Free Trade versus Protectionism

 “Should Australia stick with free trade or should we go back to the days of protectionism?”

A Comment by Dick Smith

I am often asked this particular question and I must admit that I believe we should keep going along the free trade route.

Among other things, it allows developing countries to raise their standard of living, and as the standard of living rises in other countries and people become wealthier, there is less chance of turmoil and war.  This has to be good for our children and grandchildren.  To put it simply, when people are well fed, comfortable and happy there is less chance of them supporting conflict either within their own country or with another.

Below is an extract from a comment by Alan Moran of the Institute of Public Affairs taken from the Herald Sun (September 16, 2011)

Protecting industries and living standards
FREE trade provides the cheapest goods and services for the consumer and increases real living standards.
But pressures for increased industry protection from overseas suppliers are re-emerging in Australia.
In broad terms, the average Australian tariff, and its subsidy equivalent, has been reduced from about 35 per cent to 5 per cent over the past 40 years.

Other specific assistance measures like government purchasing preferences, local content arrangements, air travel, and agricultural marketing arrangements have also been substantially dismantled.

The two most protected industries are textiles clothing and footwear with support at 13 per cent (down from 20 per cent in 2003) and motor vehicles at 11 per cent (down from 17 per cent in 2003).

When I was a kid in the 1950s, the average Australian tariff was about 35% and boy, were things expensive!  The cheapest television sets cost over $1,000 in today’s money.  Many other items were, accordingly, more expensive.

There is no doubt that globalisation and free trade has increased the wealth and wellbeing of most Australians.

But it’s interesting  that we still have tariff protection for motor vehicles – about 11% - whereas with most of our food products it’s “open slather”, i.e. unfettered free trade and our Aussie farmers have to compete with the low-cost countries like China.

What I would prefer is, rather than impose restrictions and reintroducing tariffs, that Australian families can get the facts about quality Australian food and can make a decision to pay a little extra for our better quality.

I like people to have freedom of choice, i.e. they can buy the cheap imported food that is lower quality, or they can pay a little extra for higher quality Australian grown products which not only support Australian farmers and country towns, but also support what we call “food security”, meaning that we can be self-sufficient in the eventuality that we find ourselves engaged in, for example, a war.  But it also means that profits are staying here and we are looking after our “home team”.

This is what we are doing at Dick Smith Foods.  We are communicating and making available the best tasting Australian food ever.

It’s up to the consumer to decide whether to buy the cheap imported product or the better quality Australian product.

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