Bert Kelly, The Bulletin, January 18, 1983, p. 83.

In July, 1973, when the Whitlam Government cut tariffs across the board by 25 percent, Eccles cruelly pushed me into the firing line to defend the government’s action, when my side of politics was loudly and bitterly critical of it. My side’s attitude was, I regret, par for the political course in Australia. Opposition parties of all colours seem to think it is their duty to clobber the government even when it is right. It is a pity about this but politicians quickly get a bit childish; I know I did.

When the 25 percent tariff cut was made, the government was faced with the need to encourage imports because it was in the middle of a big expansion in mineral exports. Now there is only one way of being paid for exports and this is by imports, and as exports were rising, so imports had to rise too, to pay for them. There were two ways of encouraging more imports. One was to appreciate the exchange rate by government action (it was not then floating as it is now) and the second was to reduce tariffs. The government did both. Because the ordinary citizen cannot understand exchange rate theories as easily as he can tariff reductions, it was the tariff reductions that got the blame for the subsequent downturn in manufacturing.

All but the troglodytes now know that the slump in manufacturing that followed about a year after the tariff cut was due, first, to the wages explosion that the Whitlam Government set off; second, to the exchange rate appreciations forced on the government by high exports; and third, to the tariff cut. And by far the least important of these three was the tariff cut. For instance, the tariff cut was equivalent in cost terms to the knitting industry to a rise in wages of between 6 and 13 percent. But the actual rise in wages in the industry between December, 1972, and September, 1974, was 60 percent. Or, using another measure, the tariff cut was equivalent, in its effect on imports, to a 4 or 5 percent exchange rate appreciation. Yet between December, 1972, and July, 1975, the exchange rate appreciated by more than 20 percent.

It is clear then that it was not the tariff cut that caused the downturn in manufacturing and this is now recognised by all sensible people, including Doug Anthony. But many politicians still rave on about the cut. I recently heard Michael Hodgman, when handling a tariff proposal in the House, criticise a Labor Party interjector for the Labor Party’s tariff cut and blaming all the subsequent problems on the cut.

Then, on December 11 last year, when perhaps the adrenalin was running particularly freely on both sides of the Senate, I heard Senator Sir John Carrick, the Leader of the Government in the Senate, say, “By cutting tariffs by 25 percent in 1974(!), the Labor Party — it grinned about it — disemployed 110,000 Australians in one year.” I know that Senate ministers face an impossible task in trying to absorb, and then regurgitate, all the information in all the portfolios they have to represent in that august chamber, but the other Senate ministers, if they do not know the answer to a question, are sensible enough to say so and promise to get the answer later. Sir John’s performance would be enhanced if he behaved as they do.

Sir John used to be a sensible man once and I guess he still is. But when he is in the Senate, he behaves as badly as does Malcolm Fraser in the House and that is saying something! I have been told that, in times long past, fire brigade horses used to go half cranky when they heard the fire alarm bells ringing.

Both Fraser and Carrick seem to be similarly affected when they hear the bells that summon them to their respective chambers.

I am more concerned that I heard Andrew Peacock talk the same familiar nonsense when he was interviewed after his reappointment to cabinet as Minister for Industry and Commerce. He, who usually speaks so sensibly and well, would have done better to keep silent. I will be sorry if he blots his copy book again, and will watch him anxiously.