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Thursday, 5 December 1974
Page: 3218

Senator WRIEDT (Tasmania) (Minister for Agriculture) - I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

The DEPUTY PRESIDENT-Is leave granted? There being no objection, leave is granted. (The speech read as follows)-

The purpose of this Bill is to amend the Wool Industry Act in accordance with decisions of the Government which I announced on 27 August. Senators will recall that during August the Government reviewed the then existing and anticipated circumstances of the wool market and made one of the most important decisions in respect of the wool industry that has been made for many years. In brief, the Government guaranteed the availability of sufficient finance to the Australian Wool Corporation to operate a minimum floor price for wool equivalent to 250 cents per kilo clean for 21 micron wool sold during the 1974-75 season. In response, woolgrowers agreed to contribute a levy of 5 per cent of the proceeds from wool sales in 1974-75 to establish a fund to make good any losses incurred as a result of wool purchases by the Corporation. Under the Wool Marketing (Loan) Act 1974, the Government has already provided $150m to finance the Corporation's floor price activities. This amount is in addition to a previously existing Appropriation of $13m, and commercial loans drawn by the Corporation to the extent of $34m covered by a Government guarantee of repayment. Presently before the Parliament is an Appropriation measure which will authorise the provision of up to a further $200m to the Corporation.

Evidence of the Government's determination to support the wool industry during the present period of weak demand for wool is clearly seen in these actions. Not only has the decision to support a minimum price in the market during the season prevented a collapse of wool prices, but the assurance that the floor will be maintained is providing both woolgrowers and wool users with confidence in the future of the industry. In announcing the Government's decision on the support of the wool market, I stated the intention of the Government to assist the Corporation in operating the floor price, and in its general activities in the market, by providing it with adequate powers to manage the supply of wool offered for sale, and by widening its trading powers.

I also announced that attention would be given to the possible restructuring of the board of the Corporation to provide appropriate improvements, where necessary, having regard to the additional powers to be conferred on the Corporation. This Bill is designed to implement the arrangements I foreshadowed. I turn now to the main provisions of the Bill.

Market Support Fund

The Bill contains detailed provisions to govern the use of the 5 per cent marketing levy contributed by woolgrowers during the 1974-75 season. In accordance with the wishes of the industry, the relevant provisions have been so drafted as to ensure that the proceeds of the levy and their use will be separately identified and accounted for. To this end the levy and all revenue from it will be channelled into a special fund to be established by the Australian Wool Corporation and known as the Market Support Fund. As announced when the decision to introduce the levy was taken, the object of the levy is primarily to provide funds for meeting any losses incurred as a result of maintaining a floor price in the wool market this season. However, since such losses, if any, cannot be determined until after the end of the season, the Bill provides that the levy funds may be put to other uses in the meantime of benefit to the industry.

Specifically, it is provided that moneys in the Market Support Fund may be used by the Corporation during the season to purchase wool under the reserve price arrangements, to pay advances to growers the sale of whose wool has been delayed by the Corporation's supply management, or they may be invested. Income from investment of Fund moneys will be paid into the Fund, as will interest on advances made to growers, less administrative expenses incurred by the Corporation in connection with those advances. Also allocated to the Fund will be an amount representing an appropriate charge for interest where money from the Fund is used by the Corporation to purchase wool. As well as maintaining a floor price in the wool market, the Corporation will continue to operate flexible reserve price arrangements when the market is above the floor. It would be neither practicable nor desirable to differentiate between the 2 operations for accounting purposes, and, accordingly, the profit or loss from this market support role will be determined over the total reserve price activity.

Since revenue and expenses in respect of advances to growers whose wool has been delayed from sale will play a part in the financial result of the Corporation's marketing operations over the same period, they will be also taken into account in the determination of profit or loss. If a loss results, it will be met from the Market Support Fund. If, on the other hand, a trading profit eventuates, it will be dealt with as profit made in other periods, namely, to help repay any past losses which had been met by the Government, as a reserve against future losses, or for other purposes related to the performance of the functions of the Corporation. Any balance remaining in the Fund after losses or profits have been dealt with will be kept as a separate reserve and used for purposes determined by the Minister for Agriculture with the approval in writing of the Australian Wool Industry Conference. These procedures for the final disposition of the Fund have been made at the request of the Australian Wool Industry Conference.

Supply Management

The Bill strengthens the hand of the Australian Wool Corporation in ensuring the regulation of the flow of wool on to the market in keeping with demand. Whilst the Corporation already participates in the determination of wool auction sale rosters and the scheduling of offerings, it does not have power to control the quantity of wool offered for public sale. A new provision explicitly confirms the right of the Corporation to withhold its reserve price protection in situations in which it believes deferment of all or part of a proposed offering should be made, but, contrary to the Corporation's wishes, the offering is not deferred.

Extension of Trading Powers

Amendments are proposed in the Bill to enlarge the specific trading powers of the Corporation. The present powers of the Corporation in this area were originally designed principally to enable it to dispose of the wool purchased under its reserve price operations, and, although they extend somewhat beyond this, they include restrictions which hamper the Corporation in some transactions. The new provisions will enable the Corporation to be empowered to engage in a wider range of trading activities. The precise extent to which the Corporation will be able to exercise its enlarged trading functions will be a matter for approval by the Minister for Agriculture. Subject to this approval, the Corporation is being authorised to trade not only in wool but also in wool products, to supply wool for Australia's foreign aid programs, and to process wool and manufacture wool products, or to commission such work.

These are very wide powers and hence the necessity for some ministerial control over their use. It is not envisaged that the Corporation will use all of these powers immediately, but rather as and when circumstances warrant their use. The legislation therefore provides a framework for approval to be given to the Corporation to engage in particular forms of trading activity appropriate to the needs and best interests of the wool industry, and in accordance with any guidance provided by the Minister for Agriculture concerning the exercise of those powers. Transactions that could be undertaken, for instance, may involve sales of wool on a forward basis. As forward selling involves a risk due to market price fluctuations, the Corporation is being empowered to buy and sell wool Futures with a view to reducing that risk. The exercising of this power is also to be subject to the approval of the Minister for Agriculture.

Preparation of Wool for Sale

A provision is included in the Bill to enable the Corporation to withhold reserve price protection from any lot of wool that has not been prepared and presented for sale in accordance with standards approved by the Corporation. This is intended to discourage careless classing and presentation for sale, and ensure that the Corporation is not obliged to support bad preparation of wool.

Terms and Conditions of Sale of Wool

The Corporation is being authorised to restrict its reserve price operations to those sales where the terms and conditions of acceptance, offering and sale have its approval. In this way, the Corporation will be able to exert a stronger influence than at present over such matters as, for example, selling charges.

Membership of Corporation

In keeping with the increased powers and responsibilities of the Corporation, its membership is being increased by adding another member with special qualifications to the existing 3 members in this category. This enables a wider range of expertise and experience to be available to the Corporation.

Method of Appointment of Corporation Members

At present, the members of the Corporation representing woolgrowers are appointed on the nomination of the Australian Wool Industry Conference. This requirement is being maintained, but provision is being made for the members to be selected by the Minister for Agriculture from a panel of names submitted by the Conference. This provision will bring the Wool Corporation into line with similar provisions for the selection of grower representatives on the Australian Meat Board. Provision is also being made under which the Minister for Agriculture may request the Conference to submit additional names to the panel. A further amendment provides that the 4 woolgrower members and the 4 members with special qualifications will retire by rotation. This will be achieved by making two of the initial appointments in each category for a term of 2 years and two for a term of 3 years. In this way the retirements will be staggered to avoid the bulk of Corporation membership retiring at the same time. The object is to retain a nucleus of experienced members on the Corporation at all times.

Consultation with Trade Unions

The Bill introduces a requirement for the Wool Corporation to consult with the trade unions concerned before taking action likely to affect the conditions of employment or the demand for labour in the wool industry. The Corporation already follows a usual practice of consultation with unions on relevant matters but the amendment now formally requires such consultation.

Minor Amendments

Included in the Bill are several minor amendments which are either complementary to the major provisions or are designed to clarify and harmonise other provisions of the existing Act where experience in administering the Act has shown this to be desirable. I commend the Bill to the Senate.

Debate (on motion by Senator Maunsell) adjourned.

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