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Thursday, 20 May 1993
Page: 1017

Senator CALVERT (8.56 p.m.) —This debate really holds no pleasure for me, like all those people involved in the rural area, former wool farmers, and people who have associations with the bush. These people are absolutely disgusted and dismayed at what is happening to the wool industry. I was very pleased to see that the Parliamentary Secretary to Mr Crean, Senator Sherry, my colleague from Tasmania, was here earlier; I presume he is coming back. I hope he is here to hear what I say.

  What we are talking about tonight has been well laid out by previous speakers. We are trying to extend the period for the debt repayment on our stockpile from seven to eight years and make available $50 million for interest rate subsidies. At a time when we need leadership, direction and a united approach to try to put the wool industry back on track, the Australian Wool Realisation Commission Amendment Bill can be classed only as a very small contribution to what is a huge problem.

  There are a large number of speakers on this Bill. The time we have is limited, but I am pleased to see there are so many speakers—and so there should be. The whole matter of the wool stockpile, the debt, the drought and everything else associated with the wool industry at the moment can rightly be called a natural disaster of unprecedented length. Here we are in 1993 with the lowest wool prices in 50 years, coupled with Australia's farm debt, now a staggering $15.6 billion, with an annual interest bill in the order of $12 billion. It is almost getting to the stage of what is happening with our Government and its debt.

  The only suggestion and action from the Government is to provide an interest subsidy of $50 million and to defer the debt repayment for one year. On top of that, the Government has set up the 30th review we have had into the wool industry, chaired by Mr Garnaut. Let us hope that this 30th review will come up with something which may be of some help.

  We all know that the major problem facing the wool industry at the moment is the stockpile—some 3.9 million bales. Just to give some idea of the magnitude of that, the other day I read that it equates to 11.7 million filing cabinets. Stacked one on top of the other, it would measure 5.9 million metres high, compared with Mount Everest which is a mere 8,848 metres high.

  When I was having a game of tennis today I worked out that the two tennis courts we were on would probably hold, with a bit of luck, 1,000 thousand bales of wool. If we multiply that by 4,000 we get some idea of the quantity of wool that is waiting to be sold.

  Who do we blame for all of this? It is very easy to blame the Government and the wool corporation. I suppose that, for starters, they are the ones we should look at. Over the years we have seen the wool corporation and the International Wool Secretariat waste millions of dollars on extravagant and useless wool promotions. I suppose that was fair enough when wool was selling at 1,000c a kilogram. Who amongst the woolgrowers, including myself, was ever going to question the wool corporation?

  Nevertheless, in 1990 I did—at an Agricultural Outlook Conference here in Canberra. I had not been in this place very long. At a private briefing given to us by the chairman of the wool corporation, Hugh Beggs, he said that the wool stockpile then stood at 2.5 million bales. I said, `Are you sure that it is not 3.5 million bales?'. He said, `No, of course it's not'. A week later we found out that it was 3.5 million bales. He not only misled me but he also misled Australia by making that sort of statement. Obviously he was misled, too, because he was reported as saying—a very remarkable quote, which he will probably never put in a frame over the top of his bed—`We are lucky, those of us in the wool industry, in having a product which is almost infinitely marketable'.

  On that same day I also asked whether the wool corporation had a fall-back position if anything went wrong with the reserve price scheme, which was experiencing a bit of drama. At that time the reserve price was about 860c. It had just fallen back to 700c when Mr Kerin said that it was immutable and was never going to be moved. It was amazing to me that a multi-million dollar corporation that had been running the wool industry for so long did not have a fall-back position or an emergency plan.

  Of course, when we blame the wool corporation, we have to say that the Federal government of the time must take its share of the blame. We all remember—it has been spoken about here tonight—that the fiddling of the reserve price scheme did nothing but create uncertainty in the world wool markets. We all remember the approval of the 870c a kilogram floor price. The money—I hope I declared the fact that I am a woolgrower—that I was paying out of my wool account, which was not all that big, was going into an account to buy back the wool I was selling. When it was reduced to 700c a kilogram, with about three million bales in stock, the situation was quite ridiculous. The iron-clad guarantee that Mr Kerin gave did not last very long; in fact, it eroded very quickly. I have heard of some buyers losing heaps of money. One buyer lost $50 million. It is no wonder that those people buying our wool lost faith in the industry.

  Another casualty of the wool crisis has been the CSIRO's Wool Research and Development Corporation. Because of the drop in the price of wool, the amount of money that went into that organisation has dropped from $52 million in 1990 to $29 million this financial year. That has not only put at risk 150 jobs; it also going to put at risk the critical research carried out by that corporation.

  Senator Cooney would remember how, during our time on the animal welfare committee, we had an insight into the wonderful work the corporation is doing. Things such as the flystrike program, the worm-free sheep program, scouring technology, permacrease and Siromark which it has been involved with over the years will be seriously affected by the downturn in the wool industry.

  Madam Acting Deputy President, as a member of the rural and regional affairs committee, you would know that we have been in the ideal situation over the last year or so, during the drought inquiry that we conducted and now the present shearing industry inquiry, to observe just what is happening out in the bush and the effect it is having on not just the farmers or the woolgrowers but everybody who is concerned with this industry. I do not think anybody comprehends the effect that this whole matter is having on rural and regional Australia. Everybody is affected and everybody should be concerned.

  Now I want to talk about solutions. Some of the proposed solutions have been mixed and varied. Premier Goss in Queensland said we should burn the wool stockpile. Another suggested solution, from the CWA, was that we should knit it away. Another suggestion, from a well-known economist from the economics department of La Trobe University, Mr Peter Bardsley, was that we should double the wool tax—and that was to raise the incomes of the wool producers of this country. I do not know which of those would solve the problem. I do not think any of them would.

  The Wool Council of Australia is now calling for the amalgamation of the Australian Wool Realisation Commission, the Australian Wool Corporation and the Australian Wool Research and Development Corporation. Only a couple of years ago the Wool Council was calling for them to be split up because it believed they could do a better job separately. Now it is talking about getting them back together. So we are all over the place at the moment.

  I noted in a press article the other day that the Chairman of the Australian Wool Corporation, Mac Drysdale, has warned that unless the Russian economic situation improves we will never win back our third largest market. That leads me, in the last minute or so of the time available to me, to say that I appreciate the efforts Senator Sherry made on my behalf to allow me to see the Minister for Primary Industries and Energy (Mr Crean)—I think it was around 1 o'clock last Friday morning. I believe that is where the answer is. We have to get out there and sell this wool, and promote it, even if we have to take a few risks.

  At present the Wool Realisation Commission has one hand tied behind its back. It does not have the flexibility it needs. We have proposals coming forward all the time. Some of them are quite weird and some of them need investigation. One of the proposals that Senator Sherry and I know about is an offer by the Latvian Government, through Vis Feldmanis—a Tasmanian whom Senator Sherry would know, who is acting on behalf of the National Bank of Latvia—to sell half of its leading mills to Australian interests at bargain basement prices in exchange for wool and cash.

  They are the sorts of deals we should be looking at, and there are quite a few of them out there. Unfortunately, the Wool Realisation Commission does not have the flexibility to deal with those types of offers. If the wool corporation was a commercial operation rather than a semi-government operation, I believe it would have that flexibility.

  So we have to use more aggressive marketing and more imagination to try to reverse the trend whereby we have lost market share to cotton and synthetics. In 1950-51, for instance, when dags were bringing a pound a pound, we had 10 per cent of the market. Last financial year, 1991-92, we had 4.4 per cent of the market.

  I note today from our local paper in Hobart that a team of woolgrowers went to America and talked to the people over there about wool. They found that people in America, the consumers of our wool, are worried about the prickly effect of it. They are worried about this and that. Think of the millions of dollars that have been spent through the wool corporation trying to promote our wool over the years. It is millions of dollars down the drain if the man in the street in Los Angeles believes that wool is not the right fibre. If that is the case, all I can say is that all the money that the woolgrowers and the Government have put into wool promotion for so long has been for nothing.

  Senator Sherry has the job in front of him to convince his Minister that some changes have to be made. I hope that, as a result of this debate tonight, the suggestions that he has already and those that he will hear around Australia from more learned people than myself will go a long way towards turning around what has been, and is, one of the great industries in this country.