• John Luxton
Commerce and Industry

Minister of Commerce, Hon John Luxton, today told vehicle assembly workers in Thames that the Government will work hard to get cheaper cars for New Zealand families and businesses.

The Minister today attended a rally organised in Thames to protest against the car tariff review which may result in a swift move to zero car tariffs after 1 July 2000.

"Tariffs are a tax on families and business and make cars more expensive by about $3000-$4000. Last year around 177,000 families and businesses bought new (65065) or used imported (112,365) cars," Mr Luxton said today.

The car tariff review was brought forward at the request of the car companies. It is looking at what car tariffs should be after 1 July 2000. Currently, they are 22.5% and are reducing 2.5% per year under a reduction programme begun in 1987.

"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
prohibits used imports (112,000 cars for families and businesses last year)
"This proposition from Toyota would penalise too many New Zealand families and businesses. It is surprisingly unrealistic, particularly given that existing policy since 1991 has been to reduce car tarrifs 2.5% per year to 15% by July 2000, and car tarriff reductions have been signaled scince 1987.

"It is important to remember that car companies close car plants not Governments. But Governments do set tariff rates. 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, value of the dollar, economic conditions, volume. More... "To help increase volume, for the last 3 years the Government made a number of overtures to our Australian counterparts to see if we could work towards an open Australasian car market which might provide some more opportunities for NZ assemblers to export to Australia. Unfortunately, with differences among the industry players and other factors, these initiatives were eventually not successful.

"The car tariff programme has been in place for ten years and has been well signalled in advance by various governments. Direct tariff protection costs around $300 million, around $3000-$4000 per car or about $180,000 - $200,000 per job in the assembly industry.

"As you know the review is currently underway. I am expecting a report from my officials around early November. We will then go to Cabinet and make a announcement on the new tariff rates to apply from 1 July 2000 when the current programme is due to finish.

"Car assembly companies will then be in a position to make decisions on their operations knowing what the tariff position is to be, and taking into account all the other factors that may affect them.

"I hope that when they make that decision they think through very carefully any impact on their workers.

"I am very concerned at the possible personal disruption that may occur if Toyota do decide to close their plant and would be happy to listen to any realistic, practical or constructive suggestions you may have on how the Government might assist your community in any transition," the Minister concluded.