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Tuesday, 17 October 1972
Page: 1567

The PRESIDENT - I draw the attention of honourable senators to the fact that the second reading speech of the Minister for Air is 16 foolscap pages in length. Is leave granted? There being no objection, leave is granted. (The second reading speech of the Minister for Air read as follows) -

This Bill is designed to create a wool statutory body to be known as the Australian Wool Corporation, which will bring under a single direction the functions now performed by 2 separate instrumentalities^ - the Australian Wool Board and the Australian Wool Commission. It is proposed, however, that these functions should be modified in certain respects to enable the new single body to play a more positive role in adapting wool marketing arrangements to present and future needs.

By introducing this measure, the Government wishes to assist Australian wool growers further in their efforts to advance the welfare of their industry. As clearly evidenced by the various measures taken by this Government in recent years, it is very conscious that the fortunes of this great industry are still, and will remain, of crucial importance to Australia's economic life. This is so despite the remarkable growth of secondary industry and mineral production which has taken place in recent years. Indeed, much of this industrial growth has been made possible by the availability of foreign exchange earned by wool, which helps us to pay for imports of essential materials and equipment.

Last financial year our export income from wool, including woolled sheepskins, was $634m, representing 13.3 per cent of total earnings from all merchandise exported. This has been the lowest percentage ever recorded for wool and reflects, as all of us will be aware, the catastrophic fall which occurred in wool prices last year. In most previous years this percentage usually moved within the range of 30 per cent to 40 per cent. Going back to the 1950s and earlier the proportion of export income earned by wool was frequently around 50 per cent. The effect which wool price variations have on export income is demonstrated by the fact that on present production levels a change of one cent per kilogram means a variation of about S7m in our annual export proceeds.

As some 95 per cent of wool produced in Australia is exported, clearly our vast wool industry depends for its survival on the continued demand for wool throughout the world. This demand, however, can no longer be taken for granted. Particularly in recent years a greater variety and volume of new and improved synthetic fibres have appeared on the world textile market and many of these fibres have succeeded in capturing large sections of the market for wool products.

The availability of these substitute fibres has had the effect of lowering wool prices and their increasing production makes it essential for the wool industry to take all measures possible to combat this competition. This means that greater efforts will be required in all fields, particularly in wool marketing arrangements, wool research and wool promotion. The first requirement in this respect is to create an efficient and unified organisation so that the interests of the wool industry can be advanced in a business-like manner. This is the prime objective of the Bill we are now considering. The merging of the Wool Board and the Wool Commission into a single entity will permit the integration of research and promotion with the marketing of the clip and thus enable a total and fully coordinated approach to be adopted in stimulating the demand for wool.

In amalgamating the Wool Board and the Wool Commission into one body the Government is acting in accordance with the wishes of the industry. In March of this year the Australian Wool Industry Conference submitted to the Government proposals recommending this action. In addition the Conference recommended that the new body should be equipped with wide powers including the power compulsorily to acquire the total Australian wool clip. The Government decided that the proposals of the Conference should be examined by the Randall Committee in the course of its study of the problems of the wool industry in general. The Randall Committee saw the merging of the Wool Board and the Wool Commission as a logical and sensible move but felt that the proposal for compulsory acquisition needed to be spelt out in more detail so that the full implications could be assessed and firm conclusions drawn. In addition, it is recognised that compulsory acquisition can be implemented only through Commonwealth and State complementary legislation and that this legislation can only be drafted and considered when a detailed plan for wool acquisition has been developed.

Rather than delay action on the industry proposals the Government decided to proceed with the merging of the Wool Board and the Wool Commission and specifically to empower the new Wool Corporation to investigate the whole question of wool marketing and prepare a detailed plan for a compulsory acquisition scheme, clearly defined in all respects. The plan will need to be acceptable to the wool industry, the State governments and the Commonwealth

Government. The success of the Australian Wool Commission is seen as a result of its commercial orientation. In its marketing operations, the Australian Wool Industry Conference and the Government are agreed that the Australian Wool Corporation should be similarly orientated. Accordingly, the Government has suggested that the plan should be substantially in accordance with financial safeguards announced by the Prime Minister (Mr McMahon) on 20th June of this year. These safeguards are designed to ensure that the plan is commercially sound.

As I have intimated, under the Constitution the Commonwealth cannot alone legislate to grant the power of compulsory acquisition to the Wool Corporation. To grant the Corporation such power would require the consent and complementary legislation of the States. Providing a satisfactory and acceptable plan can be devised, however, the Government is prepared to develop the necessary legislation in conjunction with the States.

I now turn to the main provisions contained in the Bill. The Bill is divided into 8 Parts. Part 1 deals with the repeal of the legislation under which the Wool Board and the Wool Commission are established. It also sets out the objects of the Bill and lists definitions. Part II provides for the establishment of the Australian Wool Corporation, its principal functions and powers, staff and finances. The Australian Wool Corporation as a body corporate will consist of 9 members comprising a full time Chairman, 4 wool grower representatives, a representative of the Commonwealth and 3 other members who possess special qualifications.

The full time Chairman of the Corporation will be appointed by the Minister for Primary Industry for a period of 5 years. Provision has also been made for the appointment of an Interim Chairman. This provision is being made in case the person selected for the position of full time Chairman cannot take up his duties immediately. Provision is also being made for the appointment of a Deputy Chairman by the Minister from amongst the members of the Wool Corporation. All other members of the Corporation will be appointed by the Minister for Primary Industry for a period of 3 years. The 4 wool grower representatives will be appointed on the nomination of the Australian Wool Industry Conference. The 3 members with special qualifications will be appointed after consultation with the Wool Industry Conference and will be persons with experience in the marketing of wool or wool products, in the processing of wool or in the manufacture of wool products, or experience in the fields of commerce, finance, economics or science.

Appropriate provisions are made to cater for the appointment of deputies of members, leave of absence of members, vacation of office of members, declaration of interest by members, resignation of a member, removal from office of a member and the conduct of meetings. The remuneration of the Chairman, the Interim Chairman and members of the Corporation will be determined by Parliament but until 1st January 1974 the rate of remuneration will be prescribed by regulations. This provision has been made because it has not been possible to determine the respective rates of renumeration before the introduction of this Bill. In brief, the functions and powers of the new Australian Wool Corporation will include those which are now performed by the Australian Wool Board and the Australian Wool Commission. These cover wool marketing, wool use promotion, wool testing, wool research and wool stores administration. I shall deal with these functions in greater detail when covering the other Parts of the Bill.

The Corporation is empowered to employ its own staff and the Bill also contains safeguards designed to preserve the rights and entitlements of employees who pre now engaged by the Wool Board and the Wool Commission upon their transfer to the Corporation. It will be more convenient to deal with the financial provisions which are set out in Division 4 of Part II when discussing the other Parts of the Bill. Nevertheless, I should mention here that to give the Corporation the greatest flexibility in its operations, income derived by the Corporation from any source, other than profits from its wool trading operations, can be used for expenditure in connection with the performance of any function of the Corporation. Part III deals with the functions of the Corporation in relation to wool marketing. These in the main embrace the functions of the Australian Wool Commission, the best known of which is the operation of a flexible reserve price scheme for wool. Provision has been made, however, for the removal of the mandatory requirement to operate a price averaging plan for small lots of wool. This has been done to allow the price averaging scheme to be replaced by other lot building arrangements should this be decided upon.

It is proposed that the Corporation be given wide investigatory powers in regard to wool marketing and be empowered to recommend to the Government and the Australian Wool Industry Conference any changes considered necessary in marketing arrangements. Such changes may, of course, include the submission of a detailed plan for a compulsory acquisition scheme. Some other modifications have been made to the wool marketing functions to facilitate the operations of the Corporation in this field. In the main these are designed to enable the Corporation to make voluntary arrangements, with the approval of the Minister for Primary Industry, in connection with the terms and conditions for the sale of wool outside thi auction system and for the programming of such sales. In Division 4 of Part II of the Bill the Wool Corporation, like the Wool Commission, is empowered to borrow funds from banks or other institutions under Government guarantee to finance its reserve price operations and its other marketing activities.

The present provision is also continued for the Government to make advances to the Corporation for working capital in connection with its wool marketing operations. A special fund, however, is to be created to be known as the Australian Wool Corporation (Working Capital) Trust Fund, through which loans made by the Government for such purposes are to be channelled. Repayments of any such loans will be credited to the Trust Account and will again become available to be lent to the Corporation without need for a fresh appropriation. As at present, provision is made for the Corporation to enter into arrangements with wool-selling brokers for the collection of the charge from wool growers' proceeds on wool sold at auction to finance the administrative costs of the Corporation in connection with its reserve price operations.

The Government will continue to meet one half of the re-handling and brokers' administrative charges for wool included in the price averaging plan, whilst this plan continues to operate, at rates approved by the Minister for Primary Industry and the Treasurer. Provision has been made also in the Bill for the Government to meet a proportion of re-handling, administration or testing charges in any new lot building scheme that may replace the price averaging plan. The proportion payable is to be determined by the Minister for Primary Industry and the Treasurer. Any losses sustained by the Corporation from the purchase and sale of wool will continue to be underwritten by the Government. Profits made by the Corporation must be applied in the first instance to repay any past losses which had been met by the Government. Any profits remaining are to be held as a contingency against future losses. Provision has been made, however, for a portion of the profits to be used for other purposes, if need be, if this is approved by the Minister for Primary Industry and the Treasurer. It is provided in the Bill that the Corporation will take over the accumulated profits of the Australian Wool Commission.

Part IV of the Bill covers the responsibilities of the Corporation in the field of wool use promotion. The provisions contained in this part are similar to those which now apply to the Australian Wool Board. As in the case of the Wool Board, the Corporation will be able to borrow moneys for temporary purposes in connection with . its wool promotion activities. Part V of the Bill deals with wool testing. It has been so drafted as to continue the Australian Wool Testing Authority in existence without disturbance to its operations and, as far as possible, its membership. The provisions covering the operations of the Authority are similar to those contained in the existing Wool Industry Act. Provision has been made, however, for the functions of the Authority to be extended to allow it to carry out tests on non-wool fibres, whether natural fibres or otherwise, and non-wool textile products as well as on wool and products made wholly or partly from wool. This will enable the Authority to meet requests from the trade for the testing of non-wool fibres and nonwool textile products as well as allow it to earn additional income.

As provided in Division 4 of Part II of the Bill, the Corporation is empowered to borrow moneys for purposes associated with the operations of the Authority and such borrowings can be guaranteed by the Government. Part VI of the Bill covers wool research. Again, the provisions in the Bill are similar to those contained in the existing Wool Industry Act which governs the joint industry-Government scheme for wool research. The Wool Research Trust Fund is continued in existence under the same name. Part VII of the Bill deals with the wool stores which are now vested in and administered by the Australian Wool Board. The stores will be vested in and administered by the Wool Corporation under the same conditions as apply at present under the existing Wool Industry Act. The right of the Government to take the stores back in the event of a war emergency is maintained. As it will be well known, these stores were built during World War II and are now in need of extensive renovation and reconstruction if they are to be maintained in good order for future need. Accordingly, provision has been made in Division 4 of Part II of the Bill for the Government to guarantee borrowings by the Corporation for this purpose.

Finally, Part VIII of the Bill deals with miscellaneous matters relating to the operations and requirements of the Corporation, as well as matters which are common to the other Parts of the Bill. Included in this Part are the present arrangements under which wool growers and the Government contribute funds for the financing of wool promotion and wool research. The arrangements for the current triennium expire on 30th June 1973 and accordingly, when the arrangements for the next triennium are determined, it will be necessary to amend the provisions which are contained in this Bill. This Part makes the usual provisions for the audit of the Corporation's financial affairs to be carried out by the Auditor-General and for the Annual Report of the Corporation to be submitted to the Minister for Primary Industry, who is obliged to table it in Parliament. To enable the smooth transfer of the functions of the Australian Wool

Board and the Australian Wool Commission to the new Australian Wool Corporation, the Bill will come into operation on a date to be proclaimed.

As I mentioned in the early part of my speech, the Australian wool industry is of vital importance to the national economy and must be preserved. Its importance lies not only in the significant contribution it makes to our export income but also in sustaining the livelihood of much of inland Australia. If the industry is to be preserved no effort must be spared to enhance its viability. This involves an energetic and imaginative pursuit of wool promotion combined with an effective research programme and an efficient marketing system. These activities require substantial funds to be effective and it is in the interests of us all to lend support to the wool industry. In this regard the Government is about to review the future needs for wool promotion and wool research and I hope to be in a position to make an announcement on this matter soon. In this context it is appropriate to mention that the participation of the Australian Wool Board in the International Wool Secretariat will become the responsibility of the Australian Wool Corporation. Increasingly, the responsibilities of the International Wool Secretariat in ensuring the competitiveness of wool in the world fibre market are of prime significance in stimulating market demand. Accordingly, the budget needs of the International Wool Secretariat for its activities will also be included in this review.

In view of inflationary pressures, it is increasingly important to cut costs in all facets of the wool industry. A field which has a great potential in this regard is the handling and transport of wool throughout the whole sequence of wool marketing. Good progress has been made in the application of pre-sale objective measurement and the sale of wool by sample. I am convinced that the broader application of this technique, along with other technological advances, will enable new methods to be employed to streamline and reduce significantly the costs of wool selling.

The establishment of a single integrated wool body in the form of the Australian Wool Corporation will make it possible to co-ordinate the efforts in all the fields I have mentioned and so strengthen the position of the wool industry in the highly competitive world textile market. The new Corporation will have a big and most important task. It can rely on the full support of the Government at all times. I commend the Bill.

Debate (on motion by Senator O'Byrne) adjourned.

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