• John Luxton
Commerce and Industry

Minister of Commerce, Hon John Luxton today took issue with suggestions that tariff reductions mean long term job losses. The Minister pointed out that experience in New Zealand has shown that reducing tariffs actually enhances jobs across the economy, increases exports and assists growth. (graph attached)

Mr Luxton said today,"In 1987 New Zealand had significant restrictions on imports through import licensing and a simple average tariff rate of over 27%. By March 1997 average tariffs had dropped to 9% and there are no import licences. Now over 90% of all goods coming into New Zealand come in tariff free.

Despite scaremongering by some commentators, jobs and exports have increased as tariffs have declined. While employment did drop in the early years of opening up the economy in the 1980's when there was really major change, since the beginning of this decade, over 220,000 additional jobs have been created and exports have increased dramatically to over $20 billion.

As well, New Zealand families and businesses now have much wider choice of goods at much lower prices. Now we don't have to fly overseas to get this choice of goods at reasonable prices.

If we are to get the growth we need to improve our standards of living and meet our social and environmental goals we have to continually improve our competitiveness. This means reducing costs and moving resources into areas where there are long term jobs, because we are competitive. Reducing tariffs does this."

The Minister said there had been lots of nonsense and scaremongering talked since he gave 3 years advance notice of the total removal of car tariffs. This move will see cheaper cars for New Zealand families and businesses, with tariff reductions of $3000 - $4000 for an average new car.

Cars and light commercials are often the second most expensive purchase of most consumers (after houses). They are often a huge cost to the small self employed tradesman and small business. Getting these costs down should help improve the competitive strength of the whole economy. In addition, reduced expenditure on cars should give families and businesses more money to spend in other ways, thus boosting jobs overall.

It is always sad for those involved when there are redundancies. While there have been a number of job losses highlighted recently in the media, it is important to remember that over the last two years around 70,000 new jobs have been created in the economy."