_-rATEMENT BY THE PRIME MINISTER, MR. E. G. WHITLAM, CQ. C., M. P.,
lDBY THE MINISTER FOR OVERSEAS TRADE A19D SECONiDARY INDUSTIRY,
* DR. J. F. CAIRNS, WEDNESDAY 18T-H JULY, 1973 AT 7. OOPM.
TARIFF REDUCTION
1. The Prime Minister and the Minister for Overseas
Trade and for Secondary Industry today announced a decision
taken by the Australian Government for a reduction of
in all tariffs each tariff will be reduced by 4 of what
it is now excluding revenue items and anti-dumping duties.
This reduction which will apply forthwith, is designed to
restrain price increases by increased competition and by
stimulating in the short run a sufficiently large inflow
of additional imports to help-~ meet pressing demand. Action
to combat price inflation through tariff action was clearly
forecast in the Prime Minister's policy speech and has
recently been urged upon the Government by Trade Union,
primary production 1) commercial and industrial groups. The
Government has also decided that in future by-law administration
will be more flexible. The reduction is to be
combined with an ambitious program of assistance to employees
and firms who may be adversely affected by the tariff
reduction. 2. The decision followed unanimous advice from a
Committee which was appointed on 27 June and reported on
July. It was chaired by Mr. G. A. Rattigan, Chairman of
the Tariff Board and comprised Professor F. H. Gruen,
Consultant to the Prime Minister; Mr. B. Brogan, Consultant
to the Minister f or Overseas lrrade arid for Secondary Industry;
Dr. S. F. Harris, Deputy Secretary, Departmewnt of Overseas
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Trade; Mr. J. C. Taylor, First Assistant SecretCary, Department
of the Prime Minister and Cabinet and Mr. F. A. Bennett,
First Assistant Secretary, Department of Secondary Industry.
The Committee's report will not be released at present
because it also deals with matters affecting our trading
relations and makes some comments on budgetary strategy. It
will be released with the Budget papers.
3. The justification for the general reduction of
tariffs is the excessive rate of inflation which now prevails.
Inflation i s harmful to every Australian. Action must be
taken to reduce its harmful effects with the least delayl.
Inflation can be offset by an increase of supply of goods in
. Australia. The most readily available source . of supply of
goods is imports from overseas. Whilst it is 6xpected that
imports will increase in the next few months, because of the
high level of tariffs the increase would be insufficient to
help combat inflation. Consequently the Government has
decided to reduce tariffs so that imports may increase in
the short term to help meet inflationary pressures in Australia.
4. The tariff changes will have a direct impact-on
import prices of approximately the same order of magnitude as*
a revaluation of slightly less than Increased competition
in Australia will have a salutary effect upon those
who have taken advantage of shortages by unjustified price
increases which have exploited the public. The Joint Committee on
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Prices will be asked to ensure that consumers get the full
benefit of these reductions as it is already doing by its
present inquiry on import prices. The earlier reference
to the Committee related to the revaluation of the Australian
dollar in December, 1972 and other relevant currency changes
in 1973. The Government is similarly determined that import
prices respond to the tariff reduction.
The increased imports may affect production and
employment in Australia. A Tribunal is being established
to immediately hear appeals from any firm or company which
may be seriously affected by imports. The Tribunal will be
authorised to immediately recommend appropriatL-e assistance
either to bring about changes for a firm or company or to
restore the tariff level which previously protected it.
Any person who may lose his job as a result of these changes
will be entitled to receive, as special readjustment assistance,
a weekly amount equal to his average wage in the previous
six months until he obtains or is found~ suitable alternative
employment. Subh persons will be of fered retraining for new
and better occupations if they so desire. The Government
has provided $ 25m to cover assistance which may be necessary
as a result of the tariff changes. The procedure for providing
assistance required as a result of these changes are set
out in a separate statement which is attaolhed.
6. While these changes can be expected to require some
workers to move from one employment to another this must be
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seen against the existing high level of unfilled vacancies
and rising employment opportunities. The Governmnent is
confident that most of the employees who may be affected
will gain from the assistance provided and from the new
opportunities which will be created. In making -this
decision the Government is conscious of the urgent need
for some major steps to deal with inflation. It has
adopted these changes as part of a complex of measures
some of which have already been taken and others will follow.
These tariff changes will assist in the fight against inflation
in the interest of the nation as a whole and at the
same time the Government is confident that losses which may
affect individuals will be adequately otfset . by readily
available assistance.
7. This decision represents a major step towards
implementing the Government's objcctive of support for
moves to liberalise international trade moves which in
the long term can only strengthen the economies of the
trading countries of the world. Consistent with these
objectives the Government intends to imqplement its international
commitments, which are of principle concern to
New Zealand and Canada, in the contexi. of the new tariff
structure. Furthermore, the scheme to aid developing
countries, announced by the Minister for Overseas Trade
and for Secondary Industry on 3 July, will be implemented
and existing and future preference margins will be lowered
from the new general tariff rate.
p. C. ' Tl^ l T. ESS . LLHT, D I RV IJIG Yl.
SP-CIAL ASSI C iEUIRDl A: A RESULT C
THl-I. EAUIiES TAE. TOl IITCJ., 1IOA. E
On the recommendation of the Prime Minister
and Minister for Overseas Trade and for Secondary Industry,
the Government has established a Tribunal to examine and
report on requests for relief for the measures taken to
increase the demand for imports rwhere a domestic industry is
being seriously damaged by the tariff reduction. The
tribunal will be guided by two basic principles; its
recommendations should be compatible w. ith the long-term
objectives of assistance to industries, and it should not
provide relief as a matter of course that is, simply
because the question of relief hod been referred to it.
The Government has also decided that there should be
established an effective ranre of adjustment assistance
measures which would be available to assist in'those cases
where the Tribunal felt that some assistance was required
but that restoration of the duties in whole or in part
*' as not a suitable means of assistance.
If the Tribunal were to recommrend relief too
readily by raising, perhaps, to their former level.,
individual tariffs which have just been. reduced as part
of a general tariff cut, the purpose of the initial tariff
cut would be largely frustrated. The desired increase in
imports resulting fromthe tariff reduction would not occur,
and the desired increase in aggregate domestic supplies
would not be achieved. In other w. ords, the antiinflationary
impact of the original measure would be
seriously weakened.
If. L the Tribulnal 7rere to provide relief ( paroticularly
in more highly protected iusre) not by raisingr tariff-: s
previously reduced, but by other measures such as;
comnensati on ipayments the -nrohlmcrsd-' r---. ribed above could
be partly avoided. ]' ut compensation paymiento or other
direct subsidies to aparticular industry could ha,, ve
uidecira'ole side effects, particularly if those payments
were not m-iade conditi onal on some adjustment by the industry
concerned to the new situation. For examiple, c ompersation
p ayments, if the--y are equivalent to the tariLff te ubsiAdy'
they replace, could continue to suqoport the use of
res-ources in activities which c Tc. hi. gh c ost; in these
circumstances the gain to consumilers of th-. e action proposed
w! ould be at the ex-, pense of taxpayerS. In cases: iw. here it is
evi-dent that the induS-try could, w--ith ass~ istance; adjust
to the changed circum-, nstances of import com'.--. etition ( and
of protection), it irould clearly b! e, in the in~ tcres'-ts of
-the cotinmunity as a whl) ole t'Uo pre-fer adjus1-tme. qntU assistance tLo
rctorinr: the hig~ h rates of duty.
In summary, therefore, if. 1-relief from 113 effcts
of the veneral tariff redu-ction is provided readily by
partially,, or -w. holly restoring7 the tari-Cfs previ. ously
reduced, part iculsarly w-here the previ-ous -Gari ff1-,-as hi-, h,
the ob; jcctives of the initial tariff reduction vill tend to
be frus2tr! Aed; and if the reief^ i, 17 readily provided in
ways w-. hich do not induce some adjustmen to the new situ., i. tion
hy hiehly protocted d~ omes L.-ic msuatrrthat relief wl
c-nd to heD incons: irtent wi-4th the-) le{ Itrmojcti-; res-of
protoctiou': policy.
Adjustment -Assietance
. yven's sucib as a currency hino atrf
reduction can be to the overall Ibcnñ: flt of thic n) ation as a
whole by makinf-more goodo.,: cervices available to the
Australian people, by helping to restrain price incre! as.,., es
and by improving the allocation of our resources and
efficiency of our industries. These benlefits, however, ma~ y
involve sonme cost in the form of reduced business
opportunities for come firm-s and the need for changes in
employmecnt and phaslocation for some individuals,
V~ hlstthe benefits are enjoyed -enerally throug-hout the
economy, the costs may tend to fall on a small minority in
t'he cormmuity. In such circwmtan'cejcs, it is ineuitable toalo
the cost to fall on any liarticuLn. r group1 csy-: ccially hen
the chanYges r broughIt abkout by a conrscious-Governrncmnt
decision. iKore importantly, i. t1i socially undesirabe
for the cost to fall on g-roups in ther-cor.-unity iwhich are
likely to be les! s. Tpri. -ili71, ed thani' the majority or on to
indiiduls hich do not have the o nportvnity o r the
capability to adapt read. cily to the cha-n-e in ircitac
A. rositive aYMor1oachI, is needed for these hum_. an and
economic problemE of structural techanological chiang7e
uhich reflects a genuirie unosa wof the non-econcaic
as well as the economic cost-, to those affTected and ,., hich
in cons ecuenirce can. not be too f: lncly calculated. In th e
abs--ence o--r effe ctive action to coun;, ter tete i
contLinue -to reprceen-t a real iecnntto desira.) ble a-ridC
beneficial chang. r: O
\ ith . thes e poirlts in minrd, the !-in: Ltors for
SccLodiacru sty, P~ bor an 20ia1 Securitly established
an inter-departmental committee t0o 7tndy moasures ncected
to facilitate desirable structur-al ch) anges in the
Australian economy. Thio ine-1pr1nn a omte ill
be recomnmending a long--term-approach to structuUra~ l cbhange0
This wvill incluide:
assistance to employceo;
' social seciirity Iacasurocs;
assistance to frs
The short-term tariff chiangos now taken will.
precipitate the need for immodiate adjustment assistance.
Because of the iranortanco, which this Government attaches
to the availability of adjuslment . s tac it has
anti cios2ted t-hose elements of the lonp-tc-rm program that
could be developed. cuickzly to assist in adjus tment to the
Prom~ sed tariff chang-ec.
Assistance to -!, npmlovrees
S3uch assistance will be given throughI the ex,-istijngservices
such as the Commjonealth PEmployr-ent 1' Iervice ith
ppropriate strengfthening and augmentation such as the
propos-als already outlined by tile IIinister for Labour in
his statement on manpower policy.
The measureS -, hich will-be applied include:
Grants-7 to indivicl 17 to mneet relocation exnoonm; es
iihere the is able to offer omploymont a
different location.. to t-hor-e sui-ted by age, health,
ecC., inludins ., guaranteed iim agsdrn
re-trainin-, payment of tr~ rigftes -L-d related
transport costs includinr: I\ Tlf-naw--ay from hiome
al3owa,, cne s where ncces cry
Ince-itives to frirm, to tGra. Ln or re-trair st,' affL
rendered redundant by ta~ zriff-1 ch-ar. n; es.
The Government has decided that an initial
alloc.-Aion of million could properly be made for
theSc purposes.
.) ocial ISecurity I31eas--uros
Additional social security me,-asu1. res mafy also
be needed for several pi urposes. order to e-Lisure
adeouate incomes for those tenmorarifly displaced by the
tariff change, the Governm-ient has decided it uould be
desirable for them to be paid their averag,( e weekrly wage
over the precedin-z six miiontlis for a-p'eriod of tip to , Aix
months or until they reoffered suitable alternative
ernplovyt~ ent '. There special local unemploym,-ent problems are
caused by the tariff changces, specia. lI local uepomn
relief grants ,. ijll be given in a forma similar to the rural
and urban unemployment reliefC scheor~ ics now being phased out.
To provide adequate incomens for those membersof
the iork force ". ho becore-redund'ant in adv. a) nce of norm.-al
retiring a-e as a result of -the tariff change cvnd are
unlikelyr to find suitable emnploymj~ en_-t becauce( of aghealth
or physicali. harndicao., 1s, the Governn-ent wvill makec provision
for early retirement bene-fits as full1 cupera nnua." ti-on
entitlemcents, retirement 7, rants ard. early retirerrenl;
a]. lo'w-ance. To minimise socia-l pr-oblems for uorkers ,? nd
e -ififcesc ted byT the( taif Ia~ fam" ily eounsellimc-
Csccrv iceos 1.. ill be provided.
These meiasures' will be ' Ghyroelenn'Go il the
Department of 2" ocial. Seci. 1rity. The Governmirent' ha-; s
decided that an initial ailocat'iop of
be made -for this,, pu-rposc.
1-fsircta. Ie. to Idrt~ sa2 im
Forms of adjust,: ent ,, ssistarce Iich sbudbe
considered by,, the TPribunal in relation Lonusre
af-foct ed, by theovo; c tlori ff redu. Lction I. cl-e
Ratons1iztio~ aistnceto encouror-e, w,. hen
arpronri tc:
chn. o-s in an industry's structure
numbers of ent--rprisies or
c s t 1i slM,! n; L s
chsar-,, es in -patterns of productionl-
( g. greate-r Product specializa'tion
or diversificat-ion into new, 7 areas of
production);-investient in neii cc u,_-ient;
cha-nges in the ec. tienxl strutctuGre Of
and industry3 ai-d clhanges in the
indu strial ' truicture of ani affectod.
reeion.
Such ass-susla nce mr-i7r be Drovided In -the form of
grant, lol oanloan ' uornr csa comiaion
of thes~ e. Onc e i. ts -new eistonhar. been..
l'assed, the Australimn InduS'Gry Developmen(-;, t
Corporation m-, ay be ,-blo to ass.-ist merge-, rs w ithin_
industries. Coi-ei-plzn-t-ion t,-o f-m; for closu,, re, give) he
part~ u ectablj-.: h'~ ts cantre!, mLn ln
productionl-thl-rough sne: Lom of rat ion! ali; a' tion
or other adjustme-nt'U. ' Vcn ioctoncannot be
continued efficiently, the cc tablirchmets
concerned 2hould be cdoe d, or the inofCi cien~ t
procesaP2sShould cease,
Th e lon;-term ocheme under d evelopmcnt for
ad juatment assistance to inchuntrLes and firms w. ill be
administ cr& c by an Ad justme~ nt~ Asrilstance Board empoowered
to Frant specified forms of nesctance from a pool of funds
2. pproprjited for the purpose. Applicationo for aszis tance
arising out of tariff chan~ es are expected to be an
important port of the Board's activits.
T'he Government ha2 ~ Ocicded that an effective
masof handling thsaspect, pjdirnr further eopon
of the loI1:' er term proposain, i0 for the Interdepartmental
Commi ttee on Structural Ad j ustment ( acting in concert vith
the Tribunal raecponsible for rcommendiny; Ph n Qdjus tment
assistance is appropriate) to administer assistance to
fcirms affected by the proposed tariff chang: es. It has
decided further that an initial allocation of 010 million
will be included in the 1970/ 714 budget for this purp~ ose.
A prima fscie case for : ceiere:' ie to the Tribunfal
could be cstab!. ihed if an industry claiming tu be affected
by the tariff change cnn ( denontrato:
that the fi rms compricing the industry were,
via~ ble prior to the effects or likely effects
of the tariff choivwe beir:; recommended; and
that tsriff ch~ nge iY cnusinq or has caused
serious injury affectin viablity of* th firms
or tha jobs of' thei~ r cmphywcEs in such a nay as
to cause hardtship or ' hiqh' social cost;
the effects of the tariff chang-; e cannot be
avoided or offset by action wich the industry
itselff might reasonably be e:: nectcd to tae;
the affected firms within the induLtry ae
unable to obtain financinG needed to m-de
necessMary chai-nges on reasonazable termr, a-tnC.
conditions from commercial sources ; ithout,
Government bcing.
Procedures for R-viewinL; Reouests for A-istance
The following ( general procedures have been
etablished for reviewing rdeuests for a-. s istance from
indutries or persos employed in them:
Requests for assistance should be submitted
by organizations representative of the affected
employers and employees. It ; ould be
uirealiStic to allowv; for the submi; ssion of
requerst s from individul-s, or isinEle f irm~ s,
and at the carme ti-me to expect careful but
speedy revieu~ j of thiose resluests.
To ensure expedition an,: d consistency of approach
and result, * Lc e-istingi; iter-deparb Ucn
machinery for servicing-Cabinet's consideration
of assistance -to industres w-iill be the vehicle
for co-ordinatiing the ,, orkl of the relevant
departments on requests for referral to the
Tribunal. Requests for assistance sh1-ould be acompaniedci
by the data which would ' be required by the
Tribunal to asSecss damlagp, and by tht-ie Interdepartmental
Committe on 2t ruetural Ad ju; tme7nM t
to deal iw: ithi questi. onz of adjusti:: nI; asais r. ce.
The data reanived uU. be spccificd., in a
ciuestionnai. re.
The Tribu-a! lcshould submit a report on a.
reference 1-ithin 60 cysof receivim.-g it.
This report cohou. 1d contai-n advice on:
whetlicr -dr-industry, or peroon eIipiye
in it hI'ave been, or are liklly to be,
seriously dam. na[ cd by the gcneral redluction
of tariiffo; and, if. s-, o,
* the form of azoi,, stance ( t'Uhat is, by
tari-ff action. or acdjue-tutcni,) t asist,---ance)
. ihich chould be given to the industrv or
emI ) 10r Ce.
on the evidence available, the Tribunal
cons iders that ad jus-t. ment assis-tance should
' be recornx-ended, the f~ encrri. I natu,,., re, extent and
lieycoSt (-Go public rcvenuea) oñ f tlm aedjus-tment
as: s tance will. be iden') tified ' by the Intexdempartmental
Commrittee on-, g tructura-l. Ad justment.
If tariff actio-n is recoruienrded, the Tribunal's
report wilrecomenIL it, form anrd lcve-. l.
The Tribunal il submit it,-rejports to the
i'rinc K~ inist or, and they will1 be published at
the s-a;-e tImcJre as2 the decisions are. an-, noun. ced on
thieir recor. unendati. is ii. udin,, t the gcneral
nature of t-he d ecisions on ad iusit;. ient ass , istanice,
if1 thA form-o-f' relief is.-roc1nlsedc,-iCcd.
It wilbe noted tbrnat tis7 time-wtab--le wli* ll recuirec thl-e
Tribuna-l t--o decide oia the c.: L; 1. on of' da wihin ab) Out
t'-hree-weeks of recoiving the ro-e. s; t fo-) r asitnsand,
1..
Jn 1, uh IeeaCtom-: A ttC to iotCjit
f~ nea ) a'tiire nr-l c: te( nt 4-h1 ~ e et cecheo .
cc rrcc o i--1, e'o d -, oi il the lb c eae! rii -e Oi:
tie to Tecaton o? darrere-and thei altiereti-ve
cCow",;) ts, of 2e e.' ie. ane 0.! v n. tio C n hI
LVniz io rL I," Xh ; onv : to o onito
durin]: n thle inot ei.. , htee-. Ka-, of~ tho x-ity-da. y pcriod
Conprm: -ition, oT TribunalO
uO fci the( y nayi~ Oe a : ffctedt by te action t o comnremict
: Icaoyn mmi;; ad -to nrovidc an ad v: 0rV rYze
Co-ri" o. c fo coc rel sxm edeevn n t~ to:
C. 2 t1 ro h
f oC n o 0 i f t v T -br~ " 1
.4 ~ Oor.~ ib -,-vor
th~-~ trib;'. ne uo c; tcd above, ori. reso
zp~ cLtdco-eerice tTotith the pYrev-',: Lio.-tat
C ol tha-nr-m and ed on his
. J.
h Iteod L. 2~ eoi f1h ~ iuv
C C: r re o eye~ jer
1ic .2 I~ L: 0 i 2 1
' 1 tIa:: 1 *. i~ CL0' rt
o a 0 tio0 11 oi 61ic -) ote:-DtiaI economic bo: ncfitc;)
( Co 9: tleu ntv r' hecaiDDcity t-o une t-he re.:, ourccos
o-r rclevmI't C 0vm-1Y11. mnt is itto to Sfervice the,-1C
Tr ibu n a'r adv i ce Uh thoseconioai; i
it ha-, decided t1. at ilcricde has the
rccu. VirCd b20-f Sjj e-por~ ience anJ~ ! uuld
r,-rovide C11 e-, U-. r: 2cstcCI rvdvice onl th'u tOt1-1 evLcv
is--r, ccmnfro I) t i t11 1-Im1 11le -ill tlhcrcoforo boe
av~ obtc' e~ the Tribun..
nmee . tioneId earlier, the Tribuinal. T'will report
e thcre i_, e atiny recd s~ ncc
cm~ cdoethat aiea~ c s eird t il recoiD !-. cd
either aro. etL-orr. i77' ut 0io 1or1 hol of theoiral
dutesor that relief shou-ld t: othe for:.. of'