PROTECTION DOES NOT MEAN HIGHER PRICES

NZ Truth, Issue 1079, 29 July 1926, Page 5

PROTECTION DOES NOT MEAN HIGHER PRICES

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HIGH DUTY MDJLOW PSCES

(By "Truth's 11 ; Managing Editor on Tour.) Do prices advance under Protection ? ' . Free Traders a'sserj that they do, and they declare that a higher tariff immediately iiiearis increased priced, thus placing a further burden upon the already overburdened shoulders. oJ; John Taxpayer-. „ '.>.-■ ; ;■:';• '• • ' ■*■>■■■■-:.;. ■ •,:/'.■••■.•'» ,-:•-:.. t■: •'^ ■;&?■■ ;'•>-• ; v BtfT IS NOT THE CASE. PROTECTION DOES NOT MEAN HIGHER PRICES.

THIS is very clearly demonstratedC by Australia's experience, and since New Zealand conditions very closely resemble those existing m the Commonwealth, there is no justification for believing that our experience would be dissimilar if the present Dominion tariff was materially increased to-morrow. I It is certain that we would derive the same benefits as has Australia, and no amount of arguing will alter the Jiruth of this statement. It is unchallengeable. ; £. The Australian tariff is much higher than oursVv and averages about. 45 -.per cent. In many.:-., cases, however, the duty runs .a" -"great 'deal higher, and when alt, ■•increase is made if- is. not limited to : a trifling 5 or .10 percent. CAME DOWN For instance; the Australian duty on internal combustion engines imported from America .was recently raised; and the increase is, typical of -the Federal j Government's method. It went up byj 20 .per cent., jumping, from 40 to 60 (per cent, ad valorem. ' Under this heavy tariff prices are extremely low— much lower , m some crises than m New Zealand, where the tariff is but a farce. The Dominion is virtually a Free Trade country, arid does not extend anything like the protection to its industries that the Commonwealth does. Yet not only is the price of the home-made article ■ cheaper m Australia than m New Zealand, but so also is the imported article m certain cases, and the difference m cost is very often substantial. ' An imported 2^-h.p. engine •ells m Australia*for £55. An

3 : : — ■■ — identical imported engine' costs £10 more m New, Zealand. A 3[/2-h.p. engine costs £84 m. New Zealand, and but £72 m Australia, a difference 0f.£12. ; • - This instance provides conclusiv I proof that prices m a Free . Trad country are higher than m a countr with a high protecting tariff, and : suggests that either the overseas tin is paying out of its own pocket th Australian' ''duty m order to retain share of the market or that it is mal« ing an excessive' profit m New. Zea land. -„.•'• .•'.-'. ■■■■'■ :'.■:•'■ -■•-' t When, the tariff, on American-mac] farm engines . was increased f com 4 to 60 por. cent, m 'Australia, the pric br the imported article promptly fell The iy 2 -h.p. stationary engin di opped from £34 10s ;to\ £31 1 0t the 3-h.p. stationary from £63 to £5 and- the 6-h.}). "stationary from . £13 to £95. :"■;-■ ...-•■. . ; Boots m Australia are a great dei cheaper than m New Zealand, thoug m this connection it has iq be remenbered that "the Australian boot is nc of the same quality as the New Zea land. The former is lighter and n( so stoutly made, being manufacture .for the easier conditions of the Coir monwealth., : . ■The' average selling pric^e for bool m London,' however, ;is recognized i b« above that of the Australian-mac boot m, say, Sydney. .That being s is it- not simply wisdom for a countr to develop and foster its secondar industries,? ''. :. ;. Imported ■s.teet split pulleys at or time had control of the Australia market. Then an Australian fir m coir

menced to manufacture •■ these pulleys m Sydney, and a departmental inquiry showed that the price of imported steel split" pulleys m Sydney was -86 per cent, lower than m Melbourne, where the importer did not have to meet local competition. ' Recently an Australian manufacturer undertook the production of certain motor gears which were being admitted into Australia on a 10 'per cent. duty. The duty was promptly raised to 55 per cent. The Australian manufacturer cut m halves the prices that were being charged for. the gears, un,d.er the .10 per cent, tariff.. In other words, the "AM°s'tr'ali'an-^ma'de gears were marketed at half the • price - that had been charged for the imported gears. ■, -. v : "■... '.That .does, not finish -the- story, how- ; eyer, fforr r the imported gears were at once sqld ' at prices that ■[ were 10 per cent, lower than those of the Australian gears, and, according to ' a report of the Australian Tariff Board, "the new price still returned a good profit to the importer." LOWER PRICES It does not. necessarily follow from these instances that importers make large profits m all cases. ; They may : m some instances and on .certain lines, particularly if. these- lines' .are surplus stocks;' n nd are being .dumped into a particular .country; but the;, point is, . ai; the Tariff :.jioard's report empha- -,' Sizes,. -.(.hat "oo.ntrol of prices is. possible .m one case li[uL. : not : in, the .'other." Australia's '.' experience,'" however, shows very conclusively that a high tariff does not mean higher prices, and where imported goods are selling m /New^ Zealand at lower prices- 'than i iii'Austi'alia these prices are not below the 'level of th 6 "Australian -made product m the Commonwealth. New Zealand s should .be, guided by j Australia's example, and l greater proteptiori, 'should be extended to our ; secondary industries. ' Such a policy if adopted m the Dominion will mean MORE EMPLOYMENT, LOWER ' PRICES AND INCREASED ! PROSPERITY, BESIDES ASSURING FOR THE PRIMARY : PRODUCER A MORE STABLE HOME MARKET. . .■• Woods' Great . Peppermint Cure, . , 'For Coughs and Colds, never fails.