H.—2Ba.

15

industry which New Zealand cannot afford to have menaced. It is unfortunately true that the vast majority of our farmers have, in recent years of depression, been exposed to a severe economic blizzard. Does it follow from this that wheat-growers whom we are in a position to some extent to safeguard, should be similarly exposed ? We think not. The recommendation of the Government then is that the present system of wheat and flour duties should be retained. Motor-vehicles . As an item in the tariff schedule motor-vehicles have a number of special features : The Customs taxation derived from them is of importance from the viewpoint of revenue ; they are a class of manufacture in which we give an especial degree of British preference. In passing, it may be mentioned that of the number of our motor-vehicles imported the percentage from United Kingdom in 1929 was 15 per cent. ; in 1930, 21 per cent. ; in 1931, 65 per cent. ; in 1932, 83 per cent. ; in 1933, 75 per cent. Although they are not made in New Zealand, we are concerned in the question of body-building and also in the more substantial question of assembling cars. All of these considerations have been borne in mind in reviewing the tariff, and, in addition, the aim has been to simplify the tariff for administration, and, as in other items, to reduce it to the advantage of users and consumers. The Tariff Commission's recommendations, not all of which the Government propose to adopt in full, cover the following points : — (1) Abolition of the differential duty between the complete vehicle and the chassis. This was intended to encourage the building of motor-bodies in New Zealand. It has not succeeded. (2) Imposition of a flat rate duty of 15 per cent, on all _ motor-vehicles entered under the British Preferential Tariff. This would have the effect of reducing the advantage in duty obtained on vehicles imported in parts —" completely knocked down " —for assembling in New Zealand. (3) Increase of the duty on motor-cycles, under the British Preferential Tariff, from the present 10 per cent, to 15 per cent. From these recommendations the Government's decision departs in two respects: Firstly, with regard to the assembly of cars in New Zealand, the Commission were of opinion that the industry was one suited to the conditions in the Dominion. They found from figures produced to them that, owing to freight and other savings, the industry could be economically carried on without special protection. Information obtained, however, since the Commission reported, with respect to the more recent types of cars which have come upon the market shows that some concession in the rate of duty is necessary if the industry of assembling cars in New Zealand is to be carried on satisfactorily. The Government have therefore decided to depart from the recommendations of the Commission in this respect. Having regard to the desirability of encouraging the assembly of cars in New Zealand, we propose that completely knocked down cars should be admitted at lower rates than those on cars completely set up. Honourable members and others who are familiar with conditions in the motor trade are aware of the value of the employment provided in assembling here in New Zealand the cars of some of the principal British and American manufacturers. We do not propose to disturb this condition, but, on the contrary, the aim is to encourage other manufacturers to assemble their cars in New Zealand and utilize New Zealand labour and material. The other variation from the Commission's recommendation that we have made is in maintaining motor-cycles at their former low rate. In so doing we sacrifice the advantage of simplicity that would be given by charging motor-cycles at the same rate as motor-vehicles ; but this advantage to the Government is foregone rather than increase the cost of motor-cycles which are a form of transport popular amongst the less affluent in the community.