PROTECTIVE TARIFF CLAIMS
DOMINION’S INTEREST THE
PREMIER FACTOR WHEAT AND FLOUR DUTIES minister Answers CRITICISM That the interests of the Dominion as a whole are the Government’s paramount consideration when local industries apply for protective tariffs is eniphasised by the Minister of Customs (Hon. W. D. Stewart) in correspondence with the Auckland Cbyhiber of Commerce on the subject of the new duties on wheat, flour and maize, which he has handed to “The Dominion” for. publication.
The Minister, in his concluding letter, recalls that on November 17 last the Council of the Auckland Chamber of Commerce passed a resolution regretting “that the Government had considered it necessary to reinforce the duty of 2s. per cental on maize and to increase the duty on wheat and flour as this undoubtedly imposes an increase in the cost of three most essential foodstuffs, namely, bread, bacon and eggs.” Price of Bread.
“Portion of this resolution,” states Mr. Stewart, “seemed to me not to be open to anv other interpretation than that the effect of the altered duties on wheat and flour would undoubtedly be to increase the cost of bread. I am glad, however, to learn from a later letter that I have been under a misapprehension as to the council’s view, and that they were merely drawing attention to an elementary economic principle that there is a tendency for increased duties to mean increased prices of the commodity protected within the protecting country. With the principle now enunciated by the council I do not, of course, disagree. Any duty on goods will tend to increase the price unless other factors (e.g. increased local production) operate. If at the time of falling prices an extra duty were imposed on goods this might inhibit a fall in the internal prices. On the other hand, if at a time of rising prices the duty on any commodity were lowered this might inhibit an increase in' internal prices. It seems to me that the_ question cannot be fairly viewed unless both aspects of the new wheat and flour duties are' concerned.” “Dominion as a Whole.” Regarding the suggestion that “certain special local interests appear .to havefbeen able to secure a protective duty,” the Minister states that ' the Government is concerned with the welfare and prosperity of New Zealand as a whole. “When requests,” he “said, “are made for duty on articles grown or made in’ this country, whether they be from wheat growers for duty on wheat and flour, from fruit growers for a duty on lemons, or from maize growers for a duty on maize, the Government takes’ into consideration the interests of the whole Dominion, and not only the special local interests more directly concerned. There is, ■therefore, nothing in this connection to which exception can rightly be taken bv the chamber.” 'it was also stated by the chamber that “the likely effect of the duties on wheat and flour is to render the price of bread higher to the whole community than it would otherwise have been, and that a burden has been imposed on the whole of the community for the benefit of a few.” “With respect to the latter point,” asks the Minister, “does, the chamber seriously contend that the growing of wheat in Canterbury, of lemons in Auckland, or of hops in Nelson, is not of material benefit to the Dominion as a whole, or that the growing of hops in, sav, Kent, or an increased output of motor-vehicles in, say, Coventry, does not contribute to the general prosperitv of Great Britain ? lam quite unable to accept the (apparent) view that increased production of wheat in Canterbury and Otago is not advantageous to New Zealand. If Customs Abolished. “With respect to the former point, the Chamber apparently object to the duties on wheat and flour, on the ground that the price of bread is thus rendered higher than' it would otherwise have been. It seems to me that if this view were followed to its logical conclusion, it would mean the abolition of all Customs duties, since all duties on goods tend (unless other factors operate) to increase prices. Apart for the question of the possible effect on local primary and secondary industries, such a policv as the abolition of Customs duties (other than, say, those on alcoholic liquors and tobacco) would mean that a very largely increased amount of taxation would have to be collected from the people of New Zealand by way of, say, income tax and land tax. Australian Decision No Connection. “I admit freely,” proceeds the Minister, “that the more or less stabilised prices of wheat and flour which are expected to result from the new duties will, in a time of falling prices abroad, tend to keep the price of bread higher than might otherwise have been. On the other hand, in a time of rising prices they will (as already indicated) tend to keep the price, of bread lower than it would have been had the alteraion in the tariff not been made. “I cannot see that the imposition of increased duty on our butter and cheese by the Australian Government has any real connection with the matter we are now discussing. Such increase, in my opinion, would have taken place in any case.” Co-operation Looked For. Referring to another point raised by the chamber, the Minister states that a sliding scale of duties was a hitherto untried way of endeavouring to adjust the various conflicting interests involved. He felt that the Auckland Chamber and the commercial community generally recognised that the introduction of a new system of collecting duties on any article, but especially on such important articles as wheat and flour, must for a while create some difficulty, but was sure that the chamber and the importers of wheat and flour generally would follow their usual policy of cooperating with the officers of the Customs Department and so arrive at a satisfactory soluiton of the difficulties at present being experienced in the clearance of shipments of these products. Exemption of Crushed Maize. “I do not underst md the attitude of the council and chamber toward the duty on whole maize and the exemption of crushed maize,” adds Mr. Stewart. “It would seem that in November last the council regretted that the Government had reinstated the duty of
2s. per cental on maize. Apparently on the ground that the exemption of crushed maize is unfair to those who have installed crushing and grinding plants in New Zealand, they do not agree with the exemption of crushed maize. The position of the Government is that it had to rgeard the matter from the point of view of the whole community, after considering very strong representations made on behalf of maize growers, that the duty on maize should remain at 2s. per cental, as under the old tariff, and equally strong representations from those interested in pig-raising as to the imperative necessity of reducing the cost of pig-fattening foods (especially maize products). The suggestion of the 2s. rate of maize, together with the exemption of ground and crushed maize, was considered by parties representative of these two special industries, and was accepted by a majority of the representatives of each as being a reasonably satisfactory compromise of the conflicting interests The Government, guided largely by tin’s acceptance, took the view that tlie suggested alteration would be for the general benefit of the Dominion.”
The Minister intimates that, in case the matter should come up again for consideration, he has asked the Auckland Chamber of Commerce to advise him as to the location of the costly crushing and grinding plants which had been installed in New Zealand, and to the owners of which they stated the exemption of ground and crushed maize was unfair.
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Dominion, Volume 21, Issue 123, 22 February 1928, Page 12
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1,298PROTECTIVE TARIFF CLAIMS Dominion, Volume 21, Issue 123, 22 February 1928, Page 12
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