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Wednesday, 15 May 1957

Mr McMAHON (Lowe) (Minister for Primary Industry) . - by leave - I move -

That the bill be now read a second time.

The purpose of this bill is to provide funds for scientific and economic research in the wool industry. It gives effect to an agreement already reached between the Government and Australian wool-grower organizations on this matter. In introducing this bill, the Government is mindful of the vital role the wool industry has played and must continue to play in the development and expansion of our economy. Our export income from wool this year will be about £500,000,000, more than 50 per cent of all export earnings. Wool is also Australia's outstanding dollar earner, contributing over one-half of Australian dollar earnings from all merchandise exports. In the last five years, wool has accounted for 8 per cent, of the gross national production - easily the biggest single item.

The history of our balance of payments problem in recent years has largely been the history of wool. As wool prices fell from 80d. in 1 953-54 to 70d. and then to 60d. so our balance of payments problem increased with consequent severe tightening of import restrictions. This year with wool prices again back to 80d. we have been able to afford substantial relaxation of import restrictions. Behind these price movements there has been an impressive increase in the volume of wool produced and exported. Without this expanded volume our troubles might have been worse and our success of this year not so striking. As far as can be seen into the future, wool will maintain this dominant role in our balance of payments situation and through it our prospects for expansion and development. Wool is truly the mainspring of our economy. The value of research, both scientific and economic, in this great industry must be obvious. Its contribution can be seen in the marked production increases of recent years and it is true to say that, insofar as the quality of the clip has been improved, research has also influenced wool values. One of the most remarkable features of the development of our highly efficient wool industry is the extent of the achievement of the wool-growers themselves. It is to them that most of the credit for the development of the merino as a breed, which is renowned throughout the world, is due. Any money spent on research to aid an industry whose initiative has been such a major factor in carrying Australia's economic development to its present level is. in my view, money well spent.

The bill we are now considering results from a joint approach by the Government and the wool industry to the problem of ensuring adequate funds for wool research. The funds previously available would have been soon exhausted by even the modest scale of the present research programme. It was therefore decided to discuss with wool industry organizations what should be done to obtain the necessary funds. The facts were put before the industry representatives and the implications explained. It was pointed out that since 1945, when the present wool research programme was introduced, the funds provided for the programme had proved totally inadequate. These funds consisted of the Government's contribution of 2s. a bale of shorn wool produced in Australia paid into the Wool Research Trust Account established under the Wool Use Promotion Act 1945 and the interest from the investment of moneys in the Wool Industry Fund. The latter fund was set up in 1946 with a capital of approximately £7,000,000 from moneys accumulated by the war-time Central Wool Committee from its activities in nonparticipating wool, wool tops and sheepskins under the war-time acquisition scheme. However, by 1953 the funds thus available were not sufficient to meet the increased costs of the wool research programme and the deficits were covered by drawing on capital from the Wool Industry Fund. This fund has been reduced from a peak of £7,800,000 in June, 1952, to £6,700,000 in June, 1956, and an estimated £6,100,000 in June, 1957. On the basis of planned expenditure, the whole Wool Industry Fund would disappear within seven years. The rapid expansion in expenditure on wool research stemmed from both the extension of the wool research programme and the rise in costs which has occurred since 1945.

The purpose of this legislation is to ensure a continuing flow of funds sufficient to " finance a level of research commensurate with the importance of this industry. Continuity is essential since many projects are of a long-term nature. Quite large sums have already been spent on laboratories, buildings, field stations and the like and, if full value is to be realized from this investment, operational funds must be available. There is also the very serious problem of continuity of employment for the highly qualified research staff. Above all, if wool is to maintain a worth-while share of the textile fibre market in the face of competition from artificial fibres, it is imperative that the research programme be expanded. The Commonwealth Scientific and Industrial Research Organization, which is responsible for the greatest part of the wool research programme, has made it clear that, unless additional funds are made available, the present programme will have to be heavily cut. The loss to the wool industry and to our economy which this would involve will be appreciated if we recall the benefits which the work of the C.S.I.R.O., often in association with universities and other bodies, has already brought. The introduction of myxomatosis is perhaps the most spectacular single scientific advance with which the C.S.I.R.O. has been associated. There are few people who are not aware of what this has meant to Australia in terms of added rural production and export income.

Large tracts of hitherto little-used land have been brought to high levels of production by the application of trace elements in which they were deficient. Millions of acres have been sown down to improved pastures over the last ten years. There has been a steady improvement in our knowledge and in the control of sheep diseases. More recently, publicity has been given to the work on the control of water evaporation in semi-arid areas, which could be of vital importance to wool-growers. In the field of wool textile research, the development of scourable branding fluids has enabled wool textile manufacturers to effect considerable savings which have been reflected in higher prices paid for tar-free wool. New techniques and processes have been developed in the fields of wool scouring, carbonizing and fellmongering. Promising results have been obtained in work on moth-proofing, shrink-proofing and permanent pleating of wool fabrics.

The contributions made by scientific research to the prosperity of the wool industry are widely appreciated. But the role of economic research is no less essential. Not all the results of scientific research have immediate economic application. On the production side, there is a continuous need for improving farm management methods and for adapting them to the changing technological environment. There is a continuous need for up-to-date information and economic analysis of the implications of the research findings, for example, the economics of pasture improvement, the relative profitability of fat lamb raising as against merino wool-growing on such pastures, the economics of drought feeding, to name but a few. At the same time, on the consumption side, the need is ever present for accurate study of the changing trends of consumers' expenditures, the effect on such expenditures of changes in income and changes in tastes as they affect the demand for wool. Especially is it of vital importance to keep in close touch with the latest developments in synthetic fibres and the economic implications for the wool industry of the ever-sharpening competition between wool and the man-made products. Investigations carried out by the Bureau of Agricultural Economics in recent years have done much to improve our understanding of the nature of the competition between wool and synthetic fibres and to assist us to shape production and research methods in such a way as to meet that threat. Even with these developments over the whole range of wool research, it is imperative that efforts continue to increase the quantity and quality of our wool clip.

I invite the attention cf the House to the specific provisions of the bill and the alterations, which will be required in the existing legislation -

(a)   It is proposed to combine the various sources of income into one fund to be known as the Wool Research Trust Fund. In this fund will be included the moneys at present standing to the credit of the Wool Research Trust Account and the Wool Industry Fund. In addition, the fund will receive the increased Government contribution of 2s. a bale, as well as the amount previously contributed, at the rate of 2s. a bale, to the Wool Research Trust Account; that is a total of 4s. a bale contributed by the Government, and the new wool-grower contribution of 2s. a bale. Provision will also be made for any additional sources of income which may become available for research purposes in the future. Based on the current level of wool production, the Wool Research Trust Fund should receive about £1,700,000 each year. Since this is slightly in excess of the current level of expenditure, it should prove adequate for the current programme and at the same time allow some room for expansion. As the size of the clip grows, so will the income of the fund.

(b)   Provision is made for all moneys not required for immediate expenditure to be invested in securities guaranteed by the Commonwealth or a State. The bill stipulates that the Wool Research Trust Fund will be used only for wool research and extension work. Expenditure from the fund will be incurred only after recommendations by the Wool Research Committee, and after approval of those recommendations by the Minister for Primary Industry in consultation with the Minister in charge of the Commonwealth Scientific and Industrial Research Organization. Moneys from the fund can be used for scientific and economic research in connexion with the production and use of wool and wool products; the publication of information; the training of persons for the benefit of the wool industry; and the application of the results of research - that is to say, in extension work. In addition, the Wool Research Committee will be empowered to engage consultants to advise it in its work.

(c)   It is proposed that a new Wool Research. Committee will be. ser up, com> prising nine members appointed by the Minister for Primary Industry, and. to hold office during his pleasure. The members will consist of the chairman, who will be a representative of the Department of Primary Industry; two representatives nominated by the Australian Woolgrowers Council;, two representatives nominated by the Australian Wool and Meat Producers Federation; the chairman of the Australian Wool Bureau; a representative of the Associated Woollen and Worsted Textile Manufacturers of Australia; a representative nominated, by the universities in Australia which engage in research relating, to the wool industry; and a representative nominated by the Commonwealth Scientific and Industrial Research Organization. Consideration has been given to the requests of several organizations that they be permitted to nominate representatives to the committee. The requests have been carefully considered, but the Government has come to the conclusion that the composition of the committee mentioned in the bill is both adequate and representative.

New arrangements for wool research and extension already outlined will necessitate the repeal of the Wool Industry Fund Act 1946, and provision' is made for this in the bill. In addition, the existing Wool Tax Acts Nos. 1 and 2 of 1952 will have to be repealed and replaced by new acts permitting the collection of the industry levy for wool research in addition to the present wool promotion levy. Consequential amendments will need to be made to the Wool Tax Assessment Act 1936-1953, and the Wool Use Promotion Act 1953 also will require some amendments in this connexion. Separate bills will be introduced covering these amendments.

In the course of negotiations, the Australian Woolgrowers Council expressed the desire that the rate of the levy be reviewed at the end of June, 1960. This is a reasonable request, and the Government proposes to undertake this review in due course, and to take into account any recommendations then made by the wool-growers' organizations. The Australian Wool and Meat Producers Federation wishes to see the resources of the Wool Industry Fund maintained at the level of at least £5,000,000 in the event of the wool industry finding itself in difficult times with growers desiring to suspend their contributions temporarily. However, it will be the function of the Wool Research Committee, which will have a majority of wool-growers, to recommend how money should be expended, and it will be in their hands to determine whether the capital of the new fund is drawn upon or run down.

In conclusion, I emphasize that in the battle of the fibres, scientific research geared to strengthening the position of wool is a major weapon. Synthetic fibre interests are spending an estimated £20,000,000 a year on research, and development of their fibres. Wool interests - and this means Australia - must match this type of programme. I consider that the provision of the additional finance for wool research by the Government and the industry is a small premium to pay for what may be justly called an insurance of national prosperity and future economic development. In the broad direction of the wool research programme, the new Wool Research Committee will undertake a task of vital importance and great responsibility. I am confident that it will discharge this task in the best interests of the wool-growers and the community. I commend the bill to honorable members.

Debate (on motion by Mr. Pollard) adjourned.

WOOL TAX BILLS (Nos. 1 and 2) 1957.

In Committee of Ways and Means:

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