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Tuesday, 23 July 1946

Mr CHIFLEY (Macquarie) (Prime Minister and Treasurer) . - by leave - I move -

That thebill be now read a second time.

The purpose of the bill is to provide for the application of certain moneys which had accumulated in the hands of the Central Wool Committee during the war in respect of activities outside the provisions of the wool purchase agreement with the United Kingdom Government. This subject was dealt with at some length in a statement in this House by the Minister for Post-war

Reconstruction (Mr. Dedman) on the 11th April last. The Minister, after explaining how the moneys had accumulated, announced that the Government had decided that they would not be taken into Consolidated Revenue and would not be distributed to individual growers, fellmongers,. top-makers and manufacturers concerned, but would be used for the benefit of the wool industry, particularly for research and promotion of the use of wool. Proposals had, at the time, been drawn up to use the fund in those directions, and it was announced that these would be discussed with representatives of wool-growers. I shall mention briefly some of the main points of that statement.

Under the wool purchase arrangement, the United Kingdom Government agreed to purchase the Australian wool clip for the period of the war and one clip thereafter. The arrangement covered the whole of the clip, with the exception of wool used by Australian manufacturers. For three years, the contract price waa a flat rate of 13.4375d., Australian, per lb. Later, in 1942, as a result of representations by the Commonwealth Government, the United Kingdom Government agreed to an increase of 15 per cent., which raised the price to the satisfactory figure of 15.453125d. per lb. Growers have been paid the contract price in respect of wool bought by the United Kingdom Government, and a similar price in respect of wool' sold to Australian manufacturers. Each grower received initially the appraised price according to a " Table of Limits ", which recognized a price differential as between various qualities, and at the end of each season he also received a supplementary payment to bring the average appraised price up to the flat rate contract price. As between the United Kingdom Government and the Commonwealth, it was agreed that any final profit made by the United Kingdom Government on sales of raw wool for use outside the United Kingdom should be divided equally between the two governments.

Mr Menzies - In saying " It was agreed I take it the right honorable gentleman refers to the original agreement made in 1939 or 1940?

Mr CHIFLEY - That is correct.

Mr Menzies - Would it be possible to have that agreement tabled before the debate on the bill is resumed?

Mr CHIFLEY - I shall arrange for that to be done.

The Central Wool Committee, in addition to handling the wool purchase arrangement for the United Kingdom Government, has carried out other activities which have resulted in certain moneys being collected on behalf of the Commonwealth Government. These moneys have mainly arisen from the following sources: -


These are provisional figures, and other transactions- will probably bring the net Accumulation to over £7,000,000.

When the "wool purchase arrangement was commenced in 1939 it was announced by the then Prime Minister (Mr. Menzies) that wool derived from sheepskins would not participate in any adjustment over and above the appraised price, which was to be the final and only price paid for such wool. This was necessary in order to enable the fellmonger, when purchasing woolled sheepskins to fix a firm price for the wool content of such sheepskins. This was 'confirmed each season to all concerned by the Central Wool Committee. The amount of £2,400,000 represents the difference between the appraised price paid to fellmongers, and the purchase price received from the United Kingdom Government, and covers transactions of six seasons. .

The control of the export of wool tops, noils and waste was vested in the. Central Wool Committee under National Security Regulations. The overseas market in wool tops to be supplied from Australia increased mainly because of the inability of the United Kingdom to supply India during the war. Tops.makers were paid the cost of raw wool, plus other charges and profit, and the excess price obtained from overseas buyers was collected by the Central Wool Committee. Although this involved exports, the United Kingdom Government intimated that any moneys derived from these operations, were for the account of the Commonwealth Government.

As I have already mentioned, raw wool used by Australian manufacturers was excluded from the wool purchase agreement, and the manufacturers obtained their wool at a price lower than the export issue price ". The growers were, however, paid the United Kingdom contract price. When woollen goods were exported, the' exporter was not allowed to retain the benefit of the price concession, and was required to pay to the Central Wool Committee a deferred payment representing the difference between the amount, actually paid for wool and the " export issue price". Although this transaction related to exports, the United Kingdom Government stated that it was agreeable to the whole of this deferred payment being retained by the Commonwealth Government.

I now come to the discussions which recently took place between the governments and the growers. The representatives of both grower organizations put forward the request that the moneys should be distributed to the growers who had supplied wool under the war-time purchase plan from 1939 to 1946. For the . reasons already outlined, the Government indicated that it was not prepared to accede to that request. Other representations were made that the moneys should bc used as capital in the finance of the new Wool Disposal Plan, subject to the recognition of ownership by the wool suppliers of 1939-46. The Government did not accept this suggestion. I wish to make it clear to all concerned that under the wool purchase arrangement with the United Kingdom Government the growers received the" full contract price each season; the moneys now in question arose from activities on behalf of the Commonwealth Government quite outside that arrangement. As government moneys they must, under the constitution, be paid in the first place to Consolidated Revenue; the Government cannot, after full consideration of all the facts, see any justification for distribution to the growers, or for recognition of the claim for ownership by growers. As a matter of interest, I think a good case could have been made for the payment of the moneys in question to Consolidated Revenue, as they accrued, for use in war finance. In that event there would have been no accumulation in the hands of the Central Wool Committee, and the present claim by growers would probably not have arisen. However, the Government is prepared to adhere to its earlier decision not to retain the moneys in Consolidated Revenue, but to ask Parliament to appropriate them to a trust fund for the benefit of theindustry, and the bill contains proposals to that end.

The bill sets out the purposes to which the fund may be applied. This follows generally the lines recommended by a departmental committee on which there was a representative of the Wool Consultative Council and representatives of the Council for Scientific and Industrial Research. The fund may be invested in Commonwealth or State securities, and the capital and income of the fund may be applied for purposes associated with the wool industry, including in particular -

(i)   Research in the production and use of wool. It may be used forcapital or current expenditure, and will supplement the existing provision of £300,000 a year.

(ii)   Promotion by publicity or otherwise of the use of wool throughout the world.

(iii)   Assisting the marketing of wool.

(iv)   Provision of temporary relief to the industry. For instance, if prices fall some relief may be given in the contributory charge under the wool disposals plan.

The bill also contains a provision that some part of the moneys referred to may be applied in meeting wholly or partly any ultimate loss the Commonwealth may incur under the wool disposals plan. Any decision under this clause would, of course, be subject to full consideration of the needs for research and promotion of the use of wool. The application of moneys in these directions will be made by the Treasurer, after consultation with other Ministers who are concerned with . the wool industry. In response to a request from growers at the recent conference, their representatives will be given the opportunity of making representations to Ministers ' through the Wool Consultative Council. 1 commend the bill to honorable members.

Debate (on motion by Mr. Menzjes) adjourned.

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