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Thursday, 24 March 1994
Page: 2257

Senator TROETH (4.43 p.m.) —I am very pleased to support Senator Macdonald's motion to celebrate National Wool Week. I recognise the enormous contribution the wool industry has made to Australia and will continue to make to the economy and the Australian people. It is one of Australia's oldest industries, if not the oldest. It is Australia's biggest user of land and the biggest employer of agricultural labour. When the wool industry is suffering, it harms other agricultural enterprises and the Australian economy in general.

  It came as no surprise to me that with the downturn in the wool industry provincial cities such as Hamilton, in western Victoria, suffered an immediate downturn in retail turnover and economic development generally. In its own way, the decline of the wool industry over the last few years—momentary I am sure—contributed to the overall result of the recent recession. There is no denying the crisis the wool industry is facing at present with low wool prices and a huge stockpile.

  There are a large number of woolgrowers under considerable financial stress with negligible or negative incomes. However, the future is not gloomy and it is on the prospect of a much brighter future rather than the gloom of the past that I wish to address my remarks today. If we act carefully there are opportunities to build the wool industry into a very strong and sustainable industry. The advantage today compared to the wool crisis in 1970 and 1971 is that today there is demand for wool. In 1991-92 and 1992-93 the amount of wool exported from Australia was close to the highest in any two-year period in Australia's history. In fact, as recently as last week, on Thursday, 17 March The Land newspaper noted that for the second successive week China had been the major buyer and supporter of Australia's firming wool markets. Medium and long-term predictions for demand indicate that buyers' support will be reasonable.

  When we take into account that the income growth in countries with cool and cold climates such as China, Japan and Europe will be considerable in the next decade, we can see there is great opportunity for the marketing and promotion of wool. Also, the rise in disposable income in nearer Asian countries such as the Philippines and Indonesia should lead to a greater demand for high fashion garments. This, combined with technological developments in the way that wool can be used in warm climates, augurs well for future markets.

  Only six years ago, in 1988, wool was our No. 1 export, earning Australia $6 billion in overseas sales. We need to get our industry back to that position. The Garnaut report, to which Senator Macdonald has already alluded, recommended three areas which the wool industry should focus on: firstly, the expansion of international trade in wool and woollen products; secondly, the establishment of industry bodies with a clear commercial focus; and, thirdly, the establishment of new market mechanisms for marketing wool. Integrating the farm with the marketplace has been identified as one of the structural changes that need to occur within the industry to make it more focused. For those people who remain in the industry, this is one of the answers. The product must be right to compete in this international world.

  The past few years have not been easy for the wool industry. While the term `true believers' is more usually applied to a certain political party, it could also be used to describe those in the wool industry who remain totally committed to the future of wool, despite four years of immense uncertainty and difficulty. During that time we have seen the removal of the reserve price, the collapse of markets in the Soviet Union, indifferent seasons here in Australia, and increasing competition from synthetics.

  I salute and congratulate those farmers and processors who have shown qualities of grit and integrity. I urge them to stay on the land and believe in the people who live there. They believe in their product. Other farmers, I regret to say, have been forced to leave their farms. Farmers are very proud people and they do not like asking for help, but last year there were 18,512 applications for assistance from the rural adjustment scheme. Unlike the Democrats, however, the coalition does not believe in bandaid measures and social welfare measures to continue to support farmers. We believe that viability should be restored to an industry which was strong, and will be strong in the future.

  The Garnaut report noted, for example, that the lower the cost and the more effective the processes that transfer ownership of wool from the farm and through each stage in the processing change, the more wool that will be sold at higher returns to growers. I wish to raise some concerns about the areas in which it is possible to lower costs and therefore to make wool growing a more viable occupation.

  I note and strongly condemn the January fuel tax increase which the Democrats voted for and which will necessarily increase the cost of transport. Indeed, every 1c increase in the fuel excise will cost the farming sector $26.8 million. Transport is a major cost factor for agriculture, accounting for about one-tenth of the value of agricultural production. On average, for every dollar of agricultural output, 7.3c is expended on road transport.

  The level of taxes and charges paid by truck operators in Australia is markedly higher than those in Canada and the United States. Taxes and charges on semi-trailers are 27c per kilometre in Australia, 17c per kilometre in Canada and 10c per kilometre in the USA. Cutting taxes on transport would make Australia far more competitive in comparable world markets.

  The wool committee report also noted the importance of continued improvements in the efficiency of the waterfront, and of the translation of improved port efficiency into lower port and shipping charges. Again, Australian ports lag sadly behind the world's best ports having regard to the cost of services provided by governments and port authorities. In Melbourne, government and port authority charges per container are $142, compared with $35 in Wellington and $18 in Rotterdam. Off-farm costs can be reduced by achieving world competitive waterfront operations. Although this is not the time to have a prolonged discussion of these aspects, I urge the government to realise the effects that further punitive taxes will have on one of our major industries.

  I would also like to mention the role of the CSIRO and ask that the funding crisis presently under question be resolved as soon as possible. The Division of Wool Technology must be retained. The wool industry is still our second biggest agricultural exporter and we are still a world pace setter in wool research and development. If we, as the world's leading wool exporter, do not generate the research needed to preserve wool's tenuous four per cent share of global apparel fibre use, we will only have ourselves to blame. If and when that share is eroded by more progressive competitors, again, we will only have ourselves to blame.

  If wool ceases to be innovative as an apparel fibre, it will soon be left behind by the research-committed cotton industry and the big spending synthetic fibre giants. If tight-fisted funding policies are retained by the government, such an attitude is intolerable in a country where government never stops telling us about the need to add value to our wool export commodities and to make Australia the clever country. I say to Minister Schacht: the ball is in his court.

  I would now like to mention some of the particularly important value-adding innovations launched in recent years, because ultimately these will make wool a far more competitive fibre in the world apparel scene. For instance, two weeks ago, we had the launch of a commodity called `soft wool', which is a new range of wool. It has been subjected to a softening and shrinkage resistant treatment, adapted and perfected by the Australian wool research and promotion organisation, together with Riverina Wool Combing. It is similar to a process called `soft lustre' developed by the International Wool Secretariat.

  The soft wool treatment makes the fibre softer to touch and much more resistant to pilling. The garments are also machine washable. It is a major change of direction for wool knitwear. It is a wonderful opportunity to capture a part of the key consumer market with a high disposable income, such as the 15- to 25-year-olds. It also has the quality of comfort next to the skin and does not itch or irritate. Lots of skivvy-type garments could be made to wear as inner wear as well as outer wear. It is innovations like these which are making the wool garment industry a lot more adaptable than it has ever been. I urge Minister Schacht to keep funding the Division of Wool Technology and other divisions of the CSIRO that deal with wool so that wool can keep its market share.

  The wool contained in the stockpile is still healthy. A detailed, two-year examination of the most important aspects of wool held in the stockpile has shown that there has been little or no deterioration. I hope that it can be held for a lot longer yet so as to ultimately be put onto the market. Other innovations such as the new processing technique of low temperature dyeing—in the sense of changing the colour of wool—have meant that wool can be dyed faster and at a lower temperature; and this does not damage the wool.

  We have also seen such innovations as wool replacing other products in housing insulation. Wool is a better thermal insulator under typical weather conditions than other insulating materials; so there is another market. Other products that I have seen showing new and better uses for wool include many products promoted by small-scale or cottage industries; that is, doonas and pillows made out of wool, sportswear made out of wool and wool blend materials—again this is aimed at younger age groups—and easy-care fabrics. This means that many more people can buy wool which can be put in the washing machine instead of having to be hand washed.

  Land care and environmental movements can take advantage of the added volume of wool for seed beds and garden mulch in this era of environmental change. All of these are products of inventive Australians of a later generation than that which produced the Hill's hoist and Sarich's orbital engine, but I would hope that inventions such as these will prove the adaptability of people who look at new ways of using wool in Australia.

  Since my marriage into a farming family I have been proud to be part of Australia's wool industry. I look forward to its growth into a glorious future as it continues to make a major contribution to Australia's economy. In my inaugural speech in this place some seven months ago I spoke of the way in which wool marketing and wool promotion must lie with the private sector. As I look back on those remarks from the vantage point of seven months in this place, and look at the developments of the wool industry that have taken place since then, I do not resile in the slightest from those remarks. But I would also note that in that speech I mentioned the importance of government incentives directed towards the improvement of production technology, and that also is a point of view which I have not changed. I look forward to the wool industry, which we celebrate today, remaining a centrepiece of Australian industry and export development.