TARIFF COMMISSION

Otago Daily Times, Issue 22052, 7 September 1933, Page 7

TARIFF COMMISSION

SITTING IN DUNEDIN EVIDENCE BY MANUFACTURERS The Customs Tariff Commission, set up by the Government to hear evidence with a view to recommending possible readjustments of tariffs, commenced its sittings in Dunedin yesterday. All the members were present —Dr G. Craig (chairman), Professor B. E. Murphy, Mr J. B. Gow, and Mr G. A. Pascoe— with the secretary (Mr J. P. D. Johnsen). Mr F. Waite intimated that he would represent the New Zealand Farmers’ Union in Dunedin and Christchurch. Mr A. E. Mander appeared for the New Zealand Manufacturers’ Federation. The chainpan said there were one or two matters he would like to mention before hearing evidence. The order of reference to the commisison was to inquire into the Customs tariff of New Zealand and to recommend for consideration by the Government any alterations therein,, having regard to existing trade agreements to which New Zealand was a party, and particularly to the agreement concluded at Ottawa in 1932 between His Majesty’s Government in the United KingA dom and in New Zealand; to the financial, economic, and industrial conditions in the Dominion; to the reasonable requirements of local industries which were being conducted in an efficient manner and were economically justifiable, and to all other relevant considerations. This order of reference was regarded ns relating'to all questions concerning the tariff, including the following:-—(a) The rates of duty to be charged or the exemptions from duty to be allowed on goods produced or manufactured in British or foreign countries, (b) The basis of the valuation of goods liable to ad valorem duty, (c) The basis of preference or of tariff concessions to any country. (d) The basis upon which dumping duty should be levied, (e) The relation of the tariff lo|thc rates of exchange ruling in New Zealand and in other countries. The commission desired that as far as possible all evidence tendered to it should be given on oath by the witnesses. It was recognised that this course would not be possible in some cases. In such cases the commission would accept the best evidence available. Furthermore, there would doubtless arise many questions upon which the commission itself would have to obtain information through official and other channels. The commission had given consideration to the question of the representation of persons or organisations by counsel or_ other agents. The object of the commission in its sittings was to obtain facts upon which its findings could be based. It was considered to be important that every reasonable facility should be afforded to those interested to adduce the facts as fully and clearly as possible. Hence the commission had decided that any person or organisation tendering evidence might, subject to the approval of the commission, be represented by counsel or other agent, and that such agent would have the right to examine or cross-examine witnesses upon evidence given by them, provided that in the opinion of the commission the questioning would result in the elucidation of facts or the obtaining of information useful to the investigation. As a general rule, the evidence would be heard in public sittings, but the commission was willing to_ receive evidence in confidence if the circumstances so warranted. Any person who desired that his evidence or any part of his evidence should be given in confidence should make application to the commission. The hearing of evidence was then proceeded with. PIANOS. Thomas Ritchie, general manager of Charles Begg and Co., Ltd., asked that the Customs duty on pianos manufactured in Great Britain should be removed. No pianos were manufactured in New Zealand and no New Zealand industry was protected by it. He pointed out that, owing to the high cost of pianos imported from Great Britain, it was practically impossible to sell new pianos in New Zealand. The Government received practically no revenue from the Customs Department through the importation of pianos. Were the duty removed the sale of pianos would be stimulated, and those firms engaged in their sale would be able to make profits and to pay income tax to the Government. He stressed the point that the learning of piano playing by young people was very valuable, as it tended to keep them in their homes, where they came under proper influences, a thing that was particularly desirable at the present time. The removal of the duty would also strengthen the Governments position in regard to its export to Great Britain. Were the duty removed, he gave the assurance that firms selling pianos would embark on an advertising campaign and push the sale of pianos. Employment would be given for hundreds of people in the way of salesmen, tuners, teachers, carriers, etc. With the removal of the duty and with a normal exchange rate pianos could be sold at from £4B to £52, whereas the present price was in the vicinity of £75. The British Pianoforte Manufacturing Association supported the request, said Mr Ritchie, and it pointed out that the importation of pianos by New Zealand had practically ceased. _ Mr Pascoe said he took it that owing to the advent of the radio there would not again be the same volume of piano selling that there was previously, even if the duty were removed. Mr Ritchie said it wpuld take tune to stimulate the sale of pianos, but there was a definite change in the attitude ot the public towards radio. While entertainment by radio was still a factor, there was a tendency, especially in Great Britain, to look to the radio for education and news rather than for entertainment. He considered, too, that when piano playing came into its own again the standard of playing would be higher because of the educational value ot the la To* Professor Murphy, Mr Ritchie admitted that even if the duty were removed there would not bo an immediate benefit to the sellers, but the demand for pianos would be stimulated, and the effect would be felt in a little time. The economic depression was also to be considered because people could not buy pianos, as the price was so high. There was definite evidence, however, that there was now a greater interest in piano playing, and there was a constant inquiry for cheap second-hand pianos. That led him to believe that if the price of new pianos were lower more would be sold. , .. Mr Pascoe: Is it borne out b> the annual competitions in various parte ot New Zealand that the number ot entrants in the contests is incieasing. Mr Ritchie replied that greater interest was being taken in the piano plaving sections. ...... Mr Pascoe: We can lake it that in a number of homes of people in poorer circumstances there were children who would learn piano playing if facilities were offering? . I Mr Ritchie: Definitely that is so. i Witness also submitted an application by James Robertson and Co., Edinburgh, for the abolition or reduction of the duty on bagpipes. At present the duty was 924 per cent., with sales tax. Bagpipes and accessories were not manufactured in the Dominion. Canada had already abolished the duty on bagpipes. Bagpipes played a definite part, in the life of the community. TIMBER. Carl Ruhen, manager of the Maoriland Importing Company, said the company imported timber and genera! lines. He asked for a reduction in the duty on timber imported from Canada, and stated the rates on timber produced in British countries and the higher rates on timber from foreign countries. Owing to the prohibitive tariff on timber the cost ol buildin" in New Zealand could not be expected to come down. The New Zealand sawinillers have been well catered foi in the way of protection, which, as far as s awn and dressed timbers were concerned, amounted to a total prohibition of imporation. Mr Ruhen quoted futures taken trom a statement by the British Columbia Lumber and Shingle Manufacturers’ Association. That showed the landed cost of 10,000 ft of rough sawn Canadian Douglas fir', including freight, insurance, exchange, I duty, and surtax, to be £147 10s Bd. The . freight amounted to 132.43 per rent, of the f.o.b. value; the exchange, winch was I collected on the freight and the f.o.b. value, to (10.78 per cent.; and the duty and surtax to 150.45 per cent. The j | a , l( ]ed cost of 10,000 ft of Canadian sawn I dressed Douglas fir was £2OO 13s 4d, the freight being 108.52 per cent, and ex- ' change 54.51 per cent., and duty and sur-

tax 246.60 per cent. The climatic conditions of Central Otajp were such that it was almost impossible to keep our native timber straight there, and until we varied our manufacturing methods and felled our logs while the sap was down we would _ not succeed in supplying skantling which would not be affected by every change in the weather. The imported sawn dressed timber, being kiln dried, was free from that defect. Although prior to the last increase in duty—from 11s 6d per 100 ft super, to 19s per 100 super, feet, the importations were not so large as when the duty was 4s per 100 super, feet, imporations were still taking place, showing that in spite of the increased price, which brought the cost to the consumer a long -way above the rest of the native article, this material was necessary, and supplied a felt want. The question was. could we afford to increase the cost of building to our producers by artificial means such as 150 per cent, and 246 per cent, ad valorem duties and surtaxes? The producers had to compete in the world’s open markets, and our competitors had the following advantages:—Shorter distances to send their products, hence lesser rates of freight; cheaper land values; and lower labour costs. Our delegates at Ottawa agreed to institute an inquiry into the protective duties, and “where necessary to reduce them as speedily as possible to such a level as will place United Kingdom producers in the position of domestic competitors; that is. that the. protection afforded to the New Zealand producer shall be on a level which will give the United Kingdom producer full opportunity of reasonable competition of relative cost of economical and efficient production.” This was in accordance with article 8 of the agreement arrived at at Ottawa. The United Kingdom implies any member of the British Commonwealth. Canada included. Witness said he thought there was sufficient evidence before this commission to show that the duties on Canadian rough sawn and sawn dressed timber were too high, and were now due for a considerable reduction, according to the implied promises of our delegates to the Ottawa Conference. Witness gave further evidence in private. DRIED FOODS. H. S. Wunsch, manager of the New Zealand Sugar of Milk and Casin Company, of Edendale, appeared in connection with dried food products. The present duty, he said, was nominally 10 per cent, on dried milk products from British countries and 25 per cent, from foreign countries. He asked that the duty on foreign goods be maintained. He had no objection to the free-entry of goods from Empire countries. Witness proceeded to deal with the Customs duty on lactose. This article, he said, was manufactured from whey. As it had a very low value per ton it could not bear high transport costs before treatment. Therefore the maximum size of any factory depended on the production of whey per acre, which was higher in New Zealand than in any other country. The manufacture entailed very high overheacl charges, so that a small factory was uneconomical. For these reasons the industry was one particularly suited to New Zealand conditions. It transformed _an industrial waste (often a nuisance) into valuable products. In addition to the production of lactose, the process in use here also gave a very valuable stock food, sold at Milkiwey Paste, so that all the contents of the whey wore utilised. The industry was at present dealing with some 4,500,000 gallons of whey per annum, transforming this into some 400 tons of lactose and 800 tons of Milkiwey Paste, and finding a market for 5000 tons of coal in the process. If it could overcome its present difficulties it would be in a position. with but slight modifications of its process, to produce other valuable foodstuffs from whey, and would undoubtedly extend to other districts. It would then convert more of the 200.000,000 or so gallons of whey at present wasted, into saleable products, largely suitable for export. in addition to lactose, it had exported in the last three years 100,500 and 1000 tons of Milkiwey Paste. There was no need to emphasise the, effect of this on cmnlovment. both directly and through the fuel and transport industries. Under normal conditions the industry was so eminently suited to New Zealand that it should need but little protection, in spite of the fact that it was working in a protected market with its labour and material costs heavily inflated. The European producers who were its only real competitors, had, of course, far lower labour and fuel costs, but the greater production of whey per acre here, and the greater efficiency of the New Zealand process went some way to counterbalance these. Conditions, however, were not normal. In Europe they had lessened the outlets for skim milk, and so forced an increase in the casein production therefrom. This in turn had left the producers with the problem of whey I disposal acute in a closely-settled country. One solution of this was the manufacture of lactose. This manufacture had glutted the market, and at present lactose was being sold below its cost of produc-

tion. This had forced some of the Continental factories out of business, but the adjustment was slow, and the difficulty of getting rid ofthe wheystil maintained too many. In New Zealand the problem of whey disposal was not yet sufficiently acute to give appreciable help. Moreover, there w r as reason to believe that the Continental manufacturers, who were in a loose combine, were making deliberate efforts to force both witness’s company and the Australian makers out of the business. The naked value of lactose in gold was, therefore, only about onethird of pre-war, and many of the costs were far higher than pre-war. The present retail price of lactose in New Zealand was from lid to Is 3d per lb—the lowest in the world. The imposition of a duty would not result in any raising of this price, at least under present conditions, but it' would ensure the whole of the local market at a price which would enable the makers to survive. If they failed to do so, it was hardly likely that any other firm would essay the manufacture of a difficult material such as lactose, and New Zealand would again be dependent solely on foreign supplies. It was almost certain that the price would sooner or later be forced up, and customers here might have to pay nearer the 2s 6d per pound which obtained in 1905. Moreover, the approaching problem of whey disposal would remain unsolved. It was perhaps not too much to claim that the industry, which was already a valuable one to the country, had promise of becoming an important factor in its further commercial development. Milkiwey Paste was a substitute for whole milk in the feeding of calves, pigs, and poultry. Its principal sale to date had been ns a calf food. It was now definitely proved for this purpose, and the quantities used rose from 60 tons last season to 169 in 1932-33.’ For these reasons it was maintained that an import duty should be imposed on lactose at least equal to that in force on dried and condensed milks. Its manufacture was far more complicated and costly than that of those products. It needed more expensive plant and more highly skilled technical control. It was probably the only “ fine chemical ” manufactured in New Zealand, and these costs were,_ of course, much higher jn the fine chemical than in any other industry. He did not ask for any tariff against lactose manufactured elsewhere in the Empire. Further evidence was tendered by the witness in committee. HAT MANUFACTURE. Representatives of the Union Felt Hat Comapny, Ltd., and Ross and Glendining, Ltd-, appeared to present their request for increased duties, the case for the former being supported by Mr John Wilson and for the latter by Mesra A. W. Jeavons, J. Evans, and J. Haig. Mr Mander, speaking for the parties engaged in the industry in New Zealand, said this was a joint case on behalf of the Union Felt Hat Company (Dunedin), Ross and Glendining (Dunedin). National Hat Mills (Wellington), and Triester and Co. (Wellington). It was claimed that the protection afforded to the industry was now somewhat below the level of the Ottawa formula. The present duty was 25 per cent, on British goods and 40 per cent on foreign goods. They asked that this industry should be regarded as an industry especially suitable for the application of the principle recommended by t,he Imperial Economic Committee on Imperial Industrial Co-operation, under which the semi-manufactured goods should be imported from the United Kingdom, while tlie New Zealand industry should he safeguarded as regards finished goods in the Dominion market. They, therefore, asked for a tariff as under; — Hat hoods: United Kingdom, free; Empire and foreign, 20 per cent, if complementary agreement is made with United Kingdom, otherwise free. Hatmakers’ materials: United Kingdom, free; Empire and foreign, as above. Hats, manufactured: United Kingdom, free; Empire, 40 per cent.; foreign, 50 per cent. The industry, Mr Mander added, made use mainly of imported materials, and the greater part of these materials were, or could be, imported from the United Kingdom in a partially processed or semimanufactured state. .The industry was, therefore, specially suitable for the application of the principles recommended by the Imperial Economic Committee on Imperial Industrial Co-operation. In this case, it was suggested, the United Kingdom and New Zealand should agree to specialise and to respect each others specialisation, in the stage of manufacture relegated to each. The United Kingdom might produce hat-hoods tor the New Zealand hatmaker, who would restrict himself to that source, while Great Britain in return would agree to leave the second stage of manufacture—the conversion of this semi-manufactured material into finished goods ready for the market—to the Dominion industry. This co-operation between Great Britain and the Dominion was the alternative to competition recommended by the Imperial Economic Committee, and ,it was asked from the commission and the Government to give it their earnest consideration. The New Zealand industry was to-day in

a difficult situation, and manufacturers had been compelled to recognise that position. The value of the New Zealand industry to Britain might be judged by the comparative values of British and foreign hat-hoods and other materials imported during the last three years by the four firms he had mentioned: — British. Foreign. ■ Hoods £61,894 £5372 Other materials 20.185 8961 The United Kingdom itself obtained a large amount of material by importation from foreign countries. In 1930 the foreign imports into the United Kingdom were valued as under;—Hatters’ wares, £86,412; wool felt hats (and bodies), £1,435,159; fur felt hats (and bodies), £437,489. The New Zealand industry, which drew the great bulk of its material from Great Britain, was thus handicapped in competing’ with British manufacturers, who obtained a great portion of their material from cheaper foreign sources. According to the United Kingdom trade report of 1930 the United Kingdom exported to New Zealand in that year as under:—Wool felt hats (including bodies), 31,897 dozen, £57,141; fur felt hats (including bodies), 10.286 dozen, £57,159: —total value, £114,300. In that year the New Zealand manufacturers imported from the United Kingdom hoods valued for Customs at,' roughly, £24,000, or £21,800 on the valuation adopted for United Kingdom statistics. This left a balance of, roughly, £92,500 (invoice value) of finished hats imported. The tour firms now employed in their factories 38 adult males, 54 adult females, 9 apprentices, and these figures were considerably lower that normal. If the plant were working to full capacity the number of workers would be at least doubled. The average wages paid per annum over the last three years amounted to £12,336. Mr Wilson made a general statement regarding the prices of English hats compared with colonial, and pointed out that the New Zealand hats were made from English raw materials. The standard of workmanship in New Zealand, he contended, was equal to that at Home, and therefore, quality for quality, the New Zealand hat compared very favourably with the imported hat. Evidence of a confidential nature was given by the parties, and was taken in committee. TO-DAY’S SITTING. At to-day’s sitting the evidence will bear on (l) preference regulations; (2) manufacture of cardboard, pasteboard, carpet felt, paper felt, paper bags, and wrapping paper; (3) brass viilves and cocks and brass pipe fittings. WELCOME TO MR MANDER. At a special meeting of the executive of the Dunedin Manufacturers’ Association on Monday evening, the president (Mr James Hogg) extended a welcome to Mr A. E. Mander, general secretary of the Manufacturers’ Federation of New Zeaand. Mr Mander was later introduced to a large and representative gathering of local manufacturers. Mr Hogg referred to the efficient and effective work being accomplished by Mr Mander on behalf of the manufacturers of the Dominion, and added that his services were available to any member ol the association in giving direction on tariff matters while he was in Dunedin. “As manufacturers,” said Mr Hogg, “we are satisfied that Dominion organisation is essential to promote the welfare of industry, to present the claims of industry for recognition, and, by keeping our plants running full time, to reduce unemployment and provide work for the thousands of boys leaving school.” Mr Mander addressed the meeting and outlined the procedure required in presenting tariff cases, after which he was accorded a hearty vote of thanks.