Manufacturers want freight rebate retained

Press, 24 July 1986, Page 9

Manufacturers want freight rebate retained

Canterbury manufacturers are alarmed at the possibility of a withdrawal of the unit freight rebate scheme.

The Government has told manufacturers that it is reviewing the scheme, which gives South Island makers of most finished goods a rebate on the cost of freight by rail, road, or sea if the goods are sent north of Porirua. The scheme has cost the Government about $2O million since it was introduced in the early 19705. The Canterbury Manufacturers’ Association has sent submissions to the Trade and Industry Department in which it makes a plea for the retention of the scheme,

and its extension to include all the North Island and freight by air.

The rebate is worth between 8 and 10 per cent of freight costs. To Canterbury manufacturers that represented about $1 million a year, said the association’s director, Mr lan Howell. The association says that in the last 30 years the South Island has experienced a lower growth rate in manufacturing than the North Island, the main factor inhibiting growth being high freight costs to North Island centres.

Freight costs had been clearly identified in surveys as the main factor inhibiting manufacturing

in the South Island, said Mr Howell. "Our discussions with companies which either had to move their operations or to concentrate expansion in the North Island have revealed that the principal reasons are reduced freight costs, with reduced freight delays,” he said.

While it was true that some companies had enjoyed a reduction in freight rates since the deregulation of transport, most of these had been those with deliveries within the South Island.

“The heavy cost of the Cook Strait ferry service clearly is still the major bottleneck for South Island manufacturers,”

said Mr Howell. The scheme was an economically effective method of delivering regional development assistance and had to be considered in the context of the Government’s over-all regional development programme rather than in isolation, said Mr Howeli.

The association wants the Government to bring in more competition in the transport industry by ir ’ lediately examining the Cook Strait ferry service, followed by “positive action to overcome many of the high-cost inefficiencies within that service.”

The Government should also ease the many problems on the waterfront, the association says.