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Wednesday, 10 June 1970

Mr IRWIN (Mitchell) (3:17 AM) - I have received many, letters from various parts of Australia, as well as one from New Zealand, congratulating me on the strong protest which 1 have been making against the injustice of foisting the proposed wool marketing authority on the producers. These letters form the basis of what I am going to say. I have even received a letter from Sir Ewen Waterman, who is present in the gallery. At a later stage I shall refer to a copy of a speech which he made in Paris. The Bill which is before the House has 3 specific purposes. An extra $30m is to be allocated to research. The structure of the Australian Wool Board is to be altered. The Bill will also provide funds for renovating some of the 280 buildings which are owned by the Wool- Board. I shall endeavour to get through my speech as quickly as possible. I repeat that my remarks have been compiled from the letters which I have received from famous names in the wool industry, including some big producers.

The economic problems of the wool growing industry are multilateral and no simple solution to them is possible. A multi-pronged attack is needed in which all problem areas are involved and in which the Government, wool growers and the wool trade generally collaborate in an adaptive relationship to ensure the long term effectiveness of the industry. The adaptive approach seeks the means for adjustment to economic reality by the introduction of policies which would promote reorganisation with the least hurtful impact on persons or property.

Positive proposals for the beneficial restructuring of the wool growing industry will be possible only when all available research capabilities are harnessed to the task of preparing a complete basis from which conclusions and policies can be confidently drawn. The research work done by the Committee for the Economic Development of Australia, though comprehensive, has revealed substantial gaps. Research is at present dispersed and uncoordinated. Funds for research work seem not to be related to priorities nor directed to the most urgent problems. At a time of dynamic growth in the economy generally the wool grower has been caught in a vice-like squeeze of falling prices and inflating costs.- Solutions to his problems will not be found by chance. Temporising, or working by hunch, wIll aggravate the imbalance. The expedients of price subsidies, which are merely temporary palliatives, inevitably defeat themselves and divert research and action from the fundamental issues.

Australia's rural industries are now sharing the experience of their counterparts in other countries with developed and powerful industrial complexes. Price support schemes have been proved inappropriate as the means for maintaining a balance between the primary and secondary sectors. In the United Kingdom, United States of America, and Europe rural policy has followed the protectionist line. The history of farm policy in these countries is evidence of the inadequacy of this approach. Protective measures do nothing to assist, and in the longer term retard the adjustments which would permit those remaining in rural industry to approximate returns on resources, labour and capital earned in the economy generally. The experience of others should not be discounted when considering the present problems of Australia's wool growers.

CEDA, in its policy statement on the wool industry, has urged Government and the industry to recognise the real causes of current problems, and the justification for structural changes implicit in them. Treating the symptoms instead of diagnosing the disease will deny opportunities for policy formation in the interests of the wool industry and the economy in general. For these reasons CEDA has proposed that the Federal Government should take the initiative in establishing a standing advisory committee on the wool industry. This committee would assume responsibility for the direction of production and economic research; co-ordinate research into the practical and economical problems of the industry; arrange for particular research projects to be undertaken; and evaluate research findings. In these responsibilities the standing advisory committee would utilise all existing research capabilities and would collaborate with wool grower organisations. The standing advisory committee would advise the Federal Government of its findings and assist in the formulation of future plans for the industry. CEDA considers that well based, long term policies for the wool growing industry cannot be established unless these research processes are instituted.

Re-structuring of the wool growing industry does not mean simply the creating of larger units of production. All factors which may influence the economic production of good quality wool must be critically reviewed, both those over which the grower exercises no control and those which relate to the growers' management. Among those factors requiring review and outside the direct influence of the grower, CEDA has included the following: rationalisation of transport costs and taxes to reduce external cost pressures; reduction of the disruptive impact of death duties to prevent the breakup of properties of efficient size; and amendment of State land laws to permit ready sale and transfer of land by the elimination of restrictive land titles. CEDA is proposing that the barriers to structural change be removed and that the processes of adjustment be promoted by a greater emphasis on applied economic research; more effective extension work and industry education; measures to speed up mobility into and out of the industry, with part of the adjustment costs to be borne by the Government; selective taxation incentives; and long term project loans. CEDA emphasises also that growers can contribute directly to the continuing effectiveness of the wool industry by adopting modern management techniques and improved methods of sheep husbandry.

A restructuring plan would take time for effective implementation, but action could be initiated immediately in some of the areas nominated by CEDA. Any immediate action on specific aspects should be consistent with a longer term policy for the industry in which uneconomic units of production would be merged into sound practical and economic aggregations. CEDA considers that immediate steps should be initiated to lift the industry from its state of despondency and to encourage active participation in the adaptive approach to problems. The question to be resolved is what action is necessary and equitable to ensure that the profit margin in the production of good quality wool, assuming competent management, will be adequate to attract investment to the wool growing industry. The answers will be found in complete and independent research, in consequential policy formation and in education. Sir Ewen Waterman, in an address to the International Wool Textile Organisation in Paris, said:

What kind of wool will be grown? Growers are seeking guidance on this most critical point. We are encouraging the production of the best possible quality wool in all types presently grown and we are seeking to improve standards of .preparation - but we look for guidance (on types needed) to the joint efforts of IWTO and IWS in forecasting shifts in demand. Some coarsening of the Australian clip has been noted in recent years, at the same time that demand for the finer types has emerged. Wool growers need expert confirmation of trends in demand before committing themselves to substantial change in both feeding and breeding policies.

What is wool's future? Wool can survive as a textile fibre of importance provided the consumer cap, through the price structure, influence the types that are grown. New methods can be developed and implemented to enable the thinking wool grower to survive in an affluent society. This does not mean that all wool growers will survive nor does it mean that the types of wool produced in Australia at present will continue in use. For example, at the moment wools containing over about 5% vegetable 011 are at a considerable discount. Unless there is a major change in the supply and demand situation this discount is more likely to increase than decrease. This is because labour is needed to process these wools and the cost of labour in all industrialised countries is rising faster than in other countries. Japan has experienced one of the fastest rates, 17% per annum.

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