THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, DECEMBER 5, 1921. THE TARIFF POLICY,

New Zealand Herald, Volume LVIII, Issue 17956, 5 December 1921, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, DECEMBER 5, 1921. THE TARIFF POLICY,

The Government has been well advised in circulating the report of the Tariff Commission, if only'because the report makes the Customs Duties Bill more intelligible. It is abundantly clear that whatever principles underlie the revision of the tariff are derived from the investigations of the Tariff Commission. The anti-dumping provisions, the attempt to make the tariff more flexible, the desire to negotiate reciprocal duties, both with British Dominions and foreign countries—all these find expression in the report of the Tariff Commission and afford at least the nucleus of a reasoned tariff policy. It is true the tariff and the Bill now before Parliament do not flatter the commission, because some of its most interesting recommendations have been ignored and others twisted almost out of recognition. The commission, for example, proposed to increase the elasticity of the tariff by the suspension or imposition of duties on expert recommendation, but it is careful to add that such changes should not have effect until ratified by Parliament. The Government proposes, under very extensive powers of Orders-in-Council, to make the changes first and consult Parliament afterwards. The commission indicated that luxuries should bear a higner rate of taxation and that some attempt might be made by the remission of duties to lower the cost of living. The first precept has been • very faithfully observed, but the application of the second is not so apparent. Again, the commission proposed that the Government should promote scientific research and development in protected industries. If this policy has been adopted it has yet to be brought into action. Among the more important of the specific recommendations is one for the termination of the South African reciprocal treaty. The commission makes out a prima-facie case for this when it states that in 1920 New Zealand remitted £18,491 in duties on South African goqds, all but a negligible amount being on wine, and in the same year the duty remitted on New Zealand goods entering South Africa was only £64. Another argument, not mentioned by the commission, for reconsideration of this treaty is that it extends to South Africa rates in some instances below the British preferential tariff. Although South Africa does not compete in the classes of goods the United Kingdom sends us, the precedent is not a desirable one. > The commission devotes the major portion of its report to a discussion of the nature and effects of protection. Much of its argument is unexceptionable, if a trifle unnecessary, since the New Zealand tariff has had a distinctively protective intention since at least 1895, and there is now no possibility of abandoning that bias. The commission' summarises List's doctrine that in the initial and final stages of a country's development free trade is the right policy, but that in the second stage, when it is striving to develop manufactures, protection is necessary. Even free traders may admit that the commission is scrupulously moderate when it argues that the Dominion is at present in the second stage, and, applying the same principle to particular industries, suggests that when thoroughly established they should be independent of any fiscal assistance.. The difficulty is that industries never take kindly to the loss of protection. Many New Zealand consumers would waive even a theoretical objection to protection if ( they were satisfied that in practice it was a temporary expedient. This is a very important question to consumers and one which merits far more exhaustive inquiry than either the commission or the Government has given it. Are the manufacturers of New Zealand building behind the tariff wall, preparing themselves for its ultimate removal, or are they building on the tariff wall, incorporating it as the basis of their industries? Is the tariff' in practice an instrument for increasing profits, or is it the price we legitimately pay for superior labour conditions and for the industrial apprenticeship of our young country? The commission does not attempt to answer.these questions, but it is to its credit that it suggests means for determining them. It lays down the principle that protection, apart from anti-dumping provisions, " should be regarded as a temporary measure covering a period long enough to ensure the due development of the industries concerned," and that several years' notice should be given of the removal of protection. It assumes, though apparently without investigation, that no industries are yet sufficiently established to stand on their own feet, hence the recommendation that no protection hitherto granted should be withdrawn except for the most cogent reasons. To safeguard the consumor the commission suggest* that the'profits of those ongaged in protected industries should be subject to periodical investigation by an authority such as the Department of Industries and Commerce. The commission apparently leans toward a form of price-control, but this is under any circumstances undesirable. It would be preferable if the

—— ■ -~ _—_ —. ■ ■ i •——-- ■;■ ; — ■ ;- Department of Industries! : and- Com-' merce ';..simply ■ reported 'industries which were abusing their protection and left Parliament to lower, or. abolish the duty. In Australia the; fear that duty might be converted simply into -..manufacturers' profit found expreusion in the policy of the " new protection," and'there-is much to be said for the checks suggested by the commission. The defect of the report is that its somewhat superficial observations afford no basis for the guarantees which would satisfy the consumer that the tariff is operating scientifically to stimulate local industry without unnecessarily penalising the public. Furthermore, the Government has enunciated no policy for protecting the consumer. The Tariff Commission laid it down that any new industry desiring a duty in its favour should be called upon to show that it represents a substantial amount of capital, that it is fully equipped with modern appliances, and that in quality and quantity its output is of some importance to the Dominion. It would 1)e interesting to know whether the industries now brought behind the tariff for the first itime have satisfied these conditions. It would be f.till more interesting to know whether, having widened the range of protection to manufacturers, the Government has a policy for the protection of consumers.