Protection element of National’s new industrial policy

Press, 2 July 1986, Page 3

Protection element of National’s new industrial policy

By

OLIVER RIDDELL

in Wellington

Lowered tariffs but continued protection are emerging as the basis of the National Party’s new policy on industry. A lot of work has gone on behind the scenes during the last two months between National and the Manufacturers’ Federation on a National policy on industry, and clear pointers have emerged. A policy on industry is now likely to be one of the first main policy planks announced by National after its annual conference in August in the 12-month run-up to the planned General Election in September, 1987. The key to the new policy on Industry will be “healthy competition and fair rewards.” In the talks between the parties, National seeks manufacturer's’ support in return for undertakings by National on the guidelines its policy will follow. What manufacturers want most is a commitment by a National Government on tariffs. In turn, National makes it clear that it cannot keep on the excessively high tariff levels of yesteryear. Instead, National is indicating a return to a policy of supporting the move from protection through import licensing

to protection by tariff. To make this more palatable to manufacturers, it will be accompanied by a guarantee of mutually agreed industry plans that avoid a premature or accelerated reduction from present tariff levels. Some manufacturing sectors, such as footwear, would get higher levels of tariff protection than others. There would also be transitional protection through variable tariffs for specific industries. This agreement on tariffs is based on an agreed viewpoint — that with protectionism so rife internationally it is absurd, if not vicious, to expose the New Zealand economy to such an environment without appropriate protection. Central to the agreement will be the future role of the Industries Development Commission. Its industry plans for specific sectors will be continued and given greater emphasis. This is acceptable to manufacturers provided these industry plans, once agreed to, are not tinkered with — a growing focus of complaint from manufacturers about the Labour Government The commission may also get a central role in the setting of tariffs for individual industries. This would be a logical development if the commis-

sion’s industry plans are to get greater weight. A mechanism for providing emergency protection is also being discussed. This would give manufacturers confidence that if tariff protection were being run down too fast there was a mechanism that could react quickly enough to prevent damage. The talks include Federated Farmers and involve the protection given inputs into agricultural production as well as manufacturing. The intention is to reduce the tariff levels of agricultural inputs, something the federation has sought for decades. National will probably follow the example of the Labour Government in reducing tariff levels on imported goods not manufactured here. National is concerned about the most recent public opinion poll in which it languished 11 points behind Labour. It has had to face up to the public perception of it as not being an alternative Government because it lacks policies. In areas such as industry, where it has been working to create policies, there is pressure to get policies agreed to and launched publicly. A lot of progress has been made towards that goal.