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Friday, 21 June 1946

Mr HUTCHINSON (Deakin) .- I direct attention to a matter of unusual importance. It relates to an amount of £7,000,000, which has accumulated in the Central Wool Committee's hands to date. That sum, it is expected, will be somewhat greater by the end of June next. To explain this matter, I must first point out that these moneys have no relation to moneys that arose out of the war-time wool agreement between the United Kingdom and Australia. When war broke put, the price of Australian wool was substantially below the cost of production. Knowing that wool would be an important war commodity, the Menzies government approached the British Government to enter into a scheme which would mean that the entire Australian wool clip would be lifted at a certain price. The British Government at the time offered a price somewhat higher than the ruling Australian level of prices, but still an unpayable price. Undoubtedly the idea behind_ the British Government's offer was that, being engaged in a war which it knew would be very costly, it did not desire to buy commodities at too high a price, as a portion of the price would be subject to war-time inflation of values.

Lengthy discussions took place between the two governments. Eventually, the then Prime Minister, Mr. Menzies, cabled direct to the Prime Minister of Great Britain pointing out that Australia could not embark upon a major war while the commodity most responsible for its economy was on an unpayable basis. The result was that the British Government gave to Australia a price representing an increase of approximately 35 per cent, on the levels of values, then ruling. In that agreement, there were also two other factors. First, the agreement was open to further adjustment, and prices would be increased if that became necessary. Secondly, any profits derived from the sale of these wools to foreign countries would be shared between the Australian and British governments. I emphasize the word "governments". Later the price was raised to approximately 15½d. per lb. - the average for the entire Australian clip. Although the profits arising from the sales of wool to foreign countries were to be shared between the British and Australian Governments, the Minister for Commerce and Agriculture in the Menzies Government made it plain on the 22nd November, 1939 thatthe Commonwealth's share would be paid to the Australian wool-growers in proportion to their contributions to the wool scheme during its operation. Again on the 17th November, 1942 the then Prime Minister, Mr. Curtin, stated that it would not be possible to take an account of the profits until the purchase arrangement was wound up, but in reply to a question, he said, that the Australian share of the profits would be distributed among the growers in proportion to their contributions to the whole scheme during its operations. Therefore, a definite assurance was given by both the Menzies Government and the Curtin Government that a share of the profits arising from sales to foreign countries would be handed over to Australian wool-growers on a proportional basis. The old appraisement scheme has been terminated and a new method of marketing has begun. This new method entails a joint organization with subsidiaries in the Dominions, the subsidiary body in, Australia being the Austraiian Wool Realization Committee. Because of certain factors which are well known to honorable members, there was a total profit of about £20,000,000 in hand at the time when the old appraisement scheme was terminated. This profit arose from sales of wool by Great Britain to foreign coUn-' tries, and Australia's share amounted to £10,000,000. A distribution could not be made at that time, because the final profit could not be determined until the last bale of accumulated stocks had been sold. Under the new scheme, Australia bought into the £100,000,000 stock-pile with its share of the profits and with £30,000,000 advanced by the Commonwealth Government. This represented a half-share in the accumulated stock-pile of between 10,000,000 and 11,000,000 bales. By this means, the £10,000,000 accrued profit was merged into the new scheme. Under this scheme, the Commonwealth Government and the British Government will share any resultant loss or profit. However, the cost of any interest charges involved in buying into the stock-pile or of any wool bought in by the joint organization, or its subsidiary in Australia, to preserve a reserve price will be borne by Australian wool-growers, who also will be required to pay one-half of the administration costs.

I come now to the fund of approximately £7,000,000 that has been accumulated by the Central Wool Committee, which will be replaced by the Australian Wool Realization Committee. This fund has accumulated under different headings. The first heading is the flat rate adjustment on skin wools, and the amount that has accumulated on this account is £2,400,000. Under the war-time appraisement scheme, there was a table of limits according to which wools were appraised. If, at the end of the vear, the average wool price received by a grower was not equivalent to the flat rate paid by the British Government an adjustment was made to increase his. cheque to that amount. With skin wools there was no flat rate adjustment. They were sold according to the table of limits only. Therefore there was a difference between the price paid according to the table of limits and . the ultimate flat rate price paid by the British Government, which to-day amounts to £2,400,000. The next heading under which money has been accumulated is the deferred price paid in respect of the wool content of manufactured goods exported from Australia. The total under this heading is £1,550,000. Wool sold to the Australian manufacturers was not covered by the agreement. It was sold to the manufacturers at a price somewhat lower than the agreement price. The grower was paid according to the table of limits, as distinct from the flat rate adjustment. When the manufacturers made that wool into cloth and exported the cloth, they made a deferred payment to the Central Wool Committee. By this means the total price paid for the wool was brought up to the equivalent of the export issue price. The third heading is the surplus derived from wool tops, noils and waste. When the agreement was entered into, wool tops, noils and waste were subject to control iri Australia, and the Central Wool Committee allowed to top-makers the cost of raw wool used to manufacture tops, plus interest and other charges, including a charge for combing, which returned to the top-makers a reasonable margin of profit. In other words, the wool was made available to the top-makers, their costs were considered, and they were allowed a charge for combing and a reasonable margin of profit. If these wools were exported, any surplus was again paid into the Central Wool Committee's fund. This has accumulated over the years into a surplus of approximately £2,700,000. Thus, the moneys accumulated in the Central- Wool Committee's fund are approximately £2,400,000 for skin-wools, £1,550,000 in respect of the deferred price on the wool content of goods exported, and £2,700,000, which is the surplus arising out of the control of tops, noils and waste, making a grand total of about £7,000,000. The balance of the £7,000,000 is made up of interest payments in respect of funds invested by the Central Wool Committee. This large amount may be substantially increased by the end of June next. The Government recently stated that this money would not go into Consolidated Revenue. It represents profits derived from Australian wool produced during the war, as apart from wool appraised under the appraisement scheme that existed between the Australian Government and the British Government. The Government has decided that this money shall be used for promotion of the use of wool and research into the wool industry, so that the industry will benefit in' the long run. A statement to that effect was made by the Minister for Post-war Reconstruction in this House in* April of this year. However, the Minister for Commerce and Agriculture recently said that no definite decision has been made as to the use of the money and that woolgrowers' organizations would be taken into consultation ' before means of expending the fund were decided upon. There is a substantial difference between the two statements. A difference of opinion between the Minister for Commerce and Agriculture and the Minister for Post-war Reconstruction is not unusual. I trust that a great deal of consideration will be given to this matter before any definite decision is made, and I certainly hope that every major wool-growers' organization in Australia will be asked to express an opinion before any distribution of the fund is made. The money rightly belongs to the wool-growers of Australia. It represents approximately one-tenth of the value of a very large Australian clip. The forthcoming clip is expected to yield between £70,000,000 'and £80,000,000. This money would be very welcome to Australian wool-growers, in view of the fact that costs rose alarmingly during the war years, that they are still producing on the basis of the values that existed during the 1st World War-- a basis on which no other industry in this country is conducting its operations; nor could it - and that .the most calamitous drought in Australian history has occurred during the last two years. [Extension of time granted.'] If. it is to be expended on research, the question arises: How quickly could it be spent? Persons having some knowledge of the technical processes of wool production, and possessing other necessary qualifications, would have to be engaged and trained. Therefore, a great deal of delay would occur. Another point arises. Last year, this House passed a bill dealing with wool use promotion and research. Under that legislation, the wool-grower voluntarily taxed himself to provide approximately £350,000 per annum for that purpose, and the Government contributed an equal amount. The money was to be raised , on the basis of a fixed amount a bale. Therefore, the amount raised would rise or fall according to the size of the clip. The total amount to be derived by. this means, together with the Government contribution, was approximately £650,0.00 a year. That is a large expenditure on wool use promotion and research by a country like Australia. Is the £7,000,000 previously mentioned also te be devoted to that purpose; if so, is 1752 Adjournment.[RE PRESENT ATI V ES.] Adjournment. the present collection of funds to be continued concurrently with the expenditure of it? I suggest that this £7,000,000 be not used for the purpose of wool use promotionand research. The moneys raised under the provisions of the Wool Use Promotion Act are sufficient for that purpose. If they are not, the matter can be re-examined by the Government and the wool-growing interests. A satisfactory agreement could be made. This £7,000,000 should be distributed among wool-growers on a pro rata basis. That is the basis which the Menzies and Curtin Governments had in mind, with profits arising out of the appraisement scheme, and is the right method to adopt. The expenditure of such a huge amount on wool use promotion and research would occupy a lengthy period, because of the lack of trained personnel. After all, the wool-growers have upheld the war economy of this country as they previously upheld its economy in times of peace.

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