Bert Kelly, The Bulletin, November 30, 1982, p. 136.

Some weeks ago I discussed the surprising and gratifying attitude of the South Australian Development Council which advocated less dependence on tariff protection and not more, which has been the traditional SA line. I pointed out that the council was composed of some of our top industrialists who, like farmers, were painfully aware of where each tariff tooth point went.

One of the most powerful political figures and top industrialists in the State, Don Laidlaw, was noted in the report to be an “observer,” so I approached him to find where he stood in this matter.

When I tried to nail Laidlaw down on the tariff question, he quickly got another hare out of the squat and tried to make me chase it. He is rightly concerned that some States erect barriers to protect their own industries. He is head of South Australia’s only cement company and its opportunities for expansion in Queensland have been limited by that government’s action in preventing the use of other than Queensland cement in government contracts.

I agree that this kind of action damages the Federal system and this is why our founding fathers insisted that trade between the States must be absolutely free. But two wrongs do not make a right so I demanded that he answer the tariff question. Then he said that, though I might be right in theory, he was a practical man with his feet firmly on the ground, and he asked: “What about the dreadful unemployment that would follow if theorists like Eccles and you had your way?”

So I quoted from a speech made by one of Australia’s really practical people, Sir James McNeill, the head of BHP, who, after saying in 1978 that only some of our secondary industries were tariff dependent, added:

Even if tariff protection were abandoned completely, there is no way these industries (the tariff-dependent ones) would be wiped out. For a start, there are already parts of them that are fully able to hold their own in the world without protection.

I am thinking of the more go-ahead and fashion-conscious sections of the clothing industry, for instance. Several of these industries have representatives able to take on all comers.

Secondly, many producers in these industries would gain as much from reduced protection on their suppliers as they would lose from reduced protection on their 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 a sharp increase in imports, the effects on the exchange rate would be such as to benefit the remaining firms in these industries along with the rest of the manufacturing sector.

Laidlaw is no economic troglodyte; he knows that tariff assistance to one industry is paid for by other industries, particularly export industries. He is not like Mr Walford, of Repco, who thinks that the pressure of lower tariffs emanates from some mythical “new class.”

Laidlaw knows that it comes not only from economists and farmers but also from big, powerful firms such as Alcoa, MIM, CRA, WMC, Elders-IXL and so on.

Because Laidlaw is a big industrialist, as well as a leader in the Liberal Party, he knows better than most that a healthy economy is the first requirement to reduce unemployment and that concentrating on the industries we are good at is the first requirement for a healthy economy.

But he still finds it hard to make up his mind. The episode reminds me of the old verse about Arthur Balfour, Prime Minister of Britain early this century:

I’m not for Free Trade, and I’m not for protection.
I approve of them both, and to both have objection.
In going through life I continually find.
It’s a terrible business to make up one’s mind.
So in spite of all comments, reproach and predictions.
I firmly adhere to Unsettled Convictions.

Poor Don Laidlaw! He is finding that sitting on a barbed wire fence is a painful process.

The second edition of my book Economics Made Easy is now on sale. It contains 27 additional articles as well as some lovely cartoons.

You can have a signed copy by sending $7.95 to GPO Box 568, Adelaide 5001. It would make an ideal Christmas present from one nice simple person to another.