Bert Kelly on Malcolm Fraser’s April 6, 1978 tariff comments:
1. How a chance to boost our exports goes up in smoke (April 21, 1978)
2. Eccles’ thin blood ran cold as the PM spoke (May 26, 1978)

1.
A Modest Farmer [Bert Kelly], “How a chance to boost our exports goes up in smoke,” The Australian Financial Review, April 21, 1978, p. 3.

One advantage of being a semi-retired as well as a tired old gentleman is that sometimes Mavis lets me knock off a little early. I did so on April 6 and came inside just in time to hear the Prime Minister speaking on the PM program.

I still come to attention when I hear my master’s voice even though I have been out of Parliament for some time now.

I may not tremble with the same abject nervousness that used to afflict me but I always listen very respectfully when I hear those well modulated tones.

I always hope that he is not going to talk about tariffs because I know from past experience that he is likely to talk a lot of nonsense and, if he does, Eccles will try to make me clobber him.

I don’t like doing that for many reasons, not the least being that it [makes] Mavis mad.

Mavis has started to come up for air, as it were, and is plotting again. One of her plans is to get me appointed to some overseas post.

I am not sure why because I have told her that State funerals are not automatically given to dead diplomats, so it isn’t that.

Perhaps she wants to find some proper task for my striped pants.

Anyhow, for some reason she is desperately keen for me not to be nasty to Him — not for a while anyway.

Unfortunately the Prime Minister was talking about tariffs and, as is not unusual for Him when so doing, was talking at least some nonsense.

I heard Him say that we would not have any secondary industry at all if it wasn’t for the tariff.

This is so demonstratively wrong that I suppose I ought to expose the foolishness of that statement, but I know that that would make Mavis angry so it will have to wait till a more opportune moment, at least until the Ambassador to Outer Mongolia has been appointed.

Then the Prime Minister went on to castigate people who wrote for the newspapers for encouraging divisions in the community.

He pointed out that we were all one people and we ought not mind if particular groups were given particular advantages at the expense of other groups, and that the latter should comfort themselves that they were being sacrificed for the common good.

As he said that I had the guilty feeling that he was metaphorically pointing at me because I have frequently pointed out that the exporters are being clobbered by the tariff. If indeed he was thinking of me, then I must be careful not to offend again.

So in conformity with my determination not to be divisive, from now on I will be all sweetness and light.

A few weeks ago, on the ABC midday TV program, Horizon 5, which I find very interesting, I heard the Agricultural Attaché at the US Embassy say that they would look kindly on the idea of reducing their tariff against our wool if we would reduce our barriers against the imports of US tobacco.

I had heard rumours that this was possible but on this occasion I both saw and heard the US official say it, so I know that it is a definite offer.

So I contacted Eccles in his ivory tower and asked him to find out how much it was costing the taxpayer and consolidated revenue to subsidise the growing of tobacco in Australia.

The figures he obtained were startling.

He was not able to get later figures and the position may have altered since then, but in 1970-71 the cost of subsidising each hectare of tobacco grown in Australia was $1,628, the next year $1,573 and in 1972-73 it was $1,334.

If the following year’s figures are of that order it certainly looks a bit odd to be jeopardising our chance of benefiting the wool industry by lowering the US wool tariff in order to protect an industry that costs the taxpayer well over $1,000 a year to support.

There was a time when I would have advocated sacrificing the tobacco growers on the wool growers’ altar.

This indeed may be the proper economic answer but, following the Prime Minister’s admonition about not being divisive, I will adopt a different line.

Clearly we must do something so I suggest that we pay tobacco growers $1,000 a hectare not to grow tobacco.

Their land could then be used for something else so they would be highly delighted.

And the woolgrowers would be rid of the US duty against our wool which has been worrying us for so long. So everyone would be happy.

If this suggestion does not get me appointed to Outer Mongolia there is no justice in the world.

2.
A Modest Farmer [Bert Kelly], “Eccles’ thin blood ran cold as the PM spoke,” The Australian Financial Review, May 26, 1978, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 56-57, as “Tariffs and Secondary Industry.”

Ever since April 6, when I heard the Prime Minister in a radio interview say that without tariff protection we would have no secondary industry at all, I have been trying to forget that I heard him say it.

After all, he was my leader once and he is a powerful Prime Minister now, able to make me ambassador to Outer Mongolia, were Mavis longs to go.

So the temptation to pretend that I hadn’t heard him was hard to resist. But someone had to point out the error of his ways and the poor Labor Party Opposition is hopeless, so I suppose I must do my duty, painful thought it be.

And, to tell the truth, I don’t really want to go to Outer Mongolia. It is Mavis who is pushing to go there.

The Prime Minister has said many quaint things about tariffs.

I don’t mean his lectures to the rest of the world because of their wickedness in putting barriers in the way of our trade with them at the same time as he is busy erecting high tariff and quota walls to keep their goods from coming here.

Nor do I refer to this very questionable attacks on the 25 per cent tariff cut, when almost every economist knows that it was not the tariff cut that did the damage to industry, but the currency appreciations and wage explosions that occurred at the same time.

These and similar statements are defensible in a lame kind of way though I have heard no reputable economist try to do so.

But rather do I refer to statements of the Prime Minister which no one would try to defend and which I guess even he tries to forget.

Typical of the latter group was his statement last year: “Employers are tending to use machines rather than people in the productive process and if tariff protection for Australian industry was reduced, this trend would worsen.”

This display of primitive economic Ludditism made Eccles’ thin blood run cold, and Fred had visions of going farming again with horses to create employment.

Then there was the queer statement that we needed to have high tariffs because of the high cost of overseas freight, when everyone knows that our high freight rates give a considerable natural protection to our industry. So tariffs should be lower rather than higher as a result.

This latest statement by the PM, that without tariffs we would not have any secondary industry at all, is another example.

He must know that 40 per cent of our secondary industry does not depend on tariffs at all.

Some industries are just good at their task, others have natural advantage or natural protection such as given by high shipping costs.

There are examples without end, starting with food processing, building bricks, beers bottles and so on and on.

So we would have this 40 per cent of our present industry without any tariffs at all.

But, in addition, this sector would be healthier because it would not be lumbered with the burden of carrying the highly protected sector around as they do now.

So, though our secondary industry would not be of the same composition as it is now without tariffs, it would be far bigger than usually thought.

Victoria had a high tariff since 1860, so you would expect Victoria to be far more industrialised at the time of Federation than was NSW, which was free trade until she joined the Commonwealth.

But this was not so. The proportion of the State production from manufacturing was about the same in both cases.

Victoria had more of the heavily protected industries, such as textiles and footwear, but the cost of protecting these had to be carried by other industries, so these were weakened.

In NSW they did what came naturally and so did not burden their efficient industries by making them carry the weak ones.

So the amount of secondary industry was about the same in both States.

It would be asking too much of a busy Prime Minister to expect him to know this bit of history. But this is no excuse for his saying that without tariffs we would have no secondary industry at all.

He just cannot be as economically ignorant as that, when he is so wise about other things.

It is a great pity that it falls to my lot to have to point out the rather primitive gaps in his understanding about tariffs just when Mavis is desperately trying to get me posted to Outer Mongolia, but I suppose I must just do my duty.