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Labour's U-Turn On Tariffs

20 October 1999

Labour's U-Turn On Tariffs Would Not Save New Zealand Jobs

Michael Cullen's acknowledgment that a Labour Government would reverse legislation to abolish tariffs on imports would not save New Zealand jobs, according to Trade Minister Lockwood Smith.

Labour's Finance Spokesperson Michael Cullen said today that a Labour Government would "hold tariffs for five years, unless our trading partners start catching up with us, in which case we will resume a faster rate of tariff reductions".
"Michael Cullen clearly misunderstands the basic principles of economics. Removing tariffs is not a strip-tease with our trading partners - we are progressively dismantling import tariffs because they are a tax on our farmers, business-people, and most importantly, New Zealand families," said Dr Smith.

"Independent research conducted by the New Zealand Institute of Economic Research found that reducing tariffs in just four sectors - cars, household appliances, clothing and footwear - has given a three-person household in New Zealand an additional $22 per week. The research shows that by 2010, the gains could be as high as $42 per week for every family.

"Cullen's comments don't signal a 'holding pattern'. In order to hold tariffs at their current levels, a Labour-Alliance Government would need to repeal the Tariff (Zero Duty) Amendment Act which provides a time-line for eliminating all import tariffs by 2006.

"In coalition with the Alliance, Labour may find in repealing this Act, Mr Anderton may require implementation of the Alliance's five percent tariff on all goods and services, except those imported from Australia. As well as losing the $42 benefit of future tariff reductions, New Zealand families could expect to pay at least five percent more for everyday goods including petrol, family cars, computers, and children's clothes and shoes.

"Dr Cullen and Mr Anderton's logic is flawed. Re-introducing tariffs will not save New Zealand jobs. In fact, it will cost jobs as tariffs will make New Zealand businesses less competitive. Since 1991, 268,000 jobs have been created under the National-led Government, and our decision to reduce tariffs has played a key role in this positive outcome.

"While today's Bendon announcement is deeply regrettable, some change is inevitable as New Zealand succeeds in becoming a truly knowledge driven economy. Sensible Governments react to change through policies that ease the plight of those in the front-line of adjustment. However Labour appear to want to stunt these changes through the re-introduction of tariffs.

"Labour's announcement today is a significant policy shift from its former position when Mike Moore was trade spokesperson, and signals a disturbing trend of the Labour Party's willingness to make significant concessions to Alliance policy," Dr Smith concluded.


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