Academic journal article The Australian Journal of Politics and History

Australian Governments and Automotive Manufacturing, 1919-1939

Academic journal article The Australian Journal of Politics and History

Australian Governments and Automotive Manufacturing, 1919-1939

Article excerpt

In recent years the progressive lowering of tariff barriers in Australia has produced a predictable backlash from those who are directly affected. The reaction, however, extends to academics and others who have no pecuniary interest in the outcome, and who have argued that the tariff represented a policy consciously designed to promote the economic development and defence capacity of this country. On the basis of experience in the motor vehicle industry, we argue that these factors had very little to do with interwar tariff policy. Rather, it was the outcome of an interplay between the Commonwealth government's need for revenue, the activities of "the lobby" in seeking rents, and the practices of the Customs bureaucracy.

Overview

Since the 25 per cent tariff cut implemented by the Whitlam government in 1973, Australia has moved away from its highly protectionist orientation, towards greater participation in an increasingly integrated global economy. The gradual dismantling of the tariff has produced significant opposition, not only from industries established under the earlier protectionist regime, but from some political and academic critics. Typical of the latter, in a recent contribution to the debate, Anne Capling and Brian Galligan have employed what they view as a "statist" approach, in which government is accorded an independence in decision-making, in this case with the tariff "weapon" having been apparently employed in the past for the purpose of promoting the economic development of an entity called the Australian nation.(1) The same approach is extended by John Laurent, in a recent article on "industry policy" regarding the motor-vehicle industry, where tariff measures to promote local automotive components manufacture after 1918 are viewed as being consciously directed towards enhancing the defence capacity of Australia. Apparently, the outcome of the resulting "blueprint", as Laurent terms it, was "a debt this country owes to its motor industry" following the Japanese attack on Pearl Harbour, and the subsequent threat to Australia posed by their conquest of Southeast Asia.(2) In particular, Laurent claims that Australia's capacity to produce some automotive components by 1941 provided "incalculable benefits ... for the rapid building of a home-grown air defence industry during the emergency of those times".(3)

We argue, however, that these and other "recollections of time passed" and other similar views of Australian tariff history, show a lack of understanding of the process through which a highly protective regime was established by the eve of the Second World War.(4) "The doctrine of development is an old story in Australia", as S.J. Butlin put it.(5) The related notion of defending a "White" or European "Australia" against a presumed "Asian" threat is of similar antiquity and especially related to the tariff issue. They became axioms of Australian politics to which every mainstream party paid obeisance.

The reality, as this analysis of motor-vehicle components of the development of the tariff is intended to demonstrate, was somewhat different. In practice the development of the tariff was in essence the product of an interaction between the government's desire for revenue, the influence that vested interests -- the "lobby" as it came to be known -- could exert, and the aspiration of politicians involved in a relatively recently created central government to demonstrate its relevance to potential constituent interests in Australia. There was no consensus within the cabinets of interwar governments as to the desirable level of protection for manufacturers of various automotive products, but increases in the level of import duties became typical -- and usually enduring -- responses to immediate balance of payment problems.(6) Tariffs were preferable political alternatives to many other forms of taxation or the likely reaction to a currency devaluation by existing and prospective British investors in Australian government bonds. …

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