The Wanganui Chronicle FRIDAY, MAY 12, 1933. THE TARIFF COMMISSION

Wanganui Chronicle, Volume 76, Issue 110, 12 May 1933, Page 4

The Wanganui Chronicle FRIDAY, MAY 12, 1933. THE TARIFF COMMISSION

gY the terms of the agreement entered into at Ottawa, a Tariff Commission was to be set up within the Dominion for the purpose of implementing the said agreement. Great Britain coneeded to the Dominions preferential treatment in so far as exports to Britain are concerned. That preferential treatment is already an accomplished fact. The complementary part of the bargain now has to be kept. There are within New Zealand industries which, with all of the natural protection afforded by the war years, when the protection was absolute, together with the long period of tariff-made protection, have failed to justify themselves by attaining to a reasonable degree of efficiency.

The efficiency of an industry is to be judged by its ability to produce goods equal in price and value to the products of other countries. The true test of an industry’s efficiency is really to be found in the ability of that industry to export its product. The dairying industry is to be regarded as efficient, for instance, because its products can be placed on the open markets of the world in competition with the products of dairymen in other countries.

The economic industry is one which provides a return for the labour, for the management and for the capital employed. The non-economic industry is one which fails to accomplish this. When, however, the domestic market is protected by a tariff, the producer can raise the price of his product above that which obtains in the markets of the world, and he can go on raising prices until they reach parity with the total of world prices, plus the tariff addition. Competition among domestic producers may bring down prices below the level of the price-cum-tariff, but it seldom falls so low in a protected country as the world parity for the product.

There are, however, difficulties in the way of finding out whether the inefficiency of an industry is inherent to the industry itself, oi- whether it is a result of handicaps imposed on the industry from the outside. High taxation on an industry in one country, when compared witji the taxation burden in another country, may be a deciding factor in the efficiency or inefficiency in the industry of the former country. Taxation cannot be pressed too heavily in any one country without detriment to the efficiency of that country’s industries. High wages without relatively high individual output, high interest charges on borrowed capital, heavy local rates, all tend to make the basis of comparison between the same industry in two different countries difficult to apprehend. A much more difficult problem to the revisers of a tariff is to discover what is exactly the weight of the burden east upon an export industry by the wages paid in a sheltered industry. For instance, after the war wages rose in England, but when the depression set in foreign competition made itself felt in the shipping, ship-building and export trades, and consequently wages in the industries so affected declined considerably. But no similar decline occurred in the sheltered industries. For instance, in December, 1920, an engineering fitter received wages which were 130 per cent, above 1914, and an engineer’s labourer 210 per cent, above 1914. By September, 1927, however, the fitter’s wages had dropped to 49 per cent, above, and the labourer’s to 82 per cent, above those of 1914. Bricklayers, however, received 148 per cent, above 1914 in December, 1920, but fell to only 82 cent, above in 1927, while builders’ labourers’ wages were 224 above in 1920 and 86 above in 1927. Railway porters wages in 1927 were as high as 147 per cent, above 1914 levels. These variations in favour of the sheltered industries cast a heavy burden upon the unsheltered industries. The work of a tariff revision commission, therefore, is not of a simple character, and it is desirable that this should be appreciated, because in such a complex situation it is impossible to please everybody, and possibly nobody will be pleased with the findings of the Tariff Commission. The personnel of the Commission is satisfactory. Mr. C. M. Craig, the Comptroller of Customs, is obviously the right man in the right place, and the same can be said of Professor B. E. Murphy. Messrs. Anderson and Gow are representatives of industrial and agricultural interests respectively, and will be able to bring a sympathetic viewpoint before the Commission when these classes of interest come under review. The inclusion of Professor Murphy is particularly appropriate in that he will be able, by reason of his dissociated position, to take a wide and at the same time fundamental view of the issues which will confront the Commission.