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Wednesday, 29 August 2001
Page: 30596

Mr HAWKER (10:37 AM) —There was one point that the honourable member for Corio did get right in his speech—that is, both the member for Corangamite and I have had a very long association with the wool industry. I am very pleased to be able to stand here as a wool grower and say that the Wool International Amendment Bill 2001 is an historic piece of legislation representing a very historic occasion. Seeing the last bale of that stockpile being sold is a very significant event in the history of wool in Australia, and it will close a chapter of what has been a very sad and sorry story in terms of the way the reserve price scheme operated, the way it spectacularly collapsed and the damage it did not only to wool producers but also to many country regions.

Having said that, I would like to refute a couple of points made by the member for Corio. He was completely wrong when he talked about the move in 1998 to push for a freeze of the stockpile. It certainly had nothing to do with other political parties; it had everything to do with good economic sense. I was proud to be part of that push because what we saw, as we predicted, was that if we could get that brief freeze for the stockpile and then manage the sell down of the stockpile in a commercial way, we would see an improvement in the price of wool—and that happened. That is nothing to do with the member for Corio now trying to rewrite history by bringing sales and economic conditions in the year 2000 back to late 1998. It was a totally different situation, and he stands to be criticised for having tried to fudge the figures on that and tried to impose different years one on the other.

As the minister said when he was introducing the legislation, this amendment was brought in because currently there is a requirement under section 22P(2)(b) of the Wool International Act 1993 for the final cash distribution to WoolStock Australia Ltd shareholders to take place `as soon as practicable after the end of the financial year in which the last stockpile of wool is disposed of'. Clearly, given the current circumstances, this would mean that it would not be able to take place until after July next year. It makes eminent sense, now that the last bale has been sold, that wool growers should be able to get the benefits. I remind everyone that those benefits are return of payments to wool growers for money that they had compulsorily acquired through the wool tax between 1993 and 1996. It is not a great compensation either directly or indirectly. For every dollar that was taken in tax, wool growers are going to receive—looking at the current market price of WoolStock Australia international shares—just under $1, plus there have been two payouts in the last year or so both of 20c. It is not very much. When you consider the pressure that the overhang of the stockpile has had on the wool market itself, wool growers have indeed paid very dearly for it.

I want to go through a couple of points about the whole question of the wool stockpile and some of the history behind it. I am reminded of that famous statement of Lord Acton that those who ignore history are destined to repeat it. Therefore I think we should go back to history and remind ourselves of what occurred and certainly avoid the pitfalls of what the member for Corio had to say when he tried to distort history and avoid reality.

The fact is that the problems of the whole reserve price scheme occurred under a Labor government and he cannot run away from it. The member for Corio sits there and says that because the government was asked to do something it is the fault of those who asked that it be done. Heavens above! Governments get asked to do something every day by interest groups. That does not mean to say that they automatically follow it up. I think he makes the most pathetic and weak argument there. We have to be aware that it was a Labor government that changed the whole reserve price scheme legislation back in 1987, which allowed the tragedy to unfold over the next three years. Labor can never run away from that and it shows that yet again, when it comes to getting involved in business decisions or something relating to other people's business, Labor has a very poor record.

I would like to refer to what this government has done to assist wool producers to get back on their feet. There have been a number of moves that we have taken. Probably the most important one is the wool task force headed by the former defence minister, the Hon. Ian McLachlan. The report that he and his task force produced is outstanding. It sets out in a very comprehensive way the future direction for wool producers. It covers the whole gambit of what the opportunities are and the way that we should go. He is to be commended for what is an outstanding report. It will certainly be around for a long time.

Given that we are talking about a particular aspect of this in the Wool International Amendment Bill 2001, I will look at the comments of the task force on the whole question of the reserve price scheme, and I come back to Lord Acton's phrase about history. It is important that we remind ourselves about the reserve price scheme. The summary document of the wool task force made the reserve price scheme legacy very clear. It said:

The direct and indirect effects of the 1991 collapse of the RPS continue to haunt wool textile businesses and woolgrowers. Whatever the rights or wrongs of what occurred, the fact remains that the RPS caused catastrophic damage to wool businesses all along the chain.

It goes further in the main report, under the heading `Marketing of Wool' and `Reserve Price Schemes'. It says:

One of the main reasons for the RPS as far as both woolgrowers and wool processors were concerned was its capacity to deliver relative price stability. Whatever stability may have been delivered during most of its existence paled into insignificance with the instability leading up to and since its collapse.

It concludes:

In case there is any doubt in the matter, the Task Force wishes to be absolutely clear: under no circumstances whatsoever should any form of RPS for wool ever be reintroduced into Australia. There should be no institution in Australia which has the capacity to make such a catastrophic mistake affecting every wool business in the country.

Those are very strong and conclusive words. I think they are something we should continue to remind ourselves of. It is almost correct that the last bale has been sold. The final decision has not been made but I am pretty confident that, while Geelong is going to get what it calls the last bale from the stockpile for the wool museum, there are several last bales. I expect to see one delivered to Hamilton because, after all, Hamilton has very proudly said for many years that it is the wool capital of the world. It has a very proud history of association with wool growing. It has produced some outstanding studs, individuals and wools, and continues to do so. Anyone who was present at Sheep Vention in Hamilton earlier this month would have seen just how significant wool is for the region and how important it is for the local economy. The fact that it is now certainly picking up is an indication that there is confidence around, albeit somewhat more soberly based than it might have been a bit over a decade ago. Nonetheless, people are getting on with the job. Now that we have this stockpile out of the way and government involvement down to the minimum that it ought to be, people are focusing very much on the future.

That is one of the real achievements of the Howard government. We have seen the movement of government out of this; we have cleaned up the sorry mess that we inherited from the Labor Party. The impressive performance of WoolStock Australia is to be commended. Contrary to what the member for Corio might have to say about it, the fact is that the decision we took in late 1998 to freeze the stockpile—and then subsequently the following year to bring WoolStock Australia into place—has been shown to be the right decision. It has certainly yielded results. As the Minister for Agriculture, Fisheries and Forestry said in his second reading speech:

The timely fashion in which the stockpile has been sold down since WoolStock Australia took over its management is a very strong reflection on the success of the Wool International privatisation. It is also a reflection on the excellent job WoolStock Australia has done over the past two years.

This is a very clear indication that what the government has done has proved to be correct. The decision taken in 1998—which was delayed slightly by the election—was the right decision. I would like to also compliment the directors and staff of WoolStock Australia for an outstanding job. They have done their job very efficiently and effectively and—might I say— at considerably less cost than their predecessor, Wool International. I just draw the attention of members to a couple of points in the 2000 annual report of WoolStock Australia. If we look at the notes attached to the financial statements, we find the remuneration of directors and executives. There has not been a major change in the remuneration of directors, but there has an amazing reduction in costs in running this outfit if we look at executives. We see the difference privatisation has made to these costs. I think it demonstrates yet again that there are a lot of areas where government should not be involved.

Under executives' remuneration we see that in the year 1999 there were 21 executives who had salaries over $100,000. If we look at the year 2000 we see that it is down to seven—and, I hasten to add, of the seven executives reported for the year, five were included as a consequence of the payment of retirement or redundancy benefits as a consequence of the wind-down of Wool International. The size of those redundancy benefits was fairly significant. One former executive officer got a payout of over $400,000 with the winding up of Wool International—not insignificant by any measure, but again this was the system that the Labor Party had put in place under the original Wool International Act 1993. It shows that, when we had a statutory body running the outfit, not only was it inefficient, not only was it constrained by the statutory requirements that placed on this, but it was costly, both in terms of running expenses and also because it did not have the flexibility that the privatised WoolStock Australia has had. The results shown by WoolStock Australia make it absolutely clear that this has been achieved.

The opening paragraph of the report by the chairman, Don McGauchie, puts to rest the comments of the member for Corio. It just shows how wrong he got it when he tried to criticise the decision to set up WoolStock. Don McGauchie says:

I am pleased to report that WoolStock has completed a most successful first year of operations selling down the stockpile, reducing debt and generating sufficient cash flow to enable the Company to declare an initial distribution of 20 cents per unit to security holders resulting in a total payment of $69.9 million on 12 September 2000.

That shows quite clearly that the government's decision was a very good one. It is something that members of the coalition should be very proud of and it shows that, in dealing with the problems we inherited from the Labor government, we have moved swiftly, efficiently and effectively through both WoolStock Australia and Australian Wool Services, which came out of the McLachlan task force as the other part of the reforms. We have seen opportunities for wool producers and wool businesses right through the chain to look forward with renewed confidence, albeit one that is tempered by the reality that wool is an internationally traded fibre and will be subject to the pressures that result from the state of the international economy.

I am very pleased to be able to support this bill. I know my good friend and colleague the member for Corangamite will also be speaking, and I am sure he has some other very significant and important points to add. I believe the government has moved and most efficiently, not only in disposing of the stockpile but in ensuring that those wool producers who did contribute through their wool taxes between 1993 and 1996 are to get some benefits back as soon as they are available.