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Wednesday, 22 May 1996
Page: 1201


Mr CAMPBELL(12.34 p.m.) —This Primary Industries and Energy Legislation Amendment Bill (No. 1) contains some very important stuff. I think one of the problems we have with the committee system is that it can very easily get buried. I did not realise just how important this was until this morning.

I want to touch on aspects of the bill. The first part of the bill seeks to deal with the Offshore Minerals Act 1994. What it tends to do is to guarantee the integrity of leases when they are affected by changes to the boundary between Commonwealth and state lands. I entirely support that. The bill does not make it quite clear whether this is retrospective. I believe that it should be retrospective to the enactment of this bill. I know of a couple of places where new surveying has changed the state-Commonwealth boundary, with significant detrimental effect on people, and I would hope that they would be protected by this very essential amendment here.

The member for Dobell (Mr Lee) spoke at some length on AQIS and quarantine matters. I cannot find it in the bill—and, of course, it is not in the bill—but it does deal with the chicken industry. I entirely support the member for Dobell. I believe that AQIS and the government should take a very hard line with respect to entry of disease into Australia and I believe that we are lessening resolve in this area.

I do not mind if we are taken by competitors to the world authorities on GATT because I have always believed that GATT is, in fact, a very corrupt document and it is not the way for Australia to go. Every time there has been a significant amendment to the General Agreement on Tariffs and Trade principal traders have gone out and simply found a way around the new agreement. The French have been notable in this regard and I take my hat off to the French. I think that the French have always acted in the interests of their citizens and that is what governments are for. I believe that this is something the government of this country should certainly consider.

I now want to talk about wool. It must be remembered that basically this bill comes from the previous government. I find it passing strange that the new government has so enthusiastically embraced it because I think it is a very flawed document indeed. It is true that this government has made amendments to the part relating to Wool International Holdings, which is what I wanted to talk about. I think that this has made the act better but in my view it is still not good enough.

This was a proposal that arose from minister Collins who, I can say now, never understood the wool industry and never really cared about it. It was a very dangerous move indeed. The member for O'Connor (Mr Tuckey) has spoken at length about this and I agree with a lot of what he has said. I want to foreshadow that I will be dissenting from this bill and I will be seeking a division on the matter in the chamber. I do so for very good reasons.

I see no reason at all why anyone would be giving Wool International Holdings $24 million of growers' money. I see that it has done nothing to justify it and, if it wants to justify it, I believe that it should be putting out a prospectus. There are many companies floated on the stock market with a capitalisation of less than this. If Wool International Holdings thinks that it has a saleable commodity, it should be putting out a prospectus meeting the requirements of the Australian Securities Commission and seeing what support it gets from the market. I am sure that it would not get support from growers; it may get it from elsewhere. To say that it is going to initiate changes in marketing is a very dubious proposition. All the things that it talks about are in place already and growers can use them.

I would suggest that futures selling was probably something which originated with the wool industry. It has been used very successfully by the gold industry. I think the reason is that the gold industry has used it as an insurance scheme, not as a gambling scheme. I believe that farmers and wool growers use it as an insurance policy, not as a casino. It is a very useful tool. If they use it as a casino they are inevitably going to get burnt because the house always wins in that scenario.

The member for Wannon (Mr Hawker) was talking about the history of the wool industry. I thought that he was rather harsh on John Kerin. The truth is that had John Kerin opposed raising the wool price under the madman, David Asimus, he would have been hounded and condemned. Fortunately, Asimus was not allowed to put it to 1,000c as he wanted to but it went to 870c, which was fine. That was the floor; it went above that.

I was one of the people who fought for the establishment of a floor price back in the very early 1970s. While it was a price set just below the cost of production, it probably did not do a lot of damage, although, faced with the same decision, I certainly would not support it again. When these people, led by Asimus, decided to make a price leader they were doomed.

It is true that John Kerin dropped the price to 700c. It is also true that anyone who knew anything about the industry knew that it was unsustainable. I used to go into committees and argue with John Kerin, who would dump on me, then he would say to me in the corridor, `Of course, you are absolutely right, but I have to hold the line for the government.' He knew, because he was a competent economist, that the 700c was untenable. I believe he should have spoken out about it and said so at the time, but he was under enormous pressure.

He certainly was not helped by the people who run the industry—the clowns that have encompassed the Wool Corporation and the various people who have been elected to the Wool Council. I think the former member for Wannon and his relation, Hugh Beggs, should come in for a fair amount of criticism with respect to the debacle that was wool marketing.

The truth about wool is that there is nothing that Wool International Holdings will do that is new or an initiative. If there is, it certainly has not been spelt out. If it believes it has something new, then it is its duty to tell us what it is. There is certainly nothing in the published material. I believe there are other people in the market who can do it as well.

What the member for O'Connor said is absolutely true. Even if you could trust Wool International Holdings to keep an arm's length agreement with Wool International and that stockpile, even if it was trustworthy in that regard—and believe me, it is not and it will not be able to isolate it—nobody out in the industry believes that it will. That confidence will not be there.

I think that the member for O'Connor did touch on a very important point. There has been an enormous loss of confidence in wool marketing and it has been brought about by Wool International. It has been selling wool at discounted prices. It says, `Nobody complained when we were selling forward at high prices.' The truth was that any mug can sell forward in a rising market at a higher price. I do not believe it maximised the price on those occasions, but anyone can do that. But then to say that the corollary is to sell down in a falling market is absolutely absurd. It is my view that if the government is going to maintain sales for the stockpile, that wool should be dispersed through the auction system, with no reserve price at all. I am not convinced, as the member for O'Connor seems to be, that we need to do that. But certainly, if it going to be disposed of, it should be through the auction system, with no reserve price.

I believe that we do have to be very careful about the future of wool because it is in our capacity to destroy the wool market. The truth is that nobody in the world needs wool anymore. It is simply replaceable. But we do have a marketable commodity in Australian wool. I would argue that Australian wool is one of the few things—and perhaps the only thing—in Australia that is unique.

The CRA said in the paper today that if we mine coal, the Americans will mine it cheaper. If we grow wheat, the Americans will dump theirs on the market. Australian merino wool is the unique product that we have, yet what have we seen? We have seen Australian wool growers' money used to promote wool generically. In a shop, any garment can wear the wool label if it comes off a sheep. It does not really matter that the sheep has more in common with a wire-haired fox terrier than a merino, it is still wool and it comes under this generic promotion which is paid for by the Australian wool growers. We should be selling Australian merino wool. It is a unique quality product.

I was in China some time ago on a committee. We asked to go to a store where the Chinese people shopped. We did not want to go into a Friendship store. We got into this place and up on the fifth floor they had a lot of the stuff that was commercially available. I was amazed at the high prices that people were paying. They had a bespoke tailor in there with a big sign which said, `Only the best British cloth used.' I was actually looking for cashmere, but I said to the sales assistant, `Do you have any Australian wool?' `Oh no', she said, `we stock only the very best British wool.'

I saw some jumpers on the counter and asked if could I have a look at one. It was a Pringle garment from one of those great mills along the English-Scottish border that produce quality woollen knitwear. It did not have the woolmark on it at all, but it did have a label saying, `Guaranteed pure botany wool. Made in England.' So I said to the girl, `Look, this is Australian wool,' and she grabbed it from me, quite irate, and said `No, no sir, made in England.' That was to her British wool; a triumph of marketing of our product. I think we have been duped enormously by wool marketing.

When I finished wool classing—I think in 1956—the instructor said to us, `Every one of you will now go out and overclass the clip,' and of course every one of us did. He also said, `If you want a job in 50 years time, you have got to do something about the American market which is the highest fibre user in the world and the lowest consumer of wool.' Those statistics are very much the same today as they were then, despite $2 billion worth of Australian wool growers' money put into a failed attempt to increase promotion there. If you look at Zegna, they have been extraordinarily successful and North America is now one of their big markets. Their marketing approach was to send Jonathan Todhunter in there with a month's wages and say, `After that you are on your own,' and he was extremely successful. We spent $2 billion basically for nothing.

Quality is going to be the name of the game, yet we have seen in recent times the quality of our wool threatened by blending. I asked a question in the House about the blending of Russian wool with Australian wool. I was told firstly that it was not happening, then I was told it had already happened and we really could not do anything about it. There is no doubt the Russians decided to put their 20 micron wool on the market, looking for cash. The Russians do have some 20 micron wool and it is usually very badly faulted. I actually had documents showing where Australian buyers had been asked to get sound 24 micron Australian wool to blend with faulty 20 micron wool to make it 22 micron filament.

I know of one case of a very large spinner in Europe who recently went through this blending exercise. It produced a lot of thread using the Russian wool blended with the very good quality Australian wool, only to find the whole lot was radioactive. Imagine what that would have done, had it become general knowledge, to confidence in the wool market—to confidence in what we are promoting as a pure product.

The time has long passed when we should have been right out of generic wool. We should be selling not Australian wool but wool from various areas of Australia. I think we should be selling specialised lambs' wool from Albany, for instance, and quality wool from other areas. It should be a promotion of Australian wool—a unique fibre which is very free from impurities and a fibre which the world can have faith in.

If we actually believe there is going to be a future in wool, we have to take steps to protect our investment now. This means that we must put a ban on the export of our genetic material. It is crazy to do otherwise. I went to a lot of effort to get the agreement through the Labor Party caucus—by every appropriate means—that it ban the export of Australian genetic material. It took me 12 months. In that time I went to New Zealand and I consulted with New Zealand stud farmers who said they would be very happy to see a ban applied. They did it only because if they had not someone else would have done so. I got unanimity amongst the major wool studs and enormous support from growers.

The opposition came from a few greedy, grubby, second-rate studs associated with the Australian Merino Breeders' Association. Those are the people who got to Collins. Collins, massively ignorant of the industry, marched into caucus and with very little effort got the caucus to roll the decision it had made and we did not get what was in Australia's interests. Some people say it is too late: not so. The great users of genetic material in the past have been the Soviet bloc, China and Russia. Through incompetence they wasted it. They put a ram out here and a ram out there, instead of putting them into breeding stations.

I believe the threat now comes from South America. The Italians are moving in there in a big way. Benetton is buying up large properties in South America. The Italians are not fools and they will not make the same mistake. I believe that we should act `yesterday' to ban the export of this genetic material. The Labor Party had the opportunity and through what I see as the perfidy and stupidity of Senator Collins it was lost. I certainly hope that, if this government seriously considers the future of the industry, it will move quickly to bring in that ban on genetic material. If it is not done I believe that the present system of allowing 900 rams a year will be our demise because, with new technologies, it might as well be nine million as 900. I sound that warning and urge the government to do something about it.

In the brief minutes left to me I want to talk about wool marketing. I believe we have to return more money to growers. Commodities throughout the world have been under pressure and the only way I can see out of this for growers is to move further down the production chain and retain ownership of their wool, perhaps down to the single white thread stage, maybe even beyond that. That is going to need some organisation. There is not just one way; there are many ways it can be done. I believe that we should look at doing the very fine wool in Australia.

For the 20, 22 and 24 micron fibres I suggest that India is the place to look. I believe that India has an industry more competent than that of the Chinese. It has labour costs that are comparable and it has a structure which I think is much easier to deal with than the Chinese. If this is pursued I think we could see a greater return to wool growers. It is quite clear that if there is not a greater return, what we are going to see in a very short time is growers in the great Australian wool industry—what was the largest small business in this nation and is an industry that is absolutely vital to the wellbeing of the hinterland of Australia—reduced to the status of peasant shepherds. That is not a future for the wool industry that I want to see.

I believe there is a future for the wool industry. I have great faith in it, but Wool International is not part of that future—Wool International is part of the problem. Garnaut's north-east Asian ascendancy and the fools on both sides have led us down this mad chase into Asia—the Garnaut report in respect of the wool industry was another very flawed document—and I think it is about time we got a lot more commonsense and commitment into making sure that the wool industry survives as the viable industry that it should be. It should be remembered that if we can increase the value adding process to wool it will very quickly become Australia's biggest single export, exceeding coal. (Time expired)