The Albanese Government plans to scrap 500 tariffs to help consumers see lower prices and take away $30 million in red tape costs for business. And The Australian predicts that this will raise productivity, which should help reduce inflation.

These tax slugs on imports are being tagged as “nuisance” tariffs by Treasurer Jim Chalmers. We haven’t seen wide tariff cuts since his hero — former Treasurer and PM, Paul Keating — embarked on microeconomic reform in the 1980s.

This economic term refers to looking at individual economic activities to see what’s needed to take away obstructions that raise costs, lower productivity, and add to inflation, while reducing potential economic growth and job creation.

At the time, Mr Keating joked: “I guarantee if you walk into any pet shop in Australia, the resident galah will be talking about microeconomic policy."

These tariff reductions are small beer compared to Keating’s cuts but they should make the following imported goods cheaper: toothbrushes, fridges, dishwashers, pyjamas, toasters, ballpoint pens, X-ray film, chamois leather, fishing reels, roller-coasters, dodgem cars, ballpoint pens, toasters, electric blankets, bamboo chopsticks and menstrual and sanitary products.
“Dr Chalmers is targeting so-called nuisance tariffs where a 5 per cent customs duty applies on goods that are mostly already eligible for duty-free importation under Australia’s system of free-trade agreements,” The Australian tells us.

However, the actual consumer effect is bound to be small, as this case in point from the Oz shows: “Examples of products that will be subject to removal of the 5 per cent Customs duty include washing machines, where annual imports worth over $490m raise less than $140,000 in revenue per annum, and fridge-freezers, where annual imports worth over $668m raise less than $28,000 in revenue a year.”

Trade Minister Don Farrell might be engaging in exaggeration or hyperbole when he says the tariff cuts will give “simple, fast, and cost-effective boosts to  Australia’s international competitiveness, help create jobs, and reduce cost-of-living pressures”.
In reality, the big winners out of this will not be consumers but businesses that have to pay for and lose time with the red tape that goes with paying these silly imposts put on what we pay for imports.

The associated price drops will be insignificant but at least it’s a price move effect in the right direction — down!

This comes as Australia recently fell from 4^th to 19^th on the global competitiveness table and “…the Business Council of Australia has urged the Treasurer to cut barriers to foreign investment, saying it was vital for economic growth and Australian jobs”. (The Australian)

Bran Black, CEO of the BCA, says foreign investment is reluctant to come to Australia right now and the Government needs to make changes ASAP. “Australia is facing an investment drought and if we don’t urgently fix the problem, then what is at stake is Australian jobs and the economic growth which our economy so badly needs,” Black told The Australian. “We cannot afford to be left behind and we can’t stand by and let economic investment and ­opportunities flow into other countries.”

In all honesty, these tariffs changes are a positive move, but Treasurer Jim Chalmers is more likely to be chasing consumers, who are voters in the May Budget, so big business will have to wait its turn, because Labor has an election to win.

Making it easier for a foreign firm to takeover a local business with huge export potential or changing labour laws to entice foreign companies here, doesn’t look likely with this government, especially before the 2025 election.