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Wednesday, 1 November 2000
Page: 21804

Mr TRUSS (Minister for Agriculture, Fisheries and Forestry) (10:33 AM) —in reply—In summing up the Wool Services Privatisation Bill 2000 I thank those members who have made a contribution to the debate, particularly the honourable member for New England, who has just completed his remarks, and the other government members, who include some people with a deep personal knowledge of the wool industry: the honourable member for Wannon in particular, who has been heavily involved in the wool industry for a very long period of time; the honourable member for Corangamite, who obviously also has a significant understanding of these issues; and the honourable member for Eden-Monaro. That is just to mention some of those who have spoken with distinction on this bill and who have pointed out, quite correctly, the landmark nature of this legislation and the fact that this is the beginning of a new era for the wool industry. They have commented favourably upon the unanimity and the strong industry support that there is for this legislation and the opportunity that it provides to build a strong and vibrant industry into the future.

The wool industry is indeed one of Australia's great national industries. It has often been said that our country rode on the sheep's back and, while many question the closeness and the importance of the industry now to our nation's economy, the reality is that it still is a very significant exporter and a very significant contributor to the regional economies of many local communities and to our nation as a whole. The wool industry still has, in my view, a strong and vibrant future. Of course, like all industries, it needs to change, to better equip itself and to identify the directions that are appropriate for a new era. This legislation will help to create for the wool industry an environment in which it will be able to take control of its own destiny, take advantage of the opportunities that are there and, in a keen and focused way, identify the best possible future for wool growers and their products.

The industry has worked very cooperatively to reach the stage when this legislation can come to the parliament. The industry has a long history of dispute and a long history of disagreement internally about its affairs. Indeed, the hostility within the industry has often been a part of the destabilisation of its capacity. In this particular instance there has been a remarkable degree of unanimity. An `outbreak of peace' is a term that I have used to describe the way in which the industry has worked with the government to develop the legislation that is before the parliament today. It is for those reasons and because of the clear expression by the industry itself of its support for this legislation that I am absolutely amazed and staggered that the opposition intends to oppose this bill. I cannot understand how people can come into this place and be so out of touch with the clearly demonstrated will of the industry as a whole.

Indeed, I doubt that the honourable member for Corio is in support of the position that his party is taking on this piece of legislation. If you carefully read his speech, he acknowledges that the industry is supportive of the legislation. He knows that he has been personally lobbied by the industry to support this deal in all its detail. In fact, I will quote briefly from the remarks of the member for Corio. I hate quoting a member of the opposition but, in this particular case, I think it is important that I do so. He said:

I do note the strong desire expressed to me by wool industry representatives and individual wool growers to forge a new path independent of what they have seen in the past as government interference in their industry...

He acknowledges later in his speech that the industry have clearly indicated that they want this legislation supported. They want this bill to be passed. They have voted through the Wool Poll for change in the industry. They have indicated very strong support in the most democratically possible form, by a ballot of growers, that they want this legislation to proceed. Yet the opposition have indicated they are going to oppose it.

If you carefully read the opposition spokesman's speech, he provides no reason why the opposition are opposed to the bill. This is a classic case of opposition for opposition's sake. Instead of joining the spirit of unity in the industry at the present time to proceed with a new start for the wool industry, the opposition are simply going to oppose it for no logical reason. If you look carefully at the remarks of the opposition spokesman, and perhaps those even more vigorously expressed by the member for Paterson, it is clear that Labor's opposition, if there are any grounds for it at all, is a part of this ideological opposition they have towards industries taking control of their own destiny. Labor still seem to believe that governments know best, that unions know best; that industries should not have control of their destinies, should not have the opportunity to benefit from the profits that can be made by providing services to their own industry and should not have any say in the direction of their industry. That is simply not a position that this government advocates, and it is not a position supported by the industry. Let us make it abundantly clear: what the opposition are doing today in opposing this bill has no support whatsoever in the industry.

Mr St Clair —None at all.

Mr TRUSS —None at all, if I may take up the comments of the member for New England. There is no support within the industry for the position of the opposition and I find, therefore, their unwillingness to support this legislation to be quite appalling and a clear demonstration that Labor are out of touch with what is going on in the industry. My view that the member for Corio does not have his heart in opposing this legislation I think is also demonstrated in his own speech. I can only assume that he got rolled in caucus on this particular matter by Senators Forshaw and O'Brien. He seems to be fingering them as the people who are to blame for the opposition's position on this particular matter. I think the member for Corio knows that the industry wants this legislation. He knows that it is right, but it seems that a couple of Labor senators have been able to roll him in the caucus. Therefore, for mindless reasons, the opposition are going to oppose rather than join the national spirit of unity on this particular matter and support this legislation. If the opposition have so little confidence in their spokesman, he has no option but to join the Aboriginal affairs spokesman and move to the back bench—and, hopefully, somebody there will come to the front bench who can get across to the Labor Party the industry's wishes and deliver a satisfactory outcome from the opposition. The dreadful thought of the opposition ever coming to government again is certainly highlighted through the inability of the shadow spokesman for agriculture to deliver key support from the Labor Party on vital industry matters.

I turn now to matters raised specifically in the legislation. The passage of this bill will convert the Australian Wool Research and Promotion Organisation and its operating subsidiary, the Woolmark Co., to Corporations Law arrangements. Importantly, it gives wool growers ownership of the organisation that delivers industry services. The role of the government in the new arrangements will be reduced to oversighting the statutory funding mechanism and ensuring accountability for the funds provided to the new company. Passage of this legislation will endorse a reform process that has had unprecedented industry support. Following the clear message received from Wool Poll 2000, both government and industry have worked closely together to develop new arrangements that deliver key results, including greater industry control, transparency and contestability between the receipt and expenditure of industry funds as well as significantly reduced overall government involvement.

The interim advisory board and the wool growers advisory group have been instrumental in the development and implementation of the new arrangements. Once again, I place on record my appreciation and the government's appreciation for the ongoing efforts in this process. As I mentioned earlier, there has been a remarkable degree of unanimity within the industry in progressing along the lines outlined in this legislation. Australian Wool Services Ltd will be a Corporations Law holding company with two operating subsidiaries: Australian Wool Innovation Ltd will fund research and development activities and the Woolmark Co. will undertake commercial branding and provide technical services to industry. These arrangements provide flexibility to the new board of AWS to consider the demerger of the holding company and subsidiaries within 12 to 24 months, leaving the two subsidiaries as stand-alone commercial companies owned by shareholders. The legislation contains provisions that exempt the company and shareholders from certain taxes in relation to specific steps involved in the restructure process. The legislation also provides for the establishment of a wool levy to replace the current wool tax. This change will see the compulsory industry contribution arrangements harmonised with all other industry levies. The wool levy will continue at the same rate as the wool tax, currently three per cent. As I previously indicated, the rate of wool tax will be lowered further, to two per cent, as soon as possible after the commencement of the new arrangements. I anticipate this will occur on 1 July 2001.

Work continues to progress on the establishment of the dual class shareholder register. On 4 October, I launched the shareholder registration kit, which has now been sent out to Australian wool growers, inviting them to apply for shares in AWS. This is the first milestone in the development of the register, and I again encourage all wool growers to take advantage of this historic opportunity. I acknowledge that there are considerable challenges to establishing a wool grower register by the target date of 1 January 2001. Every effort is being made to meet this date; however, before giving my approval, I am committed to ensuring that the list of eligible wool growers, as provided for in the legislation, is reflective of eligible wool growers. I note that there will be a six-month period following conversion to the new arrangements to allow the shareholder base to be trued up to ensure that any incorrectly issued shares are corrected and that those with legitimate claim can receive their shares. Many growers will be able to add their AWS shares to their wool stock shares, demonstrating the ongoing shift towards grower ownership and control of the bodies they fund.

A number of issues were raised during the Senate Rural and Regional Affairs and Transport Legislation Committee's consideration of this legislation, and its report recommended three amendments to the bill prior to its passage. The committee recommended amendments to provide, firstly, that any funding of a wool grower representative body be prohibited by the constitution of the new company; secondly, that a conscience clause be inserted in the bill to enable interested wool growers to pay a levy towards R&D but refuse any shareholding or partnership involvement; and, thirdly, that the definition of shorn wool be amended to include harvested wool. The bill does not need amendment to achieve the objective of the report's recommendation, and I am happy to respond to those matters.

The Interim Advisory Board, the Woolgrowers Advisory Group and the Commonwealth are discussing how the issue of consultation funding for the wool grower representative bodies should be addressed. All agree that payments should not be made to agripolitical bodies by the new company and that the issue should be addressed either in the statutory funding agreement between the Commonwealth and the Australian Wool Services or in the constitution. Although this is still being settled, it clearly does not require an amendment to the bill. This is also consistent with the McLachlan task force report, which noted that it would be inappropriate for a Corporations Law company to make consultation payments to industry representative bodies.

Regarding the conscience clause, I am aware that there are a number of wool growers who have expressed their desire, due to their religious beliefs, not to become shareholders in the new company. Corporations Law provides that a person cannot become a shareholder without their consent, and the bill has been drafted consistent with the Corporations Law in this regard. An amendment to provide for a conscience clause is therefore not required. The regulations covering issue of shares will, however, make it clear that shares cannot be forced on any levy payer against their will. The bill provides for a list of eligible wool growers to be established that would provide the basis for shareholding in the new company and its proposed subsidiary. It is intended that eligible wool growers would have to apply for shares now and in future years. This provides a mechanism for those growers who do not want to become shareholders, as they can simply refrain from applying for their initial share entitlements. It is intended that the shareholder register of the R&D subsidiary company would generally reflect the wool levy payers of the day and that growers who pay wool levy in the three-year period prior to any voting event in the company would, upon application, be issued a share and have voting rights in proportion to wool levy payments. Those wool levy payers who do not hold shares will simply have the right to vote at levy rate ballots, which are expected to be held three-yearly. This does not mean that they will be required to vote, as I understand some wool growers also do not wish to vote at levy ballots, for the same reason as they do not wish to receive shares.

The wool levy will, from 1 January 2001, be imposed by regulations. It is those regulations that will contain the definition of wool that attracts the wool levy. It is proposed that at 1 January 2001 the definition would be aligned with the current shorn wool definition in the wool tax legislation. The legislation was constructed this way to allow the coverage of the wool levy to change from time to time, in accordance with the government's levy principles, without having to amend the primary legislation. Before changing the scope of the wool levy, the government would need to be convinced that the levy's principles had been met with regard to the change. I have instigated a review into expanding the definition of eligible wool to encompass non-shorn wool such as fellmongered wool, wool on skins and biologically harvested wool. Should this review indicate that there are legitimate reasons to expand the definition in line with the levy's principles, the government would amend the regulations to accommodate this. To legislate that all harvested wool should attract a levy would provide a less flexible system than that proposed in the legislation.

The report also recommended to the board and management of Australian Wool Services that all staff positions be made contestable within the first 12 months of the life of the new company. This would provide the accountability and discipline required to drive the necessary cultural changes for the new company to become a dynamic player in the future of the wool industry. This is, however, a matter for the new board to consider on its merits, once it has assessed the staffing needs of AWS. Mr Price has made it clear that the primary assets of AWS are its staff; therefore, the clean sweep approach as suggested by some would not be cost effective and may have implications for the development of the new industry. The opposition and Democrat members of the committee have submitted a dissenting report that the bill should not proceed until all relevant material, such as company constitutions, have been considered and the legal position of the Commonwealth in relation to Cape Wools liability is clarified.

The documents referred to are currently being drafted, and I am more than happy to make them available as soon as they are ready. The legal position of the Commonwealth in relation to Cape Wools liability is clear now, and it was clear at the time the bill was introduced. The only issue to be addressed is the proper management of any Commonwealth transfer of the liability to the Woolmark Co. to ensure the minimisation of any risk of an acquisition of the property on other than just terms in this process. Under the AWRAP Act, Cape Wools would not be able to access AWRAP assets within the wool research and development fund, and the conversion arrangements would take this into account. The Cape Wools liability exists whether or not AWRAP is privatised. If it is not privatised, the liability remains a liability of AWRAP. If it is privatised, it continues as a liability of AWS. I would suggest that the liability is manageable and that it should not delay the privatisation. The liability is no greater than 8.3 per cent of the value of some intellectual property that AWRAP fully owns. It is the value of this IP that is in dispute. The restructure plan will ensure that future wool levy proceeds are fully protected from any potential claim on the value of the commercial brands held by the Woolmark Co.

The report also states that successive ministers have failed to inform members and senators of the true state of AWRAP, as they are obliged to do. Again I suggest that the management of its liabilities is a commercial matter for the AWRAP board to handle. By raising these sensitive commercial matters in parliament, the opposition has placed in jeopardy the sensitive negotiations between AWRAP and Cape Wools, which were, as everyone knows, subject to confidentiality provisions of the IWS members' agreement.

There is still considerable work to be done if Australian Wool Services is to be operational by the beginning of next year. This legislation is an important milestone to facilitate the establishment of the new commercial company arrangements. It is essential that the legislation be dealt with promptly by the parliament and not delayed; otherwise, the hopes and aspirations of the industry to have its new company structures in place by 1 January 2001 will be placed in jeopardy. I encourage all members of parliament to support this legislation to give the industry a new beginning. (Time expired)

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.