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Thursday, 21 May 1970

Mr ANTHONY (Richmond) (Minister for Primary Industry) - I move:

That the Bill be now read a second time.

The principal object of this Bill is lo amend the Wool Industry Act 1962-67 so as to give effect to new arrangements for the financing of wool research and promotion. The proposed arrangements envisage that the Government will provide a greater share of the funds needed for these activities, as foreshadowed by the Treasurer in the Budget speech last August. In addition, other amendments are proposed which are designed mainly to widen the borrowing powers of the Australian Wool Board in order that the Wool Board can rebuild and renovate the wool stores which are at present placed under its control and to construct and equip integrated wool selling complexes, if this is required by the industry. I think it can be said that this Bill has a twofold purpose. There is no need to labour the point that the wool industry is today facing great difficulties. Wool prices are now at (heir lowest point in more- than 20 years, while costs over the same period have risen very considerably. To quote a frequently used but true expression, the Australian wool industry is caught in a severe cost-price squeeze.

In saying this, however, let no one think that our great wool industry is on the road to extinction. On the contrary, I firmly believe that with 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. I have used the term 'our great wool industry' and I have used it deliberately. The wool industry is, and will continue to be for many years to come, our biggest single industry. Even at the current extremely low level of wool prices wool still contributes around onequarter of our total export income. This has been only possible because of the remarkable increase in wool production which has been achieved in spite of the plague of droughts which in recent years appear to have reasserted themselves as an inescapable part of the Australian scene; Wool growers are to be ' commended for this great achievement.

We should never forget that the great prosperity enjoyed by the bulk of Australians has been due in a large measure to the contributions made to the economy as a whole by the wool industry. No one could possibly assert that the development of our economy achieved to date would have been attained without wool providing much of the wherewithal for the imports of essential materials and equipment. Similarly, there is no doubt in my mind that, despite the spectacular growth in our mineral industries, wool's continued contribution to our export earnings is indispensable for our continued development and well being. As well as its continuing prominent role in Australia's export trade, wool growing is an essential component of the rural sector of the economy. Thousands of people rely on the industry either directly or indirectly for their livelihood. Large tracts of inland Australia would be totally unproductive without the woolgrowing industry - the only activity of economic importance for which these areas are suitable.

The Government fully recognises the significance of the woolgrowing industry not only as an export income earner but also as a vital factor in the economy of the rural areas. For this reason the Government wishes to help the industry in its present difficulties, by relieving it of the greater part of the cost of financing wool research and promotion - 2 activities which are of great importance in maintaining wool's position as the leading apparel fibre in the face of ever-increasing competition from synthetic fibres. This assistance is the first of the two purposes of this Bill which I mentioned earlier. The second purpose is to help the industry to help itself in the longer term by cutting some of its heavy cost items. An area where substantial savings can be achieved is in the handling of wool. Studies conducted by the Australian Wool Board show that very significant cost reductions are possible in the handling and processing of wool for sale by the establishment, on a national scale, of integrated wool selling complexes. For legal reasons these complexes are referred to in the Bill as 'wool selling centres'.

I think it can be said that all sections of the wool trade agree that the establishment of well laid out wool complexes incorporating modern mechanised handling equipment for common use by wool selling brokers for the speedy movement of wool into store, within store and out of store to the ship can introduce great efficiency into the wool selling and handling procedure. Further, such complexes could also provide a vehicle for the early introduction of other beneficial innovations such as the pre-sale sampling and testing of wool, that is, objective measurement, and the streamlining of bulkclassing operations. For a number of reasons the quickest way of making wool selling complexes a reality could be for the Australian Wool Board to undertake the task of constructing and equipping them. If the Wool Board is put in a position to borrow for the purpose of carrying out this task this may overcome some of the financial obstacles which are militating against the early establishment of such complexes. I would like to stress, however, that the Wool Board will only take on this role if the wool trade, including the selling brokers, wishes the Board to do so.

I now turn to the main provisions of the Bill. Provision is made in the Bill for increasing the Government's contribution for wool research and promotion from the present level of $14m a year to an average of S27m during the 3-year period commencing on 1st July 1970. At the same time the levy paid by woolgrowers under the Wool Tax Acts 1964 will be reduced, by regulation, from 2% to 1% of the gross proceeds from the sale of shorn wool. On present prices this will mean a saving to wool growers of about SI. 20 per bale. I should mention that due to the overlapping of rostered wool auction sales into July of this year, it has proved necessary to set the commencing date for the reduction in the levy at 1st August 1970. In keeping with its greatly increased contribution for wool research and promotion, a number of changes are proposed to give the Government a greater say in the administration of these activities and these are provided for in the Bill.

In the first instance, the annual apportionment of the money contributed by wool growers and the Commonwealth Government for wool research and promotion will be determined by the Minister for Primary Industry after consultation with the Australian Wool Industry Conference. At present the apportionment of the money is made by the Minister on the recommendation of the Conference. Secondly, the Bill provides for some changes in the manner of selecting the Chairman and some of the members of the Australian Wool Board. It is proposed that in future the Chairman of the Wool Board will be appointed by the Minister for Primary Industry after consultation with the Board itself. At present the Chairman of the Board is appointed by the Minister on the nomination of the Board. The Bill also provides for the Chairman of the Board to have a deliberative vote as well as a casting vote. Currently the Chairman has only a casting vote. It is furthermore proposed that the 3 members with special qualifications on the Board will in future be appointed by the Minister for Primary Industry after consultation with the Wool Industry Conference. At present these members are appointed by the Minister from a panel of names submitted by the Conference.

While the Australian Wool Board with its expertise and experience will continue to be responsible for the promotion programme, the measures which I have just outlined will provide greater safeguards for the public interest in the funds involved without disturbing the special relationship which exists between the Wool Board and the International Wool Secretariat on the matter of promotion. Thirdly, it is proposed to amend the arrangements for the control of wool research funds. The Bill provides for the deletion of the stipulation in the Act that the Minister for Primary Industry can approve the expenditure of money from the Wool Research Trust Fund only on the recommendation of the Australian Wool Board. Insofar as the allocations for individual recipients of grants from the Fund for scientific and economic research are concerned, the Wool Board will retain the power to recommend grants for recipients other than the Commonwealth Scientific and Industrial Research Organisation and the Bureau of Agricultural Economics. These other recipients include mainly State Departments of Agriculture and universities. Grants from the Fund to the CSIRO will in future be made by the Minister for Primary Industry after consultation with the Minister for Education and Science. The Minister for Primary Industry himself will determine the grants to be made to the Bureau of Agricultural Economics.

Nevertheless the Wool Board will still retain a meaningful role in regard to the research programmes of the CSIRO and the BAE. In relation to these 2 bodies it will be a function of the Board to advise the Minister for Primary Industry on the general scope of their research programmes in relation to the wool industry's problems. In doing this the Board will be expected to advise on the emphasis to be placed on the various aspects of the programmes and to make an assessment of the potential benefits of the programmes, taking into account problems of immediate significance as well as those which will have an important bearing on the future prosperity of the industry. It will not, however, be the function of the Wool Board, as at present, to recommend allocations from the Fund for the CSIRO and the BAE, nor will the Board be concerned with the management of funds allocated to these two bodies. To enable the Wool Board to make a full assessment of the CSIRO wool production and wool textile research programmes, the Board will be provided with the respective programme budgets along with the reports on the work carried out in the previous year. The form of these reports will be agreed upon between the CSIRO and the Wool Board, but the Minister for Primary Industry may also ask for special reports from the CSIRO on any particular matter.

For the wool production research programme this will cover the avenues of application as well as the areas of research. Further, in order to permit the Wool Board to examine the CSIRO sheep and wool research programmes in total, information will be provided to the Board concerning the CSIRO research programme financed from other sources which is clearly related to industry problems. In addition, provision will be made for the Board and any committee which it may establish to visit appropriate wool production and wool textile research laboratories of the CSIRO from time to time. As far as the capital items required by the CSIRO for wool production and textile research to be financed from the Fund are concerned, the Minister for Primary Industry will refer these to the Board for advice where appropriate. In regard to the BAE it, too, will provide to the Wool Board all relevant information so that the Board can advise on its economic research programme. It is proposed that the CSIRO and the BAE will have freedom in the management of their research programmes within their respective allocations from the Fund. It will be incumbent, however, on these two bodies to take due note of any views which are conveyed by the Wool Board. The Australian Wool Board in dealing with the research proposals of the State Departments of Agriculture will be obliged to consult with these Departments at least once a year on their programmes.

In view of the changed role of the Australian Wool Board in relation to wool research it is no longer necessary for the Board to maintain its present 2 statutory research advisory committees, namely, the

Wool Production Research Advisory Committee and the Wool Textile Research Advisory Committee. Accordingly the Bill provides for their abolition. However, the amending legislation has been drafted in such a way as to enable the Board to appoint research committees to assist it in its work if necessary. Opportunity has also been taken to provide in the Bill for the abolition of the provision in the Act for a statutory Wool Marketing Committee. This has been recommended by the Wool Board and endorsed by the Wool Industry Conference. Provision was originally made for this Committee to assist the Wool Board in its marketing investigation work. However, it has been found that it is no longer necessary to have a statutory committee of this nature. The establishment of the Wool Marketing Corporation will relieve the Board of a good deal of its marketing investigation work. However, the amending legislation will still enable the Wool Board to appoint ad hoc marketing committees should this prove necessary.

Finally I turn to the provisions of the Bill intended to widen the borrowing powers of the Wool Board to permit the Board to borrow money for the rebuilding and renovation of its existing wool stores and for the possible establishment of integrated wool selling centres, as well as to pledge its assets for such borrowings. The Wool Board has under its control some 280 wool stores which are a legacy of the wool purchasing arrangement between Australia and the United Kingdom which operated during the last World War. These stores are vested in the Wool Board under the Wool Industry Act which obliges the Board to maintain the stores in a satisfactory condition and the stores may be re-acquired by the Government in the event of a national emergency.

The majority of the stores are about 30 years old. Accelerated deterioration of these stores and rising maintenance costs have placed the Board in a position where, to fulfil its obligations under the Act in respect of the stores, substantial expenditure is essential. A thorough study by the Board indicates that restoration of these buildings to their original condition is no longer an an economic proposition. Accordingly the Wool Board would like to undertake a major reconstruction programme over the 5 years 1970-71 to 1974-75. The programme calls for the rebuilding of a substantial number of stores in line with modern building standards and practices and the complete renovation of others. A study commissioned by the Board shows that the proposed programme is a sound commercial proposition and the additional income derived by way of rental from the stores will augment the moneys available for wool promotion and thus benefit woolgrowers generally. Funds of the order required for the stores reconstruction programme arc not available from the Board's present sources of income. As the Wool Industry Act now stands the Board can borrow only for temporary shortfalls in wool promotion funds and for the activities of the Australian Wool Testing Authority. Hence the provision in the Bill to enable the Board to borrow also for the purpose of reconstructing its wool stores.

As I mentioned earlier, one of the areas offering woolgrowers considerable potential for cost savings is the handling of wool and in this respect the construction of integrated wool selling complexes holds considerable promise. To facilitate early establishment of such complexes, the Bill contains explicit provisions to empower the Wool Board to borrow money for the financing and/or the construction and equipping of the complexes. The provision will enable the Board to construct and equip wool complexes which it would then lease to selling brokers and other interests, or alternatively the Board will make the finance available for a commercial developer to undertake this task. What role the Wool Board may play in this regard is, however, a matter which will be decided by the industry. In relation to the proposed borrowing powers for the reconstruction of the existing wool stores and for the establishment of intregrated wool selling complexes, any borrowings under this power will require the approval of the Minister for Primary Industry with the concurrence of the Treasurer. Opportunity has also been taken to bring the existing borrowing powers of the Board in relation to the Australian Wool Testing Authority into line with those for wool stores and complexes.

The amendments which are proposed under this Bill come at a time when the woolgrowing industry is facing difficult times. The whole situation of the industry is being studied as a matter of urgency by the Government and in this regard the Government will be assisted by the findings of the special Advisory Committee of the Australian Wool Board. Meanwhile the increased Government contribution for wool research and promotion will bring some relief to woolgrowers and will also ensure that these activities essential to the maintenance of the competitive position of wool will continue undiminished. Finally the provision which can open the way for cutting, handling and selling costs by the establishment of integrated wool selling complexes provides the industry with a new means of help itself. I commend the Bill.

Debate (on motion by Dr Patterson) adjourned.

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