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
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
-
- 'Response to AWRAP "no confidence" motion', Hon Mark Vaile MP,
Minister for Agriculture, Fisheries and Forestry, Media
Release, 1 December 1998.
- Diversity and innovation for Australian wool, Report
of the Wool Industry Future Directions Task Force (Chairman: Hon
Ian McLachlan AO), Canberra, June 1999.
- 'Wool Industry 8 point plan', Hon Warren Truss MP, Minister for
Agriculture, Fisheries and Forestry, Media Release, 23
September 1999.
- Diversity and innovation for Australian wool, Report
of the Wool Industry Future Directions Task Force, volume 2, July
1999, p. A7.3.
- 'Wool tax: 2pc likely', by Cameron Morse, The Land, 17
February 2000, p. 1.
- '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.)
- 'New legislation set to further wool reform', Hon Warren Truss
MP, Minister for Agriculture, Fisheries and Forestry, Media
Release, 16 February 2000.
Rosemary Bell
7 March 2000
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2000
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