne in mind in reviewing the I tariff, and, in addition, the aim has 1 been to simplify the tariff for adminis- I tration, and, as in other items, to re- 1 duce it to the advantage of users and 1 consumers. : I The Tariff Commission's recommen- 1 dations, not all of which the Govern- 1 ment propose to adopt in full, cover 1 the following points:— | (1) Abolition of the differential duty I between the complete vehicle and the 8 chassis. This was intended to encour- ■ 1 age the building of motor bodies ia' I New Zealand. It has not succeeded, ' ', i (2) Imposition of a flat rate duty of | 15 per cent, on all motor vehicles -1 entered under the British Preferential 1 Tariff. This would have the effeci of * reducing the advantage in duty obtained on vehicles imported in parts—"completely knocked down"—for as* : sembling in New Zealand. (3) Increase of the duty on motorcycles, under the British Preferential ; Tariff, from the present 10 per cent, to 15 per cent. Government's Decision From these recommendations the Government's decision departs in two respects: First, with regard to the assembly of cars in New Zealand, the , commission was of opinion that the industry was suited to the conditions in the Dominion. It found from figures produced that, owing to freight and other savings, the industry could be" economically carried on without special.'' protection. Information obtained, however, since the commission reported; with respect to the more recent types of cars which have come upon the mar- ; ket shows that some concession in the rate of duty is necessary if the industry of assembling cars in New Zealand ! is to be carried on satisfactorily. 'The ' | Government has therefore decided to depart form the recommendations of the commission in this respect. Having regard to the desirability of encouraging the assembly of cars in New Zealand, we propose that completely knocked down cars should be admitted at rates lower than those on cars completely set up. Honourable members and others who < are familiar with conditions in the /' motor trade are aware of the value of the employment provided in assembling here in New Zealand the cars of some of the principal British American manufacturers. We do not■>";, propose to disturb this condition, bijt, ■'. on the contrary, the aim is to encourage other manufacturers to assemDle their cars in New Zealand and utilise New Zealand labour and material. The other variation from the com- ; mission's recommendation that we have made is in maintaining motor-cycles p.t their former low rate. In so doing we sacrifice the advantage of simplicity that would be given by charging motor-cycles at the same rate as motor vehicles; but this advantage to the Government is foregone rather than ' increase the cost of motor-cycles which . are a form of transport popular amongst the less affluent in the community.

TRADERS' COMMENT SMALL ADVANTAGE FOR ENGLISH CARS BRUSHWARE INDUSTRY AFFECTED With several exceptions, the tariff resolutions have been received locally without great excitement. In many ceses the difference between the present small volume of imports and an enlargement of that volume rests almost entirely on the rate of exchange, and the alterations in duty will make little difference. Importers of English cars consider that tliey will be about 7 per cent, better off under the new duties than they were, and importers of American cars regard the proposals as indicating a further 4 per cent, on to their import charges. Radio importers say that the tariffs will mean that the importation of sets other than British will be too expensive to be profitable, but they add that British sets can now cater for all the requirements of the Dominion. The tariffs were said by one manufacturer to be disastrous to the brushware industry, and to mean further reductions in employment. A motor importer remarked that on a basis of £IOO value in the country of origin, British cars formerly paid £32 18s 6d in duly and sales tax, but would now pay only £25 13s Od, American cars on the same basis formerly paid £BB 9s 7d, but would now pay £92 18s 9d.. This concerned cars imported ready assembled, and although the actual duty was 5 per cent, higher for British cars and 20 per cent, higher for American cars, this was offset by the abolition of the protective duty o.n motor bodies. Unassembled Cars The much lower rates for motor-cars imported unassembled, together with the abolition of the protective duty on dolor bodies, was staled by another importer to be likely to mean that the firms now engaged in building colonial bodies would receive the work of assembling imported bodies. The protective tariff on motor bodies had been a sore point with motor importers for some time. Though American cars were still much worse off than British cars, he thought that it v/culd take more than the increased duty to check the recent movement of buyers to American cars. Tax on Tyres By the change in the method of taxing tyres from percentage to weight much more would have to be paid for heavy-duty tyres. This would mean that importers would bring cars into the country with lighter tyres, leaving it to the owners to put on heavy covers when the first set was worn out. No great difference would be made to the trade in toilet preparations and perfumery by the 10 per cent, lower duty for British goods, said Mr F. W. Stevens. It would certainly help, however, to some extent in improving trade. In the past the Customs Department had made the duty so high that it had spoiled the revenue. Brushware Tlie reductions in the tariffs on brushware were described as disastrous by Mr I. Woolf, director of Bunting's, Ltd. He said that in his factory alone there would be a reduction in employment of about 60 hands if the tariffs were agreed on. The creation of unemployment did not stop there, he said, but would also make itself felt in the woodworking and printing trades, both of which were fairly closely connected with the brush industry. He estimated that the resolutions would put 200 workers out of employment. "It is hard to believe that the Government would do such a thing," he said. The lower British preferential duty fcr gramophones, pianos, and musical instruments was stated by Mr Webley to be likely to help the sale of pianos particularly. It was hard to say what the effect on gramophones and other instruments would be. Recently there had been a much better enquiry and sale for pianos than for the last three years, and the reduced duty would help considerably, particularly as there was no great margin of profit taken.

Boots and Leather < "The only thing that would make h difference to the boot trade would be a 10 per cent, reduction in the exchange rate," said an importer. "The reductions proposed will make no difference at all." He said that the whole question of imports of leather manufactures, including boots, was dependent at. present on the exchange position. The reductions would make virtually no difference in the quantity of boots imported. Grocery Imports Exchange had effectively dried up most of the grocery imports, 6aid Mr A. E. Kincaid, and thus the reductions in tariff on most of the grocery lines mentioned in the resolutions would not have a great effect on the trade. It would take very substantial reductions to make the importing of most lines attractive again, he said. The Furniture Trade The furniture trade in New Zealand was fairly well established, said Mr E. Archbold, : and the reductions in the i tariff were not likely to make any great difference. Freights were a fairly efficient bar to the importation of overseas furniture. He did not think that the reductions would make any material difference to manufacturers here. Effect on Smokers Doubtful "Without a close study of the provisions of the recommendations dealing with tobacco and the recommendations affecting other factors in the manufacturing processes it is impossible to say how the average smoker will be affected," said the manager of a large tobacco firm. He said that many tobaccos manufactured locally contained a proportion of New Zealand leaf, and the cost would be dictated to some extent by these proportions. "The reduction from 13s 3d a pound to Cs lOd a pound on fine cut tobacco should result in this typo of tobacco coming again on to the market, and other types of tobacco being more finely cut and therefore more suitable for cigarette-making. The price of cigarette papers and the price of locally manufactured cut tobacco is likely to be raised if the resolutions arc approved.'' Wines and Spirits The resolutions will haw.' little effect: on the wine and spirit business in New Zealand, according to Mr G. R. Malinc. The English exporter of whisky and brandy will benefit from the application of duty to soirits 25 under proof instead of J6.5 under proof, and there is likely to be some encouragement of trade in spirits bottled in England, instead of the present general method of bulk export. Advantage to British Radio The recommendations of the Tariff Commission, if approved, would make the importation of other than British radio sets almost impossible, declared Mr J. 1. Smail. Radio sets manufactured in the British Empire now met ail the requirements of the Dominion, but th« proposed rates 4 it imposed a

lew years ago, would have been a hardship both to importers and listeners The proposed tariffs would give importers of British sets a very great advantage. Mr Small could not see why the preferential duty on sets mounted in cabinets should We removed, as such a step would be of no assistance to the rapidly growmg radio manufacturing business in New Zealand. . ,• t, t• i During the operation ol the tug ft exchange, which was a very larg-a part of the total cost of import, the reduction of 5 per cent, on the preferential and - general tariffs on oil engines would have very little effect, said Mr Hugh Anderson. The proposed reduction, however, might have serious results for the local engineering firmj making this type of engine if the exchange was removed. ' Medicinal Preparations Manufacturing chemists in New Zealand will be affected considerably it the commission's recommendations regarding medicinal preparations are adopted, remarked Mr J. L. Stevens. Local manufacturers will lose the protection of 3d a pound on medicinal preparations of more than 50 p'er cent, proof spirit. At present they pay 9d a pound excise, while importers of British manufactures pay duty at the rate of Is a pound. The reduction of the preferential tariff to 9d a pound would place them on the same basis as local manufacturers, who had heavy costs for the importation of herbs and drugs. Competition in the future might become much more severe. Im» porters would be glad to see reductions in tlte tariffs on preparations not manufactured in New Zealand, although duty had not been collected for some time on certain of the items listed as being subject previously to tariffs. The proposed reductions of tariffs en medical, dental, and optical materials would be welcomed by professional men, said an importer o£ medical and dental supplies.

RESOLUTIONS DISCUSSED Criticism by Labour Members POSITION OF SECONDARY INDUSTRIES (f.KEss associate:-: telegram.) WELLINGTON, July 10. When the House of Representatives resumed at 7.30 p.m., the Customs resolutions were introduced. After the Rt. Hon. J. G. Coates's statement, the Leader of the Opposition, Mr M. J. Savage, said the statement bristled with extracts from the Tariff Commission's report; but that report was not in the hands of members. It seemed to him that it would have been helpful to members if they had that report and could see its comments. Right through it seemed a curious foundation for tariff. Trade could not expand till the purchasing power of the people was increased. Mr Coates: I think I can blow that, cut.

Mr Savage: The Minister cannot blow it out. The tariff was a direct attack on the secondary industries of the Dominion, which were to be sacrificed, he continued. They could not afford to base their standards upon a sweat shop, and New Zealand was not without them. He agreed that there should be a tariff on some things; but there was no reason for tariff upon things which could not be produced in the Dominion. There was ample opportunity for the development of trade within the British Commonwealth. When the countries within the British Commonwealth turned their attention to the development of their own territories they would come within striking distance of developing markets. They could not develop trade with any foreign country unless at the expense of Britain. He had recently visited woollen, confectionery, boot, and other factories in the Dominion and had seen them employing thousands of New Zealanders, who were consuming the primary produce of New Zealand. He had seen nothing shoddy produced in the factories visited. Mr R. A. Wright (Ind., Wellington Suburbs) said- the proposals would wipe out the nail industry of the Dominion. That industry had been built up, not at the expense of Britain, but at the expense of other countries. Mr A. Harris (C, Waitemata) said the New Zealand industries were manufacturing for only a handful of people. The conditions were not comparable wtih Home factories, which had world markets at hand. He thought New Zealand was granting too great a preference to Britain, which should put its own house in order. Mr D. G. Sullivan (Lab., Avon) thought the industrial community would read the new tariff with amazement. He thought the Minister would have brought down a bold policy; but the secondary industries were to be the pawn in the game and were to be sacrificed. The amount of employment available in New Zealand! would be further reduced. Australia, after complying with the Ottawa Agreement, was able to maintain a tariff nearly double that of the present New Zealand tariff, yet the Minister proposed to reduce still further the little protection of the New Zealand secondary industries. Mr C. A. Wilkinson (Ind., Egmont) said he was disappointed that no reduction had been made in •wheat and flour duties, which were responsible for a large increase in the cost of bread and flour, and which to-day were receiving protection of almost 100 per cent. Apparently not even a Royal Commission had influence over the Government. The wheat growers, although small in number, evidently had great power. Mr E. J. Howard (Lab., Christchurch South) said the nail industry could have supplied all the needs of the Dominion. It had been won from Germany and Belgium, yet it was to be wiped out. "Droves of people will leave the Dominion," he said. "It is a calamity that 10,000 people should leave the Dominion for Australia, with its high tariff." Mr Coates suggested that three weeks or a month should elapse to allow representations from interested parties before the Customs Bill was brought down. He would be glad to receive representations. It would not be possible to have the Tariff Commission's report printed by to-day, but it would be tabled in the House on Thursday. He hoped the discussion would be held on Friday. Wheat and Flour Duties Mr W. E. Barnard (Lab., Napier) wondered what effect the tobacco duties would have on the grower. It seemed to him that they would be hard hit. He thought a fuller explanation was required of the wheat and flour duties and should be given by the Minister. Mr W. J. Poison (C, Stratford) said he was unable to see that sec- ■ ondary industries would receive a shock. He thought a shock would be received by the primary industries which, because of recent developments in Britain, was faced with a serious disaster. It seemed to . him that the Minister's statement was an ingenious argument to prove that the Ottawa treaty did not . really mean what it said it meant. Mr H. T. Armstrong (Lab., Christchurch East) said the removal of the protection on electric ranges would strike a deadly blow at an important secondary industry and would throw hundreds of people out of employment. The whole of the proposals seemed to remove the tariff from things that could be economically produced in the Dominion. He did not think Parliament and the people had been treated fairly, as the damage would be done before the bill was introduced. The iron pipe industry would be abolished, and the manufacture of baking powder in the Dominion would be seriously affected. To his mind, it was the most damaging document that had been before Parliament for k«ome years.

Mr Clyde Carr (Lab., Ttmaru) expressed satisfaction with the proposal to retain the sliding scale of wheat and flour duties, but said the Minister's document in general aimed a knock-out blow at flourishing secondary industries. Mr C. H. Chapman (Lab., Wellington North) complained of the increased cost of cigarette papers, which made the total retail price of 100 books £1 10s or 4d a book. The .Government had gone out of its way to reduce employment and increase costs.

Mr F. Langstone (Lab., WaimaI'ino) described the customs document as cvjiber evil result of office. Assembling: of Motor-Cars Mr W. Nash (Lab., Hutt) thanked the Government for what it had done regarding the assembling of cars in the Dominion. The reduced duty on parts was a real benefit to New Zealand. Greater advantage would be derived if the duty on parts were removed altogether. It would bring the Government better revenue than the duty on whole c ars. Mr W. A. Vcitch (C. Wanganui) said the reduction in duty on iron pipes would drive the industry out, but would not reduce the price to ihe people of the Dominion, it was a direct concession to overseas firms.

Mr J. A. Lee (Lab., Grey Lynn) said the resolutions seemed to be another Government attempt to break down industry. Mr R. Semple (Lab., Wellington East) said he was satisfied the resolutions would increase the number of unemployed and apply a stranglehold on industry. He asked the Minister what they were going to do with young boys and girls if they were not going to develop secondary industries. He thought greater consideration should have been given to the importation of goods from Japan. Nothing was said about the importation of crude oil, which was in open competition with the coal industry. Mr W. J. Jordan (Lab., Manukau) appealed for further consideration of the glass and bottle industry, which had caused a reduction in the price of bottles. MrK. J. HolyoaUe (C, Motueka), said he thought the resolutions would wipe out the tobacco-grow-ing industry, which could be expanded 100 per cent, without harming anyone.

Mr A. S. Richards (Lab., Rcskill), said he was convinced that there was no need to reduce the duties on any of the articles on which the duty had been reduced. Mr Stallworthy said that if the Government removed high exchange, it would accomplish much more than was produced by the tariff resolutions. A reduction of 5 per cent, on boots would not cheapen boots to the people, but might have a great effect on operatives. Mr W. E. Parry (Lab., Auckland Central) said no attempt had been made to assist the new sack-making industry in the Manawatu, which would probably employ thousands of workers. Thousands of people would be rushing round to give evidence in the next few weeks, if the Government listened it would be all to the good; but the resolutions would be carried that night, and no good would come from the representations.

Mr H. S. S. Kyle (C, Riccarton) said he would like to see the same protection given to electric cookers and heaters as was given to gas meters. He congratulated the Government on its attitude towards the wheat and flour duties. He thought the boot industry was in a much better position than it was three or four years ago, and could stand the reduction.

Mr F. Jones (Lab., Dunernn South) said the new duties would seriously affect the boot and confectionery industries and would throw many girls out of employment. New Zealand had to face the position that she was not going to get any more preferential treatment than was given Australia, yet Australia claimed that it had met the requirements of the Ottawa Agreement. Mr D. McDougall (C, Mataura) said that after listening to Mr Kyle one would think that the v/heat growers of Canterbury were the only farmers in the Dominion. The Government did not take into consideration that farmers in the south had to pay Is for bread when they should pay 7d. Mr P. C. Webb (Lab., Buller) thought iron workers and tobacco growers should have been given a chance, and a duty placed on crude oil. The debate was carried on on similar lines until after midnight, when the resolutions were adopted and the House rose at 12.35.