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Wednesday, 10 June 1970


Mr STREET (Corangamite) - It is appropriate that the wool industry should be debated at this time, but before I make my own contribution to this debate I should like to refer to a matter raised by the honourable member for Dawson (Dr Patterson) and that is the question of the protective lobby in the United States of America and Japanese exports to that country. We need to get this in perspective. The Japanese domestic market absorbs 80% of her wool purchases. Only 20% is exported, and only a portion of that 20% goes to the United Slates. Japan exports large quantities of yarn and wool products to Russia and other countries. So while I agree that any increase in protection which might be applied in the United States is detrimental to Australia, we should keep in mind its relative importance. The wool industry is facing formidable problems but I agree with the Minister for Primary Industry (Mr Anthony) who said in his second reading speech:

.   . that wilh sound planning, the application of modern business techniques and management, combined with the resilience that wool growers have displayed over the years, the present problems can be tackled, and I believe, surmounted.

That phrase 'the application of modern business techniques and management' holds the key to the future of wool, and this legislation will go at least a part of the way to encourage and facilitate the adoption of these practices in the industry. It is this approach which will determine the ability of wool to survive in a modern industrial society; not the subsidy hand-out approach.

The honourable member for Dawson referred to the need for tariff protection for secondary industry on the one hand and subsidies for primary industries on the other. I would hope that the honourable member is not implying that our tariff structure is perfect and presents an ideal model for our primary industries to follow. I hope to be saying something on this subject in the near future in this House. The fact is that the policy of subsidies for primary products has in the long term been unsuccessful whenever and wherever it has been applied. I admit that subsidies on outputs have been introduced with the best intentions of helping industries, but it is a matter of established fact that they have ended up harming the industries they were designed to help and making eventual solutions to the industries' problems even more difficult. The experience of the last 20 years proves that they just do not work. With these historical examples to guide us, for goodness sake do not let us think that wool will be an exception. In the present critical economic situation facing the wool industry, there is a greater danger than usual that short term political considerations may override sound long term economic arguments.

Over the last few years the Minister has invariably displayed a courageous and responsible attitude to the many and pressing problems confronting him, and I have no doubt that he will continue to do so in the case of the wool industry. But there is no doubt that the wool industry operates under severe disabilities in Australia today, buying many of its inputs on a protected home market, facing steep cost rises due in large part to Government policies of rapid national economic development, and selling its outputs at the lowest price for 20 years on the open world market. It is reasonable that under such conditions the wool industry should look for and expect to receive some special consideration. As I have just explained, the great fallacy would be to believe that a subsidy would solve the problem. It would not. It would merely compound the problem and make the solution more difficult.

There is no doubt in my mind that the best, and indeed the only approach which will allow the wool growers to retain their independence and at the same time avoid the very real dangers of an open ended commitment for the taxpayer, is a reconstruction scheme on the lines broadly similar to the dairy industry reconstruction scheme recently passed by this House. That is, growers of proven managerial ability who wish to extend their scale of operations should have access to long term finance at reasonable interest rates, and I feel that provision should also be made for vocational re-training for those who wish to leave the industry. Certainly this will cost the taxpayer money, but the result will be a decline in dependence on the public purse rather than the inevitable increase in dependence which would be the result of the subsidy or cost compensation alternative approach.

I ask the Government as a matter of urgency to consider the introduction of a scheme such as I have outlined. It would restore confidence in the industry, provide some degree of stability for declining land values and prove of immense value in safeguarding the future of our towns and communities in wool growing areas.

I congratulate the Government on its generous and realistic offer to increase the Commonwealth's contribution to research and promotion by about $13m to $27m. This measure alone will relieve the grower of an average of about $1.20 per bale. I do not intend to refer in detail to the excellent work done by the various research organisations associated with the wool industry individually but 1 must mention a particularly outstanding example of cooperative effort. This was the invention and development of an entirely new technique and machine for wool spinning, or rather, wool twisting. The initial research and development work was done by the Commonwealth Scientific and Industrial Research Organisation Textile Research Laboratories at Belmont and the subsequent translation of its basic work into commercial practical hardware was done by Repco Ltd. As a result of that project Australia leads the world in this field of textile engineering and the competitive position of wool in the multi-textile battle has been improved.

I note from the Bill and the Minister's second reading speech that the allocation of research funds in the future will be rather more under the control of the Minister. This seems reasonable as the Government will be greatly increasing its contribution. 1 now ask the Minister whether the question of research into shearing, or perhaps more accurately research into getting wool off the sheep, will receive a high priority in research. In my opinion the threat posed to the wool industry by shearing costs is comparable to that posed by synthetic fibres. The percentage of the total wool clip represented by shearing costs is 4 times greater than it was 20 years ago and at the present rate could double again in 7 years. It is very doubtful whether the wool industry can survive this colossal burden. One of the largest components of the cost of shearing is wages and clearly it is unrealistic to expect that shearing industry wages will increase at a slower rate than that of the rest of the economy.

Indeed, having spent many hours at the wrong end of a down tube I have first hand appreciation of the hard work involved in the shearing operation. It seems to me that if shearing costs are to be significantly reduced there will have to be some fundamental re-thinking on the whole subject of getting wool off sheep. Certainly such innovations as the Tally Hi method of shearing, coated combs and cutters and improved hand pieces have been of some help but. they do not attack the tremendous problem of the labour cost. We have spent an enormous amount of money and research effort over the years in getting wool onto sheep; we now have reached a stage where it has become an urgent necessity to mount an equivalent programme of research into getting it off.

I am sure that all those interested in the industry will welcome the proposal to enable the Australian Wool Board to borrow funds to build wool complexes should present investigations show this to be desirable. I am convinced that integrated wool centres where wool can be received, objectively tested, stored, sold, dumped and prepared for shipping are an essential requirement for future cost savings in the industry.

The next question which arises is: What sort of organisation will be responsible for selling the wool clip in these complexes or centres? We have heard a great deal in recent times about the support from wool growers for a single selling or marketing authority. There are many opinions on what is meant by such an authority and what its powers should be. I do not intend to go into the subject tonight but what I would like to say is that while I appreciate the many potential advantages of such an authority if all the potential benefits are to be realised the management of the authority wil'l have to be of the very highest standard. I hope that if such an authority is formed every possible effort will be made to get the most able men in Australia to run it. It will need men with a wide knowledge of business and marketing techniques and, as a wool grower myself, it would not worry me if they came from outside the industry.

I want to make one final point. Monopolies of any kind are not conducive to the taking of dynamic initiatives, nor to quick reaction to a situation indicating the need for change. Therefore I feel it would be a considerable advantage if a private enterprise marketing organisation could be given the opportunity to operate in competition with any authority which might be established. If the private organisation could not show advantages for those who dealt with it, like any other business in similar circumstances, it would lose clients and probably its backers would lose their money. However if successful it would provide the eminently desirable element of competition in the marketing of our wool and a most valuable stimulus to innovation and efficiency in all aspects of the industry. I support the Bill and trust that my suggestions will receive consideration by the Government.







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