CUSTOMS SCHEDULES

Northern Advocate, 8 June 1933, Page 6

CUSTOMS SCHEDULES

' COMMISSION’S HUGE TASK PROTECTION OF PRODUCER. UNITED KINGDOM PARITY. OVER 450 ITEMS.

(Special to “Northern. Advocate. ) WELLINGTON, This Day. The Tariff Commission yesterday began the task of revising the Dominion's Customs schedules, which contain over 450 items. The commission consists or the Comptroller of Customs (Dr G. Craig), chairman, Professor B.- E. Murphy, senior professor of economies in New Zealand, Air G. A. Pascoe, of Christchurch, and Air J. B. Gow, of . Whakatane. ■ One of the duties of the commission is to carry out the terms of the Ottawa Conference agreement and place the United Kingdom producer on the basis of. a domestic competitor, that is, to see that the protection afforded to the •New .Zealand producer shall bo on a level that will give the United King dom producer full opportunity of reasonable competition on the basis of the /relative cost of economical and efli--cient production. The case for the New Zealand manu faeturers,- in general terms, was stated by Mr A. E. Alander, secretary of the /Dominion Federation, at the opening ; sifting of the commission this morning. I Mr Alander said the manufacturers shared the general desire in New Zealand that the Empire, and especially the United ipngdom, should enjoy as large (as possible a share of New Zealand •import trade, and they endorsed the principle of a preferential tariff. It may be asked why the United Kingdom, ’ ’ he continued, “should need tariff preference (or protection) in the (New Zealand market. We ourselves are often told that New Zealand manufacturers are not justified in their exis 'tencc unless they are capable of holding ■ their own in open competition with the world. We are told that if an industry cannot hold the market without the assistance of a tariff, that industry is thereby proved uneconomic, and should die. That is the argument continually being used by free-traders in New Zealand in their attack upon the tariff protection of New Zealand industries. If that argument were valid —arid it is not—then it would be equally an arguijnent'against British preference.” The New Zealand manufacturer, ’•forced’ by the preferential tariffs to buy his materials from the Empire, was iplaced at a disadvantage in competing with the British manufacturer who bought his materials in the Cheapest ■ mafket. “I would say to the representatives of British industry, do not ask for reduction in those items of our tariff 'which are required for protective pur poses,” said Air Alander. “Do not be unduly hard upon New Zealand industries, do not press us too far, or you .may easily find that you have driven us to our final economy, which is the purchase of our plant and material /from the cheapest source, whether it vis Continental Europe, America or Japan. We do not wish to do this, and it vis .Surely in Britain's interest not to drive us to it.”

Something Besides Farming. Mr -Mander ridiculed the suggestion that New Zealand was, and must always be, primarily a huge farm, and disked whether the present was the time to contemplate the prospect of th to Ting tens of thousands more workers out of work by destroying the manufacturing industries. The problem was not how to create more unemployment, but how to enable New Zealand industries to continue to provide a livelihood for the workers now engaged therein and their dependents, and how’ to enable the industries to expand sufficiently to absorb a large proportion of the present un employed, togqther "with our natural increase of working population, about 10,000 a year, “It is often said that 9G per cent, of our national V’ealth (or national in come) is produced by the exporting farm industries,” continued Mr Alan dor. “The fact is, of course, that the national income consists of the return we obtain for our exports, minus interest payable overseas, but plus the value of all the goods and services produced and consumed in New Zealand. To suggest that our national wealth or income is confined to the return for exports, is grotesque. To suggest for instance, that- the farmer who exports butter is helping to produce our national wealth ir income, while the farmer who supdies the New’ Zealand market with butter is not, is patently absurd. The farmer wdio is producing butter or milk (or meat or eggs, or wheat or wool’; for the Dominion market, is jn.st as l much a producer of our national wealth income ns is the farmer producing for export, fto also, of course, is the NewZcaland manufacturer, whose position- in the national economy is similar o that of the farmer w’ho produces for J7e\y Zealand consumption. Any step.

■hen,, which Would put New Zen la ml industries out of business, would defljitely decrease Iho amount of our uatonal income. There would be so much :ho less wealth for distribution; the Jeople of New Zealand would be defmtely'sp much the poorer.

Increasing Imports. “'Nor could this loss be compensated by any increase in imports. Jt <s evident that, apart from new overseas burrowing,- wo cannot possibly import (and pay for) more than the sterling value of onr exports, minus .119,900,900 interest, etc.., payable overseas. In the days when our exports realised nearly £57,000,000 sterling, we could buy imports up to the value of nearly £48,000,000 sterling. But in 1932 our exports were- down to less than £32,000,000 sterling, which means that our imports could not have exceeded £23,000,000 sterling, the actual figure. Apart from overseas borrowing, there is, obviously, only one possible way of increasing our imports: that is, by obtaining more for our exports. By increasing the British preference under the tariff, the British manufacturer may be able to gain a larger share of our import, trade, at tlie expense of his foreign competitor. But that is all. No alteration in the New Zealand tariff, not exon the abolition of all duties, could increase by one shill ing the sterling value (or by one single ton the volume) of our total import-; from overseas.” Opponents Answered. If duties on imports must be reduced in order to reduce the cost of living, H was unreasonable to fasten upon just those particular imports which happened to compete with New Zealand industries, demanding the reduction of duly on those particular items. That was precisely what was proposed by local opponents of the tariff. If they came across some class of dutiable goods which must in any case be imported they said nothing, but whenever they found some class of goods that New Zealand could produce perfectly well for herself, they immediately commenced an agitation to have the duty removed from imports of that class. Admittedly the duty on tea and sugar was a “'revenue” duty, but so also was the duty on shoes and clothing, and all the other lines that competed with New Zealand's own products. The only difference was that the tea and sugar duties had only one use —they wore purely for revenue and nothing else--while those other duties served a double purpose, bringing in revenue and at the same time protecting New Zealand in dustrics and preserving the employment of thousands of New Zealand people, “I know of no purely protective duty,” said Air Alander. “Every item that is of protective value is of value also in raising revenue for the State. That revenue, if not raised by Customs, would need to bo raised by some other form of taxation. I do.not think it is always appreciated that everybody who urges that Customs taxation should be reduced is, by implication, also urging that some other form of taxation should be increased. If Customs were abolished today, the most 'likely' way of replacing the lost revenue would be a very large increase of sales tax. Tlio.se who advocate any reduction in the tariff should have the honesty and courage to admit that they arc in reality advocating a corresponding increase of sales tax, or its equivalent.” Must Not Be Reduced. If the manufacturing industries were crippled by reduced protection, there would be a. heavy Joss to the Stale in taxation—definitely more than £1,(100,000 a year, apart altogether from Hie loss of Customs revenue. Local bodies, likewise, would lose a substantial pnr lion of their rates. Power boards wonl-l be ruined, and the whole financial structure of the hydro-electric scheme's would crash. Businesses would lose', by the unemployment of industrial workers, tends of thousands of their customers. The farmers would suffer severely in their best market, the New Zealand market, it was surely the most irrational policy over advocated—that of converting tens of thousands of taxpayers into relief workers, and reducing tons of thousands of good customers to-poverty—for the sake of a principle, free trade, which had now been abandoned even by Great Britain herself. With New Zealand’s available means of paying for imports reduced by half, it was evident that she would have to cut out in future many of the lines she used to import in the days when, exports realised £5(1,900,009 sterling. The problem was how to discourage the importation of non-essentials, in order to leave the means of importing esson . Lais, or, in other words, those things that the country could not make for itself and could not do without.

Were t lie re no tariff,” declared Air Wander, “we should, I think, bo forced at this time to introduce a system of Accusing' imports. But a tariff can have Hindi the same effect. It can he used to discriminate among classes of imports, allowing the most needed to come most easily, and placing an ’obstacle of carefully-adjusted height in the way of the importation of things less urgently required. Cost To Community. -There is a widespread notion that the burden of the Customs tariff upon the community is V( . n . ll(l;|vi(lt . 11,;m !t is i " j ’""I. Way f sIIOW whni i; . '■oahy amounts In.’ I„ ppm 1]l( , jo(;|j tariff revenue was £ 1,i’00,000. But more than half of this sum—£i',l w .,. collected on alcoholic beverages, (o motor cars, etc. Deducting' tho*> ■D-ins, we are left with onlv V-> (,/„) ;i " ~l(‘ of our imports, -•iitish and foreign combined ThC "' W]{ * m.t at .Cl 7/- per head of the Population for the year. f]lis mnn must not, of course, he treated as Umeost of the protective tariff. Of the .t2,025,0i1(.) duty paid in If.-:- apart from ~n' h]xul y i,l ‘ms mentioned, probab'v at least one-third was collected in re?pect, oI ‘purely revenue-' items. The ‘dual purpose' items, revenue and protection combined, may be estimated at

roughly £1,400,000, or, say, IS/8 per head of the population. “This was protection, very moderate protection, but it was also taxation; and if the State had not obtained revenue in this way, then some other form of: taxation, additional sales tax, would have had to be imposed. The protective tariff cannot be regarded as a charge upon the purse of the community. It is merely a form of taxation which, while providing the Government with necessary revenue, also at the same time has a beneficial effect on New Zealand industries. The only ‘burden' upon the community is the necessity of providing revenue for the Stalin. The fact that the tariff serves a protective purpose also does not. increase the burden. On the contrary, by providing employment for tens of thousands of workers, and wages taxami income tax obtained from manufacturing companies, the burden of taxation upon tho rest, of Hie community is considerably lightened,’’

Inter-Trade Ratio.

Defiling wit It Now Zealand’s trade with Ore at Britain, .Mr Mander sn id that in 1052 imports from the Foiled Kingdom amounted to £12,0af),000 in New Zealand enrreney. The total tori O’ revenue collected thereon was £2,of)i:,(•00. Of that, however, £802,000 was eolleeted on alcoholic beverages, tobacco and motor ears. Excluding those items, the remaining imports were t’l 1,220,000, Ihe Customs duty eolleeted being £1,111,000. Thus the .average rate of duty was 0.0 per cent. The Dominion’s total imports were £20,000,000. Of those, £10,500,000 were obtained from Britain and the Empire, admitted cither duty free or under the preferential tariff. Those goods could have been obtained from either British or foreign sources; but £5,275,000 were duty free from Britain and the Empire, while they would have been subject to a substantial duty if imported from foreign countries. That had the effect of restricting foreign imports in those classes to £95?,000, as compared with, £5,275,000 British. Another £7,4(55,000 British imports, although subject to a moderate duty, would have been subject to double the duty if obtained from foreign countries. Foreign imports in those classes were thus re stricted, tor Britain’s benefit, to £.1,890,000.

“These figures,” .Mr 'Mander added, “show how extravagant and absurd is any suggest ion that New’ Zealand is a. country of high tariffs, particular!v iu regard to trade with the United Kingdom. In the light of these figures, it is no wonder that the British Ministers at Otjawa tell that (here was verv little more that Britain could ask of this Dominion.” At llte eonchisie.il of Mr Mander's evidence, the commission adjourned until today, when the evidence of several Wellington importers will be taken.