A Modest Member of Parliament [Bert Kelly], “Why we help but don’t buy from cheap labour lands,” The Australian Financial Review, December 11, 1970, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 115-17, as “Cheap Labour (1).” “Cheap Labor (2)” is here.

Eccles holds my nose hard down on the tariff grindstone. It is a painful process, but I presume beneficial. But I can’t help wistfully peering sideways around the grindstone at my parliamentary colleagues who have time to run around their electorates opening things and getting votes. All I am getting is a sharp and sore nose.

One of the traditional arguments for tariff protection is that it protects Australian manufacturers from the competition of cheap labour countries. Often the same people use exactly the opposite argument, namely, that it is necessary to protect Australian manufacturers from U.S.A. competition where wages are higher but where greater through-put gives the economies of scale. These people remind me of the boxer who proudly boasts he will take on allcomers as long as they don’t have a strong left or a vicious right hook.

But to go back to this cheap labour argument. Sometimes the very people who use it are awfully nice people who, after they have finished presenting this case, turn around hurriedly and abuse me because I am not giving enough overseas aid to the undeveloped countries or am not letting in enough Asian migrants.

A few years ago I was in Bombay and one morning visited a milk factory where they were reconstituting Australian skimmed milk powder, using Australian machinery given under the Colombo Plan. As far as I could tell it was a well run show and the milk was needed and appreciated. And certainly Australia had plenty of skimmed milk powder to sell them. I asked them if they had any troubles and they said only one. “We like your skim milk powder, but we have difficulty in getting enough foreign exchange so that we can buy enough of it.”

In the afternoon I visited a really first class cotton sheeting factory which again, as far as I could judge, was excellently run. At the end of the visit I asked if they had any troubles. “Only one,” they said. “You people in Australia put a tariff of 55 per cent against our sheets so that we can’t sell them in your country and this prevents us earning foreign exchange.”

Now it is well-known that I am a modest Member with more to be modest about than most and this is perhaps the reason why I find it so difficult to see the sense in all this. The Australian dairy farmer can’t sell him skim milk powder, the Australian housewife has to buy dear sheets, the Indian kids can’t get milk and the efficient Indian sheet factory can’t make sheets. And this is brought about by the good and wise government which Mavis says I must not criticise.

There are two points that really worry me about this argument that we should not buy from cheap labour countries. The first is, how are they going to survive if we don’t? Everyone is relieved to see how Taiwan, South Korea, Hong Kong and Singapore are really pulling themselves up by their bootstraps and are learning to use their plentiful and comparatively cheap labour effectively to efficiently make goods we need. Our satisfaction is twofold: we just like to see people do well by their own efforts and we can’t help feeling relieved that non-Communist countries in particularly dangerous areas are demonstrating that non-Communist methods are viable. So we want them to get on for these reasons, but we don’t want to buy from them because their labour is cheap.

My second worry is even more important. About 42 per cent of our exports in the last financial year went to Asia — to cheap labour countries. It seems a funny way to encourage the growth of our exports — to refuse to buy their exports, just because their labour is cheaper than ours.

There is a frightening tendency for governments all over the world to erect barriers to trade. The European Economic Community is leading us down this dangerous slope with the U.S.A. edging towards it. It is a most unfortunate time for us to refuse to buy Asian exports because they are cheap.