TARIFF REVISION

Timaru Herald, Volume CXXXVII, Issue 19509, 8 June 1933, Page 12

TARIFF REVISION

ROYAL COMMISSION OPENS SITTINGS N.Z. MANUFACTURERS’ CASE By Telegraph—Press Association WELLINGTON, June 7. The Royal Commission investigating the Customs tariff held the first sitting for the taking of evidence to day. The chairman .the Controller of Customs) outlined the order of reference and other matters connected with the procedure already published, and proceeded to hear evidence. Manufacturers’ Evidence. Mr A. E. Mander, general secretary of the New Zealand Manufacturers’ Federation, opening the case of the manufacturers, said it may be asked: Why should the United Kingdom need tariff-preference in the New Zealand market? This raised an important point. We are told that if an industry cannot hold the market without the assistance of a tariff, such industry proved uneconomic. If that argument • were valid it would be equally an argument against British preference. The New Zealand manufacturer, buying his materials from the Empire, is i placed at a disadvantage in competing with the British manufacturer who j buys his materials in the cheapest market. There was in New Zealand a fairly widespread idea that the Dominion is, and must always be, primarily a huge farm—exporting farm produce, and obtaining in exchange practically all the manufactured goods required. There are three answers to that. In the first place, our population is already too large to be supported on the “big farm” basis. If we were confined to farming (and the businesses and industries ancillary thereto) we might conceivably support a population of one million—two-thirds of our present population. That is a generous estimate. What would happen to the remainder? Would they all join the legion of agents, importers, and salesman. or would they be settled on farms, under expensive land-settlement schemes, to produce more butter and cheese, more mutton and wool, to glut further an already glutted marker. I v.n now we have 70,000 adult males

registered as unemployed —probably 100,000 unemployed altogether. Is this a time to contemplate the prospect of throwing tens of thousands more workers out of work—by destroying our manufacturing industries?”

There was, he submitted, another serious fallacy in the argument advanced by the Farmers’ Union and importers. It was often said that 96 per cent of our national wealth is produced by the exporting farm industries. The fact, of course, was that the national income consists of the return we obtained for our exports, minus interest payable overseas, but plus the value of all the goods and services produced and consumed in New Zealand. To suggest that our national wealth or income was confined to the return for exports was grotesque. Any step which would put New Zealand industries out of business would definitely decrease the amount of our national income. Apart from overseas borrowing, there was obviously only one possible way of increasing our imports: that was, by obtaining more for our exports. 3y increasing the British preference under the tariff, the British manufacturer might be able to gain a larger share of our importtrade, at the expense of his foreign competitor. No alteration in the New Zealand tariff could decrease by one shilling the sterling value of our total imports from overseas. "Even if duties on imports must be reduced in order to reduce the cost of living, it is unreasonable to fasten upon those particular imports which happen to compete with New Zealand industries, demanding the reduction of duty on those particular items. It might be said that the duty on tea and sugar is a "revenue” duty. Of course it is. But so also is the duty on shoes and clothing and all the other lines that compete with New Zealand's own products. The only difference is that the tea and sugar duties have only one use: they are purely for revenue and nothing else—while these other duties serve a double purpose: they both bring in revenue and at the same time protect New Zealand industries, preserving the employment of thousands of New Zealand people.” It was surely the most irrational policy ever advocated—that of converting tens of thousands of taxpayers into relief workers, and reducing tens of thousands of good customers to poverty—for the sake of a principle. Free Trade, which has now been abandoned even by Great Britain herself. There was a widespread notion that the burden of the customs tariff upon the community was very much heavier than it is in fact. In 1932 the total tariff revenue was £4,200.000. But more than half of this sum—£2,l72,ooo —was collected on alcoholic beverages tobacco, motor cars, etc. Deducting these items, hey were left with only £2,028.000 paid on all the rest of our imports. This worked out at £1 7/- per head of the population for the year. Even this sum must not be treated as the cast of the protective tariff. Of the £2,028.000 duty paid in 1932 (apart from the luxury items mentioned), probably at least one-third was collected in respect of “purely revenue” items. The "dual purpose” items (revenue and protection combined) may be estimated at roughly £1.400,000 —or. say 18/8 per head of the population Of the £13.400.000 imports from foreign countries, £7,200,000 consisted of commodities not procurable from the United Kingdom. But the remaining £6,200,000 could have been obtained from the United Kingdom—if British manufacturers had been able to compete successfully with their foreign

; ri>’\.Y) in respect of price, type, quality and salesmanship Yet on more than £5,000,000 out of these £6.200,000 imports from foreign countries there was a foreign duty of double, or more than double, the British preferential iAte . . and yet the foreigner secured the trade!, In 1932, New Zealand’s total imports were reduced by nearly half; and imports from the United Kingdom were down to £11.500,000, or £12,650,000 in New Zealand currency. The total tariff revenue collected thereon was £2,006,000. Of this, however. £892,000 was collected on alcoholic beverages tobacco and motor cars. Excluding these items we find:— £ Remaining Imports (1932) from U.K. (N.Z.) 11,220,000 Customs duty collected thereon 1,114,000 Average rate of duty, 9.9%

In 1932 our total imports were £23,000,000. Of these, no less than £16,500,000 were obtained from Britain and the Empire. Of our £16,500,000 British imports, no less than £8,800,000 were admitted duty-free under the tariff.

Of our £16,500,000 British imports, over £12,740,000 were admitted under the preferential tariff. Those goods could have been obtained from either British or foreign sources. But £5,275,000 were duty-free from Britain and the Empire, while they would have been subject to a substantial duty if imported froi foreign countries. This

had the effect of restricting our foreign imports in those classes to £932,000, as compared with £5,275.000 British. Another £7,465,000 British imports, although subject to a' moderate duty would have been subject to double the duty if obtained from foreign countries. Foreign imports in those classes were thus restricted (for Britain’s benefit) to £1,890,000.

These figures, he claimed, showed how extravagant and absurd was any suggestion that New Zealand is a country of high tariffs, particularly in regard to trade with the United Kingdom. In the light of these figures, it was no wonder that the British Ministers at Ottawa felt that there was very little more that Britain could ask of this Dominion. Mr Mander said the New Zealand Manufacturers’ Association endorsed the principle of a preferential tariff, and desired that the United Kingdom should have as large a share as possible of the Dominion’s import trade. New Zealand manufacturers wished to obtain as much of their material as possible from the Home market, but if British industries pressed too far for tariff reductions, Dominion manufacturers would be forced to buy their materials and plant from cheaper sources. The “Big Farm” idea w r hich was advocated by some farmers was absurd, as farming alone could not support the whole population, and those who could not find a place on the land would become middlemen and non-producers. With a large army of unemployed, the problem w T as how to expand the country’s industries for the purpose of absorbing both those out of work and the natural increase in population. If manufacturing industries were crippled by reduced protection, there w’ould be a heavy loss to the State in taxation, definitely more than £1,600,000 a year. Apart altogether from the loss of Customs revenue, local bodies would lose a substantial portion of their rates. Power Boards would be ruined, and the whole financial structure of hydro-electric schemes would crash. Businesses would lose, by the unemployment of industrial workers, tens of thousands of customers. Farmers -vould suffer severely in their best market—the New’ Zealand market. After hearing the conclusion of evidence supporting the manufacturers’ case, the Commission adjourned till to-morrow, w’hen tne evidence of several Wellington importers is to be taken.