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Thursday, 15 May 1980
Page: 2323


Senator WALSH (Western Australia) - This Bill contains a number of individual amendments to the parent Wool Industry Act. The major amendment provides for the return to contributing wool growers of their contributions to the Wool Market Support Fund- a five per cent levy which was initiated by the Federal Labor Government in 1974 to underwrite the wool reserve price scheme. It was understood by most people associated with the industry and certainly by most wool growers at the time and had long been advocated by the Labor Party that this fund ought to revolve after it reached a reserve of $300m to $350m. We welcome the agreement of the Government expressed in this Bill that this should be done. We will therefore be supporting the Bill.

However, although we agree with the major issue we have some reservations about the procedures which the Government intends to follow not only now but also in the future. We accept that because of the paucity of records available directly to the Australian Wool Corporation it is necessary that wool brokers and other wool traders be involved in the redistribution of the 1974-75 wool growers' contribution in the coming financial year. But since this administrative procedure will necessarily be overseen by the Australian Wool Corporation it follows inevitably that there will be a significant degree of administrative duplication. For that reason we believe that once sufficient information has been collected in the central records of the Australian Wool Corporation- proposed Division 6 of the Wool Industry Amendment Bill provides the mechanism by which such information could be collected- the administration for the redistribution of funds should be transferred entirely to the Corporation. Therefore, I move:

At end of motion, add ", but the Senate:

(a)   believes that refunds should be administered by the Australian Wool Corporation only, not by wool selling brokers and wool dealers, and

(b)   calls on the Government to transfer administration of the refunds to the Corporation immediately sufficient information has been obtained pursuant to proposed Division 6 (sections 42x, 42y and 42ab) of the Bill".


The PRESIDENT -Is the amendment seconded?


Senator Robertson - Yes, I second the amendment.


Senator WALSH - The amendment is consistent with the view I have expressed that we recognise that the brokers and other agents must necessarily be involved in the initial stages. But we believe it is possible and preferable ultimately to transfer the administration entirely to the Corporation. I do not know what the Government's reaction to this will be. It did not receive very much consideration in the House of Representatives. Those honourable senators who vote against this amendment will be voting for the duplication of administrative expenses presumably in perpetuity. That is probably what the National Council of Wool Selling Brokers of Australia would like them to do. I dare say that organisation has the ear of the Prime Minister (Mr Malcolm Fraser). The Prime Minister will decide the way in which honourable senators who sit on the other side of the aisle will vote, as he normally does.

I must take to task the Minister for Primary Industry (Mr Nixon) who introduced this Bill, for the assertion at the end of his second reading speech that adequate consultation had taken place with the industry on this matter. That is a very serious misstatement of the facts. A draft Bill was not made available to members of the Wool Council of Australian until about three hours before the legislation was introduced into the House of Representatives. Even then I think they may have obtained it through irregular procedures. The legislation was introduced into the House of Representatives on a Thursday night. It was pushed through on the following Thursday afternoon. I note that this contrasts quite starkly, and for the Government very badly, with the procedures followed by the Labor Government in 1974 when major amendments were made to the Wool Marketing Act.

The Wool Industry Bill of 1974-a major Billwas introduced on 17 July and passed by the House of Representatives on 25 September. In other words 70 days were allowed for consideration and consultation by parliamentarians and by other people interested in the industry. The second BUI to amend the Wool Industry Act to provide for the reserve price scheme did not have that long. It was introduced on 19 November and passed through the House of Representatives on 4 December. It had 15 days for consideration by the House of Representatives. On the other hand, this Government allowed less than one week for the Bill to pass through the House of Representatives. We all know that in the vast majority of cases, contrary to the cant and humbug we sometimes hear about the Senate being a House of review, once a Bill is passed through the House of Representatives it is assured of automatic passage through the Senate.

I should like to refer to the other significant changes in the Bill. Clause 7 of the amending Bill provides that the pre-marketing costs incurred by the Corporation be set as a debit against the Market Support Fund instead of it being taken out of the general administration of the expenses of the Corporation, as at present. In his second reading speech the Minister for National Development and Energy (Senator Carrick) said:

Clauses 1 1 and 12 provide the enabling authority for the future matching by the Government, on a dollar for dollar basis,-

That is, of industry contributions to research and promotion expenditure. I certainly do not claim to have any particular aptitude for translating into comprehensible English the language in which legislation is normally written but it is not clear to me whether the Bill provides for a dollar for dollar matching if the Government chooses to do so or whether it makes a dollar for dollar matching of research and promotion expenditure mandatory on the Government. I hope that the Minister will clarify that point either at the end of the second reading debate or during the Committee stage.

I will take up those clauses during the Committee stage but would like to make a few further comments now. The proposal in clause 7 of the Bill to transfer the pre-marketing costs from the account from which it is presently funded and to record them as a debit against the Market Support Fund made a number of wool growers suspicious- they still are suspicious- of the ultimate consequence of that change. They fear that this may be the first step towards a substantial transfer in the current availability of the $300m or thereabouts currently held in the Market Support Fund to the general purposes of the Government. In other words they fear a raid on that trust fund and on other trust funds. Again, I do not feel competent to make a finite judgment on this matter but on the record there is certainly ample justification for the wool grower's fears. I should like to refer to a letter dated 17 July 1979 by the then Minister for Primary Industry, Mr Sinclair, to Mr Ives, the then Chairman of the Australian Wool Corporation, in which Mr Sinclair stated:

It has been the established practice to reserve part of the wool tax receipts to meet pre-marketing-

He was talking about the 3 per cent levy- administrative cost of the Wool Corporation. The amount estimated as necessary for this purpose in 1 979-80 is $3. 3m.

I interpolate to say that I understand that the estimate for next year is $4m. The letter continues:

Having regard to the foregoing funding circumstances, but viewing quite objectively the accounting practices appropriate to the Corporation's wool marketing activities, I propose that for 1979-80, and in future, the pre-marketing administration expenses be met from Corporation income other than wool tax.

These pre-marketing expenses previously had been met from the wool tax or, more accurately, from the 3 per cent levy- that term is perhaps more comprehensible to the farmers- but will in future be met from Corporation income other than income from the wool tax. That signifies a clear intention by the Government at that time to raid the trust funds. That intention became clearer in a letter of 3 October 1979 from the present Minister for Primary Industry to the Farmers' Union of Western Australia (lnc). Mr Nixon said:

As to the financing of the Corporation's pre-marketing administration costs, there does not appear to be a strong reason for requiring growers to continue financing such costs by way of levy on wool sales. The vast bulk of these costs is incurred in pre-sale appraisal work for the purposes of the Corporation's market support activities -

I understand that that is an accurate claim- and there is obvious logic in having those costs brought to account as pan of the costs of the market support activities.

I think that is more a matter of opinion than of inescapable logic. The letter continues:

Immediately, however, the Wool Industry Act does not permit the costs to be met in this way, and an amendment of the Act would be necessary before the costs could be introduced as a debit against the market support function.

I presume that we now have that amendment. The letter goes on:

There is nothing in the Act which would prevent the Corporation from bringing other non-tax or non-wool trading income into use in meeting the pre-marketing costs, and this course is being followed for 1 979/80.

In other words, the Minister is telegraphing his intention to raid the trust funds. If my interpretation is correct, that raid is recorded in note 1 9 which is appended to the accounts of the Wool Corporation's annual report 1978-79. The note records the transfer of just over $4m to a promotion reserve fund which, I gather, financed some of the promotion expenditure this year, thereby relieving the Government of its obligation. I do not know whether the fear held by some wool growers that the Government will opt out of responsibilities previously accepted by governments of both sides in assisting to finance wool promotion and research is completely accurate, but the record of the Government certainly provides ample justification for the suspicion. Mr Nixon 's letter further states:

As you will be aware, the Corporation, at least for the present, is in a position of substantial funds liquidity, and is well placed to meet the costs in 1 979-80 in this way.

The legislation now before us evidently enacts the Government's intention which was spelt out by the Minister on 3 October 1979. In both the letters from the present Minister and the former Minister for Primary Industry from which I have quoted the Government draws a distinction between what it calls wool tax income to the Corporation and other income accruing to the Corporation. That distinction is spurious. It is particularly spurious if the dollar for dollar matching requirement, referred to in the Minister's second reading speech and in clauses 1 1 and 12 of the Bill, is not mandatory. I say that for these reasons. The 5 per cent market support levy and the fund in which it accumulated was exclusively reserved for market support until this Bill was introduced. No administrative costs were taken out of it. Therefore the belief in the industry was that the levy market support was ultimately entirely returnable to the growers who had contributed to it, or at least to the overwhelming majority of growers who could be traced. So that was exclusively reserved for that purpose. The Corporation, for other financial commitments and administration, had to get its current financial needs from the 3 per cent levy, from its reserves or from other income accruing to the Corporation. Substantial income accrues from the lease of wool stores. I think the amount was about $6m in the last year that these figures were recorded.

If the Government transfers part of the administrative costs of the Corporation to the market support fund from those other sources of revenue obviously, other things being equal, more money either contributed by wool growers or accruing as income to the Corporation- which is ultimately, I think one could argue, the property of wool growers- would be available for the Corporation's other financial commitments. If the dollar for dollar Government contribution is not mandatory the Government can withdraw from its previously accepted financial commitment to promotion and research to the extent that the liquidity position of the Corporation is improved by the transfer of expenditure from the general administration to the market support fund. If the dollar for dollar matching provision- I think that was the phrase the Minister used in his second reading speech- is not mandatory, the question then arises of whether, unless there is a substantial increase in total expenditure on promotion and research, funds will continue to accumulate in those accounts.

I find it extraordinary, especially when measured against the proposition which has just come before the Senate, that the Government is going through this devious procedure just to enable it to welch on a 50 per cent contribution to expenditure of about $4m a year on wool promotion and research. I refer to the statement of intention by the Government to squander what it estimates to be $63, and goodness knows how much ultimately, on this tri-service academy- I think that is the current euphemism for it- this Prime Ministerial whim which has long been dear to the heart of the Prime Minister. However, such an intention would certainly be consistent with the Government's record.

I have a table derived from various annual reports of the Australian Wool Corporation which lists the contribution from governments and wool growers to research and promotion in each year from 1973-74 to 1978-79. It states the current income to the Corporation accruing from what is now the 3 per cent levy from its reserves and from its other sources of income. What emerges very clearly is that the Government has been financing a smaller and smaller proportion of that expenditure over the six-year period. In 1973-74 the Government contributed over 58 per cent of the total expenditure; in 1 974-75 it contributed just under 57 per cent; in 1975-76 it contributed 43 per cent; in 1976-77 it contributed 41 per cent; and in 1977-78 it contributed 48.3 per cent, a figure which I think is partly due to the low collection of- the levy that year. In the last finanical year 1978-79 the Government contributed 39.3 per cent.


Senator Primmer - That is supposed to be the party that is the farmers' friend.


Senator WALSH - That is exactly right. In fact, compared with the Labor Government which has been much reviled by members of the present Government, especially the members of the National Country Party, this Government is picking up a much smaller proportion of expenditure on wool research and promotion. It has not escaped the notice of the wool growers. In a Press release issued on 12 May Mr O'Brien, President of the Wool Council of Australia, said:

The Australian Government has been progressively abdicating its responsibility in wool promotion having provided some 40 per cent of promotion moneys in 1 978-79.

Mr O'Brienof course is correct, and the Government's action has not entirely escaped the notice of the industry.

If the Government's intention- as I mentioned before, I hope that these matters will be definitively clarified either in the Minister's response to this debate or in the Committee stage- is to provide a smaller contribution to wool industry promotion and research in the future, it should have the decency to argue openly and honestly for that proposition and not, as at least a substantial section of the wool growers suspect, amend the Wool Industry Act in a manner which camouflages such a transfer of fiscal responsibility from government back to the industry.







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