THE TARIFF AGREEMENT

Otago Daily Times, Issue 18624, 4 August 1922, Page 6

THE TARIFF AGREEMENT

MINISTER OF CUSTOMS EXPLAINS. ANSWERS TO OBJECTIONS. HOUSE URGED TO ENDORSE agreement. ! (From Oue Own Correspondent.) WELLINGTON, August J. When moving tho second reading of the Reciprocity Tariff (Australia and New Zealand) Ratification Bill in the House of Representatives this afternoon, the Minister of Customs (the Hon. W. Downie Stowart) answered some objections that have been made to the draft agreement. He asked the House to endorse the agreement as a whole, and indicated that he would be prepared later to negotiate with the Australian Government regarding certain adjustments. The Minister said that he had been very gratified at tho reception accorded the draft agreement throughout New Zealand. Tho objections that had been received had been very few in number, aaid he thought they could he answered satisfactorily. One or two points he wished to mention at once. A suggestion had been made in Dunedin that, having arranged special rates of duty on selected item?, ho should have sought to bring the Australian duties and the New Zealand duties into line so far as the remaining items of the tariff were concerned. The agreement provided that each country should charge its British preferential duties on the remaining items, paid it happened that the Australian preferential duties were higher than the Now Zealand duties. His reply to this suggestion was that the special duties, covered all the items in which the two countries were mutually interested or were competing. Ho bad been advised that the creation of a special schedule to cover the remaining items would merely have complicated the work-.of the Customs Department without conferring any benefit on either country. The raising of the Now Zealand' duties to the level of the Australian duties would merely have penalised tho New Zealand consumer without giving any advantage to the manufacturer, Mr Wilford (Hutt): That is a- question in some coses.

Mr Downie Stowart: I think members will have difficulty in pointing out cases where, advantage would have been gained Dr' Thacker (Christchurch East): Why are Cadbury and Co. going to Australia to manufacture chocolates?

Mr Downio Stewart replied that Australia had made exactly the 51 istake that some members were now inviting the New Zealand Government to ma-kc. The Australians put a prohibitive duty on confectionery in the interests of their local industry, and immediately the British manufacturers formed a huge combine and erected works iu the commonwealth, where they were competing with and seriously embarrassing the/ Australian, manufacturer. Tho New Zealand firms were in a good position. They were getting their sugar for less than £34 a - ton, while the Australians paid £49 a ton, and they had a protective duty of 2d per lb. Against the Australian goods the freight was an additional protection. Ho had thought when the main tariff was under consideration in December last that confectionery oould reasoiiably carry a large duty, but he had become convinced that the effect of a big increase in the duty would be to bring the British firms into the dominion., If the large British firms could not reach tile, New Zealand market through the tariff they would proceed to manufacture within the dominion, and would threaten the existence of the local industry. The Australian Government had agreed that the rebate of £2O a ton on sugar allowed to the Australian manufacturers of confectionery should not be paid on goods produced for export to Now Zealand. In return for this concession Now Zealand under the agreement was reducing the duty on. the Australian confectionery from 3d to 2d per! lb. The New Zealand manufacturers ■were using up-to-date machinery, and ho was satisfied that the effect of a largelyincreased protective duty would be to bring the Bntish firms here.

Mr D. G. Sullivan (Avon): What would he the effect upon the workers? Mr Downie Stewart: It would probably throw out of employment the people employed by the local firms. Sir G. Mitchell (Wellington South): The British manufacturers would employ labour The Minister: You are suggesting that it does not matter if the New Zealand manufacturer is driven out of business, and his capital is lost -Mr Mitchell: I don’t mean that at all. Mr P. Fraser (Wellington Central): There is a good deal to bo said for that point of. view. Mr Downie Stewart said that if there were items that had escaped attention when the agreement was being drafted the reason was that the people concerned had omitted to- make representations. He had invited manufacturers and others interested to put their oases before him prior to his visit to and all the representations njad?,: had received consideration. He had received .communications regarding several items, since the publication of the draft agreement. He could not have been os pected to know that the people interested in .these items desired more protection than had been given them by the general tariff in December last, and they muss largely take the blame for their present difficulty. He had pointed out already that enormous difficulties would arise if on at tempt were mode now to review items of the agreement. Representations had como from Dunedin and Invercargill about citrus fruits. The position was that the main tariff approved by the House last session had' provided that bananas, mandarins, oranges, and grape fruits should be admitted'' free of duty from. British countries, and should carry a duty of one penny per pound if imported from foreign countries. Later Australia was placed temporarily on the foreign tariff, and the duty was collected on Australian fruits, but the Australian fruits would be free again when the present agreement had been ratified. There was a conflict of interests. The southern districts wanted to get the oitrua fruits as cheaply as possible, while the northern ; districts wore producing citrus fruits to some extent. All lemons carried a duty of _ one penny per pound, this protection being given for the benefit of .the northern districts and Rarotonga. Ho thought that most of the importers of fruitwere satisfied now, since they imported mainly from Australia. Then ho had ro ceived a complaint from the leather indus try. The manufacturers were not agreed on the point. The Woolston Tanneries (Christchurch) expressed approval of the proposal contained in the agreement. Mr Atmore (Nelson): Are they not starting in Australia? The Minister: They are hoping to compote with Australia. They are going to export leather to Australia under the new rate of duty. The Auckland and Dunedin tanners are not satisfied with the new rate of duty, although we have increased the duty on sole leather from 2d to 3d per pound. Another objection had been made in connection with motor bodies, continued the Minister. Tire builders of motor bodies had been given the protection of a small fixed duty, os well ■ as of the percentage duty under the main tariff. He was advised that Australian motor bodies had not entered the New Zealand market to any extent, because the New Zealand firms were producing a British body, and the Australian firms' an American body. Sir John Luke (Wellington North): Ours is a much better body. The Minister added that the Now Zealand firms had a further advantage, owing to the- fact that they did not pay the high duties that the Australians paid on their raw materials. He had not received any representations regarding motor bodies before going to Australia. Mr L. M. Isitt (Christchurch North): They deny that they say that they waited upon the head of the department and he would not hear them. The Minister said there had been considerable discussion in the House on the subject when the main tariff was under consideration. Later the builders of motor bodies had complained to him bitterly. Ho had to make the best adjustment he could between the interests of the importers and the local manufacturers. A complaint had come from Auckland within the last few 'days regarding com brooms. Dunedin and Christchurch had also made representations. He had discussed the question wilh representatives of the industry that morning. Ho saw groat difficulty about meeting their position. The broom manufacturers had been, granted 25 per cent, protection in the British preferential tariff, and primage, etc., brought the protection up to 28i per cent. They claimed that they could not face Australian competition. He could not say yet

whether something could be done to moot their wishes. The only other representation that he remembered having received related to oats. Whn the Tariff Commission was tailing evidence in Christchurch last year the people interested in the oats business asketl that the duty on oats should be maintained, because they feared serious Australian competition. The Agricultural Department had advised that it would be dangerous to remove the duty, and possibly allow Australian oats to flood the New Zealand market. This was a product that might be held in excess of requirements in ono country or the other in any year. He had received within the last few days a communication from Invercargill stating that if New Zealand oats could secure admission to Australia it would bo a great advantage to growers who were unable to find a market at present. It appeared that Southland fanners wanted an Australian market, while Canterbury growers were afraid of Australian competition. He had ee P by die Agricultural Department that a reduction of the Australian duty on oats, without alteration of the New Zealand duty, would l-eneCt the local growers of oats, lie had received many communications approving of the agreement, but need nob discuss them. The Minister emphasised again the difficulty of amending the draft agreement before it was ratified. If New Zealand suggested alterations affecting certain items, and if Australia made other suggestions tho negotiations would be bound to bo nrolcnged, and the whole agreement might be imncrilled. His own view was that the House*should adopt the agreement m globo, then later it might bo possible for hup to arrange certain minor amendments relating to items that had boon mentioned. Iho Minister wont on to say that there was one item tho Australians were very much concerned about, that they had forgotten during tho negotiations, and that was dned fruits. They were particularly keen about that, because they were settling numbers ot returned soldiers at Mildura. they , had been supplying Now Zealand with “jed fruits without raising the price but they wished to ho able to compete with bmyina and other places on the Mediterranean, where cheaper labour obtaihed. When New' Zealand put the suspended duties, in the tariff last year it was partly with a mew to' negotiating with Australia- He had been able to negotiate with Australia without using that, and he was satisfied that tho bargain he had made was sufficiently good to warrant him in not discussing that item at the time. The Australian Government had, however, been very persistent since that the point be conceded, and within the past few days ho had received three cables on the subject. He had replied that there could be no modification of the agreement at tlie present juncture, as that might imperil the whole agreement, but that the point might Ipe loft over for future negotiation. In conclusion, speaking- generally, ho suggested that the House should agree to tho proposals as they stood, with a view to adjusting them afterwards by; way o£ bargain in regard to such an item as dned fruits, which could be dealt.with aeagainst other items such as oats, etc. That, he believed, was the amplest and. quickest way to bring the matter to a satisfactory conclusion. He thought tho House would realise that it would bo more - satisfactory to have the agreement adopted as it stood, land afterwards there might be further adjustment in regard to representations made It a later stage. So, also, they might ho able to deal with other items in regard to which representations had not been made. If anything could bo done m this direction it was his desire to help as talas he could. Ho thought the House, m considering tho Bill, should take a broad view of tbe whole question, as to whether it was advantageous to New Zealand to adopt the agreement as it stood and leave it to subsequent negotiations to make tho best agreement possible. With regard to items on which special representations might be made, ho would be glad to hoar the views of hon. members, and to explain any points they might raise when he replied at the end of toe debate.

DEBATE IN THE HOUSE. (Pbb Ukitid Press Assooiatiok.l ■WELLINGTON, August 3. Mr T. M. Wilford contended that the establishment of a Tariff Board, working m conjunction with various industries, and advising tho Minister, would have enabled tho Minister to undertake the Australian negotiations armed with a better knowledge of tho subject. Now Zealand could not disregard the fact that whore goods n.o.e. are dealt in as between New Zealand and Australia tho result must he generally to the disadvantage of New Zealand. Mr Wilford feared that under the proposed tariff Australian woollen and textile -manufacturers would bo able to undersell the New Zealand manufacturer in the dominion. New Zealand might at least adopt tho same (ariff thereon towards Australia as Australia does to Great Britain. He commended tho bargain made in regard to timber, but ho hoped New Zealand s own requirements in tho matter of local woods would he fully conserved. Ho thought New Zealand agricultural implement makers would benefit under tho tariff. The reduction of tho oats duty from 2s to Is 6d per cental left the impost still 100 per cent higher than it was before December last.'. Mr Wilford asked how the additional 9d was made out. If the Bill stood as proposed it would smash every motor body-making firm in New Zealand. New Zealand motor bodies were of better quality than the Australian, but the latter, througn larger production, were cheaper. He appealed for consideration tor the glass bottle manufacturers, and pointed out that companies had scent £30,000 on the erection of works near Auckland, and were now compelled to stop building operations. The new tariff had simply smashed them. Tho Hon. E. P. Lee thought the agreement generally advantageous to New Zealand, which he pointed out did not interfere ’ with the dominion’s powers to prevent dumping. Regarding tho duty of 10 per cent, against Australian bottles, this would not affect the Auckland works, as any bottles coming from Australia would bo from the same company’s works. He added that the impost as against Great Britain would, • however, benefit the Auckland manufacturer. Mr T. K. Sidey said Australia’s settled policy for years had been tho encouragement of local industry to an extent that had not prevailed in New Zealand., Australia had a high protective tariff, and New Zealand was content with- giving special protection to her industries, and with hav ing a general revenue-producing tariff. New Zealand manufacturers were up against high duties. . ..... Mr Massey: And production m Australia. ■Mr Sidey said that company taxation in tho dominion had also seriously affected the manufacturer’s position to such an extent that if ho wanted to compete in the Australian market, tho combined taxation and duties amounted to as much as 33 1-3 per cent. He advocated charging the same tariff as Australia did on all lines in the tariff schedules, not on a specially selected list. New Zealand should foster every industry possible. He contrasted instances of Australian and New Zealand duties in various items, wherein the former were on an average 50 per cent, higher. The Minister interjected that Mr Sidev was mistaken. Most of the items he had quoted were on the same level of duties both ways. Mr Sidey instanced complaints from woollen mills, and soap makers in Dunedin, regarding tho effects of tho new tariff on their operations. They were also afraid of tho dumping of Australian goods on tho New Zealand market, Australia, he was sure, would reap by far tho greatest benefit from tho new agreement. Mr V. H. Reed pointed out that New Zealand formerly exported a greater value of goods to Australia than sho imported therefrom, but the commonwealth’s adverse tariff had since caused a serious chock to our exports, though tho imports wont on increasing. It was surely time some tariff arrangement was made to remedy such a position. Mr R, M'Oallum (Wairau) said that two great Lilwal leaders, tho lato Mr Sedrlon and Sir Joseph Ward, wore of opinion that wo should have commercial reciprocity with Australia. This would he all very well if it could bo shown that tho financial advantage would bo about the same; hut the Minister had not shown in this easo that the financial advantage was nearly equal. As the representative of a fanning district, ho was bound to say that tho agricui'mral interests had been sacrificed to tho secondary interests. At the same time he frit that he was not competent to discuss the details of tho proposals, and therefroo he proposed to move that the second reading of tho Bill bo postponed, and that it be. referred to a special committee, wlijch would take evidence and report to the House within 10 days. He saw no reason to rush tho proposal through, and ho thought it would he advantageous to parley a little.

Mr J. Horn said the concession on oats was all very well, but people in the south could not, take advantage of it because tho shipping was so intermittent that any orders could not. he filled in the specified lime.

Mr A. Harris -(Waitemata) said we hod made too good a bar-gain to rislk it’by delay. Ho therefore had no sympathy with Mr M'Callum’e amendment.

Mr J. M‘Combs (Lyttelton) attacked the Government on its sugar contract with tho Colonial Sugar Refining Company, contending that the price was being held up against tho consumer in the interests of tho company. Tho Hon. E. P. Lee replied that the reduction of 3d to Id per lb in sugar, announced a few days ago, was most, disastrous to Mr M‘Combs, because there was nothing more fatal to him and his party than a reduction in the cost of living. The Hon. J. A. Hanan complained that they were being asked to consider this important matter in the absence of the fullest information regarding many items. He wanted to know whv all this rush? Dr Newman said that only tho experience of one year would disclose whether New Zealand or Australia had got the bettor bargain. lie put in a plea for a further protection to minor industries, notably the chocolate industry. Mr C. E. Statham complained that the House was asked to ratify the agreement, but under the Bill the Minister could, by negotiation, alter any item he pleased without ratification by Parliament. The debate was continued by Messrs Malcolm, Lysnar, Forbes, M'Nicol, and M‘Cal him. Tho amendment was then put and lost on tho voices. The Minister then briefly replied, devoting most of his remarks to statements made by the president .of tho Otago Industrial Society, with a view to showing that that, gentleman’s figures wore completely mixed up, He denied Mr Statham’s allegations that tho Minister could alter, the treaty without reference to Parliament. Changes could bo made only by Ordor-in-Council, and those orders must be laid before the House. In answer to a comment that Now Zealand was getting no benefit by the treaty he quoted figures to show that, under present conditions, trade with Australia had practically disappeared, and the now conditions could not be worse than they are. Tho treaty would come into force on a day to be arranged, and that would bo proclaimed. ’

The Bill was then read a second time on the voices. The House rose at 11.45 p.m. THE PRIME MINISTER. • (From Ouh Own Correspondent.) . WELLINGTON, August 3, An assertion/ that the. tariff treaty arranged by the Hon. W. Downie Stewart on behalf of New Zealand would sacrifice the interests of the farmers of the dominion to some degree to those of the secondary industries was made by Mr R. M’Oallum (Wairau) in the House to-night. He thought the House should seriously consider the items of the-agreement, and moved as an amendment that the second reading of the Bill be postponed in order that a special committee might be.sot up for the purpose of taking evidence and submitting a report to the House within 10 days. The Prime Minister congratulated the member for Wairau on assuming the position of ono of tho Leaders of tho Opposition. , . . Mr M'Callum: Oh, we have a lot of chiefs over here I A Reform Member: But you have not got much of a tribe. - Mr Massey said many attempts had been made to bring about treaties of the kind, but without success, and he thought the House should not delay in ratifying the treaty, as any time lost would probably mean the defeat of the measure. Ho hinted that if the agreement was in the interests of any section, it was in the interests of the farming community. Now Zealand had placed Australia on the foreign tariff last session..- for the purpose of bringing the Australian Government to reason. The New Zealand Government had felt that Australia was not treating New Zealand fairly. Mr M’Callum: They postponed this for a week to-day. Mr Massey said that it might bo so. It was not a good indication. Ho would have preferred to see that Australia had passed the agreement into law at once, and leave it to later negotiations to remove any minor defects. 'The New Zealand Government was not laying itself open to any charge of passing the agreement into law- at lightning speed, as one member had suggested. Tho treaty had been before the country for about a week. The newspapers, or the great bulk of them, appeared to be very strongly in favour of it. Complaints would naturally go, of course, to tho Minister of Customs, but so far as ho could remember he personally had not received a single complaint. The treaty was meeting with the approval of the people. No .treaty could bo perfect, and no doubt when this one was passed into law fault would be found with it, and amendments would have to be negotiated for; but it was a good arrangement from any point of view, and he hoped that it would not he many days before it was signed by the Governor-General. When the Bill was on the Statute Book it would have the effect of increasing trade between Now Zealand and Australia. He was further of opinion that it would bring about an increase in tho volume of the exports from New Zealand to the commonwealth. In all probability, owing to tho much greater population of Australia, the balance would remain in that country’s favour, but the treaty would do good and remove a feeling of soreness that had undoubtedly existed for some time past. \Yith regard to one item in the treaty Australia had scored, and was entitled to score. The item was wine. The tariff on wines from South Africa had been something like 2s a gallon, while that on Australian wines had been ss. On sparkling wines the rates had been higher. Mr Wilford: You can’t find a bottle of South African wane anywhere.

Mr Massey replied that in 1920 the quality of Australian wine imported into New Zealand had been 112.902 gallons, and the quantity of South African wine 125,750 gallons.

Mr Wilford: My point was that wines from South Africa are not sold as South African wines. 1

Mr Massey replied that ho was not able to give an opinion, on that. He know only of what passed* through the Customs. He thought this country had been treating Australia very unfairly in charging its wines a duty double that which the Slouth African wines were charged. New Zertland was doing right in putting the two countries on a level footing. He had heard the Opposition Leader— “Number one Opposition Leader”—talking .about the establishment of a tariff board. He did not think that a board would be of any use. The Customs Department had a very efficient Comptroller at its head. If a board were set f ,up it would mean that four or five men would have to be paid high salaries for not doing the work any better than it was being done, and, incidentally, if th e Government had proposed to set up a board there would have been an Opposition protest against “government by board.” In Mr Montgomery he believed New Zealand had one of the best possible comptrollers. Ho doubted if Mr Montgomery’s equal could bo found in the Empire. The second officer in command was also a particularly good man. The Prime Minister proceeded to refer to particular items in respect of which New Zealand had obtained concessions from Australia. Ho did not know, ho said, whether there would be a big trade in butter and cheese from this country to Australia, but the English people expressed the opinion that New Zealand butter and cheese were superior to the Australian products, and a demand might, grow up among Australian epicureans for this country’s butter. As the dairy industry developed. The output of hams and bacon in New Zealand would develop, and if the Australians desired this country’s hams and bacons they could be supplied. Ho looked on Australia as a good prospective market. He did not know whether it would be possible to do anything in regard to oats. The Minister Of Customs had been able to bring about a reduction in the duty on oatmeal, exported from Now Zealand to Australia. There was undoubtedly a surplus of oats in Now Zealand at present, and he thought the position would remain the same for many years. If Australia could bo induced to still further reduce the tariff on oats it would bo a good tiling for New Zealand. A great deal might lio done in negotiations on this point by offering Australians a concession in respect of dried fruits. If New Zealand gave the commonwealth an improvement in the duty on dried fruits, and Australia gave in exchange an improvement in the terms <>n which rats were submitted. ; t would bo a good thing for both countries. There wore other items on which the public of New Zealand had gained. There was tea. for instance. While Australia was cm the foreign list tariff the duty on tea coming through Australia was 5d per Ih. as compared with a duty of 3d on tea from other parts of the Empire. That distin'c lion would bo done away with, when 'Australia came off the foreign tariff. A very important, change was that which made it possible for New Zealand, to send its fish free into Australia, lie did not suppose for one moment that New Zealand had the same quantity of fish in its waters that the United Kingdom or Canada had. but it had good fish in largo quantities, and if it could find a market, as he believed it could, in Australia, the. people of this country would benefit. The duty on hops it was proposed to reduce from Is per 11> to 9d per lb [into the commonwealth). “Whore is the member for Wairau?‘’ asked Mr Massey jokingly. “We may have to export our hops in large

quantities after next election, and I don’t think we ought to turn down this market.” The reduction in the tariff against onions from this country, the Prime Minister continued, was from £6 a ton to £1 under the terms of the treaty. Agricultural machinery made in the dominion would pass inlo Australia free of duty. That was a very important gain. He had known of English firms which hod sent put to New Zealand for models in order to copy implements made there. He expected that the implement makers would ho able to da good business with Australia. He very strongly recommended the tariff to the House. It was not perfect, but neither was it like the laws of the Modes and the Persians —an impossible one to alter. When the treaty had been agreed to on each side either Minister of Customs could bring up any fresh item in which a change was desired. The Governments of both countries were at present reasonable Governments, and he had no doubt that the issue of any further negotiations would be satisfactory. QUESTION BY DR THACKER. (From Oob Own Correspondent.) WELLINGTON, August 3. In the House of Representatives during the afternoon Dr Thacker (Christchurch East) asked the Government if people interested in tile Reciprocity Bill would bo allowed to give evidence. He had received letters from people regarding the hardships that Would be imposed upon them under the Bill. In Christchurch there were two firms —one with 1700 employees and the other with 1654 employees—whose combined wage bills reached £389,586, and they stated that if the tariff on manufactured articles passed as set out they would practically have to go out of office. The Hon. W. Downie Stewart replied that the debate would be taken that afternoon, and it would be impossible to take ■evidence at that juncture, as it would mean the Kanging-up of the whole question. He would make a statement to the House that he thought would satisfy the hon. member. If it did not, the only course would be For him to vote against it. RATIFICATION OF TREATY. ; NO PROTESTS RECEIVED. Press Association—By Telegraph—Copyright MELBOURNE. August 3. (Received Aug. 3, at 8.30 p.m.) In the House of Representatives Mr A. Rodgers (Minister of Trade and Customs) said, in reply to a question, that he had no objection to laying the correspondence between Australia and New Zealand upon the proposed reciprocity treaty before Parliament, with the reservation that ho would not place before the House anything which, in his judgment, would jeopardise the agreement. Ho added that he received no protest against the ‘ratification of the agreement, but there had been some communications to him upon it.