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Wednesday, 8 March 2000
Page: 14243

Mr O'CONNOR (11:30 AM) —The Australian Wool Research and Promotion Organisation Amendment (Funding and Wool Tax) Bill 2000 continues the process of reform of this very important industry to rural and regional Australia. I acknowledge the presence in the chamber today of the honourable member for Wannon who has a deep and abiding interest in this particular industry. He warned me not to get fired up on the industry, so I will not do that in this debate today. However, I remind him that the stockpile is still there. It is an issue that still has to be dealt with by the industry. I will now turn to the legislation that is before us.

The opposition does not intend to oppose the legislation that is before the parliament. The bill is part of the government's response to the recommendations of the Future Directions Taskforce chaired by Ian McLachlan. That taskforce recommended, among other things, the establishment of a new company to commission wool innovation for the maximum benefit of wool growers. The company would be established as a conventional company with shares issued to growers in proportion to their compulsory wool levy contributions, would be commercially focused with its key attributes being innovation, implementation and customer service, would have a mixture of commercial and levy funded activities and would be controlled by a newly formed board of directors with wide commercial experience. This bill will allow the minister, through the Australian Wool Research and Promotion Organisation, AWRAP, to meet the costs of establishing a new Australian wool service organisation, as was recommended by the taskforce.

Let us cast our minds back to that very historical day in November 1998—when I had just come to assume the shadow ministerial portfolio responsibilities for agriculture—to the AGM of the Australian Wool Research and Promotion Organisation, at which a resolution of no confidence was passed. That vote of no confidence was a watershed in the history of this industry: out of it came the formation, in December 1998, of the Wool Industry Future Directions TaskForce, chaired by a former minister of the government, the prominent South Australian wool grower, Ian McLachlan. The taskforce reported to the government in July 1999. In response, the government formed a working party which has conducted the WoolPoll 2000 survey of wool growers throughout Australia to gauge their views on how research and development moneys should be raised and spent. The working party produced a series of propositions on those levy funding alternatives, which have been put to wool growers. One important recommendation of the taskforce was the establishment of a new organisation designed to promote innovation and commercialisation in the wool industry; that is the subject of the legislation that we have before us today.

The working party identified some key issues. Some related to innovation and commercialisation but one related specifically to the empowerment of wool growers by assisting them to take control not only of their businesses but of their industry. It is a subject of some concern to me that, given the quite contentious and rather intense debate within the wool industry itself about its future, there has not been a greater response to WoolPoll 2000 on the part of wool growers. I understand that farmers are busy, I understand the requirements of their business, but at the end of the day, although growers can argue that governments ought to get out their way and get out of their business, it is very important for the industry and growers in it to cooperate with government when it attempts through a poll to genuinely gauge their attitudes to a very important aspect of their industry operation. I am referring to how moneys are going to be raised to fund research and development activities and the direction of those research and development activities once that money is raised.

I commend the government for taking the initiative to consult wool growers on the future of their industry. It seems that governments of all political persuasions at state and federal level have been conducting polls lately, and I refer to the polls that have been conducted within the dairy industry, both in New South Wales and in Victoria. These, I think, are honest attempts by government to gauge the feeling on the ground of farmers. But they are like everything else—they ought not to be the sole determinants of a policy direction, because often the information may be made available to producers but not digested sufficiently for them to make an informed judgment on the propositions that are before them. In the case of the wool growers and the Wool Working Party, the propositions that were put to wool growers were quite impressive. I commend the work of Dr John Keniry, the Chairman of the Wool Working Party, for the documentation that was put before growers on the funding options that might be available to them. The industry has not responded as we might have wanted it to do because the particular area that they were asked to pass judgment on is one that is critical to the future of the wool industry in Australia.

The working party identified four core business and service areas that needed to be addressed. Without going into them all, I want to make comment on one in particular, and that relates to innovation, research, development and delivery. As a general proposition, I think it is fair to say the cutting edge of Australian agriculture in this millennium will be driven by research and development and by innovation. It is rather disappointing, if we look generally across the spectrum of industry research and development in Australia, to see the very poor performance and guardianship of this very important aspect of our economic development by this government. I will not quote the figures here today because they are well known in the parliament, but it is quite an appalling record for a nation that is seeking to propel its economic development off the back of the skills development and certainly of the research, development and commercialisation of new innovative technologies, not only in manufacturing industries but in agriculture industries as well.

I think it is acknowledged generally in the wool industry that there are some—if I could call them this—cultural obstacles to change. The McLachlan taskforce was about propelling the industry to change its cultural outlook to come to grips with some of the inhibitors that were holding the industry back from progressing and growing. It identified innovation, research and development as critical elements of the future of this particular industry. That taskforce identified, very importantly, the place of on farm research as well as off farm research in the manufacturing chain for wool.

As far as on farm research is concerned, it is very important to dairy farmers—I mean to wool growers. My apologies, Madam Deputy Speaker, I have just come out of the main chamber debating the dairy bills. There was no offence meant there to wool growers. On farm research and development will have positive impacts for wool growers because that research and development can be directly linked to the profitability of enterprises. When that on farm research takes place we start getting the shift in the culture that is required to ensure that farmers open their minds up to new possibilities, look for new ways and are more receptive to the introduction of new technologies.

The wool industry is a case in point because surveys indicate that where wool growers have adapted and applied those new technologies, where they have been receptive to the application of information and other technologies, these growers invariably run more profitable enterprises. So we can actually make a direct link between the outlook of the farmer, his capacity to undertake and join in partnerships in on farm R&D, and the eventual profitability of the enterprise. Of course, off farm research is very important as well—the post-farmgate area; the textile sector R&D, the processing sector. The efficiencies there are important to the general efficiencies that are developed within the chain of production for this particular product.

Of course, in my electorate and in the electorate of the honourable member for Wannon—and we are joined in the chamber today by a great supporter of the wool industry, the honourable member for Lyons and, I am sorry, I absolutely throw myself on the ground for omitting the honourable member for Hinkler in this discussion—we all know very well that wool plays an essential and important place in the local economy. We all know very well the part played by Geelong in the history of wool. We are a hub for the transportation and storage of wool. There is a productive hinterland in the Western District and in the outer fringes of my electorate where there are very important wool growing areas. Of course, the port of Geelong is a major bulk handling port—the biggest bulk handling port in the Southern Hemisphere—and it is over that wharf that wool production goes.

We have in Geelong the National Wool Museum, a very advanced museum and very well patronised, not only by the people of Geelong but by people from throughout Australia. We have also the CSIRO Division of Wool Technology where research is conducted into the wool industry. In the processing sector we have Godfrey Hirst, Brintons Carpets and Australian Wool Combing located in my electorate. So we really are the wool capital of Australia and we are quite proud of that fact.

Let me pay tribute here to a gentleman who passed away in 1999, Mr George McKendrick of Godfrey Hirst. There was no greater supporter of the wool industry than George McKendrick. He would not mind me saying that he was a cowboy from the old school, but he had the interests of this industry at heart and passionately believed that Australia ought to build its value adding capacity, and build it quickly. He put his money where his mouth was, the money that he and his family accumulated through this industry, and he grew this enterprise in Geelong from almost nothing to where it now employs over 1,100 people. Geelong mourned his passing, and the industry did as well.

I was walking down the street the other day and I passed a retail outlet called Juswool. It prompted me to go in and have a cup of tea with the proprietor, a person who I have not seen for some time, Hedley Earl of Hedrena Textiles.

Mr O'CONNOR —The honourable member for Hinkler is showering accolades on me today, just as I am on him. I popped in for a cup of tea with Hedley Earl because I had not seen him for a long while. When I was on the staff of Senator John Button, we assisted Hedrena Textiles in the infancy stages of the business. Hedley Earl was a producer of fine wool and at the time was manufacturing fine woollen baby blankets and dressing gowns. He has now moved—and honourable members will be interested in this—into the area of fine woollen underwear for both men and women. I purchased a pair of socks there the other day. They are top of the range and quite expensive, but for well-worn feet like mine, feet that have done some miles, they are a beautiful product to wear.

I congratulate Mr Earl because at one time this particular entrepreneur used to get in his car and travel around rural and regional Victoria and New South Wales to retail outlets to get his product into the marketplace. I would suggest he has made it now in one sense in that he has opened a retail outlet in the centre of Melbourne where the product is being snapped up by international visitors. They cannot get enough of it. He did have some harsh things to say about the impact of the GST on his business. I should just remind the House of that. We ought not gild the lily. The hard work of this entrepreneur is going to be burdened by the introduction of the GST. I will not go into the details of that but certainly it will happen where his product is going into the domestic market. He could not get the quality servicing here in the Australian market, so he had to have the fine wool processed in Germany. When it comes back over the wharf, he will be required to pay a GST. As the product is on-processed very carefully, it can take many months before the product gets into the marketplace and, of course, he is going to have to carry the burden of the GST like many other businesses around Australia.

Frankly, I have a great deal of sympathy for these small business people, who are trying to create jobs, because the GST is a job crusher. It is as simple as that. It is a job crusher. They try as hard as they can to generate jobs in this particular industry but along comes the government with a 1960s tax to burden them with compliance costs. Of course, all the money that has to go out to prepare for the GST I would imagine could, in the case of that particular business, go into promoting the product, getting more sales, securing his supply and securing the future of wool growers in the meantime.

In conclusion, might I reflect on the outlook for wool in the coming years. I noted with interest the assessments and the forecasts that were made at the Outlook conference recently. There is some potential for prices to increase in the short and medium term and I think wool growers will generally welcome that development. We have seen a strengthening of demand in the Asian markets, especially in South Korea and Chinese Taipei. Of course, China, which had a slowing of its growth, is still in there as a significant buyer of Australian wool. We are seeing signs of a resurgence in the Japanese economy and that is very important to the demand for apparel. We have had some very interesting markets come on line for wool in recent times. India is emerging as a very important market. We are securing some interesting markets in Turkey as well.

How are wool growers going to respond to these developments? I guess over the long term we cannot expect a real or substantial strengthening in demand domestically but certainly the rise in prices will be moderated by the fact that the industry is holding significant stocks on farm and in brokerage houses around the nation.

This particular legislation also allows the government to set the rate of wool tax in accordance with the wishes of growers as they were indicated in the wool poll ballot. That ballot concluded on 3 March if memory serves me well—and these days, at my age, with overload, sometimes it does not serve me well but I certainly remember the policy omissions of this particular government. I think the results of this particular poll will be known late this month, around 23 or 24 March. This particular legislation will enable the minister and the government to set the rate of wool tax in accordance with the wishes of growers that were expressed in that poll.

In conclusion, let me say once again to wool growers in this fine industry: you have an industry which I honestly believe the current government believes in, as does the opposition. We see potential for growth here. But, as night turns to day, there will be many people in the industry who will be prepared to attack the government, regardless of its political persuasion, for the initiative that it mounts in that particular industry. I do believe that this government is motivated by a desire to see this industry grow, restructure and refocus its efforts in the sorts of ways that were outlined in the McLachlan report. We concur with many of those recommendations in the way these changes will encourage the industry's development over time.

Having said that, it is up to wool growers themselves to participate fully when the opportunities are given to them in good faith by the government. I think that needs to be said. I would encourage wool growers who have not participated in this poll to examine why they have not and perhaps make it their business to keep themselves informed of the developments in this industry and its structure as those changes occur. They need to keep themselves up to speed, keep an interest in their industry and keep abreast of what is being done by the industry and by governments of all political persuasions, who genuinely want this industry to grow and to be restored to its pre-eminent place in Australian agriculture. Madam Deputy Speaker, the opposition will not be opposing the bill.