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Monday, 24 May 1993
Page: 1110


Senator CRANE (6.02 p.m.) —First of all, I compliment my colleague Senator Panizza on the very important matters that he has raised tonight. In my comments tonight on these Appropriation and Supply Bills, I want to deal with just one particular aspect which came out of the additional estimates the other night as a result of my questioning. It relates to the lack of coordination within the various arms of government, particularly in the Department of Trade, Austrade, which is tied to it, the Department of Primary Industries and Energy, the Australian Wool Corporation and the Australian Wool Realisation Commission. In doing that, while I will not go over all the debate that occurred, I wish to quote a number of statements which highlight very much the point that I wish to make. My question to the Minister at the time, Senator Gareth Evans, was as follows:

You have led me to my next question, Minister. I make particular reference to the current wool crisis. What coordination is there between the Department of Trade, the Department of Primary Industries and Energy and the Wool Realisation Commission in terms of identification of potential markets and alternative uses for wool?

Senator Evans said:

I think that question is better answered in the context of the inquiry that is now proceeding about how we might best take advantage of market conditions, getting rid of the stockpile and generally moving the industry forward. I suppose someone here might be in a position to give a snapshot account of how these arrangements have worked in the past.

I think that answer from the responsible Minister—in this case Senator Evans—highlights very clearly just how little coordination there is, how little he knew about what was going on and how poorly this Government had addressed the current crisis in the wool industry. Senator Evans then referred the matter to the officer at the table Mr Delofski. Mr Delofski said:

I am not aware that we are closely involved in the issue that you have identified . . .

I find that quite remarkable coming from the Department of Foreign Affairs and Trade which has, as we know, units all around the world in various countries. Of course, the answers were very similar when I questioned Austrade officers, although they had a little more knowledge of the matter that I was questioning them on, and the answers were not very different when it came to the Department of Primary Industries and Energy.

  The reason I raise this is that it is now almost three years since the severe wool crisis hit Australia. Its impact is felt throughout the economy, whether it be on the producers on the ground, the service people or on the capacity of the industry to earn export dollars. This country has operated for three years in a total void with regard to a management plan for handling the stockpile. I want to quote from what I said in a debate in this place on 18 October 1990. It was at a time when people on this side of the chamber were saying that to get on top of the problems of a collapsed reserve price and a stockpile in excess of four billion bales a major effort had to be made to get a balance between supply and demand. I am sure that Senator Sherry would remember what I said:

  In addition to the already announced low value slaughter scheme to humanely slaughter old sheep at an estimated cost of up to a $2 a head, a commercial scheme to slaughter the younger sheep must be considered. I would just like to say that unfortunately, in my view, the industry has no choice but to put in place a commercial slaughter scheme. In other words, I am saying that in terms of the situation now with the oversupply of wool the industry is at D-day and it is absolutely essential that the numbers be got down to around 130 million so that we have some chance of equating production with demand.

  Unfortunately, and as unpalatable and difficult as it is, I cannot see any other way. If this action is not taken, the stockpile will become an albatross

I emphasise that—

around the neck of the industry and more and more producers will be bankrupted as the tax goes up. This is not a debate about the floor price or the Corporation's existence or non-existence. Regardless of the floor price or the role of the Corporation, supply has to be reduced to demand.

On 15 November I said a very similar thing:

  The position is totally unsustainable and it cannot go on. The stockpile has become an albatross which unless brought under control will destroy the industry in two ways: firstly, by distortion of market prices into the future and, secondly, in that the tax required to maintain it will send producers broke.

We have now had almost three years of crisis and this Government has no plan to manage, properly and sustainably, the Australian wool industry or to overcome its current problems. It is about time—to put it quite frankly—that government members got off their butts, put together a comprehensive plan, coordinated the various arms of government, did the research required and set up an environment where private enterprise would feel comfortable about coming back into the Australian wool scene, purchasing our wool as it used to be purchased and developing new markets. I could criticise the Government all night—that is very easy to do—and it deserves to be criticised, because, as I have said, it has had almost three years to address this problem.

  The reason I spent a significant amount of Additional Estimates time the other night was to try to ascertain whether the various departments or arms of government, in conjunction with the Australian Wool Realisation Commission and the Australian Wool Corporation, which are also set up under statutes of parliament, were doing anything that was at all imaginative or likely to develop in the future. An announcement has been made with regard to the Garnaut report. We had the Vines report. We have had a number of reports into the wool industry and none of them has addressed the essential point—none of them has looked at how we are going to manage the wool industry through this difficult period, with supply still running where it is and the stockpile overhanging the market. As I predicted two and a half years ago, the stockpile has become an albatross around the industry's neck.

  The proposition that I wish to put before this Parliament and the Government and will be putting before the Garnaut committee—in fact, I have even started processing the finer detail—is that a highly refined technical unit should be set up between the Department of Trade, the Department of Primary Industries and Energy, Austrade, the Australian Wool Realisation Commission, the Australian Wool Corporation and, I suggest, two professional, highly motivated marketers. This unit should have the responsibility of analysing and objectively researching various opportunistic markets, if I can put it that way, for alternative uses of wool.

  We have heard many people throwing around ideas such that we ought to hand the stockpile to the CWA and get it all knitted into socks. We have heard other suggestions that a large percentage of the stockpile should be used for insulation. We have heard that barter schemes should be set up between what was formerly the USSR and other countries in the world. But these things have just been put on the table. None of them has been followed through. They need to be tested to see whether they have a place in the market. We then need to find people in private enterprise, whether it be within Australia or externally, to look at the total proposition.

  I am putting before this Parliament and the Garnaut committee that we need to use the best brains in these departments and a couple of marketers and resource them properly so that they can carry out international research. I received a phone call about 10 days ago from some people from India who happened to be in Western Australia. They said that there was an opportunity in northern India, Pakistan and Bangladesh for wool to be used as insulation. They asked where they could go to find out how they could progress this idea. If we had a finely tuned, developed research unit that knew what it would cost to do these things and that could go into these areas and find out what was required and what the market potential was, it might give us a chance to do something constructive about the problem.

  One thing I know is that we cannot continue to sit back in Australia and hope that somebody will come along with a big golden egg and solve the problem for us, because it will not happen; it is as simple as that. We cannot sit back in Australia and wait for this Government to solve the problem. It has to be driven into doing it. It is absolutely crucial that we in this place drive the Government. I have heard comments that some of these ideas that have been put forward are snake oil remedies. I agree that some may be snake oil remedies, but it does not necessarily mean that they all are or that they cannot be utilised somewhere.

  The point that always comes to mind when it comes to the utilisation of significant levels of wool from the stockpile, even to pick up the additional production that exists in Australia, is that of insulation. A small company operating in Perth is insulating houses using a different process from the batt processes. It is cheaper; better in quality; safer from the fire aspect; and protected from infestation of bugs and wogs. That process has been neatly developed.

  Until the Government actually gives somebody the resources, responsibility, direction and the guidelines and gets people who have a bit of will, get up and go and guts, we will just sit back and watch the wool industry wallow in the bottom of the trough, as it is doing now. I will have my critics in the wool industry because I have dared suggest we should walk through the golden gates of the Wool Corporation. But the structure of the Australian Wool Corporation is just so cumbersome and weighed down in its various aspects that it is not actually addressing the key point of finding markets. It is not finding alternative markets, researching those markets, measuring their size and potential, and then coordinating with private enterprise to bring about the development of those markets. I seek leave to table the extract from Focus on Wool, volume 2, No. 3, July 1992, headed `New structure of Australia's wool industry'.

  Leave granted.


Senator CRANE —I am not suggesting that the Government should actually be the processor or the manufacturer of the wool, but there is a role for it, when coordinated properly, in bringing about some of these things through its various arms. These arms of government could combine with a couple of dynamic people in private enterprise who are skilled in marketing—which would make a total of about seven people. It would be necessary to make sure that they had a very defined research unit and marketing promotional unit. It would be absolutely crucial that this body be resourced properly and thoroughly.

  Estimates have been made of the additional income tax this Government received because of the operation of the reserve price scheme while the four million or so bales were stored. After the $1.8 billion of growers' money in reserve was spent, another $2.3 billion to $2.5 billion in funds was borrowed which was used to buy our wool, put it into the stockpile and increase the price. In my estimation, the additional income tax received by the Government was in the order of $750 million. It would not seem unreasonable to me, in view of the benefits that the Government and the community received from the wool reserve price scheme through additional income tax, that such a body could be resourced. I would give it a life of three to five years, with something like $50 million, so that it could get out there and tie it up. There would be no need for this body to set up new office structures because we already have offices established around the world, through our various embassies and trade divisions.

  I have spent virtually all of my time in this appropriations debate speaking on one thing: the wool industry. I have thought a lot about something progressive, active and dynamic that will actually address the issue and not let it sit around as it has done for almost the last three years.

  I would like somebody to come up with a better idea or a better way of doing this. I have not heard anything yet, but I do know that if Australians, this Government and this Senate value rural Australia—if they value the foundations upon which the wealth of this nation was built, the people who live in rural Australia and the multiplier effect of the jobs that come out of rural Australia—they will look very seriously at what I have put before them tonight. If we do not address this issue we will see the worst infrastructure collapse in this country since European settlement.

  The wool industry today—and I must declare my interest in this area because I am a woolgrower—is in a very serious state. In fact, `serious' is not a strong enough word. Last year the wool industry, in the depths of despair, still put $3.8 billion into the Australian economy. If it is not worth having a close look—and I mean a close look—and actually taking up some of these issues and doing something about them, then it is not worth continuing to live in this country. I challenge the Government here tonight to look very seriously at what I have put before it and, after 2 1/2 to three years, not to sit around and wait any longer. The people out there cannot afford it and they deserve better treatment.