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Wednesday, 28 October 1970

Mr IRWIN (Mitchell) - I rise tonight on this very important occasion to add what I trust will be an intelligent appreciation of the situation as it now exists in regard to the wool industry. I wanted to quote something which I noticed on my office table, lt is: 'God grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.' I approach this subject tonight in that vein. I want to impress upon those who hold very definite ideas that people holding contrary ideas are just as sincere and as genuine in their attempts to do the best thing possible for the growers of wool in this country. I want to state right now without any qualification whatsoever that this scheme will not render unto the grower one extra cent. I have no better authority for that statement than Sir William Gunn who stated some 3 or 4 months ago that he could not give any guarantee that there would be any increase in the price of wool as a result of this scheme.

The further decrease in the price of wool in Australia has been brought about by the lack of confidence in all sections of the industry engendered by a series of events that have occurred this year. Firstly, there were the stage managed meetings that growers held earlier this year at the instigation of the Australian Wool Board and graziers' organisations, at which resolutions were passed requesting and demanding that a single marketing authority be set up. Secondly, there was the Wool Board's report on the establishment of a marketing authority followed by the report of the Wool Board's Advisory Committee recommending the setting up of a single statutory authority and the establishment of a reserve price and an acquisition scheme. The latter has been described as a shocker, even by those now in favour of the marketing authority and reserve price scheme which this Bill provides for. Thirdly, rumours spread overseas in September that wool sales were to be suspended for one month. This caused confusion all over the world and the rumours should have been promptly denied by Sir William Gunn. He did not deny that there would be a suspension of sales. Fourthly, there was the curt reception the members of the International Wool Textile Organisation received from some members of the wool industry and, fifthly, there was the opposition to some of the sections of Sir John Crawford's report to the Minister for Primary Industry (Mr Anthony).

Most industries spend thousands of dollars attracting users and buyers of their products. The Wool Board and graziers' and growers' associations - not the majority of growers - spend much money and effort in driving them away. Mr Gullett's statement in regard to a buyers' cartel has cast suspicion and a stigma on the other 166 buyers. Mr Gullett should name the 2 buyers who informed him that a cartel was arranged to bring about a decrease in the price of wool in Australia and the Government should appoint a select committee which would be required to bring in its findings within a fortnight. We could bring Mr Gullett before the committee, find out the names of the buyers and bring the representatives of the buyers before the committee. Then once and for all it could be established whether a cartel is operating to the disadvantage of the wool growers in Australia. This time last year I said it appeared to me that a cartel was operating.

We have a golden opportunity to prove one way or the other whether an organised attempt is being made to depress the price of wool in Australia. I trust the Government will grasp this opportunity with both hands to establish whether a cartel has been operating to the detriment of the wool industry in Australia. Fear and desperation can produce and have produced unreasoned logic. The lessons of the past and the techniques that we know are being discarded, not because they have fallen down but for schemes unproven. This is being done because it is a change.

We should consider the position of the wool industry. I have been to the Library and have traversed the history of the wool industry from the start of the First World War. Wool was a required commodity. Great Britain wanted it and she desperately desired that it should not be used by the enemy. More or less the same thing happened in the Second World War. Australia had a reserve price in 1921 when the British Government guaranteed a fixed price of 8c a lb. The industry quickly rehabilitated itself, the wool market became stable and the surplus wool which had built up was quickly sold. We have to look at the wool industry as it now is. Firstly, I want to deal with some of the statements made by the honourable member for Dawson (Dr Patterson) I am astounded that he is so ill-informed in regard to marketing. He stated that all experts had agreed to an acquisition scheme. If honourable members go back to the Philp report of 1961 they will find that it strenuously opposed the establishment of the statutory authority, a reserve price and an acquisition scheme.

Dr Patterson - I said: 'Of wool growers'.

Mr IRWIN - I recorded the honourable member as saying 'all experts'. Now he is speaking about willing buyers. He paraded this suggestion of collusion. 1 ask him, if he is so definite that there is collusion, why does he not bring the evidence before the House? From investigations that I have made and from reading the Australian Encyclopaedia I find that in the wool industry there has been not one defalcation in the payment for wool purchased. I find that when there has been disagreement or misrepresentation in regard to marketing, not once has lt gone to court. The differences have been settled amicably. The wool industry must be a remarkable one to have existed so long with this record. There would be no other sphere of business where this would happen.

I want to impress upon the people the position in which the wool industry now finds itself. In 1958 there was a drop in the price of wool. Man-made fibres were 50 per cent dearer than wool in 1958 when wool was at a lower price than it had been for a few years. But now, at the prices that were applicable 3 weeks ago, man-made fibres are 50 per cent cheaper than wool fibres. Have honourable members opposite got that in their minds? Three weeks ago man-made fibres were 50 per cent cheaper than wool fibres. We have got to face the facts of life and the facts of marketing. Almost every segment of the wool industry is in difficulty. This season wool garments and fabrics could not find a ready market in the United Kingdom and Europe. It is no good putting our heads in the sand and not standing up to the realities of the situation. Wool has certain qualities that are incomparable.

Our difficulties arise mainly from the inability of the International Wool Secretariat and the Australian Wool Board to do their job as they should. Australia subscribes many millions of dollars to the International Wool Secretariat. It would not agree to promote the blends such as terylene and wool and wool with other fibres. There was a terrific market there, but we kept to the old idea of selling all-wool garments. We have missed out on that segment of the trade, and now we are suffering. Sir William Gunn must bear the brunt - as a general does if he loses a battle - for the decline in the industry as it now exists. The Wool Board has let the growers of Australia down. I have heard some people say that the Government should have come in. I say that the Government should come in only when it is requested to do so. We do not interfere with organisations like Broken Hill Proprietary Company Ltd or Lysaghts. They run their businesses. If it wants any assistance from the Government, it is the industry's job to approach the Government. Sir William Gunn sold the wool growers down the drain. He should take full responsibility for what has occurred in the wool industry.

I want to get my message over as quickly as I can, so I will condense as much as I can. I will read a letter that I sent. We should not have any ideas that the majority of wool growers are in favour of this scheme. I have batches of letters, not only from individuals but from individuals on behalf of hundreds of other wool growers. There is no unanimous approval of this scheme or of any other wool marketing scheme. 1 can prove that. I can prove that the owners of 60 per cent of- Australia's sheep are opposed to the scheme. They want loan money. Furthermore, they want it at commercial rates. They say that, if the industry is not viable and cannot stand on its feet, it is time they got out. I shall read a letter that I wrote to Mr Hudson, who wrote to me about a certain matter. -Because it is written I can read it quickly and I will be able to finish quoting it before I resume my seat. It reads:

Thank you for your letter of 19th October which f have read carefully and with interest. While I share your concern at the present situation in which most primary producers are placed, I feel that certain of your statements need interpretation. In some respects I do not agree with your conclusions and necessarily, therefore, I do not agree with the steps you suggest for correcting problems.

I shall refer to several of the points you make in the order in which they appear in your letter.

(a)   Forward Selling

I do not dispute your contention that some SO per cent of the wool clip is sold on firm contracts for delivery at nominated dates.

The question of the impact on prices of the practice of selling forward was fully investigated by the Philp Committee in 1961, and has been frequently discussed in the last few years. I believe the following points are valid:

(i)   wool is faced with strong and increasing competition from man-made fibres, which are immediately available to the mills. Mill programmes are established at least one year ahead, and supplies of fibres must be assured. The mills cannot risk a breakdown in supply which will throw machinery and labour idle.

Forward contracts allow the mills to schedule deliveries of wool, recognising that the source of supply of the raw material is far distant from the ultimate consumer market.

Forward contracts, therefore, counteract the immediate availability of man-made fibres and place wool in a sounder competitive position.

You argue that the practice depresses prices as the forward contract prices have a limiting effect on competition. It can equally well be argued that as deliveries must be effected in accordance with contract terms, competition can be stimulated, a point emphasised by the Philp Committee.

(ii)   Forward selling is not, in my view, the cause of the economic crisis among woolgrowers, nor is it the reason for the low level of prices. Three factors combine to determine profitability, production, which is determined in large measure by seasonal conditions, costs of production, which have continued to rise, and prices, which have fallen seriously.

Of these factors I regard the drought as the major adverse influence, as in the badly affected areas it has reduced production in quantity and quality, caused rapid increases in liabilities, and involved a higher rate of expenses.

Merely to lay the blame for the crisis on the level of wool prices is not logical, and clearly the adverse season has been a major cause in the reduction in prices. The modern, high-speed mill machinery cannot cope with the tender light wool which was been offered in large quantities, and this necessarily results in discounted values.

(iii)   If forward contracting were abolished another advantage would be conceded to man-made fibres, and I consider the adverse effect on wool prices would be serious. We cannot risk those steps which would make wool commercially hazardous to the buyer and user.

(b)   Gross Wool Income

The most recently published figures indicate a recovery in wool production this year which will in part offset the fall in value. Present indications are that gross wool realisations in 1970-71 will fall by not more than $150m, not $400m as estimated by you.

The probable reduction of $150m is serious in itself, but I must query your figure to ensure that proper perspective is maintained. I believe also, that the rules of supply and demand do apply to wool, and that an increased supply at a time of economic depression in several of the major buying countries, such as France and Italy, would in itself have a depressing effect on prices.

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