17 May 2000

Car prices increase despite free trade

Green Party co-leader Rod Donald says National Party predictions that the cost of new cars would fall as a result of tariff cuts have failed to materialise.

In the lead up to National's 1998 budget announcement removing the remaining 15 per cent of tariff on imported motor vehicles, National Minister John Luxton predicted that the cost of new cars would fall by $3000 to $4000 each.

"As with most claims about free trade, Luxton's prediction has fallen flat," said Mr Donald.

"According to the Automobile Association, the cost of new cars has actually increased in the two years since the tariffs were removed," he said during last night's debate on the Tariff Amendment Bill. In March 1998 a Mitsubishi Lancer GLXi wagon cost $27,750; today it sells for $27,950. A Toyota Camry GL-Sedan cost $34,300 in March 1998; today $34,500. A Honda Accord LXi was $35,000, now $36,050.

"Of course one of the main reasons for the prices of new cars not dropping is because New Zealand's exchange rate has fallen to a 14 year low, but one reason the exchange rate has deteriorated in the last two years is because of our balance of payments crisis," he said.

"This in turn is heavily influenced by the record merchandise trade deficit, one of the largest components of which is the cost of imported motor vehicles. Imports jumped by almost a billion dollars to $2.488B in the last two years, because New Zealand's motor vehicle assembly industry was forced to close by National.

"The former National Government not only refused to acknowledge the impact car plant closures had on towns such as Nelson, Thames, Porirua and Masterton, they failed to understand the impact the resulting increase in imports would have on the whole economy," said Mr Donald.

"The car industry has gone but the tariff freeze bill before parliament will help to save what's left of the clothing industry.

"We want the Government to go further. At the very least it should investigate the employment consequences of recent tariff cuts before entering into any new free trade agreements," he said.

Ends

Rod Donald MP: 025 507 183, 04 470 6660 Jonathan Hill (press secretary): 04 470 6719, 021 110 1133

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