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Tuesday, 23 May 1972
Page: 2912

Mr KELLY (Wakefield) - This Bill gives the Government power to add 2 members to the Tariff Board for one main reason, that is, to speed up the process of review of those areas of the tariff which have not been explored for some years. In a recent speech I spelt out the need for this. Anyone who can imagine the pressure that will be brought to bear on the metal manufacturers - which is one of the main groups that has not been looked at - by the new amalgamated metal workers union in its demands for over-award payments can see the need for this progressive review. The Government wisely is taking the opportunity to appoint 2 extra members of the Tariff Board to speed this process. I will not argue about the need for this. The honourable member for Lalor (Dr J. F. Cairns) did not either.

There are 4 particular points that 1 want to raise with the Minister for Customs and Excise (Mr Chipp) and with the Government as to what they should bear in mind when considering those appointments. The first point I have mentioned before. I would strongly recommend that the Government pay more attention to the quality of the men appointed to the Board rather than the particular industry whence they come. I think that it is quite obvious that the Board's responsibility will increase in the future and will become even more important than it has been in the past. For that reason the quality of the men who go on to the Board will be most important, so I hope that the Government will depart from its usual procedure of going to the industry groups rather than looking as a first requirement for quality above all, because quality above all will be required.

The second thing I bring to the mind of the Government is the quality of the reports which the system brings out. I want to refer particularly to the special advisory authority reports. I give as an illustration the special advisory authority report on man made fibres which the Minister presented last Thursday. I will not debate this report in any detail, but I bring to the Minister's attention one specific fact, namely, that there was recommended by the special advisory authority a 45c a lb duty without any arithmetic or guidance in the report as to what was the ad valorem incidence of this specific duty. No-one, who is not in the textile trade, would be aware of the significance of a 45c duty. We have seen some arguments in the newspapers as to whether it is 60, 80 or 100. I would strongly urge the Government to ask the special advisory authority what is the significance of a specific duty when he recommends it. The special advisory authority has the arithmetic and information within his command. He knows the situation. This action would make the understanding of honourable members much clearer. We would then have more knowledgable and understandable debates, because 1 defy anybody in the House to say that he really understands the significance of a recommendation of 45c a lb duty without any relationship to what it really means in ad valorem terms.

The third point I raise with the Government is that it is no good increasing the membership of the Tariff Board if the Board's workload is increased by a kind of shuttle service where a report from the Tariff Board is received but is quickly passed to the special advisory authority and subsequently is returned to the Tariff Board again. If there were 500 members on the Tariff Board and they were given this kind of increased workload by passing references backwards and forwards we would not get the important progressive review accomplished. We had a recent illustration of this in the special advisory authority report on man-made fibres which was presented by the Minister last Thursday.

I understand that this will be the sixth time within 10 years that a temporary duty has been imposed on man made fibres. I should not like to be held to that definitely, but this is my understanding of the position. On 18th September 1969 a Tariff Board report was received. In April 1970 it was accepted by the Government and brought before the House. In September 1970 the Minister for Customs and Excise submitted a reference to the Tariff Board concerning dumping. A report was received on that reference in 1971. It showed that no damage was being done but that dumping did indeed occur. Then the matter was passed to the special advisory authority on 30th March. On 18th May customs tariff proposals recommending the imposition of temporary duties were introduced in this House. We could not have a better illustration than this of the way in which a system can be stopped working.

The other proposal that was brought into this House by the Minister last Thursday concerned propylene. This is a remarkable illustration of the way the system gets bunged up. However many members there are on the Tariff Board it is not likely that we will receive the kinds of results that are expected. Although I have not studied this matter thoroughly I understand that synthetic resins were the subject of inquiry in the general report on chemicals in April 1966 and that a 40 per cent duty was made available to the industry. But the industry did not take advantage of this. No-one was producing propylene powder at that stage but the industry had available to it a 40 per cent duty. An industry started up and, having got its head within the tent, it asked for a 60 per cent duty plus a support value of $595 per ton for popolymers. Yet on 3rd May 1971 the Tariff Board received a reference on propylene. On many occasions I have had reason to praise the Minister for Customs and Excise for the way in which he has tried to help our understanding of these kinds of tariff proposals, but in this case, if he will forgive me for saying so, I think he has erred because there was in these 2 instances a need to spell out, firstly, the past history and, particularly in relation to propylene, what is going on now. No-one knows what is going to happen to the Special Advisory Authority report on propylene.

As the Minister would know, once the Special Advisory Authority report is received by the Government it is obligatory upon the Government to refer the report back to the Tariff Board, but the Tariff Board hearing is already in progress and the report has yet to be signed. I guess that the Minister will tell me, when he speaks in reply, what is now going to happen, but it would have helped honourable members to understand this matter if he had spelt it out when he introduced these proposals last Thursday. I hope that the Minister will forgive this soft impeachment. He has been an exemplary Minister in helping us to understand matters in this difficult area, but these proposals are an example of a situation which I would have understood more clearly if the Minister had earlier spelt out what will happen.

Mr Chipp - May I ask the honourable member what he means when he says that the Minister for Customs and Excise will spell out what is now going to happen?

Mr KELLY - When the Minister replies in this debate.

Mr Chipp - Yes, but what do you want to know?

Mr KELLY - What is going to happen now that the Special Advisory Authority report has been presented? Will it go back to the Tariff Board which is now considering the matter which was referred to it on, I think, 3rd May 1971. The Board has not yet reported on that matter. Will this go back to the Board yet again? This is the kind of technical information which I would like to have to enable me to understand. In regard to the report on the whole tariff system, it is clear that we are up against problems of protection. Although we know what ought to be done, the difficulty is in how to make the changes. Most responsible people - all economists and indeed most honourable members - agree that the policy of tariff protection that we followed in the past was probably unwise, although perhaps I should not say that, but at least we now know that they are different from the ones that we ought to follow in the future. I am not going to belabour the fact that I have asked for a more realistic approach towards the tariff question, but one thing is clear and that is that future policies - I think that the honourable member for Lalor mentioned this - must be different from the ones that we adopted in the past. Most people agree with this.

There are a few people in this House - and I shall not refer to them by name - who think that very high tariff protection is a good thing. They believe that by having tariff protection we necessarily create more employment. There are only a few of these people but their views have to be listened to with respect because they are sincere people. But they ignore the fact that the employment opportunities which are gained by these lavish protection policies which they recommend are obtained always at the expense of employment and development in other industries, be they export or secondary industries whose general costs and raw material costs are increased thereby. These people ignore the fact that we are now one of the most urbanised countries in the world and that we are now a truly industrialised country with a greater percentage of our workforce employed in secondary industry than has the United States of America.

This group - and I wonder whether I should now put the honourable member for Lalor back into this group because quite often I am uncertain as to exactly where he fits in - also justifies a policy of limitless protection by saying that it protects our industries against the imports from cheap labour countries, ignoring the awful truth of the ever-widening gap that is opening up now between the developed and underdeveloped countries and that our whole civilisation will tumble into this gap unless by some means or other we succeed in closing this gap. The people in this group also ignore the plain fact that many of these undeveloped countries are good customers of ours and that their ability to purchase more from us would be enhanced if we bought more from them. The people in this group are entitled to their point of view but. as I said, there are not very many of them. Most honourable members, all economists and most other people now realise that there will always have to be a price paid for high tariff protection. We now realise that trade always benefits both the exporter and the importer. We realise also that employment gained in the highly protected sector is paid for by the loss of employment in other industries. In short, this diminishing group of people will not realise the economic sense of this argument, but most people now realise that opportunities for employment are enhanced if there is a greater flow of trade.

This brings me to the situation which I wanted to raise particularly. If an industry in the electorate of any honourable member is threatened by a reduction of tariff duty there is a tendency for the honourable member to react strongly to protect the industry. There are always forces operating to slow down the inevitable and beneficial lowering of our trade barriers. We can speed up the process. We can speed up this process by making the change more acceptable. It is not easy to show where employment has been gained. It is easy to point out where employment has been lost if a factory gate is closed, but it is hard to point to employment that has been gained if opportunities in other industries are enhanced, if they are encouraged to expand. How can we make this change more acceptable to a democratic Parliament such as this? I suggest that we should try to bring about changes gradually. The Tariff Board has made some steps along this line, notably in the case of woven shirts and malleable cast iron pipe fittings. Perhaps we should follow this line more often. If we phase out gradually a duty or if we have a programme of lowering a duty and this is done gradually, it will give to the industry a chance to look around for other ways of employing its capital and it will also give to the people employed in the industry an opportunity to seek other employment in other industries, which opportunities may be enhanced by having the cost of raw materials in those industries reduced. We ought to be looking continually for some way which, although it may be slower than the economic theorists and particularly some of my farmer constituents would like, is really better than achieving our objective by trying to knock great holes in the tariff wall suddenly.

Let us have a look at the process of gradual change. Another way we could do it is by compensating industries for change. Many industries have been encouraged to set up by unwise State government action and indeed sometimes by Federal Government action, with the acceptance that lavish protection will always be available. It may well be desirable to ease these industries out of production by compensating them. The classic case is the case of the Imperial Chemical Industries of Australia and New Zealand subsidiary. Fibre Makers Ltd, in the field of man-made fibres. Through no fault of its own it seems to be uneconomic - not inefficient - because of its throughput. It seems that if it continues in production we will have an increasing load on the textile industry that will inhibit development or the chance of the textile industry to expand. This is an example that I give quickly off the top of my head. It is one thing that we ought to be looking at. We may proceed more effectively in the process of lowering tariffs if we look at compensating industries that are already in existence. 1 do not think for one minute that we are ever going to go back to the silly policy of protecting everything that moves as we did in the past. I think those days are gone. At least I hope so. Knowing the democratic process perhaps more clearly than I did in the past, I think we ought to consider bringing about changes more slowly but surely inevitably in regard to existing industries.

The other point I make is that one of the greatest pressures for change in the future will come from an active consumer organisation. One of the things I would hope from the visit of Ralph Nader to the country is that he will bring it home to the consumers that they and they alone are the ones paying the extra cost for some of this unwise protection. There has to bc some change. We all recognise this, except perhaps a few diehards on both sides of the House. We have to work within the economic processes to bring it about. We need a process of more gradual change, particularly in the phasing out of duties. Gradual phasing out of duties, slow though it may appear to the economist, is something that appears increasingly attractive to the practising politician.

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