TARIFF INQUIRY

New Zealand Herald, Volume LXX, Issue 21521, 19 June 1933, Page 11

TARIFF INQUIRY

NELSON IRON INDUSTRY

CLAIM FOR PROTECTION

ASSISTANCE FROM STATE

* DUMPING " BY AUSTRALIA

£bt telegraph—own correspondent] "WELLINGTON, Saturday

The problems of the Onekaka Iron Company (in liquidation), whose works are at Golden Bay, were placed before the Tariff Commission to-day. Dr. G. Craig, Comptroller of Customs, presided.

Charles Gilbert Whyte, receiver on behalf of the debenture-holders, said that pig iron was at present admitted free into the Dominion. He suggested that this should continue to apply to pig iron from tho United Kingdom, but that a duty of 20 per cent should be placed on other Empire pig iron, and a duty of 30 per cent on all foreign supplies. The/ iron industry, said witness, was a key industry of tho Dominion and, in addition to the capital invested by the shareholders, the Government also had a, financial interest in the company. The Government also collected a royalty on the iron extracted an d on the coal used in connection with the smelting operations. Tho whole of the material used was obtained in the Dominion, and thus the money expended was circulated within the country. Seventy men were employed at the works and the industry also provided employment indirectly to coal miners and transport workers.

Australian Exchange Advantage

Before operations were started at Onekaka, the cost of imported pig iron was £l3 a ton; with the commencement of the New Zealand industry the price was lowered to £8 a,, ton. With the depreciation of the Australian exchange the company was subject to competition from the Commonwealth, which it considered amounted to dumping'. If it obtained the New Zealand market it could cater for its requirements. It looked upon the industry as a primary one, because all the raw materials were obtained within the Dominion.

Prior to the fall in the Australian exchange little iron was marketed in New Zealand from that source, but with the help of this factor Australians were able to undercut the New Zealand product. The Dominion consumer appeared to have adopted a shortsighted policy; he preferred to buy Australian iron at from 5s to 7s 6d a ton cheaper, although the aggregate saving on the total amount imported was only about £750 a year. As a result of this small saving, 77 men had been thrown out of work for three months, and about 30 miners, as well as transport workers, had also been affected. The result was that over 100 men had been put out of work by the use of about 3000 tons of Australian iron. /

Gost of Australian Iron

"We have maintained for some time," said Mr. Whyte, "that the operations of Australia are dumping operations. The provisions of the dumping legislation may not be construed by the Customs Department to meet the case, but we submit that if the boot had been on the other foot they would have been." The price of Australian iron at the principal ports in the Commonwealth was £5 5s a ton, he added, but iron had been sold at £5 17s 6d a ton in Cbristchurch, notwithstanding the fact that it cost 25s a ton to ship it to New Zealand, and a further 10s lid a ton to land it in Christchorch. By the time those costs were deducted it could be seen that the Australian consumer was paying a higher price than the New Zealand price, minus landed costs. Australian iron was protected by a duty of £1 a ton, but the price was so low that the shareholders of the company were receiving no return. If the industry in, New Zealand was protected it could be placed on a profitable basis. Company Aided by State

Professor Murphy pointed out that * the balance-sheet of the Onekaka Company had shown consistent losses in spite of the fact that the company had received assistance from' the Government. He felt some concern as to whether the iron industry in New Zealand should be protected. Mr. Whyte replied that if the company was protected from unfair competition from Australia it would be able to place the industry on a profitable basis. Professor Murphy said the company had received £BO,OOO from the taxpayers in the five years it had been receiving the bounty and it owed the Government £35,000. On a prima facie examination the chances of the Government getting a penny in the pound back were nil. (Mr. Whyte: You do not suggest that We should rQpaj' the bounty? Professor Murphy: I do not suggest that a steam hammer should be used to crack a nut. He added that every time he looked at the balance-sheet it appeared to be worse. The company had been going to the bad in the Inst two years at an accelerating rate. He asked whether it was likely that the duty would make a difference in the future. /Mr. Whyte replied that since he had taken charge on behalf of the deben-ture-holders he was convinced that the industry could be made to pay Provided it was not subject to unfair competition from Australia. Protecting a Single Industry Professor Murphy pointed out that the Indian Tariff Commission and the Australian Commission had both emphasised that it was not a wise practice to protect; a single industry. Ho asked witness whether he was of the opinion that a single industry should be protected by a tariff or bounty. Mr. AYhyte replied that he did not think that the bounty was the correct way to deal with the position when iron was being dumped into "the country. The company only wanted to ho safeguarded against dumping. At present. it was able to work the blast furnace for three months only. If the furnace was working continuously the Company would be able to reduce costs. L)r. Craig asked whether the company was supporting a duty on pipes. / Mr. Whyte replied that ho was not making any direct application, but ho would support an application which TVfis coming from another source. Dr. Craig asked whether the company would again make pipes. Mr. Whyte replied that it would if they could be made to pay. The requirements of New Zealand were somewhere about 9000 tons in good times and the plant was capable of producing 30 tons a day. The furnace was a Replica of that used* in Australia, fe Replying to Mr. G. A. Pascoe, witness said that New Zealand ore compared favourably with ores in other parts of the world and it could he made to any specification. Two or three foundries preferred Australian iron because it was cheaper. Mr. Pascoe: Are there any foundries Which say it is not suitable? / Mr. Whyte said that two foundries Mid they obtained better results from Scottish iron.

h The representatives of the company Srere further examined in camera.