TARIFF REVISION

Otago Daily Times, Issue 22053, 8 September 1933, Page 2

TARIFF REVISION

SITTING OF COMMISSION SECOND DAY'S PROCEEDINGS Yesterday morning the Customs Tariff Commission resumed its sittings, all the members being present—viz., Dr Craig (chairman), Professor Murphy, Mr J. B. Gow, Mr D. A. Pascoe, and the secretary (Mr J. P. D. Johnsen). Mr A. E. Mander appeared for the New Zealand Manufacturers' Association and Mr F. Waite for the New Zealand Farmers' Union. ENAMELWARE. Andrew Henson Allen, managing director of Allen, Son, and M'Clure, Ltd., agents for Kockums Emaljerverk, Ronneby, Sweden, manufacturers of enamelled utensils, said that the present rate of duty on such utensils was 45 per cent. ad valorem, plus the fixed per cent., equal to £6O 12« 9d per cent, when the kroner was at par with fl. He asked that a decided preference under the Customs tariff should be given to the products of Kockums Emaljerverk over similar products of other foreign manufacturers using wholly foreign materials on the grounds: (1) That Kockums enamelled utensils were substantially British in origin as they were made almost wholly from British raw materials. He submitted a British Consular certificate, certifying to the raw materials purchased from Great Britain during the year 1932 by Messrs Kockums Emaljerverk as disclosed by an examination of their books. In the previous year Messrs Kockunfs's purchases of British raw materials were more than three times the quantity of finished enamelled goods shipped by them to the British Empire. (2) It was dis-j tinctly in the interests of British trade that manufacturers in foreign countries should be encouraged to purchase British raw materials. (3) The prohibitive Customs duty to which it was at present subject was penalising the British producer of raw materials and British shipping. (4) The New Zealand public desired a j good quality ware, but the almost prohibitive duty now payable compelled many intending purchasers of K.E.R. ware to accept inferior qualities and often at the risk of health, as disclosed by a recent report of a test by the Auckland Hospital Board's staff. (5) Kockums was the highest grade made in any factory, and was absolutely free from antimony or any deleterious substance. The British Consular Service provided machinery for ascertaining from Kockums Emaljerverk the percentage of British materials used in the production of their utensils. That .method was adopted during the war when proof from foreign manufacturers was required that no enemy raw materials entered into the production of their goods. For such services Kockums Emaljerverk were prepared to pay. In 1925, out of Kockums's entire purchaser of raw materials 82} per cent, were of British origin, and imported by them direct from Great Britain. An article now admitted as British might be only 50 per cent. British in material and labour, and yet be classed as British if the final process in manufacturing was done in Great Britain, .entitling it to New Zealand's preferential duty of 20 per cent, ad valorem, in the case of enamelled utensils, whereas Kockums ware had been as high as 75 per cent. British in origin, but because the final process in manufacturing took place in Sweden, duty was levied at the rate of 45 per cent., plus 9.40 th, ad valorem, equal to £OO }2s 9d per cent. PREFERENTIAL DUTIES.

Mr Allen, who is a member of the executive of the Associated Chamber of Commerce, submitted the following resolution of the Associated Chambers: — " That whereas, under our Customs Act, articles made with the aid of foreign materials but finished in Great Britain are admitted as British for Customs duty purposes provided that at least 50 per cent, of the labour and raw materials used in their production are of British origin; some preference over the rate of duty charged on goods wholly foreign should be given to articles finished in a foreign country but made from British raw materials, so that when finished the article is British in origin to the extent of, say, 60 per cent." The association felt that if that proposal were put into ♦ffect its result would be a distinct Stimulus to British trade. Mr Allen added that he felt that Customs taxation was often levied more for revenue than for protection purposes, and had much to do with the present disordered state of the world. High Customs tariffs were interrupting the natural flow of international trade and were consequently hindering economic recovery. There were some 40 odd countries each with their own Customs barriers for the protection of their own home markets, but each endeavouring to sell to other nations. Those countries were all more or less endowed by Nature for the production of certain raw materials and foodstuffs, enabling them to specialise in the manufacture of certain commodities at a price lower than that obtainable at other countries. It was uurely intended that humanity was to enjoy those benefits which it was now denied through prohibitive ' tariffs. As an instance, Britain was favoured for the production of pottery, cutlery, cotton goods, steel products, coal, etc. Let her then reciprocate with such countries by interchanging goods and materials without the imposition of prohibitive Customs duties. Tfie cost of living and production would then come down and the people would be strengthened to meet world competition. New Zealand must seek a wider market for the Bale of her produce, but her present penal tariff prohibited such development and should be modified by a general scaling down of Customs duty. His remarks. 'he said, did not apply to the manufactured products of such countries as Japan which under present conditions would nave to be dealt with by means other than Customs duty. In reply to questions, witness said he hoped he was as British as anybody in the Dominion, and he stood for the Empire first. He tried to take a wide view of the Cjuestion and to satisfy himself as to what would be for the ultimate good of the Empire and the Dominion, and he said unhesitatingly- that New Zealand's tariff was a penal tariff in many respects. It had always been his opinion that New Zealand should ascertain the amount for duty on the home consumption price of the exporting country converted into sterling at the par rate of exchange. Something ought to be done to prevent Japan ruining the markets in different parts of the world. PAPER. Howard L. Dolamore, general manager of New Zealand Paper Mills, Ltd., said the business of the company was carried on at paper mills at Woodhaugh and at Mataura, and consisted of paper making in most of its branches, cardboard making in the lighter weights, and the manufacture of carpet and .insulating felts. Remanufacture of all those items was carried on extensively by both the company and other concerns. In respect to paper bags, Mr Dolamore asked that the present rate of protection (British preferential 25 per cent, and general 55 per cent.) be retained. In respect of those bags involving a fair amount of labour the protection was quite inadequate to permit profitable manufacture here. That was due to the low rates paid for young labour in Great Britain. It was found, however, that on the larger sizes the local manufacturers could hold their own, and as the principal manufacturer in the Dominion his company was content to let matters stand as they were. A considerable amount of labour was absorbed throughout New Zealand in this branch of the industry, and 'they knew that protection in bulk was essential to successful manufacture.

In respect to carpet and paper felt, almost wholly a New Zealand product, a small measure of protection was suggested. He asked for protection of 10 per cent. British and 2o per cent, general. The company would raise no objection to free admission of felt required for industrial or constructional purposes. In regard to wrapping paper, it was a matter of supreme importance to the local industry that the item should stand as at present. Any alteration in the tariff in a downward direction would certainly jeopardise the existence of the local manufacturers. For many years |he Canadian manufacturers throup;h their agents in this country had definitely threatened their existence. Those mills, many of them owned for the greater part by United States capitalists, would go to almost any extreme to embarrass them. The company had been harassed by the dumping policy of the Canadian mills for many years, and any reduction in the tariff would most certainly make the posi-

tion more acute than, ever. English competition was as a general rule quite fair. It would be significant to the commission that they had on occasions been asked by the Canadian agents to raise their prices, but had refused to do so unless their costs warranted such a step and by refusing had kept prices down. The fact that creped toilet paper was admitted to this country free under the British preferential tariff was a matter of some concern to them. A plant had been laid down, and not long afterwards the classification of the line was altered and the enterprise defeated. Mr Dolamore said the company desired to urge the desirability of placing a protective tariff upon newsprint imported into New Zealand for purposes other than the printing of newspapers. Newsprint' was being used for a variety of other purposes, including wrapping, and it-was considered it was not the intention of former commissions or the Customs Department that there should be free entry for other than newspaper proprietors. The approximate proportion which the total New Zealand output bore to the total New Zealand requirements was difficult to estimate. He would place it at 70 per cent., and, in doing so, he had disregarded consideration of all industrial wrapping paper such as grease-proof, vegetable parchment, apple wrapping, newsprint, etc. Mr Dolamore added that the wrapping industry in Great Britain had been largely built up by the protection afforded (luring the past few years. The duty there at present was 25 per cent, ad valorem. A reduction of the protection accorded in New Zealand would never lower production, lighten costs per ton of manufacture, unemployment both inside and outside the mills, a reduced consumption of electric power and coal (at present the company was burning 11,000 tons of coal per annum), and less timber and locally-pro-duced raw material. Professor Murphy said the company had an excellent balance sheet, and he could hardly reconcile Mr Dolamore's statement that an alteration in the tariff would jeopardise the local manufacturers of wrapping paper with the published figures of the company's very excellent balance sheet. As far as he could make out from press reports, the company had done very well since 1929, and even in the present difficult times had made a profit of £37,000 to £45,000. Expenses undoubtedly had gone up, but during that period it had been able to show a dividend of just under 8 per cent. That did not look as if the company was in jeopardy and the shares were quoted at 28s. He considered the company was very sound and stable and that the figures were very creditable. Mr Dolamore replied that a lower tariff would mean competition with Canada. Thev asked for the duty in order to ensure' the company's production. The shareholders were paid 7 per cent., and 1 per cent, was being carried torward. He considered the shareholders were entitled to 7 per cent., and if the protection were taken away the company would not be able to pay anything like that figure.

BRASSWORK. Charles Henry Brown, on behalf of G. Methven and Co., Ltd., 'gave evidence regarding the manufacture of valves, cocks, and similar articles of brass or other copper alloys, knees, bends, elbows, junctions of brass, and other fittings ot brass or other copper alloy. The present tariff was 25 per cent. British preferential tariff, 30 per cent. Australian and 50 per cent, general tariff, and witness put forward a request for 27J per cent. British preferential tariff, 30 per cent. Australian, and 50 per cent, general tariff. The company were manufacturers of domestic and commercial brasswork, and they based their claim for continued protection on the grounds that the industry was efficient and economically operated, and was able to compete with imports from overseas if granted only sufficient protection to compensate lor unavoidably higher material and labour costs locally. The labour costs at present operating in New Zealand showed an increased percentage over United Kingdom rates of 45 per cent. This increased labour cost was enhanced by restrictions in regard to youth labour, which, in the case of apprentices under the Apprenticeship Act, allowed in the brassfoundry trade one apprentice to two tradesmen. There was no restriction in the United Kingdom. Regarding female workers, there were no restrictions under the Faetory Adt to prevent them employing females, but to adopt this measure would create decided opposition from the amalgamated unions and lead to serious labour troubles. In any case the employment of females in the works was entirely foreign to their policy, particularly at. the present time, when large numbers ot male tradesmen were unemployed. Female labour in the United Kingdom was likewise not restricted, and was used extensively. The records of imports ot goods that the company manufactured were not kept separately by the Customs Department, but from observations and inquiry the company, had assessed the value of these importations at £.3O>OUU annually in normal years. The revenue accruing from this fiource -was, therefore, not great, and were they to have complete protection the loss of revenue would be more than counterbalanced by the increase of employment in'this industry. The Customs duty payable on £30,000 of imports amounted to £8250, whereas if the goods were made in New Zealand the wages charge against that Production would amount to approximately £14,000. In order to nay out £14,000 in labour charges thev would naturally have to purchase metal, sand, coke, gas, and power and employ many other labour-using channels It would be very difficult to estimate the effect of this work on sources extraneous to their manufacture, but they could safely say that the labour charges would amount to at least £2500. This would mean that the wages payable would amount to exactly double the revenue. Prior to the depression the non-competi-tive price was not to them a very great hardship, in that the consumption of goods wag so great that their share of New Zealand's requirements was sufficient to make the concern a profitable one. Now, however, with the building trade, upon which thev largely depended, at a point approaching stagnation, ann* the general economic position prevailing, the price factor entered prominently, almost solely, into the selling of goods. With the present exchange their prices were just competitive, but' were the exchange to fall they would be in the same position, as they had been for many years past, i.e., they would have to market goods at a high price and rely on quality of product, service, and despatch, to enable them to secure the' business; but goodwill these times would not secure business —the price must be competitive. Reviewing all the facts, they believed that the commissioners must conclude that, in order to give adequate protection up to the limit of what was allowed by the Ottawa agreement, a considerable increase of duty would be justified. They asked, however, only for a very slight increase of 2$ per cent. If they had access to additional work to the importation value mentioned, and if they could only obtain that work through a preferential tariff, they would be in a position to double their present number of employees, and would guarantee that no exploitation of the public would occur, in that they would maintain reasonable prices based on the material and labour charges made against them. Their factory was modern, well equipped with the latest machinery, and capable of handling the requirements of buyers without importation, and of absorbing the necessary labour.

In reply to Mr Waite, witness said the exchange was of some value to the company at present, but the fact that the high exchange prevented a lot of building operations at the present time reduced their output; therefore, it was not of as much value as it might appear to be. The commission heard a confidential statement from the witness in private, VISITS OP INSPECTION.

To-day the commission will visit the Roslyn Woollen Mills, later proceeding south to inspect the Mataura Paper Mills at Mataura, and the New Zealand Sugar of Milk and Casein Company's factory at Edendale. The commission will return to-morrow night, and will hear further evidence in Dunedin on Monday.