Surcharge plan unworkable hoax: Mr Brill

Press, 14 June 1978, Page 1

Surcharge plan unworkable hoax: Mr Brill

PA Wellington The Labour Party’s proposed surcharge on foreign exchange was illegal because it would break international agreements signed by both National and Labour Governments, said a National backbencher, Mr B. E. Brill (Kapiti) in Parliament yesterday.

Labour announced in its alternative economic statement that it would use money collected from the surcharge to pay for cuts in personal income tax if it becomes the Government in November.

But Mr Brill, speaking during the Budget debate, described the scheme as an elaborate hoax, incapable of being implemented. While New Zealand was striving to remove trade barriers imposed by other countries, the Labour Party proposed to introduce a new tariff of 10 per cent on imported goods. “Such a proposal would be decried by all our trading partners as an unfair and unacceptable imposition,” said Mr Brill. “Years of negotiations for improved trade terms will be swept aside overnight.”

Mr Brill said the scheme would give powerful trade partners the perfect excuse to raise tariffs against New Zealand, reduce quotas, and close their markets. The mere fact that the proposal had been raised could create incalculable damage to delicate trade negotiations. Mr Brill said “facile attempts to subvert and repress world trade” had long been foreseen and prohibited by agreements enforceable by international law.

He quoted articles from the General Agreement on Tariffs and Trade, which he said expressly prohibited practices such as Labour was proposing. Another article provided for retaliatory action in cases where a country interfered with benefits

accruing under G.A.T.T. “In the present world trading climate we need be in no doubt that such retaliatory action will be taken, and taken joyfully,” Mr Brill said. As a member of the International Monetary Fund, New Zealand was entitled to apply restrictions on payments and transfers for present international transactions, but the I.M.F. could at any time direct New Zealand that continuation of the restriction was no longer justified. “Will a Labour Government then apply a huge tax bite of $4OO million so as to finance the removal of the currency tax?" Mr Brill asked. Mr Brill said that under the Organisation for Economic Co-operation and Development trade pledge, member countries would avoid "having recourse to unilateral measures of either a general or specific nature to restrict imports.”

Mr Brill said it was naive to assume that the Australian Government would quietly accept an additional 10 per cent tariff across the board, and that New Zealand’s bilateral trading arrangements with Canada would survive such a “savage unilateral onslaught.”