“Free-trade area would be a disaster for N.Z.”

Press, 30 August 1979, Page 19

“Free-trade area would be a disaster for N.Z.”

PA Wellington A Trans-Tasman free trade area would be a disaster for a large number of New Zealand manufacturers, and a customs or economic union would be even more dangerous, said the chairman of Salmond Holdings, Ltd (Mr G. W. Salmond) at the annual meeting. “Under a customs or economic union, New Zealand’s import licensing system would be dismantled, and New Zealand manufacturers could lose all export incentives on goods sold in Australia,” he said. “Based on our manufacturing experience in three different i 'dustries, and extending over 40 years, I am firmly opposed to unrestricted trade with Australia. The group manufactures, and distributes cosmetics, pharmaceuticals, foodstuffs, and brushware.

“To adopt the Australian proposal would destroy the confidence of many New Zealand manufacturers in the security of their own industries,” Mr Salmond said. “For a long time economists have been telling us that New Zealand industry must be forced to become

[internationally competitive by the removal of import licensing protection. “Except for those few industries which have access to low cost raw materials, or have achieved economies of scale through exports, I believe that it is impossible for any manufacturer servicing our domestic market of only three million people to be internationally competitive,” he said. “The New Zealand manufacturer had no control over the high cost in our society, including:— “High interest rates — engendered by inflation and Government borrowing. “High interna 1 transport cost — transport from Sydney to Auckland is little more costly, and usually more reliable than transport from Auckland to Christchurch. “High energy costs in New Zealand, which are artifically inflated by Government levies. ‘..mi cost caused by an ab-surdly-high level of Government and local body regulations, and restrictions on every kind of industrial enterprise. and a high level of taxation to support a

vast state enterprise,” said Mr Salmond.

“When the necessary restructuring has been enforced in the public sector it will be time to talk of restructuring our manufacturing industries, but not before,” he said. In advocating free trade, the Australian “Financial Review” said that it would be a real bonanza” for Australian manufacturers. “The corollary is clear — it would be a disaster for many New Zealand manufacturers. Dump-ing-duties would not protect us, because mar-ginal-costing by Austra--1 i a n manufacturers would enable them to spend heavily on advertising to capture the New Zealand market. ■‘lt is said that we will gain access to a much larger market in Australia, but we already have excellent products on which Australia has placed quantitative restrictions. These are products of the very industries in which New Zealand is internationally competitive,” Mr Salmond said.

“If New Zealand adopted a union with Australia, over the next decade it could expect an increased flow of professional people a.id skilled workers, to Australia, because that was where the new industrial investment for both countries would be concentrated. “This would be a repetition of our own drift from the South Island to the North Island, but 1 on a much larger scale,” he said. “The proposal cut right across vital new opportunties, and initiatives for New Zealand exporters. “New export incentives, and currency adjustments assured New Zealand manufacturers of opportunities for continued export growth, not only to Australia, but to ’ larger markets 1 around L the world,” he said, Salmond’s marketing divisions were well organised, and could switch to imports from Austra- ' lid “if that should be forced on us,” said Mr Salmond.