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Alliance Tariff Policy Gets Thumbs Up

Policy announced by the Alliance yesterday to increase tariffs by 5% on all imported goods, (except those covered by the CER agreement with Australia), has received an unconditional thumbs up from many of New Zealand’s trade unions.

The policy is aimed specifically at tackling New Zealand’s current account deficit which, at 6.4% exceeds the IMF suggested maximum of 4% and which has ballooned alarmingly with a massive 50% increase in sales of imported vehicles since all tariffs were removed in last year’s budget.

“We have long advocated low to moderate tariff barriers as a way of encouraging local jobs and industries, particularly as a domestic base for export ventures,” New Zealand Trade Union Federation Secretary, Michael Gilchrist said today.

“But the balance of payments crisis adds real urgency to the situation.”

“Under the Alliance policy tariffs would still be low in those areas in which they remain at present - the maximum would be an average 20% in clothing and footwear, for example.

“What we have experienced recently is a brief import-led recovery caused by lower interest rates and the removal of tariffs,” Mr Gilchrist said.

“In terms of the national economy this is just under-funded spending. It will quickly worsen our overall position and that’s starting to become apparent already. A low, across-the-board tariff is certainly the best way of addressing this situation.

“A national economy is like any organism in a larger environment - it needs to maintain a semi-permeable membrane if it is to survive and grow as an entity. Where there are taxes there should be tariffs. At the moment that level of border regulation is way too low.

“We have no security against the changes that other countries may make in regulating their inflows and outflows, for example. What happens if, say, China devalues?

“The free market ideology is, of course, not about maintaining national economies. For example, if you think our GDP growth rate is poor then check out the growth in our Gross National Product. That’s the part that stays here and goes to creating jobs and assets in New Zealand. It runs at about 60% of GDP growth.

“The Alliance policy is probably too sensible to be legible to New Zealand’s small but powerful elite of wannabe global citizens. But it is a signpost which we will not always have the luxury of ignoring,” Mr Gilchrist concluded.


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