I'm afraid to say that the Minister for Trade Negotiations, Jim Sutton, still does not have it right. Last week he acknowledged in his speech to Federated Farmers that New Zealand is "naked and vulnerable". Well, we certainly are thanks to proceeding National and Labour Governments. Mr Sutton admitted that New Zealand's current trade policy is, and I quote from the Christchurch Press: "like stripping your clothes off and standing naked on the beach only to discover that no one else has taken off their clothes." But then he went on to say that the thrust of the new Government's effort were now aimed at others taking off their clothes, too.
Mr Sutton may well want to become the wild thing of the Government, but I would urge caution. No one else but him is likely to take off their clothes in the middle of winter because we all know that we are likely to get a cold.
In the summer he should know he should cover up to avoid melanoma. When we think about it, in the same way that clothes protect us from the elements, border tariffs protect industries, jobs, and indeed, our way of life from exploitation. Mr Sutton has accused the Greens of having rocks in our heads for holding that point of view, But I would like him to come up with the evidence to prove that we are wrong.
We all know the theory about free trade: if we remove tariffs then domestic producers will come more efficient, productive resources will be allocated to the most profitable use, and the economic well-being of New Zealanders will improve. But what is the reality? While New Zealand Governments have imposed this particularly rabid theory on our people, other more powerful Governments have pursued a managed approach to trade, and I think that the United States is the classic example. The United States makes it's own rules to protect it's own economic interests, and all we have to think about is sheep to find a good example of how that applies.
But it has become a article of faith in that country — particularly on the part of the two members of the opposition front bench tonight (John Luxton & Lockwood Smith) for free trade zealots that somehow we must be better off if we go down the free trade route.
Yet there has been no genuine attempt to establish the gains and costs of dismantling protections from the domestic economy, both in total.
Economist Tim Hazeldine has said there is no systematic evidence that liberalisation has produced the predicted efficiency gains. In a contribution to the Trade Union Federation's 1998 tariff review submission, he said, and I quote because I like this particular one: "it is rather as though out there in the great economic jungle there have been roaming, large beasts called "TREGS" — Tariff reduction efficiency gains — but in nearly half a century no intrepid explorer has ever gone into the jungle and captured a "TREG" and bought it back to the economic dissection table so that its weight and size can actually be measured. Could it be that the "TREG" is in fact a mythical beast, or perhaps just too tiny to be spotted in the jungle?" The same sentiments, of course, have been expressed by that eminent trade economist Dr Paul Krugman.
I hope wild thing Jim Sutton can prove the existence of "TREGS" before negotiating away any more tariffs in pursuit of his free-trade agreements, but I doubt that he or anyone else can find empirical evidence that tariffs in, for example, the textile clothing and footwear industries, prevented the profitable expansion of other industries. Certainly, the costs exist for all to see. High unemployment, especially in provincial towns where manufacturing industries have closed down because of tariff reductions. There has been a decline in New Zealand's living standards. We have gone from twenty-first in the OECD in 1984 to twenty-fifth today.
Has liberalising trade benefited the tangata whenua? No, it has not. Medium Maori income has dropped 20 percent between 1986 and 1996. It is no coincidence that many of the jobs that disappeared as a result of tariff cuts were held by Maori.
Are consumers better off? Mr Luxton, who has chanted for years the mantra of greed that consumers will be better off, has not been able to prove that they are. Before the May 1998 budget ended tariffs on car imports, Mr Luxton predicted that the cost of new cars would fall by $3,000 to $4,000 a car. Exactly what happened. According to the Automobile Association, in March 1998 a Mitsubishi Lancer cost $27,750. The same model in March 2000 cost $27,950. That is no saving of $3000 to $4000. That is an extra $200. In March 1998 a Toyota Camry cost $34,3000. In March 2000, it cost $34,500. In March 1998 a Honda Accord — the Accords that used to be made in Nelson — cost $35,000 and in March 2000 it cost $36,050.
All three of those cars have gone up. Of course, it has a lot to do with the exchange rate. Why has the exchange rate dropped. Does it have anything to do with our appalling balance of payments situation? Why is our balance of payments 8 percent of GDP? It is because we have a whopping great merchandise trade deficit. Why do we have a whopping great merchandise trade deficit? The imports of cars have gone from $1.5 billion in 1998 to $2.5 billion in March 1999. On top of that, of course, there is the increases in imports of a whole range of goods, particularly consumer goods. Members just have to look at the sort of things that used to be made in New Zealand by New Zealanders.
Back in 1996 we imported about $4.9 billion of consumer goods. Now, that has gone up to $6.7 billion. The previous Government's own Ministry of Commerce has been travelling around the country, - when National was in Government, and continues to do that now that we have a change of Government — telling the world that every million dollars worth of consumer goods we import is costing 15.7 jobs in this country. That is the message I would like both main parties to take on before they rush down the free-trade path, and expose New Zealand to unfair competition from countries like Thailand where there is a minimum legal age for employment of 13 years, where there are something like 850,000 to 1.5 million children working in Thailand, and where the minimum wage there is US$2.72 per day. It is a similar story with Indonesia where something like 4 per cent of children aged between 10 and 14 are working full time. That is around two million children in the labour force. In Jakarta the minimum wage is US$70 a month.
The free-traders in this Parliament claim that somehow we can compete on a level playing field with economies that exploit child labour and which will inevitably put more New Zealand workers out of jobs than the last two Governments have managed to put out of jobs. So we support this bill to freeze tariffs, but in our view it simply does not go far enough. We have an obligation as a Parliament, and the Government has an obligation as the people in charge of policy to ensure that there are adequate protections of the New Zealand economy to generate genuine job growth, instead of exposing the New Zealand economy to greater exploitation.
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