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Tuesday, 31 October 2000
Page: 21773


Mr McARTHUR (10:08 PM) —It is with some delight that I participate in this debate on the Wool Services Privatisation Bill 2000. Hopefully this might be the last debate that we have in the House of Representatives on the wool industry. I particularly note the presence in the chamber of the Minister for Agriculture, Fisheries and Forestry, who guided this bill through a lot of difficulties, with wool industry debates and arguments. I note that the shadow minister is not in the chamber. He has made very strong statements that the bare bones of the bill were not available to the opposition. I do not accept that as a proposition. This matter has been around for a long while and has been debated by industry personnel, by the minister himself and by a number of committees. After all the debate, there is a surprising amount of unanimity, which is unusual in the wool industry, about the process and the way in which we might come to a final conclusion to move the wool industry away from government control and let it guide its own fortunes.

The shadow minister makes some wild accusations about Cape Wools South Africa. He was quite pleased with himself for having raised the matter in parliament. That was a matter for commercial consideration. It was mentioned in their annual report and it was a matter that the minister at the table thought he could negotiate in a commercial way to get a genuine outcome. I note that the shadow minister says what a shame it is that the wool industry will no longer be under government scrutiny. This is what this bill is all about. The government at long last, after a hundred years, will be out of the wool industry. I am surprised and disappointed that, as I heard the shadow minister, he was suggesting that the opposition would in fact vote against the bill. Minister at the table, can you believe that? I think I heard him say that.


Mr Truss —It is absolutely staggering.


Mr McARTHUR —I think the member for Corio should go back to Alvie and his onion growing. He is much better suited to that. He understands that, whereas he knows very little about the wool growing industry. But he is the only member of the opposition prepared to speak on the bill and at least we ought to commend him for that.

This is really a watershed piece of legislation, although not so much for its content. It marks the end of an era in which governments, both of the conservative side and of the Labor side, have been involved in wool politics. I hope this will be the last piece of legislation that governments will be involved in. It moves the industry back into the hands of the growers, the processors and those who are keen to participate in the industry for a commercial gain. If you look at the background of the industry, you see that they have been through boom and bust times. Every time they went through the booms they complained about the level of taxation. That was in the 1950s. Then they had a bust during the war. They had the JO scheme and then they had the reserve price scheme, introduced in 1971 by the Gorton government and completed by the Labor government, as I remind the shadow minister, so government was always involved in the fluctuations of the wool industry.

As for the reserve price scheme under Minister Kerin, I remind the shadow minister that Minister Kerin was the minister who supported the reserve price scheme and said that there was no way that the government would not support the 870c per kilogram price. Inevitably, that went bust; so, in the long-term trend, the reserve price plan really had no chance of success. Yet it was the other side of the parliament that supported it. I did have some sympathy, because of the politics of the time, for the arguments that were raging so strongly on the reserve price scheme.

The wool task force headed by Ian McLachlan, who is well known to both sides of the parliament, was the origin of the current legislation before the parliament. I just want to put on the record that its report—and we have the smaller version and the full report here—was one of the best reports that I have dealt with in the wool industry. It is interesting to note that since 1962 there have been 31 reports, but this stands as a pre-eminent report and makes some strong recommendations. Whilst they were not fully followed by the government, the philosophy and attitude that the chairman and the committee portrayed to Australian wool growers was full of good sense. I particularly pay tribute to Mr David Trebeck of ACIL—I can see his particular background work in the words and detail of the report. This report was the foundation for the quite dramatic change of attitude that has now taken place in the wool industry culminating in the legislation.

I would just like to quote some comments from the report. The first is:

The task force determined that it should describe the situation as it saw it—no gilding of the lillies and fudging of the hard issues.

So we had a situation where the McLachlan committee had a look at the wool industry here in Australia and overseas and at the wool pipeline and was going to really address the problems as it found them. As we have so often seen with Sir William Gunn and the reserve price argument, there were leaders of the industry who thought they had the answer: if only you put up a reserve price scheme or something similar, the wool industry problem would be solved. This quote of the committee is interesting:

... be wary of charismatic Messiahs leading the industry purposefully out of its wilderness with an overwhelmingly firm hand.

We did see that. Even Minister Kerin had some of those characteristics. One of the interesting thrusts of this report is seen in this quote:

The mind-set must change from `they or them' to `I/me or `we/us'.

The report is saying that no longer can the wool growers rely on the government to support them in making the changes that so often are required by commercial industry to bring about innovation and change. This report was the catalyst for the legislation that the minister has brought to the parliament. The legislation is of a technical nature, but it is also symbolic of the fact that research and development has progressed over the years and has been a focal point of argument amongst wool growers as to the role of wool, as against the synthetic fibre industry, and its percentage of the market. As they say in the smaller version of the report:

There are no magic puddings and there are no messiahs.

That is an interesting quote, because I think all too often industry leaders have said, `If only we could have a reserve price scheme, if only we could have more research, if only we could have generic advertising—then the wool industry problems would be solved.' This report really was the beginning of the legislation, and in my view it shows a cultural and attitudinal change that has taken place amongst wool growers. At long last in this parliament we have some legislation on this issue and we have the wool growing fraternity agreeing that they will be in charge of research and development and promotion. They will be doing most of the paying, and they will be some of the shareholders that will be finally responsible. There will be no politics, either of the opposition or the government.

The McLachlan report has demonstrated this change—a report which I think has been supported, surprisingly enough, by a big range of wool growers, despite all the arguments of the last 20 years. The cultural change that is talked about in the report includes the beliefs that the diversity of the wool industry should be celebrated, not considered to be something different or something that is not to be supported, and that the future of wool success depends upon innovation. This legislation allows the wool industry to pay for their research and promotion and to make some critical judgments which are distanced from politics on the outcome of that. As I said before, the wool industry, for the first time in a hundred years, are saying that they will move away from reserve price schemes, that they will be totally responsible for their own outcomes and that they will not come running to government.

As the report quite rightly says, the wool industry is cyclical in nature. We are all aware of that. Whilst they are now enjoying better times because of the improvement in prices, tomorrow may provide a different situation. With regard to their attitude to natural fibres, wool growers in Australia have presumed that the world would always buy wool. We know that the commercial reality is that the world does not always want to buy Australian wool, because there are other fibres competing at a price and quality that will ensure that Australian wool will sometimes be on the stockpile. As I have said, the task force spoke quite categorically against the reserve price scheme that fell over in 1991, and I hope that members of this parliament will never introduce a reserve price scheme in the wool industry in my lifetime. They looked at the profitability of the wool growers. The comments of some of the wool growers were that a lot of them were unprofitable, but they drew attention to the fact that the top 20 per cent of wool growing enterprises, even at lower prices, were profitable and were doing well. They moved on to the research and development aspect that wool growers have had some concern about. They identified an amazing figure that over the years governments and wool growers have contributed $12.6 billion to research and development, yet the place of wool in the fibre market is not fully established. It could be challenged in terms of the fact that there has been all that promotion and all that research and development yet we do not have a clear picture that wool has a very good and sound future. I commend the report, both for the sentiment of it and for its recommendations, which provide the basis of the current legislation.

I now move to the legislation, which in many ways is the culmination of months of argument and debate—some of it acrimonious—amongst wool growers in order to come to a final conclusion. My personal view is that the wool growers had rather a warped view that the salvation of the wool industry would be involved in research and development and promotion. They did not see the cyclical nature of the industry or that the wool industry would inevitably—or hopefully—recover after the Asian crisis and that, once the world economies improved, a demand would return for that fibre. So we had these arguments about two per cent and four per cent levies on wool growers to improve research and development and promotion. Let us go back to the famous meeting in Goulburn in 1998 that a number of us were aware of—Mr Deputy Speaker Nehl, you would remember that as you are from New South Wales. The wool growers turned up in droves, and they voted very strongly against the AWRAP board. I do not think it was a matter of a technical nature; it was a matter of the spirit of the time. The wool growers felt that if they had had more research and better promotion of their product they might have got a better place in the marketplace. I am not sure if that is the fact of the matter but that was the sentiment, and certainly that pervaded the industry at that time, having suffered the horrendous losses and the impact on the industry that the collapse of the reserve price brought about.

The wool task force brought up some recommendations, and the minister at the table, Mr Truss, considered them very carefully. I commend him for the way in which he consulted the backbench—members like me—and listened to our point of view as to how we might proceed in a sensible way. He also talked to leading members of the industry and made a value judgment on the way in which to proceed to keep all parties `inside the tent' so that we might get a genuine outcome. He then had a wool poll in October 1999. There was a lot of discussion about that, and wool growers were polled as to whether they wanted four per cent, three per cent, two per cent or no levy at all. I think there was a genuine understanding amongst wool growers that they did need some research and some promotion; and the final outcome, as we are all aware, was two per cent and that inevitably they could be in control of their own environment.

The minister at the table, the Minister for Agriculture, Fisheries and Forestry, then went ahead to form two corporations under the Corporations Law to replace AWRAP. Then there was the appointment of Mr Rodney Price, a well-known wool grower with a commercial background. Again, I commend the minister who was under a lot of pressure at the time to find a suitable person who had to be Christ-like in his attributes. Not only did he have to have a wool growing background but also he had to be compatible with all groups, have commercial experience and he had to want the job. They were very difficult attributes. I commend the minister for appointing Mr Rodney Price, who had a commercial background, who had a large wool growing enterprise of his own and who had participated in the Ross Garnaut committee in 1993. All reports that I receive—and I think that the minister receives—state that Mr Price is doing a very good job. He is bringing the warring factions—almost like the Labor Party—together and they are now participating in the industry to try to get a genuine outcome.

I think the legislation before the House is very well thought through. It brings the ownership of the research and development operations under the control of wool taxpayers so that, if they pay the levy, they can control the outcome. That was not always the case historically. There will be minimal government involvement. I noticed the shadow minister talked a lot about the Senate committee saying that it was a great pity that the government did not undertake further scrutiny. That is the very thing that the minister at the table and I are very strong about: we want the wool industry to go out on their own, away from government scrutiny, and run their own business in a commercial sense. There will be contestability and transparency of expenditure of the wool funds. Again, that is a very big argument among wool growers: where did their R&D funds go; where were their promotion funds going; were they lost on promotions in Paris, London or Sydney? At long last, that will be contested at the annual meeting and wool growers will be able to go along and challenge management as to how they are spending the money.

It will be under commercial discipline. Again, that is a new concept introduced to R&D and promotion among the wool industry. That has not always been the case. There will be a commercial legal structure comparable with other companies. The other important thing is that the minister has allowed the structure to evolve over a couple of years. As the shadow minister was complaining, he has allowed some flexibility and allowed members to move along and identify themselves as shareholders. The perennial difficulty of wool growers is whether they are going to be shareholders and can they identify themselves. I commend the minister, the advisory group and the interim board for developing the document entitled WoolShare: Register now for your share in Australian Wool Services Limited. They have gone to a lot of effort to produce this document, to get it to wool growers who potentially might have been shareholders, who have paid their levies under different names so that they could become a shareholder, having paid the levy over the last three years. Then it sets out clearly what the shareholders would be looking forward to doing. AWRAP would move into two different companies by 1 January 2001 and by 1 January 2003 and the levy would be paid to Australian Wool Innovation Ltd and the Woolmark Co., two different companies but contestable and with a commercial background.

The fundamental thing that this legislation brings to this parliament is a historic change in attitude and perspective to the wool industry. So many times in this parliament have I debated this wool industry—on reserve price schemes, on the arguments up and down—and here we have a final piece of legislation which says to the wool growing fraternity, `At long last, you are in charge of your own birthright, you are in charge of your own commercial activity and you are in change of your own innovation. Please go out and innovate and compete with the world. Please compete with other fibres in a commercial sense.' If the top 20 per cent of wool growers can do it better and compete with the world, so be it. If the remaining wool growers wish to leave the industry, that would be their choice without government interference.

It is with great enthusiasm that I commend this legislation to the parliament. It is landmark legislation because of the philosophic thrust behind it rather than the technical nature of the legislation. I hope that the shadow minister opposite and the Senate will support it with enthusiasm because it marks a dramatic change in the wool industry. In my view, it would lay the foundation for a future and very prosperous wool industry because research and development in the 21st century will be full of people who have a future in the industry. (Time expired)