Bills Digest No. 126 1999-2000


Numerical Index | Alphabetical Index

Australian Wool Research and Promotion Organisation Amendment (Funding and Wool Tax) Bill 2000

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Australian Wool Research and Promotion Organisation Amendment (Funding and Wool Tax) Bill 2000

Date Introduced: 16 February 2000

House: House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement: On Royal Assent

Purpose

The main purposes of the Bill are to amend the Australian Wool Research and Promotion Organisation Act 1993 (AWRAP Act) in order to

  • require Australian Wool Research and Promotion Organisation (AWRAP) to assist, including financially, in the reform of the Organisation, including its possible privatisation or abolition, and,
  • allow the Minister to determine the percentages of wool tax receipts to be used for research and development and wool promotion.

The Bill also amends the Wool Tax Act (No. 1) 1964, Wool Tax Act (No. 2) 1964, Wool Tax Act (No. 3) 1964, Wool Tax Act (No. 4) 1964, and Wool Tax Act (No. 5) 1964 (Wool Tax Acts 1-5) to reduce the minimum rate of wool levy from 2.75% to nil.

Background

In November 1998 Australian woolgrowers, at a meeting in Goulburn, passed a motion of no confidence in the AWRAP, the body which is funded through levies and government contributions to manage research and development and promotion of wool on their behalf. As a result of the no confidence motion which was supported by 74 per cent of registered wool tax payers, the Board of AWRAP stood down. The Minister for Agriculture, Fisheries and Forestry at the time, Hon Mark Vaile, then established the Wool Industry Future Directions Task Force, chaired by Hon Ian McLachlan AO.(1) The Task Force was asked to consider the following questions:

  • what affects the competitiveness of wool as a textile fibre?
  • how can the performance and profitability of wool businesses be improved, both at home and overseas?
  • how can the performance of Australian wool and wool products in international textile markets be improved?
  • are there better ways to fund and administer wool research and promotion? and,
  • how appropriate are the existing institutional and statutory arrangements?

The Task Force presented its report on 30 June 1999.(2) Most of the report's recommendations were addressed to woolgrowers and concerned decisions about the management of their businesses and the wool industry. Several recommendations involved changes to the Australian Wool Research and Promotion Organisation and the level of statutory levies which woolgrowers pay.

On 23 September 1999 the Minister for Agriculture, Fisheries and Forestry, Hon Warren Truss, announced an eight-point plan for implementing the Task Force report.(3) Included in the plan of action was a national ballot of woolgrowers (called WoolPoll 2000) to seek views on the percentage levy which woolgrowers would be prepared to pay to fund future research and development and promotion activities. Information has been provided to all woolgrowers setting out the levels of wool tax required to provide different levels of services and woolgrowers have been asked to choose between five options, ranging from four per cent to nil.

At present woolgrowers contribute four per cent of the value of their gross clip income to AWRAP. Three and a half per cent is spent on the promotion of wool and half a per cent on research and development. In addition, the Commonwealth Government contributes to research and development for the wool industry through a long-standing policy of matching wool research and development levy expenditure, up to 0.5 per cent of gross proceeds. In 1997-98 (the latest year for which figures are available) the wool levy raised $12.832 million for research and development and $89.964 million for wool promotion. The Government contributed a further $13.090 million to research and development.(4)

WoolPoll 2000 is currently under way. Voting is to conclude on Friday 3 March 2000 and the results of the poll are expected to be known by the end of March 2000. A survey of woolgrowers, conducted in February by the Adelaide-based Rural Press Marketing Services and published in The Land on 17 February 2000, indicates that the two per cent levy option is attracting the strongest support.(5)

This Bill gives the Minister the power to determine the rate of the wool levy, taking into account the preference of woolgrowers. The Minister has already indicated that he proposes to reduce the wool levy to three per cent from 1 July 2000.(6) He has also said that the rate of wool tax could eventually be reduced to zero or some other figure depending on the results of the WoolPoll 2000 ballot.(7)

Main Provisions

Amendments to the AWRAP Act

Section 6 of the AWRAP Act sets out the functions of the Organisation. Item 1 imposes additional functions requiring AWRAP, at the written direction of the Minister or otherwise, to plan, facilitate or participate in changes to the Organisation, including its privatisation or abolition, or the establishment of a new body to perform its current functions (proposed subsection 6(1B)). Such assistance may include the reimbursement of financial expenses incurred by persons or bodies (including the Commonwealth) in reforming, privatising or abolishing the Organisation or setting up a new body to carry out its functions (proposed subsection 6(1C)).

At present, under section 68 of the AWRAP Act, the Minister may only provide directions to AWRAP if he or she is satisfied that direction is required because of exceptional circumstances and to ensure that the operation of the Organisation does not conflict with major government policies. Such restrictions will not apply to Ministerial directions issued under proposed subsection 6(1D). These Ministerial directions may address both specific matters or set out general policies and require AWRAP to carry out its functions consistently with those policies.

Part 8 of the AWRAP Act deals with the allocation of funds raised by the wool tax between wool promotion and research and development. Currently the percentage of funds that is applied to these activities is determined by a postal ballot of woolgrowers conducted in accordance with the regulations.

The effect of items 2 and 3 is to allow the Minister to determine the percentages of wool tax receipts to be used for research and development and for wool promotion, having regard to the preferences of woolgrowers, as expressed in a postal ballot, or through other means including WoolPoll 2000. If the Minister does not determine the allocation of funds in a particular year, then the recommendation would be approved by means of a postal ballot of woolgrowers.

The recommended percentage to be made available for promotion and research and development activities is taken into account in determining the rate of tax payable under the Wool Tax Acts. Item 4 inserts proposed subsection 51(3A) to allow the minimum percentage specified in a recommendation to be nil.

Amendments to the Wool Tax Acts

Wool Tax is imposed by five Acts: the Wool Tax Act (No. 1) 1964, Wool Tax Act (No. 2) 1964, Wool Tax Act (No. 3) 1964, Wool Tax Act (No. 4) 1964, and Wool Tax Act (No. 5) 1964. Each Act imposes a tax on a particular dealing in shorn wool and carpet wool. For example, the Wool Tax Act (No. 1) 1964 imposes a tax on the sale value of shorn wool and carpet wool sold by a wool-broker, while the Wool Tax Act (No. 5) 1964 imposes a tax on the sale value of shorn wool and carpet wool exported from Australia. The reason for the large number of Acts is section 55 of the Constitution, part of which provides that 'Laws imposing taxation, except laws imposing duties of customs or excise, shall deal with one subject of taxation only'.

Subsection 6(5) of each of the Wool Tax Acts requires the Governor-General, before making regulations prescribing the operative rate of tax to apply in relation to the sale value of shorn wool and carpet wool, to take into consideration recommendations from certain bodies, including the Australian Wool Research and Promotion Organisation. At present the total percentage to be made available to promotion and research and development is to be between the maximum rate of tax specified in the relevant Wool Tax Act for that type of wool, and the percentage that applies under subsection 43(2) of the Wool International Act 1993 for that financial year. Items 7-11 repeal the existing paragraphs in the Wool Tax Acts which set the minimum rate of wool tax at 2.75 per cent and allow that rate to be nil.

Item 12 specifies that the amendments made by items 2 to 6 in relation to recommendations will apply to financial years beginning on or after 1 July 2000. Amendments made by items 7 to 11 relating to the minimum rate of wool tax will apply to financial years beginning on or after 1 July 2000.

Endnotes

  1. 'Response to AWRAP "no confidence" motion', Hon Mark Vaile MP, Minister for Agriculture, Fisheries and Forestry, Media Release, 1 December 1998.

  2. Diversity and innovation for Australian wool, Report of the Wool Industry Future Directions Task Force (Chairman: Hon Ian McLachlan AO), Canberra, June 1999.

  3. 'Wool Industry 8 point plan', Hon Warren Truss MP, Minister for Agriculture, Fisheries and Forestry, Media Release, 23 September 1999.

  4. Diversity and innovation for Australian wool, Report of the Wool Industry Future Directions Task Force, volume 2, July 1999, p. A7.3.

  5. 'Wool tax: 2pc likely', by Cameron Morse, The Land, 17 February 2000, p. 1.

  6. 'Wool Industry 8 point plan', Hon Warren Truss MP, Minister for Agriculture, Fisheries and Forestry, Media Release, 23 September 1999. The Minister reiterated his intention to reduce the levy to 3% in a press release dated 16 February 2000 ('New legislation set to further wool reform', Hon Warren Truss MP, Minister for Agriculture, Fisheries and Forestry, Media Release, 16 February 2000.)

  7. 'New legislation set to further wool reform', Hon Warren Truss MP, Minister for Agriculture, Fisheries and Forestry, Media Release, 16 February 2000.

Contact Officer and Copyright Details

Rosemary Bell
7 March 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2000.

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