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Democrat statement on tariffs

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26 April 1992 7Λ-/Α//


The Democrats today released a detailed statement on their tariff policy, following their demand to the Government to conduct a Public Inquiry into protection policy.

"Understandably public attention was focussed on the Textile Clothing and Footwear industries in Wills, as it now is on the National Party Senators standing up for the survival of their constituents," Senator Sid Spindler, Democrat Spokesperson on Trade and Customs, said today.

"They are to be congratulated on their stance, which is shared and indeed was pioneered by the Democrats, but clearly it is now time to examine the content and direction of Australia's trade and industry policy as a whole, in the light of one million unemployed, 40% youth unemployment and rising, sharp increases in crime, family break-ups and bankruptcies."

"It is the responsibility of Government to devise a trade and industry policy which tilts the playing field in favour of Australian industries and primary producers before they all go down the drain," Senator Spindler concluded.

The attached statement is offered as:

1. a feature, to be printed in full (subject to negotiated amendments/deletions);


2. as a press release for comment, quoting, etc.

Additional information or queries:

Contact Senator Sid Spindler - 03 416 1880 (w), 03 859 5607 (h).


Statement, by Senator Sid Spindler, Democrat Spokesperson on Trade and Customs. 24.4.92

The central theme in the Trade area is the need to integrate two apparently opposing objectives:

1. to induce Australian manufacturers and producers to

increase their productivity and international competitiveness; and

2. to reduce the current unacceptably high unemployment and to maintain a reasonable level of employment during a period of technological change, shifting comparative advantage and changing global trade relationships.

It is often argued that high tariffs, while protecting employment, also produce lazy and unintelligent management and low labour productivity. Certainly there is evidence that this has been the case in Australia, particularly during the period after the 2nd World War, when high tariffs were applied across the board. Little regard was paid to the level of

domestic competition or any resulting slackness and feather­

bedding and there were few incentives for industries to

develop international markets.

There is no suggestion that we should return to the days of indiscriminately high protection. However, the massive

increase in the imports of cars and TCF products and the corresponding wave of job losses and factory closures confirms the failure of the Keating/Hewson scorched earth policy.

In fact, tariffs and other protective devices are but one of

the measures necessary to achieve the twin objectives of higher international competitiveness and low unemployment.


It is utterly simplistic to make a general judgment that tariffs are 'good' or 'bad'. Rather the task is to use them as one of the tools available and to determine the level,

timing and type of protection, if any, for each industry in accordance with clearly defined criteria. These must include:

1. import replacement and export boosting potential in the light of present and projected markets, eg in the Asian region.

2. effect on employment, including the social effects of endangering the continuing existence of regional industries, eg the Gippsland dairy industry, TCF enterprises in

Melbourne's north western suburbs and sugar cane growers in Queensland and NSW.

3. effect on the use of energy and natural resources and the degree of contribution towards sustainability.

4. potential for the development of alternative industries including timescale, retraining and investment required, eg

tourism in lieu of woodchipping in East Gippsland, kenaf for paper pulp as an alternative crop for cane growers etc.

5. the "exploitation index", ie unacceptably low wages, work safety and environmental safeguards which enable international competitors to undercut Australian products.

Such an assessment would be considered eminently sensible if

it were pursued by an individual enterprise seeking to determine its future strategies. Yet the Government, and to a

much greater extent the Coalition, are determined to ignore such considerations and to deliver Australian employers and their workers to the 'invisible hand' of a market which pays no heed to the social or environmental consequences of its operation. Worse, it is a market subverted in countless ways


by other nations seeking to tilt the playing field in their favour.

Clearly, there are advantages in pursuing a freer world trade

to provide fairer competition and to bring down the cost of goods available to consumers. Australian primary producers

would certainly appreciate a reduction in the 44% subsidies U.S. and European farmers use to keep us out of many of our traditional markets.

Pursued with the simplistic zeal of a Hewson or a Dawkins we might well achieve a higher material living standard by the year 2000. Even that is doubtful: if we have killed off our

own industries overseas suppliers are likely to make us pay for their full costs plus transport plus whatever profit they think the market will bear.

But let us assume that we will be able to purchase a Japanese car, a Taiwanese refrigerator, French cheese or a Zegna suit at a price lower than we now pay for them or for Australian made products. Unemployment will still be at 8% even after 4 years of One Nation, let alone whatever figure we would

inherit from the Scorched Earth policy of Dr Hewson's.

We will have achieved the illusory 'higher' living standard at the expense of more juvenile crime, more people in prisons,

more family breakups and more bankruptcies. We will also have refused to make considered decisions on how to maximise our quality of life, measured in terms of employment levels, social well-being and ecological sustainability and will not

have achieved any such progress except by unlikely chance.

The argument is not for a planned economy, a concept which has demonstrably failed. It is for an interventionist policy which influences the existing market mechanism through incentives and penalties. The aim is to move us closer to


achieving the community's economic, social and environmental aspirations identified through the political process.

A responsible Trade and Industry Policy for the 1990's would include:

1. A pause in tariff reductions to enable a close

examination of each industry and its products in the light of

the 5 strategic criteria previously listed.

2. A continuing assessment of the level, duration and type of protection required a) to allow action to be taken to increase our

penetration of overseas markets and to replace imports; OR b) to permit an orderly phasing out or a partial

redirection of resources and retraining, eg enabling Queensland cane growers to switch to kenaf for paper pulp production;

OR c) to decide that certain industries are socially or geographically important enough to warrant longer term protection. Thus we may have to forego a potential saving of some 12% on the cheese we consume to avoid the

wholesale destruction of the Gippsland dairy farmers (which represent 90% of Australia's dairy industry).

3. An examination of the additional tax incentives,

depreciation allowances, 'cost of entry' assistance, research and development support which should be provided to industries "most likely to succeed".

Picking individual winners may be difficult and risky, however, projecting trends, devising strategies and measuring them against social and ecological provisos should not be

beyond our capacity or political will.


4. An assessment of the capital and expertise required to implement such strategies and the development of a framework for domestic capital formation (including some direction of Superannuation Funds), greater control over the currency and external capital flows and greater investment in education and training and research and development.

5. A toughening of anti-dumpincr measures. including much faster processing with a reversal of the onus of proof once a prima facie case is established and the introduction of the

"exploitation index" as a criterion to assist in raising global standards rather than allow ours to be depressed.

Failure to take these initiatives will mean that we destroy our industries while increasingly unemployed Australians will pay a little less for the reduced basket of necessities they

can afford while we create jobs in China, Korea and Taiwan.