A BOLD STEP.

Otago Witness, Issue 3972, 29 April 1930, Page 24

A BOLD STEP.

AUSTRALIA’S TARIFF.

PRAISE FOR LABOUR GOVERNMENT.

(From Our Own Correspondent.) SYDNEY, April 10.

It is an outstanding fact that few people have been bold enough to attack the Labour Government for the extra

ordinary measures it has taken to restore Australian trade balance. Everyone seems to be'agreed that the situation that had to be met was extraordinary in the extreme, and that no ordinary measures would meet it. Gradually the trade position was drifting from bad to worse, and it was clear that the rationing of credit by the banks and the great increase in the exchange on London were not having the desired effect. With the statement made by the Prime Minister (Mr Scullin) that he has acted only after full consultation with the banks and with experts who have made a careful study of the econoxmie position, critics were more or less disarmed. Anyhow,- no one has come forward with a scheme that can be regarded as a suitable substitute to what is, practically, a prohibition of extensive trade overseas.

The main question now is how long conditions will take to right themselves, and the Acting Minister of Customs (Mr Forde) cannot see any definite improvement inside 18 months. It means, then, that Australian manufacturers will have ample time to adjust their businesses to the altered conditions, and it is hoped that Australians by then will have become so accustomed to buying locallymade articles that they will not. want to return to the overseas product. To thousands there has come a vision of a vast development of Australian factories and the banishment of all unemployment — the breaking down of prejudices and the development of a local sentiment surpassing anything that has been in evidence to date. Most of the big manufacturers and many of the big traders are strongly behind the Government. At the same time it must be definitely understood that the imposition of a tremendous tariff, and the absolute prohibition of some goods, is not part of the policy of protection. In support of the Government’s decision, and by way of explaining its necessity, it should be pointed out that in the last six years and seven months the total adverse trade balances amounted to nearly £90,000,000. So it had been clear for some time that the Commonwealth was drifting into a serious position, with millions going out and comparatively little coming in. The serious drop in the prices of wool and wheat was largely responsible for accentuating the position still further. It is expected that the Government’s action, plus the action of the banks in restricting credit, will rectify a deficiency of approximately £40,000,00*0 in London, which seemed inevitable in the trend of trading.

The restriction of imports is going to result in a big falling off in Federal revenue, for the Federal Government has always looked to the Customs as its principal source for money. One estimate is that the revenue will suffer to the extent of about £8,000,000 a year, but the Treasurer (Mr Theodore) thinks that £5,000.000 would be nearej the mark. Fears have been expressed that this will mean a great increase in income tax — and any such increase would add to the already heavy burdens of industry and may have the effect of increasing unemployment, or at least detracting from the benefits which the emergency tariff may bring with it. The point has not yet been cleared up. for although Mr Theodore has stated that steps have been taken to bridge the financial gap, he has not been prepared to indicate what they are. He has at least made everyone curious, and perhaps a little hopeful that he may have found a way out that will not fall too heavily on the people as a whole. An increase in direct taxation at the present time would be more or less disastrous. The threats that have been made by other countries of retaliatory measures against Australia have aroused little interest. for the reason that Australia has little to fear in that direction. The case of France, which has been loudest in its protest to date, is more or less illustrative of the general position. France takes only essential products of Australia, such as wool, and it would be interesting to know where France would look to for its wool if it were decided not to trade with Australia. Of course, Australia would not like to lose French trade, for it is worth £15,000,000 to this country,’ while imports into Australia are valued at only £3,000,000. There are also favourable balances with Italy, Japan, and Belgium, mainly on account of the wool which those countries take. However, it is made clear that the action is not aimed at any country, and did not warrant reactionary measures against Australia.

Mr Theodore put the position very plainly the other day. “ We have been importing £27,000,000 worth of luxury goods a year,” he said. “ If we do without that £27,000,000 importation we can eay that we are closing down on that amount of imports without affecting the cost of living or doing anyone a permanent injury in this country. The value of exports now should not only equal the imports, but be sufficient to meet Australia’s interest obligations overseas. The measure is not a political measure, but a tactical means of solving a very real

problem with which the nation is faced.’’ In more than one quarter a fear has been expressed that local manufacturers will take advantage of the elimination of overseas competition in many lines and so exploit the public by increasing prices. The Labour Government can be relied upon to stop any little game of this sort. In fact, it has already appointed an officer whose duty it will be to keep a strict eye on the prices of local products, and to demand an explanation whenever an increase takes place. It has ample powers for this, and is determined to put those powers into full operation. The fillip that has already been given to outward cargo traffic has pleased the shipping companies, which had been having a rather lean time in that respect, and the fears that there will be a large increase in outward freights may not be justified. The companies are prepared to stabilise freights for 12 months at least, and important contracts may soon be announced, which will relieve the situation tremendously.