LABOUR AGREES WITH LUXTON ON CAR TARIFFS

Minister of Commerce, Hon John Luxton, today said Paul Swain and the Labour Party supported removal of tariffs from cars. This follows a press statement from Labour Commerce spokesman Paul Swain, which states: "Mr Swain said the Labour Party was not opposed to tariff removal but believed, as with any structural issue, that business had to have certainty as to how tariffs would be removed and be given the opportunity to plan their response"

"I am pleased that Labour and Paul Swain agree with the Coalition Government. We have been working hard to do just what he says. The car tariff review was brought forward at the car companies request. They do want that certainty that he talks about.

"Car companies do need advance notice to plan their operations. That is why Thursdays announcement will outline the program of tariff reductions to commence at the end of the current programme next century, on 1 July 2000, over two and a half years away. Car tariff reductions have been signalled and happening since 1987.

"Like Mr Swain and the Labour Party, who first allowed in used imports and started the car tariff reduction program in 1987, this Government knows that tariffs are a tax on families and business and can make every new car more expensive by about $3000-$4000. Last year around 177,000 families and businesses bought new (65065) or used imported (112,365) cars. New Zealand assembled car production in 1997 is likely to be as low as 25,000, or 14% of first time registrations.

"The Labour Party know that car companies open and close car plants, not Governments. Mr Swain knows that car companies decisions to close or open a plant are based on a number of things; excess world capacity, global sourcing practices by car companies, competition, tariffs, exchange rates, relative productivity between car plants, economic conditions, and volume.

"Mr Swain knows that Toyota has said that the only way that they will keep their Thames plant open is if the Government: freezes current tariffs of 22.5% now, a rate 7.5% higher than Australia will be at on 1 July 2000; and prohibits all used imports (112,000 cars for families and businesses in 1996) Mr Swain knows that this proposition from Toyota would penalise too many New Zealand families and businesses. This is another reason why Labour agree with the Government on tariff removal.

"I am very concerned at the possible personal disruption that may occur if car companies do decide to close plant at some stage and would be happy to listen to any realistic, practical or constructive suggestions on how the Government might assist any community in any transition. I would welcome Mr Swains contribution as well," Mr Luxton concluded.