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Tuesday, 22 May 1973
Page: 2447


Mr DRUMMOND (Forrest) - I think that the honourable members for Wannon (Mr Malcolm Fraser) and New England (Mr Sinclair) have forcefully debated the Bill. Much of what the honourable members for Macarthur (Mr Kerin) and Eden-Monaro (Mr Whan) have said shows an understanding of the industry. We on this side of the House support the amendment which reads:

That ali words after That' be omitted with a view to inserting the following words in place thereof: whilst not refusing the bill a second reading, this House deplores the fact that the Government's decisions were made without proper consultation with industry leaders, the fact that a three year program has been cut to a one year program, making forward planning virtually impossible, and thirdly, the fact that the present Government has broken an undertaking given by the previous Government to the Australian Wool Industry Conference.'.

The honourable member for Eden-Monaro has much criticism of the Australian Wool Corporation. He said that the Minister for Primary Industry (Senator Wriedt) had had consultation with the executive of the Aus tralian Wool Industry Conference. This I doubt - or perhaps they did not understand what one another said. In discussion with me, the representatives of the farming and grazing organisations in Western Australia, where I have grown wool for many years, indicated that there had not been any consultation with the Government. Perhaps the Minister just told the AWIC what was going on. During its life the Australian Wool Board reported to the industry through the Australian Wool Industry Conference. Now the Australian Wool Corporation, which is a body structured from the Australian Wool Board and the Australian Wool Commission, will do the same.

One of the matters that the Board referred to the growers last year was the budgetary requirements of the International Wool Secretariat for research and promotion, in addition to the requirements of the wool production research institutes in Australia, and the research carried out by the Commonwealth Scientific and Industrial Research Organisation, State Departments of Agriculture and institutes of agriculture and State universities. This financing, as we know, was done by means of a grower levy and Federal Government subsidies. As has been stated tonight, because of the low values of wool in recent years budget requirements have had to be curtailed extensively, particularly internationally. Growers' contributions have been 1 per cent of gross proceeds deducted as a tax. The Commonwealth Government has met the difference between grower contributions and the budgetary requirements. In fact, the Commonwealth has paid up to $27m in a year.

The Australian Wool Board prepared the budget for the next triennium - 1973-74, 1974-75 and 1975-76. In 1972 the Commonwealth Government suggested to the Australian Wool Industry Conference that the Government would contribute 533m in the first year of the triennium, rising to $42m in the final year on the basis of the grower contribution increasing. After debate, the AWIC agreed to growers contributing 1.6 per cent - an increase of 0.6 per cent - for promotion and research, and in addition 0.4 per cent as a levy for the administrative expenses of the Australian Wool Corporation, provided that the Federal Government agreed to maintain its contribution at the levels proposed. This was a firm commitment entered into by the previous Government and now, without consultation with the wool industry, this Government has broken that understanding.

The Wool Tax Administration Act of 1964 allows for a maximum tax of 2 per cent on wool growers in order to finance promotion and research, and the Wool Industry Act allows for a maximum of 0.4 per cent for financing the administrative costs of the Wool Corporation. Following the change of government, the industry could not obtain an indication of the Government's acceptance of the Australian wool industry's recommendation, which caused some concern to the Australian Wool Corporation because of its need to be able to implement policies based on a knowledge of income available to it to meet both domestic and international spending through its contributions to the International Wool Secretariat.

The Government, when it did make an announcement, caught the industry by surprise in that it adopted 2 new policies. Firstly, it did not consult the industry prior to making its decisions which were somewhat different from what the industry had previously discussed and, secondly, it adopted a policy of enforcing the total contributions payable by growers through the system of taxing and levies as allowable under the various Acts of Parliament. In so doing, the Government also appears to have adopted a third new policy - that of contributing on a dollar for dollar basis, a principle which is not unacceptable to the industry but which is fraught with danger in the wool industry where prices can rise 200 per cent to 300 per cent in a year and fall just as dramatically. To enlarge on that, the industry's budgetary requirements need to be assessed and calculated for a lengthy period in advance. This is necessary not only from the technical point of view of planning research programs often in advance but also to attract skilled labour which would not be attracted if it were aware that research was to be controlled by a financing scheme which could be substantially decreased if the price of wool fell in any one year - a situation, as I have just described, not unknown to the wool industry.

The Government appears to have assessed what the likely average return per bale will be for the next 12 months and, on the basis of a 2.4 per cent levy and a tax, has calculated a payment by growers of $22m. To this the Government has agreed to add an additional $22m for only one year commencing 1 July 1973. The Government has announced that it will reappraise the position in the light of the then current situation and the anticipated situation in December 1973 and then, early in 1974, will go to the industry with its recommendations for the years 1974-75 and 1975- 76. Should growers returns fall below the estimated level, the Government's contribution will decrease below the anticipated level of $22m, and so some projects might require to be curtailed or abandoned. Should values increase, it is expected that surplus funds will be allocated to a trust reserve account from which growers' payments could be assisted in years of low income.

The Government has stated that the Wool Corporation's reserves will be available to meet deficits which might arise if increases in the costs of programs prove to be greater than anticipated or if the revenue from the tax is less than expected. These statements cause some concern in view of the Labor Party's pre-election platform promises of marketing reform. If - and I emphasise 'if - the industry is placed in a position of relative stability through marketing reform, long term planning of expenditures can be made in the light of a certain degree of return made possible by that stability. Therefore, growers should not need to contribute possibly substantial amounts to a reserve fund in order to provide for future years of low income. I mention this in a constructive context for the Government to consider.

As a wool producer myself, I have nothing but admiration for the Wool Corporation, which got a slight hammering from the honourable member for Eden-Monaro, and for its personnel and the manner in which it has conducted its and our business over the last 2 years. But the legislation which controls the Wool Corporation makes it dear that the profits, which could be approximately $25m over the last couple of years of operation, made by the Corporation should go into reserves and not be returned to the growers. I believe that this money should be used by the Corporation actively to enforce a sound reserve price scheme and not used for areas other than that of market control.

In conclusion, it appears that this Federal Labor Government has transferred at least $10m from the wool industry for other purposes this financial year. While it can be argued that the industry can afford it this year, the Government had done this without providing for effective stability in the industry or marketing provisions for the long term requirements of the industry in the areas of research and promotion.







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