BOLD STEP WITH TARIFF

Evening Post, Volume CIX, Issue 92, 19 April 1930, Page 7

BOLD STEP WITH TARIFF

PRAISE FOR LABOUR BIG TRADERS AGREE (From "The Post's" Representative.) SYDNEY, 10th April. It is an outstanding fact that few people have, been bold enough to attack the Labour Government for the extraordinary measures it has taken to restore Australian trade balance. Everyone seems to be agreed that the situation that had to be met was extra- | ordinary in the extreme, and that no ordinary measures would meet' it. Gradually the trade position was drifting from bad to worse, and it was clear that the rationing of credit by the banks and the great increase in the exchange on London was not having the desired effect. With the statement made by the Prime Minister (Mr. Scullin) that he has aeted^ only after full consultation with the banks, and with experts who have made a careful study of the economic position, critics were more or less, disarmed. Anyhow, no one has come forward with a scheme that can be regarded asa suitable substitute to what is, practically, a prohibition of extensive trade overseas. , The main question now is how long will conditions take to right themselves, and the Acting-Minister of Customs (Mr. Fordo) cannot see any definite improvement inside eighteen mouths. It means, then, that Australian manufacturers will have ample time to adjust their businesses to the altered conditions, and it is hoped that Australians by then will have become so accustomed to buying locally-made articles that they will not want to return to the overseas product. To thousands there has come a vision of a vast development of Australian factories and the banishment of all un-employment—-the breaking down of prejudices and the development of a local sentiment surpassing anything that has been in evidence to date. Most of the big manufacturers and many of the big traders are strongly behind the Government. At the same time it must be definitely understood that the imposition of a tremendous tariff, and the absolute prohibition of some goods, is not part of the policy of protection. COMMONWEALTH WAS DRIFTING. In support of the Government's decision, and by way of explaining its necessity, it should bo pointed iout that in the last six years and seven months the total adverso trade balances amounted to nearly £90,000,000. So it had been clear for some thno that the Commonwealth was drifting into a serious position with millions going out and comparatively little coming in.' The serious drop in the prices of wool and wheat was largely responsible for accentuating the position still further. It is expected that tho Government's action, plus the action of the banks in restricting credit, will rectify a deficiency of approximately £40,----000,000 in London, which > seemed inevitable in the trend of trading. The restriction of imports is going to result in a big falling-off in Federal revenue, for the Federal Government has always looked to the Customs as its principal source for money. One estimate is that the revenue will suffer to'tho extent of about £8,000,000 a year, but the Treasurer (Mr. Theodore) thinks that £5,000,000 would be nearer the mark. Fears have been expressed that this will mean a great increase in income tax- —and any such increase would add to the already heavy burdons of industry and may have the effect of increasing unemployment, or at least detracting from the benefits which the emergency tariff may bring with it. The point has not yet been cleared up, for although Mr. Theo dore has stated that steps have boen taken to bridge the financial gap, he has not been prepared to indicate what they are. Ho has at least made everyone curious, and perhaps a little hopeful that ho may have found a way out that will not fall too heavily on the people as a whole. An increase in direct taxation at the present time would be more or less disastrous. THREATS AROUSE LITTLE INTEREST. The threats that have been made by other countries of retaliatory measures against Australia have aroused little interest, for the reason that Australia has little to fear in that direction. The case of France, which has been

loudest in its protest to date, is more or less illustrative of the goneral position. France takes only essential products of Australia, such as wool, and it would'bo interesting to know where France would look to for its woo) if it woro decided not to trade with Australia. Of course, Australia would not like to lose French trade, for it is worth £15,000,000 to this country, while imports into Australia are valued at only £3,000,000. There are also favourable balances with Italy, Japan, and Belgium, mainly on account of tho wool which those countries take. However, it is mado eleiir that the action is not aimed at any country, and did not warrant reactionary measures against Australia. Mr. Theodore put the position very plainly the other day. ""Wo have been importing £27,000,000 worth of luxury goods a year," he said. "If wo do without that £27,000,000 importation we can say that we are closing down on that amount of imports without affecting tho cost of living or doing anyone a permanent injury in this country. The value of exports now should not only equal the imports but be sufficient to meet Australia's interest obligations overseas. The measuro is not a political measure, but a tactical means of solving a very real problem with which tho nation is faced." In more than one quarter a fear has been expressed .that local manufacturers will take' advantage of the elimination of overseas competition in many lines and so oxploit tho public by increasing prices. The Labour Government can be relied upon to stop any little game of this sort. In fact it has already appointed an officer whoso duty it will bo to keep a strict eye on tho prices -of local products, and to demand an explanation whenever an increase takes place. It has ample powers for this, and is determined to put those powers into full operation. The fillip that has already been given to outward cargo traffic has pleased tho shipping companies, which had been having a rather lean timo in that respect, and tho fears that there will be a largo increase in outward freights may not be justified. The companies are prepared to stabilise freights for twelve months at least, and important contracts may soon bo announced which will relievo the situation tremendously.