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House of Representatives
5 May 2010
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Tariff Act 1988 Repeal Bill — First Reading


Tariff Act 1988 Repeal Bill

First Reading

Hon Sir ROGER DOUGLAS (ACT) : I move, That the Tariff Act 1988 Repeal Bill be now read a first time. Way back in 1998, when National actually seemed to believe in something, it passed an Act that would have abolished all tariffs by 2006. The National Party back then had it right; the National Party today has lost its way, and now does not appear to believe in private enterprise or competition.

Tariffs can only harm the country that imposes them. When we impose tariffs on iPods, sports equipment, and shoes, we make New Zealand consumers worse off. Consumers have to pay for the goods that they want. To take just one example, let us assume that we have a family in South Auckland who want to buy a pair of shoes. If those shoes are heavily protected they might have to pay $200 for a pair, when they could pay only $100 for an imported pair. What happens when they pay the $200 instead of the $100? During that week they will be unable to go to the picture theatre, and they will possibly be unable to buy as much food as they would otherwise have, etc. In other words, although protection might have produced one or two jobs in the shoe industry, the country would have lost jobs elsewhere.

Let us take the recent idea that the Labour Party has desperately latched on to—that we should build trains here. Let us say that the cost is $200 million to import trains and $250 million to build them here. I ask members what the first effect is of buying from overseas. The first effect is that the Government is better off by $50 million. That is money that can be used to cut taxes or to spend elsewhere. “But what about the $200 million that goes to China?”, some will say, “instead of staying in New Zealand?”. Well, what can the Chinese do with New Zealand dollars? There are only three things. The first thing they can do is to purchase goods and services from New Zealand, in which case we have nothing to worry about. The second thing they can do is to make the money available for investment. Once again, if people want to invest in New Zealand we should be happy about that, as well. The third thing they can do is exchange New Zealand dollars for their local currency. If they do that, then someone else has those New Zealand dollars—dollars that must flow back to New Zealand in the end.

Labour members misunderstand the economics of trade. That is why they will not support this bill. Many in National understand the economics, but think that the politics are far too tough. National seems also to think that trade barriers are somehow a useful bargaining chip in international trade. According to the logic that National applies, the most powerful trade negotiator in the world must be North Korea, a country with the highest trade barriers in the world. According to the perverse logic employed by National—and by Labour, I might add—we must harm ourselves in order to convince other countries to sign a trade agreement with us. That is a truly stupid argument. According to that logic the Governments of Singapore and Hong Kong are fools, because no one will ever want to sign a free-trade agreement with them. So which dumb countries have bothered to sign free-trade agreements with countries like Singapore and Hong Kong, which have no tariffs? Interestingly enough, New Zealand has a free-trade agreement with both.

The fact is that New Zealand can gain—and this is the essence of the argument—by selling goods that it can produce at a relatively low cost, from agriculture, etc., and by using the proceeds to buy things that it can produce only at high cost, like trains and shoes. There are three reasons for that: firstly, in international trade the people of each nation will be able to use more of their resources to produce and sell things they do well—a major plus. Secondly, international trade allows both domestic producers and consumers to gain from reductions in per-unit costs, which are brought about by specialisation, size, etc. Thirdly, international trade promotes competition in domestic markets, and thereby allows consumers more choice and lower prices.

During the 1980s eight of the least developed countries in the world with the lowest restrictions—the lowest tariffs—grew their economies at 5 percent a year, while 10 of the least developed countries with the highest tariffs remained at zero percent for economic growth. I think that that is significant. If we take eight of the least developed countries in the world with low tariffs during the 1980s, we see that on average their economies grew by 5 percent. On the other hand, 10 of the countries that had the highest protection, the highest level of tariffs and other restrictions, collectively remained at zero percent for growth. I think that that makes the case for getting rid of tariffs.

Labour members, both last week and this week, have argued that if we provide protection to the rail industry by building trains here, then we will create jobs for New Zealand. That is wrong—wrong. If jobs were the key to high incomes, we could create as many as we liked. We could dig holes one day and fill them in the next, but we would be very poor as a result. Of course high tariffs will expand employment in a protected industry. That is obvious; anyone can see that. However, that does not mean that total employment in the country will expand. If job-savers think that high tariffs and other trade restraints will create jobs, why do they not introduce a tariff between the North Island and the South Island? For heaven’s sake, if it is such a good idea, why not do that? That example simply illustrates how absurd some of the arguments for having high tariffs really are.

To conclude, I want to make one final point: New Zealanders should simply be left to trade with whomever they want. We should be free to buy from the cheapest markets, and, if at all possible, to sell our goods in the most expensive. The economic benefits of trade do not—and I emphasise do not—care about political borders. Just as trade between Wellington and Auckland makes both cities better off—as indeed any voluntary trade must do—so does international trade make countries better off.

JOHN HAYES (National—Wairarapa) : That speech made by Sir Roger Douglas sounded plausible, but I rise to oppose him, and I rise to oppose his piece of political theatre—one and a bit pages of four clauses that, if passed, would allow imports without the payment of tariffs, which are currently provided for by the Tariff Act 1988. In effect, this tiny piece of political theatre would get rid of the Tariff Act 1988. The Act provides a framework for the Tariff of New Zealand and its administration. The Tariff Act also provides for transitional safeguard measures where such measures have been provided for under free-trade agreements. Such safeguards protect New Zealand industries from serious injury caused by increased imports resulting from the reduction or elimination of tariffs under a free-trade agreement.

In many circumstances I would be inclined to support the proposal. Why? Lowering trade barriers is good for the ordinary person in my electorate and, more broadly, for this country. The Uruguay round of trade negotiations, which reduced trade barriers right across the world from 1994, is estimated to have increased world income by roughly US$100 billion. If tariffs on agricultural and industrial goods and services were reduced by one-third, there would be a further gain of about US$600 billion—or about 2 percent of world income. The removal of all trade barriers would deliver over 6 percent of world income. In fact, the gains would be much greater, I suspect, because these numbers are back-of-the-envelope calculations estimating the gains from bringing cheaper goods from world markets into what are currently protected markets. It is a very simple application of Ricardo’s theory of comparative advantage.

So why am I standing against this proposal from Sir Roger Douglas? Essentially, I say to Sir Roger that the question is about judgment; mine differs from his. New Zealand tariffs are already amongst the lowest in the world. New Zealand’s economy, along with economies like those of Hong Kong and Singapore, which Sir Roger mentioned, is one of the most open in the world. There are very few tariffs left to be knocked off, and those that remain are very low. The current 5 percent and 10 percent tariffs are subject to reductions that may arise out of the World Trade Organization’s Doha round, and also to reductions that may be negotiated with New Zealand’s free-trade agreement partners over the coming years. The most recent of these is the Malaysia free-trade agreement, which is before my select committee, the Foreign Affairs, Defence and Trade Committee.

In fact, if we look at New Zealand’s existing free-trade agreements, we see that there are very few tariffs left. They have been eliminated from exports from Australia, and our recently concluded free-trade agreements with China and 10 nations of South-east Asia—Hong Kong and others—mean that we are on a path towards the elimination of tariffs on goods from these countries also. In addition, through the World Trade Organization, we have offered duty-free access to the world’s poorest countries, the least developed countries. There are only a few sectors, such as clothing, textiles, footwear, and some manufacturing sectors, where tariffs remain. New Zealand’s last scheduled unilateral reduction of tariffs took place on 1 July last year, when the highest tariffs, mainly on footwear and carpets, were reduced to 10 percent. On 1 July 2008 tariffs on a range of mainly manufactured goods were reduced to 5 percent.

Let us talk about companies in my electorate, such as Metalform in Dannevirke where I will be on Friday helping to lock up a container with the 500th high-tech wheelchair to be exported. These companies are in absolutely no rush to see the remaining tariffs eliminated. They have competed with imports for years. Shoe manufacturers in my electorate, and certainly clothing manufacturers, have competed with imports for years and will continue to do so. These tariffs are likely to be negotiated away as our free-trade agreements take effect, but there is little to be gained from doing this immediately. This is why my judgment differs from Sir Roger’s. I remember what happened back in the late 1980s, when Sir Roger and his colleagues from the Labour Party caused massive economic restructuring, and what did that achieve? It increased unemployment, it ruined many small businesses, it ruined many farmers in my electorate, it penalised those on low incomes, and it penalised the elderly, who rebelled against discriminatory taxes. I say to Sir Roger that this is not what we need at this time on the back of a recession. It is a question of judgment, and that is why I stand against him.

The problem New Zealand faces is not that our consumers are hampered by high tariffs; that was certainly once the case, but it no longer is. It is that other countries have not followed suit—I am particularly thinking of America. We would see real economic gains if tariffs were reduced in our key export markets, and that is precisely what the Government is working hard to do through its agenda of free-trade agreement negotiations. We have done it with China, which is now our second-largest trading partner, and we are reaping the benefits. New Zealand exports to China grew by 43 percent last year. I say to Sir Roger that that was a key factor in driving New Zealand through the global recession and helping to keep New Zealanders in jobs. Increased market access in key export markets achieved through free-trade agreements can be expected to provide significant benefit to the New Zealand economy, to New Zealand companies, and to New Zealand consumers, and, in turn, support employment, which is so critical at this time of economic fragility.

Last year Cabinet decided to maintain tariffs through until 2015. That judgment was made on the basis that tariff reductions through trade negotiations, rather than through unilateral tariff reduction—as Sir Roger is proposing in the House tonight—will provide more benefit for domestic tariff liberalisation, and enhanced as well as reciprocal access to the markets of important trading partners. I say to Sir Roger that we have to be smart about this. That strategy makes sense for the economy as a whole. That is what Sir Roger Douglas overlooks; it is why his bill is faulty, and it is why I will vote against it tonight. Thank you.

Hon MARYAN STREET (Labour) : I rise as the third speaker on the Tariff Act 1988 Repeal Bill. As the third speaker I have only 5 minutes, so I will not waste too much time traversing history. Suffice it to say that in the time of the fourth Labour Government, of which Sir Roger Douglas was a key member, there was huge economic restructuring and consequent dislocation, particularly of 300,000 people who lost their jobs in the process. Although we still stand by some of the economic restructuring, it was a period that saw the Labour Party nearly tear itself apart because of the extreme implications and effects of these policies. Sir Roger has now come back to finish the job. The Labour Party stands against this bill tonight and will stand against Sir Roger finishing this job.

The Tariff Act 1988 was legislated, to begin with, in order to provide for changing regulations around tariffs and the implementation of the Government’s plan to lower tariff rates to below 20 percent by 1992. Throughout the 1990s the National Government repeatedly and unilaterally lowered tariffs to the point where they were one-fifth of late 1980s levels. In 1998 the Government passed the Tariff (Zero Duty) Amendment Bill, which mandated the reduction of all tariffs to zero by 2006. But the new Labour Government in 2000 amended this bill, placing a freeze on all further unilateral tariff reductions until 2005, and tariff reductions were to continue as part of free-trade agreements. For Sir Roger to characterise our free-trade agreements as being only tariff reduction mechanisms is to do them a disservice. These days they are much more complex mechanisms than that, which is why the logic about countries that have no tariffs not entering into free-trade agreements with New Zealand does not stand up, because they continue to make gains from the other provisions in free-trade agreements that have nothing to do with tariff reductions.

I say to Sir Roger that that logic is out of date and needs to be updated. The new free-trade agreements well may contain tariff reductions, and frequently do. They are done on a calculated and measured basis in a way that allows some protection of New Zealand industry, and at the same time provides New Zealand with a few remaining bargaining chips. They are not the only things, but we have a few remaining bargaining chips that we may be able to deliver in the course of free-trade agreements. However, they are complex mechanisms these days, and they are not simply about tariff reductions. We have tariffs remaining on a number of goods. In particular, we have a 5 percent customs duty on textile imports and a range of other products imported from overseas. These products include processed foods, machinery, steel, and some plastic products. A 10 percent customs duty applies to a few imports, mainly clothing, footwear, and carpet. Those tariffs apply on goods that are still made in New Zealand.

I refer to a press release from the New Zealand Council of Trade Unions at the time when Tim Groser, the Minister of Trade, together with Simon Power, the Minister of Commerce, had announced that they not would be proceeding with any more unilateral tariff reductions. Peter Conway, the Secretary of the New Zealand Council of Trade Unions, said that although the level of tariffs provided much less security in respect of local industry and employment than in the past, it still made a difference to sectors such as carpets, clothing, textiles, and footwear, as well as to plastics and whiteware. He went on to say that the eventual phase-out of tariffs on items such as clothing, in the context of the free-trade agreement with China, and the likelihood that tariff reductions would feature in other such trade agreements, means that it does not make sense for New Zealand to undertake unilateral tariff reductions. I say to Sir Roger that the process of arriving at tariff reductions these days is a much more measured and calculated affair. They are now done in the context of complicated and very sophisticated free-trade agreements.

JACQUI DEAN (National—Waitaki) : I rise to oppose the Tariff Act 1988 Repeal Bill with an air of confusion as to why this bill has come to Parliament. It seems to me that this is—

Hon Maryan Street: Finishing the job. It’s an old agenda.

Hon Steve Chadwick: Political theatre!

JACQUI DEAN: Indeed, I am in agreement with my Labour colleagues on this. This is an old agenda, and I believe it is an agenda that previous Governments and this Government have moved well away from. The Government is working successfully in terms of trade for both our importers and exporters.

When I looked at this brief bill, a couple of things struck me. The first thing that struck me was that in terms of trade this is an “all bets are off” type of bill. This bill is like New Zealand taking off its overcoat and exposing everything it has to offer to the world whilst still dealing, in trade terms, with fully clothed opponents. To me, that did not seem to be a very good thing to do. The bill seems to give away any trade advantage that New Zealand has, and we are an exporting nation. Exports are incredibly important to New Zealand and will continue to be important.

Another aspect of this bill that struck me was that previous trade Ministers, and our own Minister of Trade, the Hon Tim Groser, are working extremely hard to negotiate free-trade agreements. The word “negotiate” really captures where New Zealand is at in terms of trade these days, which is that we engage with countries like Hong Kong, China, and the ASEAN countries in negotiations that are not just about tariff rates but also about other aspects of trade with those countries and doing business with them. That might include things such as rights for workers, educational opportunities for both countries, and other such things. Tariffs may form a small part of those negotiations, but I would not have thought it was a very smart move for a small country in the middle of the South Pacific that is very dependent on trade and on forming trade relationships with other countries to just say: “OK, come in; it won’t cost you much. We’ll pay a tariff on goods going into your country.”.

This bill may work for importers, but certainly tariffs remain for exporters. As I have already said, we are a country that relies very heavily on exports. The repeal of the Tariff Act would put New Zealand at a huge disadvantage. We would open the door to tariff-free goods, yet our exporters would still face tariffs from our trading partners. The other problem is that we would lose the protection that we currently enjoy under the Tariff Act—that is, we would have no protection from a sudden influx of goods into our country. It has happened before; we are well aware of it. Chinese T-shirts or underpants come to mind. Without the protection of the Tariff Act, I fear that New Zealand would be exposed—possibly the wrong word—to that kind of influx of goods, with little protection.

I am curious about a term used in the bill, and in Sir Roger Douglas’ speech in reply I invite him to explain it, because I can make neither head nor tail of it. This is a short bill, luckily, and I refer to clause 4(2). He might explain the phrase “shipment includes loading into an aircraft; and to ship and cognate expressions have corresponding meanings”. I cannot understand what that term means. I am very interested to hear what Sir Roger Douglas makes of it, and I invite him to give us a very clear and full explanation of it. I strongly oppose this outdated, outmoded, and damaging bill. Thank you.

SU’A WILLIAM SIO (Labour—Māngere) : This morning I was released by my whips to attend a community event where several Pacific community leaders who have been involved in a life-changing programme called “OTC”, or Off the Couch, were celebrating. This is a programme run by Buck and Lucretia Stowers of Genetics Gym in Manukau. Off the Couch involves some of the heaviest South Auckland men supporting one another to change their lifestyle through exercise and information.

I took a taxi from the South Auckland Taxi Association. While talking to the taxi driver, I learnt that he was quite concerned about the Auckland super-city and the impact of that change on him and his family. He was quite free with his views. He revealed to me that he did not like the person whom he called “the architect of the super-city”. He did not say any names but simply referred to that person as the “architect of the super-city”. He believed that his proposal would be “a disaster for Auckland”, and then he said: “He’s only firing the gun, but the bullets are coming from Roger himself.”

The “Roger” that this taxi driver referred to this morning is the same Hon Sir Roger Douglas whose bill, the Tariff Act 1988 Repeal Bill, we are debating. The taxi driver had a very vivid memory of losing his job during the Rogernomics period. He did not have a kind word to say at all about Sir Roger Douglas. I confess that I gave the taxi driver a bit of encouragement about that. Our community still has vivid memories of Sir Roger Douglas being responsible for Rogernomics in the 1980s. Tonight in this House in 2010 we are debating the first reading of a bill that is based on the same ideological thinking, which delivers only for the few and not for the many in our country. Sir Roger’s bill aims to remove all taxes on imports. The last time that Sir Roger played around with the removal of tariffs, he practically destroyed many of the industries of that time, particularly in my neighbourhood in Māngere in Manukau, South Auckland.

The wholesale overnight removal of all tariffs, as proposed by the Hon Sir Roger Douglas’ bill, is in our view reckless, and it would have a detrimental impact on many New Zealand industries and jobs, especially on our manufacturing industry. I will quote Peter Conway, Secretary of the Council of Trade Unions: “although the level of tariffs provide much less security in respect of local industry and employment than in the past, they still make a difference to sectors such as carpets, clothing, textile and footwear as well as plastics and whiteware.”

New Zealand’s unemployment rate has ballooned to over 7 percent under this Government, and it continues to rise. Māori and Pacific unemployment numbers have hit double digits, and the detrimental impact of being unemployed manifests itself in children going without and missing out on the basic necessities. Some families are falling behind in their power and rent payments. They are risking eviction and power cuts, because they have lost their jobs and cannot find other ones quickly enough. Some families are struggling to meet their mortgage payments, and risk losing their home, because they have been laid off from work. Since the last election, our unemployment rate has soared and it now stands at 30 percent higher than Australia’s rate, which has gone down. If this bill is passed, this Government will risk the livelihoods of many more families, who will lose their jobs as a result of the reckless ideology of the past.

Mr Douglas will argue that the tariff imposed on imported goods hurts consumers. He will argue that the tariff forces us to pay higher prices for goods. He will say the tariff should be removed so that consumers can have more money in their hand to spend elsewhere. If he is concerned about that, and if this Government is so concerned about additional costs being placed on consumers, they should back down on their proposed increases to GST, because increases to GST mean there will be higher prices in our community. No one voted for increases to GST. No one voted for higher prices for the basics.

We oppose Sir Roger Douglas’ bill. Labour supports free trade by endeavouring to build free-trade agreements, bilaterally and multilaterally through the World Trade Organization system, not through the reckless unilateral action that this bill proposes. New Zealand already has some of the lowest tariff rates in the world, which benefits our consumers.

DAVID CLENDON (Green) : The point has been made that the Tariff Act 1988 Repeal Bill reflects a rather old agenda, and that must indeed be the case, because, when I was a much younger man—the honourable member in charge of the bill, the Hon Sir Roger Douglas, will be pleased to know this—I engaged in a protest against tariffs. That was at a time when New Zealand had a very diverse and robust manufacturing industry, unlike today. One of the products we manufactured was tyres, and at that time there was a very high tariff placed on the import of tyres, which was well and good, except that it included motorcycle tyres. Of course, we did not manufacture motorcycle tyres locally. So I took part in a protest, which took the form of many of us posting used tyres to our local member of Parliament. I rejoice in remembering the television images of the time, which showed a great pile of tyres arriving in this place.

More seriously, there are very valid reasons why one would continue to impose tariffs on imported goods. We all enjoy buying cheap products, and tariffs can indeed increase the price of imported products. If the cheapness of those imported products is because the manufacturers are more efficient and use the best technology and better design, then so be it. But most often, or very often, it is the case that cheap imported products are cheap because the people manufacturing them are not being paid what we would consider a reasonable wage, even in the context of their countries. They are not protected by unions and have no choice in the conditions of their employment. Very often products are cheap and arrive at our shores because the environmental measures taken during manufacture in the countries of origin would not be acceptable to us. Using resources carelessly, dumping waste into rivers and drains, and using child labour are all reasons why one would reasonably impose tariffs on goods coming into this country.

It is interesting that this bill comes to the House during Fair Trade Fortnight. A few days ago, a number of members from all parties across the House joined a small celebration of fair trade. The idea is that fair-trade products are guaranteed to come from countries, or at least from supply chains, where people are paid reasonably, and where there is some environmental management and control. One can purchase and consume those products with a clear conscience. In fact, there was a proposal that Parliament ought to become a fair-trade workplace.

The Greens have always had significant ambivalence about the notion of free trade, because it can simply be a disguise, or a mechanism for allowing us to import products that are not from sources that any of us would find acceptable if we took a moment to look at them, for the reasons that I have outlined. Tariffs are certainly a very legitimate mechanism, even in 2010. They are perhaps a mechanism to be used thoughtfully and lightly, but they have a place. We will certainly be opposing this bill.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā nō tātou e te Whare. With an 18,000 kilometre coastline and a lack of land borders with other countries, Aotearoa is probably ideally suited to levying border tariffs on imported goods. In fact, tariffs have been a part of Government policies since right back in 1840. I am told that one of the first actions of Governor Hobson was to issue a customs regulation ordinance, which imposed a tariff on alcohol, tobacco, tea, sugar, and grains. These days, however, most goods remain free of tax. I am told that in 2008 about 80 percent of New Zealand’s imports were tariff-free. Some tariffs, of course, are of about 10 percent, and these apply mainly, as other speakers have said, to clothing, footwear, and carpet.

I understand Sir Roger’s kōrero that removing the payment of tariffs from importers would have some immediate benefits for consumers, with a likely reduction in the price of imported goods such as cellphones and computers. We know that the immediate income effects of lower consumer prices would inevitably benefit Māori, and to the extent that tariffs are a tax on exports, there is a school of thought that tariff reduction would benefit Māori relatively more than other groups. This is in light of the fact that, on average, the Māori economic base is twice as export-intensive as the New Zealand economy.

But there are a couple of major hitches, and I will outline those at this point. The Māori Party suggests that opening up the domestic market to a potential flood of imported goods could, and would, undermine locally manufactured goods. We say that this move might threaten our own local manufacturers at a time when we can least afford it, and in the wave of the very successful introduction of the tobacco tax by my co-leader Tariana Turia just last week, it would be devastating if removing tariffs suddenly opened the door to a mass of cheap alcohol and cigarettes.

I will raise a couple of other issues very quickly. The first is that this bill is inconsistent with the Māori Party’s position about the bigger picture of our international relationships. In our policy document, He Aha Te Mea Nui?, we made a commitment that “The economic benefits of international trade agreements need to be balanced with consideration of our own local, regional and national social progress and environmental enhancement.” That is the first point.

The second point is that as a political party, the Māori Party has opposed all free-trade agreement legislation to date. Our policy position is probably summed up best by saying that we want fair trade, not free trade. We seek a trading partnership that seeks greater equity in international trade, that offers better trading conditions, and that contributes to securing the rights of all workers. We say that more than profit is at stake. We want to see attention paid to labour and environmental justice issues, and to human rights issues.

Finally, I cannot leave this debate without stating the obvious: the Government has decided against any review of tariffs until 2015 at the earliest. Quite simply, nothing in the 105 words in this tiny little bill convinces us, as the Māori Party, to disregard our policy position, to turn against our voting history, to short-cut the Government’s deadline, or to support this bill. That will inevitably tell this House that the Māori Party will not be supporting the bill at its first reading. Kia ora tātou.

STUART NASH (Labour) : I have heard the Māori Party member Te Ururoa Flavell talk about principles, and I hope he stands by his principles when the Government comes to introducing the Budget, which will increase GST on food to 15 percent. I hope he has the balls to stand by his principles and vote against the Budget.

We have heard from Labour members and National members, from every party in this House, as to why they will not support the Tariff Act 1988 Repeal Bill. I offer a personal message to Sir Roger Douglas. There are a few of us in this House whose ancestors have trod this path before. There is Todd McClay, whose father was Roger; there is Jonathan Young, whose father was Venn Young; and, although I am a little further removed, I have an ancestor who was here for 38 years. Then, there is Sir Roger Douglas, who was a Minister in the same Cabinet that his father was a Minister in. I remember Sir Roger Douglas as the man behind the concept of compulsory superannuation. I wonder what state our country would be in today if Sir Roger’s vision of compulsory superannuation had been realised and Robert Muldoon had not illegally cut the scheme off. I wonder what it would have looked like today. I think that Sir Roger’s vision of compulsory superannuation would have created an economy far greater in size and scope than the one we have today. So I take my hat off to him.

But I say to Sir Roger that at this point in time it is a game for a different generation. The prestige that he once had is now gone; it is a different game now. What happened to the principles he once stood for that allowed him to stand for Labour and work for the rights of workers? The ACT Party opposed my colleague Darien Fenton’s Employment Relations (Statutory Minimum Redundancy Entitlements) Amendment Bill. That bill represented the rights of the workers—the workers whom Sir Roger Douglas once stood for, stood proud for, and fought for.

The Tariff Act 1988 Repeal Bill would remove the tariffs that protect the industry still remaining in this country. It is the ideological thinking of a Sir Roger Douglas who is not connected to the Labour Party. In his younger days in the Kirk Government, he espoused everything that the Labour Party stood for. It is time for Sir Roger to retire. It is time for him to hang up his gloves, put his boots away, and remember the old times. I will remember him for introducing compulsory superannuation, because I think it was an awesome scheme. But this bill is not the bill that he wants to go out on. This bill will not protect New Zealand workers and New Zealand industry. It is not a bill put forward by a Labour Minister from a party that has 94 years of proud legacy. It is not a bill from a man who comes from three generations of Labour Party members of Parliament. It is time for Sir Roger Douglas and the outdated philosophy of the ACT Party to move forward. When it gets to a point where not only Labour but also National, the Greens, Jim Anderton, and Peter Dunne—everyone—oppose that philosophy, it is a sad conclusion to a great Labour Party family.

Labour supports free trade—of course we support free trade. New Zealand’s next Prime Minister, the Hon Phil Goff, signed the free-trade agreement with China. We are the champions of free trade; we believe in free trade. But this bill will not champion free trade. It will not move New Zealand forward; it will move New Zealand back. I am not too sure why Jacqui Dean is offering a rebuttal speech, because she stood up less than 5 minutes ago and supported the stance that I am now taking. This is not a bill for New Zealanders. All I can say to Sir Roger is that I am sad and ashamed that such a proud Labour family is bowing out on such a bill. I will not support it.

TODD McCLAY (National—Rotorua) : What a disgraceful speech that was! That member, Stuart Nash, is as new to the House as I am. He stood up, and, first of all, pretended to heap praise upon a member of this Parliament who has been here for many years representing New Zealanders and constituents, worked hard, and come forward with something that he believes in and believes will help New Zealand. Then Mr Nash made an outright attack on that member of Parliament. I have decided to change my speech a little bit after that disgraceful intervention by the last member. Mr Nash lost all credibility at the end of his intervention when he said that the next Labour Party Prime Minister would be Phil Goff. At that stage everybody on this side of the House, and certainly everybody on that side of the House, switched off and stopped listening. I think there is a reasonable chance that the next Labour Party Prime Minister could be Stuart Nash himself. Would that not be a wonderful, wonderful country to live in?

I come directly to the Tariff Act 1988 Repeal Bill. Along with members opposite, I will not be supporting this bill, because I do not believe that it is the best thing we could be doing for the country in terms of trade at this moment. It is a little bit like a can of coconut cream. It looks good and it smells good, and we all want it, but when we dig down a bit deeper, we realise that it is not good for us. I will speak more about that in a moment.

The thing about trade negotiation is that it is like a game of chess. We do not give up all of our options or all of our advantages before we start playing the game. Unfortunately, this bill before us today would do exactly that. It would mean that when our negotiators went out to negotiate trade agreements on our behalf, we would have given up all of our advantages; all of the things we might trade away for better access for our exporters to other markets would have gone.

New Zealand tariffs are imposed against a very small number of imported products, and at extremely low levels. In 2008, 80 percent of goods imported into New Zealand were tariff-free, with no restriction. Those that did have tariffs imposed against them had tariffs rated at between 5 and 10 percent. As Jacqui Dean, a very capable member of Parliament from the South Island, said, the Tariff Act provides protection for New Zealand industries. A number of industries, perhaps, could not function as well if a large number of foreign goods were imported from other markets. The Minister of Commerce and the Government have the ability to provide some short-term protection through the imposition of tariffs to stop those goods from being imported. I think that is very, very important.

Last year, along with a number of my colleagues and members from the other side of this House, I had an opportunity to visit the Pacific Islands. It was very interesting to have discussions with people there. In fact, in a previous life before coming to this Parliament, I worked very closely with a number of Pacific Islands. I spent a good 4 years with them, negotiating trade access and trade agreements with the European Union. The one thing that the European Union wanted from the Pacific Island countries was increased access, because their tariff rates were very high. Conversely, on the other side, there was not a lot that the Pacific Island countries could offer the European Union—one of the largest trading blocs in the world—and, therefore the Pacific Island countries were very cautious not to give up too much of their protection too quickly. This bill would mean that New Zealand would be giving up too much at a time when we have the ability to negotiate more.

I will take the case of Niue, and come back to my analogy of coconut cream. In Niue people go out and pick coconuts. They make wonderful coconut milk and great coconut cream in factories over there. They get to export it to New Zealand without a tariff upon it, at all. Countries in Asia also produce coconut cream, and under the bill they would get access to our country without any tariff restriction, because there is no tariff restriction. Well, that would mean that coconut cream producers in countries like Niue, the Cook Islands, and the many other countries where great coconut cream is produced would be under greater pressure because of this bill. So I think we should not be doing it, at all. As the member opposite has just said, it tastes good, but it is not necessarily good for us. Certainly, this bill would not be good for those producers in the Pacific Islands.

I will finish up very, very briefly. If all of our trading partners were doing this tonight, as well, and if all of our trading partners around the world were saying “Let’s get rid of all tariffs.”, that would be fantastic for New Zealand. But, sadly, they are not. Sadly, it will take many years and a lot of hard work on the part of this Government to sign more free-trade agreements in order for us to have freer trade access. Therefore, we must go step by step to do that. I commend the honourable member Sir Roger Douglas for bringing the bill to the House, but National will not be supporting it. Thank you.

Hon Sir ROGER DOUGLAS (ACT) : When I listened to the member from Māngere, I was reminded of a story that I think is very relevant. I recall a taxi trip I had from my home to the airport in 1990. I asked the taxi driver, a Samoan who lived in Ōtara, how business was. He looked at me and said: “Well, not all that fantastic, not that good.” I asked him why, thinking I would get a story about the deregulated taxi industry, leading to too many taxis, as the reason he was not doing well. But he said: “I am not doing all that well, but I am not complaining about it, because a lot of my customers now own their own cars. Because you’ve reduced the price so much, as a result of lowering tariffs, etc., my customers can now afford a car. So instead of having to get a taxi to take them home after they have been to the local grocery store, they can drive themselves home.” The fact is that because the Labour Government of the 1980s lowered tariffs in respect of cars and opened up that particular industry, a whole lot of people who could not own cars suddenly could do so. I think the Labour Party should think about that.

Mr Nash, I think, was trying to give me some sort of lecture. Given that Mr Nash gave me so much advice, I thought I might be able to give him a little bit of advice. I think he should start apologising to all those young Māori who are out of work—38 percent, after 9 years of a Labour Government. Thirty eight percent of young Māori are out of work. I think that Mr Nash should start to apologise to them. I think he should say sorry to every superannuitant in the country. When the State controls our entitlement to superannuation, as it does, then it will undoubtedly discriminate against those groups who have shorter lives. Our present system, which, of course, was amended and changed by the Labour Government over the last 9 years, discriminates against Māori and Pacific Islanders, in particular. So I think those Labour members should apologise for that.

I think Labour members should apologise for the populist vote-buying they entered into over 9 years, which left the country in debt, and left us with a deficit of 7 or 8 percent of GDP. I think they should apologise for the way in which they discriminated against low-income earners, and got them to pay for the children of the wealthy to go to university. I could go on. The last Labour Government tried to buy votes. It was a Government that spent over and above the rate of inflation by about $18 billion—in other words, for a family of four it imposed an extra $20,000 a year in costs. So if anyone needs to apologise, I think we should start with the Labour Party, and with Mr Nash in particular.

A party vote was called for on the question, That the Tariff Act 1988 Repeal Bill be now read a first time.

Ayes 5 ACT New Zealand 5.
Noes 116 New Zealand National 58; New Zealand Labour 43; Green Party 9; Māori Party 5; United Future 1.
Motion not agreed to.