Industry leader attacks academic economists

Press, 12 August 1980, Page 26

Industry leader attacks academic economists

Academic economists' have come under criticism from the president of the Canterbury Manufacturers’ Association over a conflict of opinion on protection of industry through the use of tariffs and import licensing. •The association accepted that manufacturers could •not be protected from overseas imports forever, but they wanted change to be gradual and to be achieved in consultation with industry, said Mr W. B. Beaven in his annual report. “The Government and the manufacturers broadly agree that an export-led growth strategy is the appropriate one for this nation. That must involve the maintenance of the import-licensing system, and we are confident the Government will adhere to such a policy,” said Mr Heaven. The New Zealand Planning Council’s;, discussion paper on economic development, which, advocated abolition of import licensing and a policy switch from export-led growth, was a “pointless academic exercise” which could only confuse people, said Mr Beaven. It was utterly essential for New Zealand to ; continue to be protected by a combination of import licensing and tariffs. Mr Beaven said that New Zealand was not unique in enjoying high levels of protection. Australia controlled 7 per cent of its imports by quotas, yielding results similar to what New Zealand achieved by import, licens- . ing, which effectively-con-trolled less than 20 per cent of New Zealand’s imports. Korea and Taiwan entirely .* • prohibited textile imports; the Philippines' applied an 80 per cent tariff, and Thailand 80 per cent. India and Indonesia extended to the full 100 per'’ cent, .-while other Asian countries generally had very high tariff protection on consumer items. “The New Zealand manufacturer and consumer can be forgiven for being confused, by. what one is being told,” said Mr Beaven. “Comments by some Government members of Parliament are completely at variance with, statements.. by the Prime. Minister (Mr Mui-' doon) and the Minister of Tradeand' Industry (Mr Adams-Schneider), who

have assured manufacturers that major changes in the system of protection are not contemplated. “It cannot be too greats ly emphasised that an essential point, often overlooked by doctrinaire economists, is that our tiny market can so easily be dominated by large overseas companies that tariff protection alone cannot be adequate for many industries. It has been aptly remarked that some people listen too much to the economists and fail to adequately examine the realities of the marketplace,” said Mr Beaven. “Perhaps we need to convince the public still more plainly that what the manufacturer seeks is the continued development of a broad industrial base, not the elimination of all but a narrow range of industries where New Zealand enjoys a natural advantage. This would be under threat if theoretical economists had their way and the present protection system were radically altered,” said Mr Beaven.

“The association has been encouraged to note that more company directors and spokesmen are challenging the theoreticians. These experienced men are beginning to hammer the point that we worry too much about incomes, without paying regard to performance in New Zealand. “Surely, we should be much more concerned . with rewarding people and organisations for their proved achievements and skills than being obsessed with the . possibility of some ending up better off than others. We need greater encouragement for people to acquire skills, perform well, and invest their earnings. intelligently. “The basic facts are very simple. To earn more,. New Zealanders must produce more efficiently and sell abroad the results of our greater in-depth efficiency. By creating a climate of challenge, encouragement, in- . centive and unity there are no limits to what can be achieved,” said Mr Beaveh. . On transport, Mr Beaven said, that it would be disastrous to disrupt the railways system by exposing it to full-scale competition, from unrestricted : jrpad haulage. It was important to remem- . her .that the railways rep-•-resented a public invest-

ment of about $550 million and employed 23,000 people. “Our object is an efficient railway system capable of handling longhaul freight movements quickly and economically — run on a commercial basis and with services deemed to be socially justifiable — funded to the extent of their true cost from the Consolidated Revenue Account or similar source. “We contend that a rationalised railway system could compete with road services. We would go further: should there be no adequate moves to eliminate social overheads impinging on the Railways operating costs within the next few years, and progress become apparent within five, years, we

would seriously review the support given to railway transport in past years,” said Mr Beaven. The association is becoming disappointed with the : “dog and tail syndrome” typified by some Government attitudes over the proposed Christchurch Airport runway extensions. “It is fatuous to. delay extending the runway until overset.; operators wish to use the airport. They must be encouraged to do so by providing the most modem facilities which we are capable of giving them.” There was also a case for landing charges to be set in line with the efficiency of an airport rather than on a national basis, he said.