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Thursday, 20 June 1996
Page: 1907

Senator WOODLEY(11.36 a.m.) —The Primary Industries and Energy Legislation Amendment Bill (No.1) 1996 is an omnibus bill. I want to speak to only part of the bill, to schedules 6 and 7, which deal with the wool industry.

Late in 1993 there was legislation passed in this house setting up a body to deal with a problem that the then government had, or what it saw as a problem, and that is the very large stockpile of wool which had been gathered together and which the government saw as a liability. The government was spooked by the size of the stockpile and the cost of the debt which was accumulating. The government believed that something had to be done, and I agree with it. I think the whole nation was concerned about that issue.

The problem right from the beginning was that the government and the opposition at the time saw what should have been regarded as an asset as, in fact, a liability. It was from that point on, I think, that many of the problems which we encounter in the wool industry today really flowed. Professor Garnaut was engaged and came up with the solution, which was to be the fixed release schedule, and so the initiation of Wool International by legislation and the selling of an average of 187,000 bales of wool from the stockpile every quarter was put in place.

At the time, the Democrats proposed a method whereby the very rigid scheme put in place by the government could enjoy a certain amount of flexibility. We proposed a trigger price by which sales from the stockpile would cease if the price at auction fell below a certain figure, and sales from the stockpile could be increased if the price rose above a certain high trigger price. This would have given flexibility to Wool International in their marketing of the stockpile and, I believe, would have mitigated significantly the current situation we have in the wool industry. However, the proposal by the Democrats was defeated by Labor and the coalition voting together. I believe that what we initiated at that time would have worked and would have given flexibility, as I said a moment ago, to Wool International in the task that they were given.

However, the government, the opposition and Wool International continue on a predetermined legislated course to disaster because the fixed release schedule is far too rigid.

Senator Panizza —No.

Senator WOODLEY —Senator Panizza, I might say to you that the majority of woolgrowers in Australia agree with me. Wool International was not only bound by a far too rigid marketing device but also forced at times to discount the price of wool sold at auction. Wool International's own memo in November 1995 admits that.

Let me put on the record some examples, and this comes from a submission by Tom Silcock to the hearing on 17 June last. The example he gives is that, on Thursday, 23 November 1995, the market closed at 611 EMI. On Friday, 24 November 1995, Wool International sold all remaining December quarter quota for up to 40c under the market price of the day before. On Monday, 27 November 1995, exporters were appalled by the action of Wool International. Their orders and limits had all been reduced for the next day's auction so that, on Tuesday, 28 November 1995, the market fell 36c to 575 EMI. A recently conducted Rural Press survey of woolgrowers asked whether or not they believed a trigger price would improve the fixed release schedule. A survey of 370 woolgrowers conducted in December 1995 by Rural Press Ltd indicated that 74 per cent of Australian wool growers supported a trigger price for wool stockpile sales.

Senator Panizza —Where did you do that survey?

Senator WOODLEY —I didn't do it. It was done by Rural Press. There is a terrible distress—and I am not necessarily trying to make political capital—in primary industry, particularly in the wool industry, today. We are in a serious situation. We are facing the collapse of the wool industry and, without a strong agricultural sector, no nation can have confidence in its future.

The wool industry is still the foundation stone of agriculture and the pastoral industries in Australia. Let me read to you what the Financial Review said in reporting a meeting involving the Minister for Primary Industries and Energy, Mr John Anderson, in May this year:

The Federal Government warned yesterday that Australia's wool production would collapse unless prices improved soon—and foreshadowed moves to raise a further $70 million to $80 million from industry to promote demand.

The paper said, on the same day, that the wool industry had been warned it faced collapse. In another newspaper article, Mr Anderson is reported to have said, after an eight-hour crisis meeting of industry leaders:

. . . plummeting prices and demand were now reaching a dangerous climax.

The article continued:

Queensland's wool industry—

that is, the industry in my own state—

has been the hardest hit with years of drought on top of a price collapse. The state's production has plunged to its lowest level since records were kept early this century. Queensland Sheep and Wool Council senior vice-president, Don Compagnoni said he was pleased the Federal Government had recognised the depth of the crisis.

So I agree the government admits that there is a crisis in the wool industry. The problem is that it will not admit that the solutions which the Democrats proposed three years ago would have at least been a factor in making Wool International's job much easier, enabling them to be much more flexible in their approach to this problem.

Senator Bob Collins —What solutions were those, Senator?

Senator WOODLEY —The ones that you defeated when you voted against them, Senator Collins.

Senator Bob Collins —Yes. I just wanted you to refresh my memory—it was three years ago.

Senator WOODLEY —The trigger price.

Senator Bob Collins —Oh that, yes.

Senator WOODLEY —I just remind Senator Collins that I mentioned a survey of woolgrowers, where 74 per cent of woolgrowers actually agreed with the Democrats' amendment, which you defeated.

So we are facing a terrible problem in the wool industry in Australia. The legislation which we are debating today will do at least three things: it will enable Wool International to set up a subsidiary company to be known as Wool International Holdings; it will return a proportion of the tax to woolgrowers; and it will enable the wool industry contribution to be made to the Australian Animal Health Council. It is interesting that a number of woolgrowers have asked that the tax be used to fund retaining the stockpile as an asset rather than selling it at a liquidation sale. However, at this stage, the Democrats will support that part of the legislation.

The funding of the Australian Animal Health Council has some problems. One of the problems is using the wool tax for a rather remote purpose from the intentions of the original purpose of the wool tax, and there are some questions that I wonder whether the minister might address in his response to the second reading debate. These questions are: what contributions are other industries making to the Australian Animal Health Council? What is the role and purpose of the Australian Animal Health Council? Is the Australian Animal Health Council meeting some of the gaps which have been caused by states withdrawing from the animal health areas, such as the Victorian government's closure through privatisation of Victorian veterinary laboratories in a number of areas?

However, let me turn to Wool International Holdings. My main concern about Wool International Holdings is that it is being formed in the midst of a crisis of confidence in the wool industry—a crisis of confidence in the Wool Council and in Wool International. In the midst of that crisis of confidence, I wonder whether Wool International Holdings will be the panacea that the government and the Labor Party believe it should be. If one does not have confidence in those who are promoting the setting up of this particular marketing device, one probably could not have confidence in the device either.

I have had many phone calls both in favour of and against this legislation, and it is very hard to balance out where the majority lies. For this reason I did ask the Senate, and the Senate agreed, to hold some hearings on the matter. These hearings were held on 30 May and 17 June this year. I might add that my concern to hold hearings was based on a number of meetings which I attended, and others which were communicated to me, in Victoria, in Western Australia and in New South Wales.

I would like to put on the record some of the evidence given by witnesses at the hearings, particularly evidence given on 17 June. I want to do this because I believe I have to underline to the Senate that there is a lack of confidence in Wool International, in the Wool Council and, therefore, in Wool International Holdings. Mr Massy, a woolgrower from Cooma in New South Wales, said this:

If I can be blunt, let us be very clear about cause and effect. The cause is a combination of Wool Council agripolitics and an interfering statutory marketing authority and government, including the bureaucracy, all of whom thought they could ignore the customer and drive a system to their own advantage. They have managed to bring an industry to its knees. The effect is that wounded customers are reluctant to commit capital to the industry because they are fearful of the unpredictability of the industry, owing to ongoing political interference.

A second speaker at that particular hearing was Mr David Webster, Chairman of the Committee to Reform Legislation, Stud Merino Breeders Association of Western Australia. He said:

Through the Stud Merino Breeders Association . . . a move was initiated out of New South Wales. . . . New South Wales initiated the current major movement that we are seeing from the woolgrowers—in fact, I believe it is the biggest movement of growers in the history of our industry in my lifetime—to express their opinions and concerns about what has happened over the last year.

He goes on to say that there are representatives in each state. He also says this:

On a personal basis, our organisation has the closest grower network of any organisation in this country. We go onto their properties; we talk to them numerous times during the year. We are now seeing instances where kids' education is getting cut off. The very rural social fabric is in decay. The wool industry is the cornerstone in the rural areas because it involves so many people. It is a people's industry, and I do not think we should ever forget that. You cannot run it without people. It is far reaching throughout the whole community.

Another grower from Hay in New South Wales spoke about his reticence towards Wool International Holdings because of its close association with Wool International and the Wool Council of Australia. Tom Silcock, a grower from Horsham in Victoria, said:

The government has put in place an organisation in Wool International which has little regard for the wool growers or the wool industry but is purely focused on reducing government borrowings and the government exposure through its guarantee. The board of Wool International was appointed to achieve that outcome and, as I have already shown you and can show you more, it has repeatedly shown scant regard to the effects of their actions on the wool industry. If Wool International Holdings has any chance it must be totally separate from Wool International, and real wool growers of Australia must have real input.

Mr Hill from Benalla in Victoria repeated the same story. Because I am running out of time, I will not read into the record the many comments which were made. The big problem is that, if we are going to set up a subsidiary company, it must have the confidence of the growers and the rest of the industry. I am saying that certain communities in Australia have a distinct lack of confidence.

The Senate Rural and Regional Affairs and Transport Legislation Committee handed down a day ago its report on this matter. I put in a dissenting report. I would like to put on the record a couple of reasons why I felt I needed to make a dissenting report. The first reason is that one of the conclusions of this report was that those opposed to the bill represent a minority. I question that conclusion. No figures of the number of wool growers represented by the Wool Council of Australia are available, but a generous estimation is 50 per cent. The Pastoralists and Graziers Association of Western Australia says 40 per cent.

In that report I put on the record all of the bodies which have raised concerns about this legislation. They include the Pastoralists and Graziers Association of Western Australia, the Western Australian Farmers Federation, the South Australian Farmers Federation, and the Western Australian and New South Wales stud marino breeders associations. Many individuals also raised concerns.

Another concern I have is that Wool International did not appear at the hearing but they were the main focus of the criticisms. They did give us written evidence but, in the words of Sir James Killen in a speech to the House of Representatives some years ago, evidence which is not examined is not worth very much. Our inability to examine the evidence given by Wool International in writing seriously reduces its value. I am very disappointed that they did not appear in person.

I also raised some objections to the style and content of this report in that the arguments which were put in chapters 1 and 2 in favour of the legislation stood on their own but all through chapter 3, which put the arguments against the legislation, contrary propositions were put for every point. It seems to me that is a pretty poor way of dealing with objections to and evidence in favour of legislation.

Later in this debate I will move a number of amendments, and I will give reasons for those at that time. But I urge the Senate to consider this legislation, particularly this part of it, very carefully indeed.