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Wednesday, 29 August 2001
Page: 30603

Mr St CLAIR (11:12 AM) —It certainly gives me great pleasure to stand in this place. We are entering a new era, and the wool industry has gone through tremendous changes. As many in this House are aware, I live in the very small village of Guyra in the middle of New England, in the high country at nearly 4,500 feet. We are in the middle of some of the finest wool growing country in this nation, if not the world. We certainly see that. We are also in the middle of an area that has very innovative and very forward looking wool growers. I have lived in the district for the last 18 years and have seen the tremendous changes that have taken place in the wool industry. Today really is a great day. As the member for Corangamite more eloquently put in his speech on the Wool International Amendment Bill 2001, we have seen the end of something that has been held over the head of this industry and the wool growers for too long.

The importance of the wool industry and wool growers to New England cannot be understated. I do take exception to the member for Wannon suggesting that Hamilton should be the centre of fine wool growing in this country. I think everyone knows that New England, because of the strength of its wool and the superfineness of its wool, certainly does not have to worry about having competitors because quite often ours are the ones that all others are judged by.

It is great news that WoolStock Australia has sold the last of the stockpile that a decade ago stood at 4.7 million bales. I wonder whether, when people look back at some of the speeches that were given today by the member for Corangamite and the member for Wannon, they will understand just how many bales that really is when you start looking at the physical size of it. The suggestion—which I think the member for Wannon was talking about earlier—that it should be burnt is just extraordinary. Actually the member for Corangamite had said that. Somewhere in the vicinity of $2.8 billion of both the government's and wool growers' money was tied up in that stockpile.

Of course, hindsight is a marvellous asset. When the wool reserve price scheme was established, I think it had the best of good intentions. I did not necessarily agree with them at that point, but I was not part of the industry; I was not a wool grower. It provided producers with greater price stability, and while it operated at prices that were just that—floor prices—all went reasonably well. Then, in 1989 to 1991, reserve prices were set at unsustainable levels. I remember that period; I remember it distinctly as a period of quite extraordinary activity at a time when you could just see the price rising up and up.

I have spent all my life in another commodity industry, the timber industry. Our industry is governed a bit by the building industry, of course, and it is cyclical. When you are in these industries for long periods of time, you know that they are cyclical. It is a boom and bust cycle—always has been. Having seen what was happening in the late 1980s and seeing the unsustainable prices that were being paid, I knew that the inevitable had to come and, of course, it did. The stockpile soared, as we are all aware, and the scheme collapsed, and for the best part of a decade the industry had a stockpile hanging over its head. That was when the restructuring of this industry with wool growers came about.

In my electorate of New England, I saw people who were able to cope with the situation; I saw people who had gained a great deal of benefit and asset building out of the higher prices that were achieved, putting money back into their places and paying off debt. But I also saw a number of people who went the other way and believed that these sorts of prices were sustainable forever and who were not necessarily as frugal as they should have been, and then they paid the penalty. I saw land prices, for example, go through the roof. An area which was always known to be sustainable in our part of the country was probably around 1,200 acres; people were paying the price of 1,200 acres but were only buying 600 acres. They were making a substantial living off that but it was unsustainable. Quite often, the older and sometimes more business orientated wool growers said, `This is not sustainable; we will pay off debt, do maintenance or bring our assets up to scratch.'

Now, with the stockpile gone, the government's amendment bill will wind up WoolStock Australia and bring forward the final cash distribution to wool growers. Today's bill is a popular bill. It is something that is discussed in my electorate. This morning I spoke to a number of wool growers to say, `There are three of us on the government side talking on this important bill today and, when you look at the three—the member for Corangamite, the member for Wannon and me—we represent huge areas of some of the finest wool-growing country in this nation.' It is a good day for them today. Certainly there were times in the past decade when many of my constituent wool growers thought quite honestly that this day would not come. They were concerned. But it has come, and it is a great day not only for wool growers but for us as a nation.

The wool industry is able to trade completely freely in the market. The member for Corangamite expressed his views on that, and I support them very strongly. It is able to do that now by producing a product that the buyers want and taking some responsibility for ensuring that their breeding programs on the quality, fineness, et cetera of the wool product will create a fibre that will compete in the world market, find its place and be able to have people trading in futures on wool as a fibre. More particularly, the buyers are now concerned about what happens to their product after it leaves the farm gate, rather than putting all their effort into concerning themselves with what happens on the property. They can do that now without the thought of any excess stock hanging over the market. I read in a newspaper recently of someone suggesting that it was a bad thing that the wool stockpile had gone; I could not believe such an attitude, that people could actually still think that maybe it was a great thing to have some sort of a stockpile. In my industry, as I have said, I think that that is an appalling way to do business.

I am glad to see the stockpile gone and I am certainly pleased that we have finished with the 4.7 million bales in 1991 and with the debt of $2.8 billion. I do not think we can say it often enough because, when people look back and see what happened when governments got involved in industries and when select groups within those industries came into parliament to exert pressure to get their own way, quite often we find that those exerting that will on governments were not necessarily those leading the industry.

Mr McArthur —Can you just repeat that debt?

Mr St CLAIR —Thank you very much, member for Corangamite, I will because I think that it has to go down. The stockpile peaked at nearly five million bales in 1991 with a debt to wool growers and the Australian government of $2.8 billion—that is, $2,800 million. If the act is not amended then the final distribution cannot take place until after July 2002. I do call on the Senate to give smooth passage to this legislation so that the growers can receive their payments as soon as possible. WoolStock shareholders are typically wool growers who carried the burden of the debt associated with the stockpile during the industry's very difficult years from 1993 through to about 1996-97. In my electorate some of our wool growers struggled to survive and that had an effect on the social and economic fabric of our towns and it had an effect on the personal health of wool growers in the region.

The sell down of the stockpile demonstrates the success of privatising Wool International in July 1999 to allow WoolStock Australia to take over the job of managing the stockpile. In October 1998, and largely in response to the economic crisis in Asia, the government agreed to industry calls to freeze sales from the stockpile and to privatise Wool International. Wool International was originally established in 1993 to dispose of the wool stockpile and to repay the Commonweatlh government guaranteed debt accumulated under what was known as the reserve price scheme. At the time that Wool International took over, the stockpile stood at around 3.8 million bales—again a figure of astronomical proportions—with a guaranteed debt to the Commonwealth of some $2,200 million.

Wool International was initially required to sell a set number of bales per quarter, but amendments to its governing legislation provided it with a selling scheme with greater flexibility. On 1 July 1999 WoolStock Australia was incorporated. It has successfully disposed of the wool stockpile and retired the associated debt ahead of schedule while at the same time maximising the net return to shareholders. Donald McGauchie and members of the WoolStock board have played a key role in this operation and really do deserve our congratulations. It needs to be said that these Australians took on the very onerous job of producing a result at the end of the day for wool growers. I believe in any talks on this issue they need that recognition, as does the Minister for Agriculture, Fisheries and Forestry, who has just come in. He has seen this pass through to this time and he, together with the government, ought to be congratulated.

Shareholders were given units of entitlement to the surplus equity generated by Wool International's selling off of the stockpile. Shareholders have already received two payments from WoolStock units and will receive a further distribution of payments. While this is very positive news for the wool industry, there are many in the industry who have now turned their focus to the operations of the privatised Australia Wool Research and Promotion Organisation that is now the shareholder owner company, Australian Wool Services Ltd. Certainly Australia's wool growers now have significantly more control over the future of their industry, and so they should. It is something they have been demanding for many years.

The jury is still out on the operations of Australian Wool Services Ltd. I fully welcome the new commercial focus of Australian Wool Innovation Pty Ltd. A project which is very close to my heart is the Sheep Industry Cooperative Research Centre in Armidale. This project is not being supported by either the managing director, Mr Dorber, or Australian Wool Innovation. I would like to place on record my disappointment at this lack of support both from Mr Dorber and from the company. The Sheep Industry Cooperative Research Centre is a fantastic project. It is one that should go ahead and it is one that will have all the commercial focus that is needed for the whole of the industry. It will be one of the few times that meat and fibre research has been brought together. However, having placed on record my disappointment, I do not wish to sound too negative about Australian Wool International. As I have said, the jury is still out, and I sincerely hope that Mr Dorber succeeds for the industry's sake and for the sake of wool growers throughout New England. I shall be keeping a watch to ensure that wool growers, not only in New England but around Australia, have received a fair and equitable deal, and that certainly involves keeping government out of it altogether.

This amendment to the Wool International Act is without doubt one of the most popular amendments that I have had the pleasure of supporting over the last three years. Today is a great day for wool growers in New England, Corangamite, Wannon, and everywhere else around Australia, including Eden-Monaro.