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Australian Wool Research and Promotion Organisation Bill 1993



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House: House of Representatives

Portfolio: Primary Industries and Energy

Commencement: 1 July 1994 or an earlier date fixed by Proclamation.

Purpose

To establish the Australian Wool Research and Promotion Organisation which will promote the use of wool and wool products and evaluate and provide funds for research related to the wool industry.

Background

Promotion of Australian wool is carried out by both the Australian Wool Corporation (AWC) and the International Wool Secretariat (IWS). The IWS is responsible for the international promotion of generic wool products, i.e. products where the country of origin cannot be determined, and is funded by the major wool producers including Australia, New Zealand, South Africa and Uruguay. The IWS is responsible for the promotion of the Woolmark symbol. The AWC performs domestic promotion of wool products and also promotes identified Australian wool in international markets. This generally involves promoting Australian wool prior to its incorporation into garments when it is usually blended with wool from other sources and loses its national identity.

The IWS is mainly funded by Australia, which provides approximately 76% of the IWS budget. The Australian contribution was $107 million in 1992- 3 and is estimated to be $103 million in 1993- 4. These funds are raised through a levy on growers and Commonwealth government contributions. Regarding the latter, the Commonwealth contributed $25 million towards the AWC promotion activities in 1992- 3 and will contribute $20 million in 1993- 4. 1 Commonwealth contribution to wool promotion will cease after 1993- 4. 2 As part of its examination of wool promotion, the Garnaut report (Report of the Wool Industry Review Committee) recommends that wool processors contribute to the promotion of wool. 3

Research and development (RD) in the wool industry aims to maximise the return to woolgrowers by improving the efficiency of wool production and harvesting, raw wool marketing and processing, and improving the quality and performance of wool products. Management of RD is the responsibility of the Wool Research and Development Corporation. Prior to 1991, this was the responsibility of the AWC and the two bodies maintain close links. Wool RD is funded through a levy on wool producers and matching government contributions. Funding in 1991- 2 was $27.38 million and is estimated to be $24.4 million in 1992- 3 and $22.8 million in 1993- 4. In addition, wool RD is conducted by the CSIRO, which is estimated to receive $38.6 million for wool RD in 1993- 4. 4

The major recommendation of the Garnaut report regarding wool promotion and RD is the establishment of a Wool Research and Promotion Organisation. The recommendation is based on the need for closer relations between wool promotion and RD bodies and a desire to achieve greater efficiency and commercial benefits for the funds expended. 5 This recommendation will be implemented by this Bill.

Main Provisions

The Bill will commence on 1 July 1994 unless an earlier date is fixed by Proclamation (clause 2).

The object of the bill is to improve the performance of the Australian wool industry through improved funding and administration of wool promotion and RD and the establishment of one organisation responsible for these matters (clause 3).

The Australian Wool Research and Promotion Organisation (AWRPO) will be established as a corporation by clause 5. Its functions include:

* the promotion of the use of wool and wool products in Australia and overseas;

* evaluating RD requirements and providing funding for RD; and

* facilitating the adoption and commercialisation of the results of RD.

Clause 5 also provides that AWRPO is only to perform its functions in a way that brings it within the Commonwealth's Constitutional power (e.g. in trade between Australia and other countries, between States/Territories and for a purpose connected with external affairs).

AWRPO will have power to enter into RD agreements, apply for patents and trade marks, buy and sell wool for use in technical development projects, and, with Ministerial approval, form a company, acquire and dispose of shares and share in profits (clause 7).

Part 3 of the Bill (clauses 8 to 17) requires AWRPO to prepare five year corporate plans and annual operational plans and, as far as is practicable, to perform its functions in accordance with those plans.

Clause 18 will give AWRPO specific power to enter into agreements under which the other party to the agreement is to carry out RD connected with the wool industry, including the provision of funds and agreement for the commercial exploitation of the results of RD projects. Similarly, clause 19 will allow AWRPO to enter into agreements under which both parties to the agreement carry out RD activities.

Part 5 of the Bill deals with annual meetings of wool tax payers. Such meetings are to be held in each financial year commencing with 1994- 5 and no more than 15 months are to elapse between meetings (clause 20). The meetings are to consider the most recent annual report of AWRPO, receive the Chairperson's address, enable members to ask questions about the operation of AWRPO and to consider motions put to the meeting. The only motions that may be put are a no confidence motion in AWRPO or a motion moved by the Chairperson that the annual report and financial statements be accepted (clause 22). Only wool tax payers will be entitled to vote at meetings (clause 24) and regulations may be made dealing with the procedure to be followed at the meetings (clause 25).

AWRPO is to consist of a Chairperson, Managing Director, a representative of the Commonwealth and six other members. The six other members must have qualifications relevant to, or experience in, at least one of the following fields:

* wool production;

* wool processing;

* business management and finance;

* research and development and technology transfer; or

* product promotion.

Members, other than the managing Director, are to be appointed by the Minister (clause 27). The Managing Director is to be appointed by AWRPO (clause 36).

Part 8 of the Bill deals with AWRPOs finances. Clause 43 provides that for the 1993- 4 and later financial years, there is payable to AWRPO a percentage of wool tax collections determined in accordance with the applicable recommendation (see below) for RD. Similarly, clause 44 provides for a percentage of wool tax collections calculated in accordance with the relevant recommendation to be paid to AWRPO for wool promotion. The recommendations are dealt with in clause 45. The percentage of the value of shorn wool, other than carpet wool, that is to applied to these activities is to be determined by a ballot of wool tax payers conducted in accordance with the regulations. The recommendation made in 1993- 4 will apply for each of the three years commencing on 1 July 1994; a recommendation made in the first or second year of a triennium will apply for the remainder of the three years; and a recommendation made in the last year of a triennium will apply for the next three years. The total percentage to be made available to promotion and RD is to be between 4.5% and the maximum rate of tax specified in the relevant Wool Tax Act for that type of wool. The recommended percentage is to be taken into account in determining the rate of tax payable under the Wool Tax Acts (clause 45).

Clause 46 deals with Wool Tax collected in 1993 that has not been paid to the Australian Wool Corporation or the Wool Research and Development Corporation (i.e. AWRPO's predecessors) by the time it is established. The clause provides for any such unpaid amount to be paid to AWRPO.

A Wool Research and Development Fund (the Fund) will be established by clause 47. The major sources of finance for the Fund will be moneys made available under clause 43, funds transferred from the Wool Research and Development Corporation, money received from the sale of property of the Fund, funds received from dealing in patents and trade marks and funds received from the Commonwealth (clause 48).

Clause 49 provides for matching Commonwealth payments to AWRPO. The Commonwealth is to pay to AWRPO an amount that is equal half of AWRPOs expenditure relating to RD. However, the payment is not to exceed the amounts paid to AWRPO under clauses 43 and 46 or 0.5% of the amount that the Minister determines to be the gross value of shorn wool produced in Australia in the relevant financial year. Regulations may be made for the determination of the gross value of production. Commonwealth payments are to be paid into the Fund.

Money in the Fund is to be used in the following ways:

* meeting costs in relation to RD;

* repayment of borrowings incurred in connection with RD expenditure; and

* making payments to the Commonwealth under clause 51 (see below).

Clause 50 provides that where money is not immediately required it must be invested in Commonwealth or State securities, deposited in a bank or invested in a way that corresponds with sound commercial practice.

Clause 51 will require AWRPO to pay to the Commonwealth amounts equal to the costs incurred by the Commonwealth in collecting the monies payable under the Wool Tax Acts.

AWRPO will be allowed to charge fair and proper fees for it's services (clause 52).

Money of AWRPO, other than money in the Fund, may be used to discharge the expenses of AWRPO in performing its functions; paying amounts due to the Commonwealth; paying the remuneration and allowance payable to members of AWRPO; engaging consultants; and making other payments required under this Bill (clause 53).

Clause 54 will allow AWRPO to borrow a total of $15 million without Ministerial approval. Ministerial approval will be required for borrowings in excess of this amount.

AWRPO will be authorised to enter into currency and commodity hedging contracts by clause 56.

AWRPO will be required to keep a minimum of two bank accounts, with it's money and that of the Fund being in separate accounts (Clause 58).

References

1. Wool Industry Review Committee, Structuring for Global Realities, p. 118.

2. 1992- 3 Budget Paper No. 1, p. 3.164.

3. Wool Industry Review Committee, Structuring for Global Realities, p. 120.

4. Ibid., p. 132.

5. Ibid., p. 109.

C. Field (06 2772439)

Bills Digest Service 6 October 1993

Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1993.

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Published by the Department of the Parliamentary Library, 1993.