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Tuesday, 5 December 2000
Page: 20700

Senator TROETH (Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) (5:58 PM) —The purpose and the operation of this Wool Services Privatisation Bill 2000 have been thoroughly canvassed in the House and here in the Senate. I do not intend to go into detail on these matters other than to say that the conversion of the Australian Wool Research and Promotion Organisation—known as AWRAP—and its subsidiary, the Woolmark Company, to Corporations Law arrangements does give wool growers ownership over the organisation which delivers their industry's services. The government's role will be significantly reduced to oversighting the statutory funding mechanism and ensuring accountability for the funds provided to the new companies. That is what wool growers have been calling for. Passage of the bill will allow it to proceed.

I propose to deal briefly with some matters and then move to those questions that have been asked, which I will endeavour to deal with in my speech during the second reading stage and in the committee stage. If I have not got up to dealing with any of those matters or there are further questions, I will endeavour to deal with them then. The minister has already responded to the issues raised in the Senate Rural and Regional Affairs and Transport Committee's report during the debate in the House of Representatives. I think the minister has made it very clear that none of the proposed amendments to the bill are necessary. The statutory funding agreement prohibits the new company from funding agripolitical activity. The shareholder eligibility regulations make it clear that no-one can be forced to receive shares against their will, and the government has instituted a review into the coverage of the wool levy to include non-shorn wool. I do not intend to go over that ground again, but I am happy to answer specific questions on the report's findings.

The opposition have made it clear that they will not support the bill until flesh has been put on what they describe as its bones. This flesh has now been provided to the Senate committee in draft form by way of the constitutions for Australian Wool Services Ltd and its subsidiaries, Australian Wool Innovation Ltd and the Woolmark Company. The statutory funding agreement, referred to as the contract in the bill, provides the details of accountability and reporting requirements to be placed on the new company for it to receive the wool levy. The Senate committee has been provided with the key regulations flowing from the bill, which set out the eligibility requirements for shareholding under the new arrangements. They provide for the new levy to replace the existing wool tax. They set the rules for polls to determine the future rate of wool levy, and they determine the formula for calculating the Commonwealth's matching contribution for eligible research and development projects.

As the Minister for Agriculture, Fisheries and Forestry advised on 1 November, the legal position of the Commonwealth in relation to the Cape Wools liability is clear. The Commonwealth will transfer the liability to the new company so as to ensure that the interests of all parties are not altered as a result. Importantly, under the AWRAP Act, Cape Wools would not be able to access AWRAP assets within the Wool Research and Development Fund. The conversion arrangements continue to take this into account. The Cape Wools liability exists now as a liability of AWRAP. If it is not privatised, the liability remains a liability of AWRAP. If it is privatised, it continues as a liability of Australian Wool Services. The liability is manageable and the industry is quite clear 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, and it is the value of this intellectual property that is in dispute.

The management of AWRAP's liabilities will ultimately be a commercial matter for the new company structure to address. I understand that negotiations are proceeding well with Cape Wools, and the government has every confidence that Mr Tony Sherlock, the AWRAP chairman, and Mr Rodney Price, the chairman designate of the new company, will conclude the negotiations with the South Africans on a reasonable and satisfactory basis. I would simply say that the parliament should respect the wool growers' publicly stated wish that this matter be left in the capable hands of Mr Price and Mr Sherlock. Progress continues on the establishment of the dual-class shareholder register. As of this week, around 35,000 wool growers have applied for shares in the new company. That is a very encouraging result, and it sends a clear message that wool growers are strongly supportive of these arrangements.

In relation to the boards of the new companies, Mr Rodney Price has been appointed chairman of the inaugural board, and the minister expects to have discussions shortly with the IAB on the final nomination of board members. Appointments to the inaugural boards will be made in consultation with the Wool Growers Advisory Group. After the establishment of the new companies, board appointments will of course be made under Corporations Law procedures and accountable to the companies' shareholders. The IAB and the Wool Growers Advisory Group continue to work tirelessly in developing the new arrangements. Once again, I pass on the government's thanks for their efforts to date. The spirit in which this whole process has been undertaken is a testimony to how industry and government, as well as public and private sectors, can work.

The momentum to meet the 1 January 2001 target for the establishment of the new arrangements continues to build. Passage of this legislation now will make that objective all the more achievable. Further delays will put pressure on the range of activities which are currently running parallel but are ultimately subject to passage of this bill as they approach resolution in the lead-up to the first day of private sector provision of wool industry services. Over three-quarters of Australian wool growers have now registered interest in the new company. If we delay passage of the bill, it has the effect of preventing wool growers from receiving shares in their new company—something that they have been calling for for some time now.

I will now deal with some of the questions that have been raised in speeches during the second reading debate and, as I said, if there is anything I do not have time to cover or if there are further questions, I am sure we will be able to deal with those in committee. Firstly, Senator Harris remarked on what he considered the undemocratic nature of the appointment of the board. As with other agricultural industries, that board will be elected after the first annual general meeting of the new company. But I must say to you that, in my experience of dealing with this and other agricultural industries, you may find that growers do not necessarily want what you would call a representative board. They want a board that has a wide base of skills, and that is something that any truly competitive private sector commercial board needs in this day and age. We would not want a board, for instance, composed entirely of wool growers. We need another much wider aspect of business experience, commercial dealing, intellectual property aspects and other aspects of board experience brought into this. I imagine that that is what wool growers will be looking at when they move to elect a board.

Senator Woodley also had some questions, firstly, regarding the provision for those growers who feel that they have been disadvantaged because of their experience with ovine Johne's disease. This matter, Senator Woodley, has been raised with the Interim Advisory Board, and it has already undertaken to consider this matter compassionately. The constitution of the new company enables the board to consider such exceptional circumstances and, with that particular aspect of the sheep industry at the moment, I imagine that it would move to do so.

Senator O'Brien also made a couple of comments which I would like to deal with. For instance, he referred to the fact that the Cape Wools business was a cost of conversion. The Cape Wools liability existed irrespective of the conversion. As I think even you pointed out, it was a line item in an annual report, regardless whether anybody actually took it up. So it was a matter that existed whether or not we then moved to conversion. Therefore, it cannot be considered a cost of conversion. I should also tell you that Mr Sutton was not appointed to the board of AWRAP—you referred to Mr Paul Sutton—until after the minister agreed to the conversion of the IWS to AWRAP, at which time he was the departmental adviser. Therefore, he had no conflict of interest, as was implied by you. I would like to point that out.

I will now deal with some of the other questions. I think Senator Sandy Macdonald made a point regarding the wool grower response to wool share. I have already indicated the number of applications that have been made. In relation to the supply of documents identified in the Senate committee inquiry, regarding the offer by Mr Price to forward a statement of accounts ending September 2000 to the committee, I am not aware of this matter but I can ask the department to follow it up. Again, if Mr Sherlock has promised a summary of matters relating to AWRAP and Cape Wools, then we will also follow that up through the department. Some other questions may come up in committee as well. I might leave it there for the moment. I am sure that, as you suggested in your earlier remarks, we will be dealing with some of these other matters at a later stage. I commend the bill to the Senate and I thank honourable senators for their comments.

Question resolved in the affirmative.

Bill read a second time.