249 Cabinet Submission by Templeton
- The programme of seminars organised by the Government to explain and offer the opportunity for questioning and comment on the CER proposal concluded on Friday 9 July. Over the preceding four weeks 21 seminars were held in 17 centres. Each seminar was led by a Minister, Under-Secretary or, in one case, by the Speaker. In the four main centres separate seminars were held for manufacturers under the auspices of the local Manufacturers' Associations, in addition to the open Government seminars. A schedule of the seminars held, leader and approximate attendance is annexed to this paper.
- Attendances totalled some 2,500, ranging from almost 1,000 at the two Auckland meetings to 13 at Greymouth. In addition to the manufacturing sector, which was strongly represented at most of the provincial as well as the main centres, a wide range of interests were represented and, from time to time, expressed their concerns through questions and comment. They included retailers, the farming sector (including wheat producers, hot-house growers, dairy farmers and apiarists), trade union representatives, secondary and tertiary students, and numerous members of the public with no apparent affiliations to particular interest groups.
- The seminars were widely advertised through the media (newspaper advertisements and free spots on local radio) as well as by organisations such as Manfed, Chambers of Commerce and local Export Institute and productivity groups.
The seminars can be considered to have successfully achieved the following objectives:
- they have provided an opportunity to explain the background to and reasons for pursuing CER. Only a handful of the persons attending the seminars demonstrated antagonism to the concept;
- they have fulfilled the Government's commitment to consult the public at large on the proposal; and it was made clear at each meeting that further observations and questions could be addressed to the Government up to the end of July. The Government's initiative in holding the seminars seemed to be very much welcomed, especially in the smaller centres;
- they enabled numerous manufacturers and others to seek clarification of aspects of the proposal and to identify particular concerns. The main issues raised are summarised below. While none of them is new, we now have a better idea of the issues that are particularly preoccupying the manufacturing and the agricultural sector in particular.
- IMPORT LICENSING: TERMINAL DATE: Clearly this is a concern to most manufacturers and it was referred to by Manfed speakers at each of the seminars in the main centres sponsored by the Federation as being contrary to their wishes. Nonetheless there was little reference to this issue in the body of the sessions. A 1995 terminal date for import licensing appears to have been largely accepted, albeit reluctantly, as a 'given'.
- EXCLUSIVE AUSTRALIAN LICENCE: There were questions at a number of seminars as to how Exclusive Australian Licences would be distributed. The meetings were told that this had not been decided definitively by the Government as yet but that, having regard to the desirability of giving manufacturers some assistance in the efforts they would be making to rationalise their activities with Australian counterparts, the Ministers of Trade and Industry and Customs and Trade and Industry officials had concluded that making available something like 50 per cent of the EALs to manufacturers would be appropriate. This figure would be varied for some industries. It was mentioned also that a paper was being drafted by officials for consideration by Government that took account of views expressed by the different industries during the current seminars and consultations. Some manufacturers pressed that their sector should be given 100 per cent of the EALs while some retailer representatives asserted that manufacturers should not be specially privileged at all. There was also some objection voiced to tendering of import licences both generally and in the CER context.
- CUSTOMS ISSUES: Questions related to the handling of anti-dumping complaints, the proposed CER rules of origin and the means of coping with suspected fraudulent evasion of the origin rules loomed large in the manufacturers' questioning. There was some private sector scepticism of the Government's capacity to deal quickly with cases as they arise but general acceptance of the Government's determination to key-up its capacity to do so utilising the newly installed computer facility and with the benefit of close cooperation with the private sector.
- INTERMEDIATE GOODS: There were numerous questions seeking elaboration of the approach that will be adopted in dealing with intermediate goods cases that may arise.
REGIONAL ISSUES/NATIONAL PRICING: In the provincial centres in particular several specific concerns were identified:
- the possible abandonment of national pricing by distant (eg, Auckland-based) suppliers of essential inputs such as steel and sugar;
- the impact of the railway monopoly and the cost of the Cook Strait crossing on long distance freight haulage;
- in the South some feeling that these factors (along with the sentiment that they are not benefiting as they should from the lower cost of South Island energy resources) will mean that once access for Australian goods has been liberalised, the Australians will be better able to compete in the Auckland region than will the Southern producers;
- there were some concerns that CER might circumscribe the Government's ability to apply policies to encourage regional development. The assurance was given that CER did not inhibit such activity.
- AGRICULTURAL/HORTICULTURAL ISSUES: In general there was relatively little discussion on these questions. Two particular concerns raised were the impact on the Southland wheat industry once the restrictions are lifted on imports of wheat flour in 1995, and the need for the glasshouse industry to diversify away from its concentration on tomatoes, also after 1995. There was some discussion of the place of quarantine and hygiene restrictions in CER. Some participants in the seminars commented that they were concerned that Australia may use quarantine restrictions to inhibit trade while others expressed their anxiety that New Zealand should not, in consequence of CER, relax its own genuinely necessary measures. At several seminars the latter point was made especially by bee-keeping interests. There were a few enquiries about the explanation of the special treatment of export incentives on canned corn, frozen peas and beans and processed potato products. Once the background was explained there was no debate about this.
- COVERAGE AND CONCEPT OF THE PROPOSED AGREEMENT: In most centres a number of questions were asked as to the impact CER would have on New Zealand's independence of action in a variety of ways; on why the Government had not opted for a customs union; and why exchange rates were not to be linked, etc. With very few exceptions questions seemed to be genuinely aimed at seeking information and the questioners appeared satisfied by the responses.
- IMPACT OF CER ON EMPLOYMENT: Some concerns were expressed by workers' representatives about the possible impact of CER on employment in specific industries, notably clothing, footwear and motor vehicles. It was possible to point to the optimism of many New Zealand garment and footwear manufacturers about their ability to compete in the Australian market, subject to improved conditions of access; and to the deferral of motor vehicles.
- INVESTMENT: The feeling was expressed by manufacturers on a number of occasions that it would be necessary at an early stage to make progress towards freer opportunity for trans-Tasman investment in production and distribution industries.
- STATE GOVERNMENT PURCHASING: Concerns were expressed that purchasing policies in the States would inhibit opportunity for New Zealand exporters for an indeterminate period but questioners seemed reasonably satisfied at the equity envisaged in the reciprocal approach the Government intended to take until the question was finally resolved.
- The Government has told the manufacturers and other private sector interests that they should ensure that their considered views reach the Government by the end of July. At present the CER proposal is being considered by the Foreign Affairs Select Committee of the House. It is envisaged that meetings of the Select Committee for this purpose will conclude on 4 August and that the Committee will report back to the House, permitting a debate before mid August.
- The Australian Government will be completing its consultations with the private sector and the States at the beginning of August and it is envisaged that the Australian Cabinet will take a decision on the proposal in the light of the consultations on 24 August. Having regard to these time parameters it would appear appropriate that the Government aim for a paper bringing together the results of the New Zealand consultations and any feedback we have from Australia, and serving as a basis for a Government decision to be considered by the Cabinet Economic Committee on Tuesday, 17 August. It could then be referred to Cabinet for Monday, 23 August.
[ABHS 950/Box 1228, 40/4/2 Part 4 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]