SUBSIDISATION OF INDUSTRIES.

Taranaki Daily News, 29 September 1919, Page 2

SUBSIDISATION OF INDUSTRIES.

To tho Editor. Sir,—Wo respectfully desire to place More you tho position of Tariff Reforms as it appeals to us. In (Joins so, we shall try to make our remarks as concise and plain as possible, and trust, you will, each and every one, give the suliject. tho consideration it deserves. 1. Encouragement of young Industries.—We would ask you to consider that, there being plonty of coal and waler-power, raw materials, etc., in our Dominion, New Zealand is not entirely an agricultural and pastoral country. Or. the contrary, there Is no reason why we should not manufacture to even a very much greater extent than at present. A policy of encouraging tho development of local manufacture would not merely make us more selfreliant—and; in doing bo save the necessity for such heavy importing as at present—hut would create much more work for our workers, and especially for those who, as returned soldiers, are, since their roturn, looking about for the entry again into Industrial life. 2. While subsidisation of young Industries IS not unknown in New Zealand—(take the case of gold-mining, oil well sinking, etc., etc.)— we hare, generally speaking, stuck to the old and now obsolete system of Customs duty for the purposes of "protection." Were we as progressive In our protection legislation as some parts of Europe have been for many years past, we would, In most cases where protection is necessary,, have adopted the Continental sjsiem whereby, instead of Customs duty, the governments of • such places have pnid from the consolidated revenue to manufacturers such sums as .may from time to tune have been found necessary" to enable local industries not only to compete with the Imported article, but also to find markets elsewhere for any surplus manufacture over and above local requirements. 3. To make our point clear, we shall show the difference as wc see It between "protection by means of Customs Duty" and "protection by means of Government subsidy." PROTECTION BY MEANS OP CUSTOMS DUTY. R. d. Say, for example, that a cerialn specified article can be landed c.i.f.e. at any New Zealand port for 20 0 And that the local manufacturer cannot produce under 21 0 A duty of 5 per cent (Is) on the c.i.f.e. price would bring tho landed price of the imported article to 21 0 and thus protect the local manufacturer while ho needed such protection The landed price then, say, Is 21 0 (20s plus Is duty.) Add warehouso proft, of, say, 25 per cent, 5 3 ■Price to retailer would he 26 3 Add retailer's profit—say, 33 1-3 per per cent 8 9 Cost to Consumer would be 35 0 PROTECTION BY MEANS OP SUBSIDY. Prlco c.i.f.e. N.Z. port 20 0 Cost, of local manufacture 21 0 Minus Government subsidy paid to local manufacturer from Consolidated Fund . l o Cost to warehouse .' 20 0 Add warehouse profit of, say, 25 per cent .; 5 o Cost to Tt taile'r would be 25 0 Add retailer's profit of, say, 33 1-3 per cent 8 4 Cost to consumer would be 33 4 Gain or saving to consumer through adoption by Parliament of the policy of Government subsidy instead of Customs Duty 1 8 On analysis, we find this Is 8d Is made up as follows: Saving of Customs Duty 1 0 Extra profit to merchants, retailers, bankers and financiers generally 0 8 4. Co3t of Living—We claim, therefore, that a general policy of Government subsidisation of local industries would considerably reduce the cost of living to tho consumer, while at the same time It would also give considerably more opportunity for the employment of moro capital, and by so doing tho creation of more work for tlie workers within our own Dominion. In conclusion, permit us to hope that this letter will receive every possible consideration before you again deal with any Increase of the Customs Tariff, for any such increase might possibly not protect local Industry, at all. It may have the reverse effect In scmo cases: it may kill local Industry.—Your3 faithfully, UNION FELT HAT CO., LTD. Dunedin, 12th September.