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Thursday, 11 June 1970

Mr STREET (Corangamite) - Like all honourable members who are interested in this topic I appreciate one of the relatively few opportunities we have to debate the vitally important topic of tariffs. As my friend and colleague the honourable member for Wakefield (Mr Kelly) has said, a remarkable change in climate has taken place during the last few years - even since I first started speaking on this subject - but modesy and honesty prevent me taking any credit for that. As the honourable member said, a much greater awareness exists of the importance of tariffs in influencing the cost structure in the Australian economy by directly increasing the price of goods to consumers and, more importantly, because of the pervasive influence of excessive tariff protection throughout the economy. I have spoken on this aspect of tariff protection before. 1 do not intend to cover that subject again. It is quite apparent that the prime objective of all Australian industry must be to become competitive on the world market.

Recently our primary industries have been almost alone in facing the problems of buying on a protected market and selling on an open market. It is a remarkable compliment to our farming community that ii has succeeded in increasing production substantially when faced with such disabilities. lt must never be forgotten that it has been possible to establish secondary industry in Australia only under the protection of the foreign exchange earnings of primary industry. But now the position has been reached where our secondary industry is no longer able to depend entirely on the domestic market for its existence. If the Australian consumer is not to be denied the benefits of lower prices and better products as a result of new technologies and economies of scale, secondary industry must increasingly look towards the export market to absorb its growing productive capacity. lt took a long time for this fact to' receive official acceptance, but fortunately it has now been accepted, and it is a measure of the change in climate to which I referred a moment ago that- is now almost taken for granted. The first indication came in Sir Alan Westerman's speech to the Australian Chemical Industry Council last year when ho said:

The alternative to making the world our market for secondary industries is ossified, stultified secondary industry based on products with smaller domestic opportunities and hence relying upon higher and higher tariff barriers wilh a decreasing rate of development and meriting the description uneconomic and inefficient.

This was followed by several references by the Prime Minister (Mr Gorton) in the ensuing months in broadly similar terms. For example, in his address to the Western Australian Chamber of Manufactures on 10th April this year the Prime Minister said:

We think that in many fields of manufacture Australian enterprise must be much more massive than is the case in much of Australian industry, if there are to be economies of scale to enable that industry to compete on a world market and to compete in Australia wilh overseas industry with a minimum of tariff protection.

The Minister for Trade and Industry (Mr M c Ewen) in a recent debate in this House relating to the Australian Industry Development Corporation had this to say: lt must aim especially at expanding exports on a world-competitive basis, and enhancing our long-term balance of payments position, lt must seek to enable Australian industry to conserve our foreign exchange by competing with imports without recourse to high tariff barriers.

It is certain that Australian industry will be able to face the challenge of world competition only if it is soundly based and not relying on excessive - again I stress the word 'excessive' - tariff protection for its existence. Since the publication of the Tariff Board Report for 1967-68 a great deal of attention has been focused on the rates of protection received by various industries, and the principles enunciated by the Tariff Board on which it intends to base its future investigations and consequent recommendations to the Government. The fact that a great deal of attention has been given to the Tariff Board's annual reports has not, unfortunately, invariably resulted in informed comment on them. 1 have been amazed at some of the quite mistaken conclusions drawn from those reports and at the way in which those conclusions have been constantly reiterated even after it has been demonstrated quite clearly that those conclusions are wrong.

I am referring now particularly to the question of industries receiving, or requiring, protection at an effective rate exceeding 50%. No other item in recent Tariff Board reports has been so misinterpreted or caused so much uninformed criticism. Typical of the sort of comment is the use of such terms as arbitrary limit, cut-off point and similar expressions. Anyone who was prepared to spend some time investigating and objectively assessing just what the Board said in its 1967 and 1968 reports must have realised that such a reaction was completely unjustified. In view of subsequent events, including the assurance of the Chairman of the Board to the Associated Chambers of Manufactures of Australia last year and the policy speech of the Prime Minister before the last general election, I find it extraordinary that some people and organisations are persisting in this attitude. First of all, let us see what Mr Rattigan said to ACMA in answer to the question: Do the Board's points of reference provide a predetermined upper limit to protection?

Mr Kelly - fs Mr Rattigan the Chairman of the Tariff Board?

Mr STREET - Yes, Mr Rattigan is Chairman of the Tariff Board. He answered:

The points of reference do not provide a predetermined upper limit to protection.

He then went on to explain exactly why. In his policy speech the Prime Minister said:

The Government does not accept any predetermined upper limit to the level of protection that might be afforded.

Why then, even as recently as a couple of weeks ago, do we find statements such as that made by the President of the Australian Industries Development Association which in the annual report of that Association said: lt-

The Tariff Board - is doing this to its own policy of a 50% effective upper rate of limit.

I must admit that 1 was very disappointed to hear these comments when recent statements from the same source have given great cause for encouragement.

Debate interrupted.

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