SYDNEY - New Zealand families will gain the equivalent of a $42-a-week tax-free pay rise within 10 years as a result of the decision to axe all tariffs, an analysis of the gains of trade reform predicts.
The analysis, by the New Zealand Institute of Economic Research, was usedin Sydney yesterday by Trade Minister Lockwood Smith to push the case for the lowering of global trade barriers during an address to foreign correspondents representing some of the world's most influential news organisations.
The analysis said that consumers had already gained significantly from tariff reductions since March 1987, with car prices in March 1998 16 per cent cheaper than what they would otherwise have been.
If tariffs had not been reduced, clothes would have been 15 per cent more expensive, household appliances 9 per cent dearer, and shoes would have cost about 5 per cent more.
By 2010, the analysis said, the complete phaseout of tariffs would mean that cars would be almost one-third cheaper than they would have been had the 1987 tariffs continued.
Clothes prices would be more than one-third cheaper, shoes about 22 per cent, and household appliances about 16 per cent less expensive.
"The fact that prices on these four items - which account for about one-quarter of total real household spending - are lower than they otherwise would have been means that consumers have recorded gains in purchasing power," the analysis said.
It said that by March 1998 the average consumer had gained about $7.30 a week as a result of the tariff cuts on cars, household appliances, shoes and clothes. The average household had gained an extra $22 a week, or $1140 a year.
By 2010 the gain for the average consumer would rise to $14.10 a week, with the average household gaining an extra $42 a week - or $2180 a year.
