Academic journal article The Economic and Labour Relations Review : ELRR

An Overview of Protection of Australian Manufacturing: Past, Present and Future

Academic journal article The Economic and Labour Relations Review : ELRR

An Overview of Protection of Australian Manufacturing: Past, Present and Future

Article excerpt

Part I of this paper provides a brief overview of manufacturing protection in Australia--from the first (revenue) duties imposed in the Colony of New South Wales, and the post-gold rush, protectionist tariffs of Victoria, to the assistance provided to manufacturing in the late 1980s and early 1990s. In examining recent assistance, the emphasis of Part U is on the distribution of employment and assistance by activity.

By the turn of the century, the Australian Tariff will have been largely dismantled. In recent years, the focus of assistance has shifted from tariff protection to alternative measures, and Part in looks briefly (and selectively) at some of these, including assistance for exports and research and development, and two of the most important industry 'plans'--textiles, clothing and footwear, and automotive. Finally, the changing form of future assistance--the 'fall' of the tariff and the rise of alternative measures is briefly examined.

1. The Past (1)

The role of tariffs in Australia has been debated in Australia since before Federation. Governor Phillip first proposed customs duties in 1791, though it was not until 1800, that 'assessments'--revenue duties--on imported spirits were imposed in the Colony of New South Wales. Protective duties can be traced back to the 1840s. Then, NSW, Van Dieman's Land and South Australia pursued 'beggar-my-neighbour' policies (imposing protective measure and counter-measure) designed to foster local industry at the expense of the other Colonies.

The first overtly protectionist tariff was introduced in Victoria in 1865 following the Gold Rushes which had resulted in a dramatic increase in Victoria's population. In eight years to 1860 it increased from 150,000 to 540,000, and a protective tariff was seen as a means of creating new employment opportunities for the erstwhile miners.

A significant barrier to Federation was the divergent views of protectionist Victoria (whose Governments were heavily dependent on tariff revenues) and free-trading New South Wales where pastoral interests dominated, and Crown land sales made the Government independent of tariff revenues. Essentially, the Victorians 'won' on the tariff issue in the Federation debate.

The common uniform external tariff which was introduced following Federation however recognised, according to the then minister for Trade and Customs (C.C. Kingston), 'at this time in our history neither free-trader nor protectionist can have his way entirely'. The prime objective of the tariff was raising revenue, 'but protection, to existing industries at least, must accompany it' (quoted in Brigden, 1929, p. 148). Thereafter, the protective element in the tariff tended to increase in importance.

Indeed, the Tariff Board which was created in 1921 to inquire and report on matters of protection to the government, in 1928 expressed concern about 'the danger of the tariff being used to bolster up the ever-increasing cost of production', and instances of 'abuse' of protection where 'a highly protected industry returns to its shareholders, dividends considerably in excess of commercial rates ...' (Tariff Board, 1927, p. 18). The result was the formation of the Brigden Committee which inquired into protection policy. It was broadly supportive of the policy as it had operated to that time. However it suggested that' ... the tariff may be likened to a powerful drug with excellent tonic properties, but with reactions on the body politic which make it dangerous in the hands of the unskilled and the uninformed.' It concluded that the tariff had reached its 'economic limits', and that 'no further increases in, or extensions of the tariff should be made without the closest scrutiny of the costs involved.' (Brigden, 1929, pp. 6-7). Despite this, by World War 2 tariffs were about one-half again as high as they were in 1929 as a result of measures introduced during the Depression (Jackson, 1975, p. …

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