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Wednesday, 25 September 1974
Page: 1426

Senator WRIEDT (Tasmania) (Minister for Agriculture) - I move-

That the Bill be now read a second time.

Mr Deputy President,as this second reading speech is identical to the one which was read in the House of Representatives, I seek leave to have the speech incorporated.

The ACTING DEPUTY PRESIDENT (Senator Marriott)- Is leave granted? There being no objection, it is so ordered. (The speech read as follows)-

Honourable senators will recall that, in the Budget Speech, the Treasurer (Mr Crean) indicated that he would shortly introduce legislation to appropriate funds to enable the Government to make loans to the Australian Wool Corporation in addition to the $ 13m provided for in the Budget. The purpose of this Bill is to enable the Treasurer, on behalf of the Australian Government, to make loans of up to $150m to the Corporation. Proceeds of such loans would be available for financing purchases of wool at auction (including tender) and for the making of advances to growers whose wool is withheld from the market by the Corporation. As honourable senators are aware, I announced on 27 August that the Corporation would operate a minimum (floor) price equivalent to 250c per kilo clean for 21 micron wool during the 1974-75 season, and that the Government would guarantee sufficient funds for this purpose.

The Treasurer and I agreed that, in the first instance, the Corporation should explore the possibility of the consortium of trading banks augmenting their current line of credit of $34m. In the event, however, it has become clear that the trading banks are not well placed at this time to commit funds of the order necessary to put beyond doubt the Corporation's capacity to sustain the floor price. Honourable senators will appreciate that, from the standpoint of maintaining confidence in the wool market, it is of the utmost importance to ensure that the Corporation's capacity to do this is beyond question. The Government has also recognised that the provision of large amounts of bank finance to the Corporation would have meant a substantial reduction in the amount of such finance available to meet other essential needs in the rural and other sectors of the economy.

These considerations led the Government to the view that the only really practicable way to provide the Corporation with the finance required is by means of a special appropriation of funds by the Parliament. Honourable senators will be aware that, in addition to purchases at prices equivalent to the floor price, the Corporation may at times acquire wool at prices above the floor price, under its flexible reserve price scheme. Also, as indicated earlier, the Corporation's operations in 1974-75 may entail not only substantial purchases of wool but also arrangements for the withholding of wool from market at times when demand is weak. It will be apparent to honourable senators that, should the Corporation withhold wool from sale for a time pending an improvement in the market outlook, some growers would be temporarily disadvantaged and, indeed, could be faced with considerable financial difficulties, if the banking system and other traditional sources of finance for wool growers were unable or unwilling to carry grower for the additional time involved. The Government has therefore decided to provide the Corporation with sufficient funds to enable it also to make advances of a proportion of the floor price of growers experiencing such difficulties. The total amount of funds likely to be required for the Corporation's purposes is difficult to establish, depending as it does on the extent to which the trade supports the market. It is considered that the amount available to the Corporation should be sufficiently large to cover its requirements for a reasonable period ahead. Insofar as it is possible to predict at this stage, we judge that an amount of $ 150m should be fully adequate for this purpose, and the Bill seeks an appropriation of that amount. We shall, however, keep the position under close review.

Having regard to the difficulty of forecasting with any precision either the timing or amount of the Corporation's requirements, the Bill proposes that the Treasurer be empowered to make advances up to the amount indicated in such amounts, and on such terms and conditions, as he approves. The Treasurer will, of course, exercise these powers in full consultation with me.

The Bill provides that the advances to the Corporation to be made either from the Consolidated Revenue Fund or the Loan Fund, and authorises the Treasurer to borrow the moneys concerned if he considers that desirable. I am sure that honourable senators will appreciate the need for expeditious action in this matter, to put the Wool Corporation in funds and demonstrate beyond all possible doubt the Corporation's capacity to sustain its floor price operations. I commend the Bill to honourable senators.

Debate (on motion by Senator Young) adjourned.

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