Bert Kelly, The Bulletin, March 27, 1984, p. 116.

I had a lively but friendly argument about tariffs with South Australia’s Minister of Agriculture, Frank Blevins, recently.

He made two points which will bob up again if and when Prime Minister Hawke embarks on the difficult task of persuading people in heavily-protected industries that some reconstruction is necessary for everyone’s benefit.

Blevins’ first point was: “How can protection of secondary industry be so wrong when the political giants of the past, such as Menzies and Playford, deliberately set out to attract secondary industry by promising tariff protection?”

There is a simple answer to this. It was John McEwen, not Menzies, who designed our tariff policy after the war and who lavishly protected industry. He knew that doing this would damage our export industries and his solution was to protect them also.

Sir Thomas Playford had the same cure for the same problem. I quote from Sir Walter Crocker’s biography of the South Australian Premier: “Playford was not upset by the facts, bared again and again in the reports of the Tariff Board and its successor, about excess being common to so much of our tariff protection: that so many of our industries, not least those in South Australia, were feather-bedded to such a degree that it would be cheaper to close them down, pay them a pension equivalent to their wages and import the cars, electrical appliances, textiles and the like. Kelly, he would go on, was right about the people on the land being disadvantaged by the tariff but their remedy was to insist on feather-bedding too.”

The prospect of living in a country where we all live by everyone subsidising each other makes my blood run cold. I think that Blevins has too much sense to want us to go down that road.

Blevins then said that he had read my articles for years but protested that I never gave any solutions on how we could employ all the people who would lose their jobs if the protection rug was pulled suddenly from under the highly-protected industries. I have never advocated a sudden removal of tariffs; what I want is their gradual but certain reduction.

But I must still answer the question: “How would we employ the people who might lose their jobs even if tariffs were gradually reduced?” I have often dealt with this but, evidently, I have not got my message across so I will try another tack.

This time I will not quote Eccles or even a spokesman for the farmers. Instead, I will quote from a speech given by Sir James McNeill, the head of BHP. He said:

Even if protection were abandoned completely, there is no way in which these industries (the highly-protected ones) would be wiped out.

For a start there are already parts of them which are fully able to hold their own in the world without protection. I am thinking of some of the more go-ahead and fashion-conscious sections of the clothing industry, for instance, but several of these industries currently have representatives able to take on all-comers.

Secondly, many producers in these industries would gain as much from lower protection on their suppliers as they would lose from reduced protection on their own products.

Thirdly, in the shake-out which would nonetheless result if protection were removed, some of the existing firms would benefit as much as importers from the elimination of their local competitors.

Fourthly, if the outcome was in fact a sharp increase in imports, the effect on the exchange rate would be such as the benefit the remaining firms in these industries along with the rest of the manufacturing sector.

I should perhaps emphasise that I am not advocating such a wholesale dismantling of protection, least of all at this moment, but the point I would like to leave you with is that we mustn’t talk ourselves into believing all the gloom and doom about the future of manufacturing. Even if our worst fears were justified, we are talking about 10-15 percent of manufacturing employment (or slightly more than 2-3 percent of employment in general). Such a decline is no more than we have already experienced in … the past four years.

If we have a growing economy, employment opportunities would bob up all over the place, not where governments or I said they would. The reason we are falling behind the rest of the world is that governments have encouraged us, by tariffs, to continue producing things we are bad at instead of concentrating on what we are good at. So let us help Hawke in his task of persuading people to face up to the traumas and opportunities of reconstruction of industry. He will need this help if many Labor Party politicians think like Blevins.