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The wool industry today: address by Minister for Primary Industry, the Hon J. D. Anthony M.P. to Australian Wool Board Advisory Committee, Canberra



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FOR

I NDUSTRY

PR ^ ES S

STATEMENT

MINISTER PRIMARY

0

THE WOOL INDUSTRY TODAY

ADDRESS BY MIN IST ER FOR PRIMARY INDUSTRY THE HON. J. D. ANTHONY M.P.

TO AUSTRALIAN WOOL BOARD ADVISORY OOMLIITTEE

Beyond any doubt the wool industry is going through a very difficult time at present. Wol prices are at their lowest level for twenty years. In those twenty

years, however, costs of the goods and services used by

woolgrowers have increased substantially. As a result the

industry is caught in a severe cost/price squeeze.

In this situation many woolgrowers no doubt feel

that they have been forgot ten in their plight by the Government and the community at large. Speaking for the

Governmont I can say quite categorically that this is not

the case and this is amply demonstrated in what the Government has done for the wool industry over many years,

I ea over many years b ecause the present difficulties of the industry have not developed overnight.

The most important thing for the industry now is not to become despondent and allow emotion to dictate its actions. In tivms of difficulty which all of us have to face at one stage or another, what is called for is

steadfastness and clear thinking, Realities must be accepted and people must pull together in a determined effort to work out solutions.

Here again theGovernment stends ready to help because it fully recognises the vital importance of the

wool industry to this country

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There is no need for me to quote chapter and verse

on this point and I will merely mention the wool industry's

}huge contribution over many decades to our export income.

It has been largely through this contribution that we have

been able to maintain a fast rate of national development

which has brought with it a steady growth of affluence for

the people of Australia. In recent times the glamour of the boom in minerals has obscured the fact that wool is still

our major export income earner and it is clear that it will

remain so for years. It is a disturbing thought to

contemplate what would happen to our economic progress

and hence our standard of living if wool fell by the

wayside.

It is this realisation of the importance of the

wool industry which has led the Government to give increasing

assistance to the industry over the years. In addition to a whole range of measures introduced for primary producers

generally, woolgrowers have also been' given assistance

specific to their industry, In the light of the difficult situation which has developed for the industry recently the Government introduced

further measures of assistance in the last budget. This assistance, which amounts to some $20 million a year, is in the fields of wool research, promotion and marketing, The

assistance granted for research and promotion will save woolgrowers about $1.20 per bale on present prices.

Cincessions were also granted in estate duties.

It is pleasing to note that the Board of .i.rectors

of the Wool Marketing Corporation, which will administer the

industry's wool marketing proposals, has already been

appointed and will have the scheme in operation from the

beginning of the next wool-selling season.

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I look upon the establishment of the Wool Marketing Corporation as a real break-through for the industry on marketing, a field which has for too long caused conflict in the industry. I hope that it would be possible to work any further changes which may come about in wool marketing through the Wool Marketing Corporation now that the industry has agreed to establishthe Corporation

as its own marketing body. However, a situation may arise where radical measures might have to be taken in marketing which may require a body with wider powers.

I should here like to pay tribute to the Australian Wool Board for what it is doing to help overcome the present difficulties of the industry. The Board has made great progress in examining the problem of high handling and

transport costs. I understand that the studies of the Board have shown that substantial cost savings can be effected by the establishment of integrated wool complexes and, if all sectors of the wool industry and trade co-operate, a wool

complex in Sydney should soon become a reality. The Government stands ready to look carefully at any proposals which may be put to it for assistance in this regard.

Another important sphere that the Board is concentrating on is the application of objective measurement of wool prior to sale at auction. I strongly believe that any problems that exist can be solved and that pre-auction testing will be successfully introduced. This should lead to a streamlining of the present wool-selling mechanism and bring with it significant cost savings. Again the Government will be prepared to look sympathetically at any request for

assistance in this matter. -

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The problem which always faces me in dealing with

the wool industry is the conflict of views which invariably

arises on major issues. Thus at present conflicting policies have been placed before me on ways in which the industry

could be helped over its current difficulties. This is where

a representative group such as this Committee can play a very useful role.

I have studied the terms of reference of the

Committee and noticed that they are comprehensive and

embrace a very wide scope. Because of the difficult position

in which woolgrowers find themselves at present it is

imperative that the Committee concentrate, in the first

instance, on the most urgent and pressing problems of the

industry. I feel that even in the brief period since the

formation the Committee was announced, the position of

the industry has deteriorated further0 i em sure, however,

that the urgency of the situation will 1 uppermost in the

minds of all members of the Committee.

I was pleased to see that the first item listed for immediate consideration in the terms of reference of

the Committee is, in effect, to determine the reasons for

the present depressed levels of wool prices.

It is far from clear what is the main reason

behind this decline. Has it been due to the present economic climate prevailing throughout the world? Or has

it been due to developments which have undermined the

effectiveness of the free auction system? Or is a new

level of wool prices becoming established due to the competition from other apparel fibres? Or has it been

due to a combination of all of these factors?

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To my mind the answer to this question must be found, and found quickly. I have noted that the Committee has allowed itself until the end of May to answer this question but I would hope that it can be done sooner than this. Wherever the fault is found to lie, whether in the marketing system or elsewhere, no time should be lost

in rectifying the position. --^

The Government is prepared to look carefully at all practical proposals which may be put to it. However, in discussing the present difficulties of the wool industry we should ask ourselves° is the payment of a direct subsidy the first, best and simplest way to help woolgrowers? Apart from the heavy cost to the community

of subsidising an industry as big as the wool industry, there are also other problems to be considered such as the effect on the efficiency of the industry and difficulties

of ensuring equity of payments.

Direct subsidies may also be looked upon as mere palliatives which treat the symptoms of the problem but not f.ts cause. There is certainly much to be said for positive policies which get at the roots of the fundamental problems

and I would hope that the Committee will not lose sight of this.

However, due to the present disturbing price position, some form of immediate assistance for the industry may become necessary.

'The Government no less than the industry is

conscious of the serious position facing the industry.

?:.s I h^ve mentioned_. above, the problem which hiways confronts the Govornmont when dealing Wit h the wool industry is the lack of a re sonable consensus of -opinion as to . what should be done.

))ccordingly., I fool that while this Commiti•e.e • h>s

a. particultirly onerous task 3t c'cn play 0 most import :nt role in devising a positive solution which will have the support of the industry.

I look upon the work of this Committee as being of

such importance for the planning of sound future policies

for the industry that I an prepared to make the resources

of the Bureau of Agricultural Economics available to assist

the Committee in its investigations.

The economic policy which the Government has been following to promote rapid national growth is sound and

necessary for the future security and welfare of this country.

It has, however, had the unavoidable side effect

of some inflation. This is by no means a problem peculiar to Australia. Our record in restraining inflation compares very favourably with the best of other countries.

The policy adopted by the Government has led to great prosperity for the community at large. On the other hand its associated inflationary effects have hurt wool-growers and the rural sector generally'because of their inability to pass on increases in costs.

In these circumstances it is only fair that the

section of the community which is enjoying groat prosperity

should be prepared to share a portion of it with those who

have done, and I hope will continue to do, so much to. make

it possible but who are now in financial difficulty.

I am confident that sound solutions can be arrived

at to preserve the wool industry and restore it to reason-able prosperity, Nevertheless this will require strenuous efforts by the industry itself.. In times of adversity such

as droughts and depressions, woolgrowers in the past have

shown great courage and tenacity. This attitude is needed

just as much today as in past crises.

If the industry and the Government work as a team I am sure that measures can be taken to put the industry back on a sound basis - a, basis which will and must ensure a

lasting place for the wool industry in the Australian economy.

To do this it is of the utmost importance that the

industry itself -- and I mean both individuals and

organisations in it - pull together and get behind the Wool Board in its efforts to lead- the industry out of

trouble,

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I have already emphasised the importance of the assignment with which the members of this Committee have been entrusted. I also appreciate that top men in their respective fields have been prepared to give their valuable time for this important task.

I wish you every success in your endeavours and will look forward to receiving your reports, particularly the report on your first term of reference, namely, the reasons underlying the drastic fall in wool prices.

CMTBERIU March 25th, 1970.