Bills Digest No. 46  1998-99 Australian Wool Research and Promotion Organisation Amendment Bill 1998


Numerical Index | Alphabetical Index

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 and Copyright Details

Passage History

Australian Wool Research and Promotion Organisation Amendment Bill 1998

Date Introduced: 12 November 1998

House: House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement: The provisions outlined in this Digest commence on a day to be fixed by Proclamation. However, if a provision has not commenced within 6 months of the Bill receiving Royal Assent, it will be taken to have commenced on the day after that period.

Purpose

The major amendments proposed by the Bill:

  • provide the Australian Wool Research and Promotion Organisation (AWRAP) with the power to sell, or enter into commercial arrangements for the provision of any technical services or market information;
  • broaden the type of motions which may be considered at an annual general meeting;
  • require AWRAP when preparing a corporate plan to consult in relation to that plan and prior to submission to the Minister, with the Wool Council of Australia and the Australian Interior Textile and Carpet Wool Council;
  • increase the size of the AWRAP Board from 9 to 11 members; and
  • require AWRAP to establish and maintain a voluntary register of persons who are, or have recently been, wool taxpayers.

Background

Government Rationale for Amendments

The Minister for Primary Industries and Energy announced on 6 February 1998 moves to increase woolgrower participation in the Australian Wool Research and Promotion Organisation (AWRAP). The Minister stated:

The Wool Legislation Working Party, which I asked my Department to convene with the industry, met for the first time this week.

I am pleased to see it has made good progress in considering proposals from the Wool Council to give woolgrowers a greater say in AWRAP.

These proposal include:

  • increasing the number of woolgrowers on the Board
  • changing the selection process for Board members to give woolgrowers more say in who is selected and
  • changes to the AWRAP Annual General Meeting to allow woolgrowers a greater voice on issues of concern to them.

The major amendments proposed by the Bill appear to have arisen from recommendations of the Wool Industry Working Group.

AWRAP

AWRAP was established on 1 December 1993 under the Australian Wool Research and Promotion Organisation Act 1993 (the Principal Act). The functions of AWRAP include:

  • to undertake promotion of wool and wool products domestically and internationally
  • participate in the organisation and management of bodies for the promotion of wool in a way that best promotes the interests of the Australian wool industry
  • investigate and evaluate wool industry requirements for research and development
  • provide funds for research and development and
  • provide funds for activities and facilitate the dissemination, adoption and commercialisation of results of research and development.

AWRAP's Component of the Wool Tax

Sections 49 and 50 of the Principal Act provide that AWRAP will receive a percentage of wool tax collections for research and development and wool promotion. The actual level of funding is decided by wool-tax payer ballot and is a percentage of the value of shorn wool (other than carpet wool).

In relation to AWRAP's component of the wool tax, it may be noted that in December 1997, 73% of the 12,996 woolgrowers, who voted in the wool tax ballot, opted to support the continuation of the compulsory 4% wool tax to fund AWRAP and preserve the 3.5%:0.5% split between promotion and research and development for the next three years.

IWS International Pty Limited

IWS International Pty Limited (formerly known as the International Wool Secretariat) is a company funded by Australian woolgrowers to conduct international wool promotion activities on their behalf. Since 1994-95 AWRAP and IWS activities have been merged and are managed as one organisation under AWRAP control. IWS is distinguished from a commercial public company in a number of important ways, including woolgrowers have no choice about paying the wool tax which funds AWRAP/IWS and there are no direct returns to growers against which performance can be assessed. These two factors are at the core of grower unease with AWRAP/IWS.

Performance Appraisal of AWRAP/IWS

The NSW Farmers' Association recently conducted an assessment of the performance of the IWS in 1996-97 against their stated objectives of sustaining and building wool demand and improving woolgrower productivity. The findings and recommendations of this assessment, which were released in October 1997, in a report titled Building Demand For Wool? - A Performance Review Of The IWS, included:

From the information available in the IWS and AWRAP Annual Reports it is impossible to conclude that the organisation has been successful in achieving its objectives, particularly in improving consumer demand for wool.

Performance indicators must be linked to woolgrower productivity improvements and net domestic consumption of wool in major markets, and must more clearly benchmark the impact of promotion and advertising programs on consumer demand for wool.

Extremely low levels of funding for on-farm R&D are of great concern. Administrative and operating costs of R&D are high by comparison with other rural research and development corporations.

The IWS retail promotion programs reported 12.8 million kgs of new products promoted at retail level, however this gives no indication of whether these programs had any net impact on wool demand.

It is strongly recommended that IWS collect adequate information to enable benchmarking of promotion and global innovation programs against markets where there has been no IWS activity.

Although IWS communications are professional and sophisticated, the transparency of IWS operations and performance to woolgrowers remains low. Consultation with growers is often conducted superficially.(1)

Required Ministerial Action following a Motion of No Confidence in AWRAP Board

On the 30 November at the annual general meeting of AWRAP, the Board of AWRAP faces a no confidence motion.(2) Should the motion be passed, the entire Board will be forced to stand down. The no confidence motion stems from a perception among wool growers that AWRAP has been mismanaged and is not able to stem the decline in the wool market.(3)

Section 34 of the Principal Act deals with the consequences of a successful no confidence motion in AWRAP.

Section 34 of the Principal Act provides that where a motion of no confidence in AWRAP has been passed at an annual general meeting the following occurs:

  • AWRAP may not perform any of its functions or exercise any of its powers;
  • the Minister must, as soon as practicable, end the appointment of each of the appointed members;
  • the Minister must, within a month, appoint a person to be the Chairperson; and
  • until such time as there are again 5 members, the Chairperson may perform and exercise all the functions and powers of AWRAP, except the power to appoint, or end the appointment of, the Managing Director.

Main Provisions

Definition of Wool-Tax Payer

For the purposes of the annual general meeting of wool-tax payers and recommendations as to the level of wool tax, subsection 4(1) of the Australia Wool Research and Promotion Organisation Act 1993 (the Principal Act) defines the term " wool-tax payer" as:

  • a person who has during the preceding financial year is liable to pay wool tax and
  • has paid that tax.

Item 4 of Schedule 1 substitutes a new definition of wool-tax payer in the Principal Act that defines such a person to be one who has paid wool tax incurred during:

  • the financial year immediately preceding the particular financial year and
  • the financial year immediately preceding that preceding year.

The Government's stated objective of this broadening of who is a "wool-tax payer" is

... to prevent the exclusion of those wool growers who, for financial or managerial reasons, may have held wool for more than one financial year, from participation in the Annual General Meeting. This will also apply to eligibility to participate in any ballots conducted by the Australian Wool Research and Promotion Organisation.(4)

Powers of AWRAP

A new paragraph 7(2)(a) is inserted in the Principal Act by item 5 of Schedule 1 providing AWRAP with the power to sell, or enter into commercial arrangements for the provision of any technical services or market information.

Consultation Relating to Corporate Plan

Section 11 of the Principal Act requires AWRAP prior to giving the Minister its corporate plan to consult with the Wool Council of Australia in relation to the plan. A new section 11 is inserted in the Principal Act by item 6 of Schedule 1 which requires AWRAP when preparing a corporate plan to consult in relation to the plan with:

  • the Wool Council of Australia and
  • the Australian Interior Textile and Carpet Wool Council.

The differences between the former and proposed section 11 is that a second peak grower organisation is included and consultation is required during the development of the corporate plan rather than prior to submission to the Minister.

AGM Motions and AWRAP Response

Item 7 of Schedule 1 inserts a new paragraph 23(2)(aa) in the Principal Act that broadens the type of motions which may be considered at an annual general meeting of wool tax payers to any motions for which the prescribed notice has been given. A new subsection 23(3) is inserted in the Principal Act by item 8 of Schedule 1 which provides that where a motion is passed at an annual general meeting that a matter is to be considered by AWRAP, AWRAP must consider the matter but does not have to do anything else as a consequence of that consideration. It is the Government's stated intention to pass regulations that will require AWRAP to provide evidence that it has considered specified matters as directed by wool-tax payers.(5)

AWRAP Board Membership Increase

Item 9 of Schedule 1 increases the size of the AWRAP Board from 9 to 11 members. The Board currently comprises a Chairperson, Managing Director, Commonwealth representative and six other members. The rationale given by the Minister in the Second Reading Speech for the increase is to:

... allow the number of wool grower members on the Board to be increased to four, not only reflecting the importance of this skill on the Board but also greatly assisting communications on the business of the Organisation with growers spread across the country.

Qualifications of Board Members

A new subsection 28(1A) is inserted in the Principal Act by item 10 of Schedule 1 which requires the Chairperson of AWRAP to have, or have had, involvement in wool production, appropriate board experience and certain qualifications relevant to, or experience in, one or more of the following:

  • wool processing, including manufacture of wool products
  • business management and technology transfer
  • research and development and technology transfer
  • production and promotion, and
  • environmental and ecological matters.

Subsection 28(2) of the Principal Act specifies the experience and/or qualifications Board members other than the Chairperson, Managing Director and Commonwealth representative must have. Proposed sub section 28(2A), which is inserted in the Principal Act by item 12 of Schedule 1, provides that at least four of these 'other members' must have experience in wool production and qualifications relevant to, or experience in, one or more of the following:

  • wool processing, including manufacture of wool products
  • business management and technology transfer
  • research and development and technology transfer
  • production promotion, and
  • environmental and ecological matters.

In addition, at least one of the 'other' members must have significant knowledge of the production or processing of non-apparel wool.

Voluntary Register of Wool Tax Payers

Item 21 of Schedule 1 inserts a new section 69 in the Principal Act which requires AWRAP to establish and maintain a voluntary register of persons who are, or have recently been, wool-tax payers. The Register is to have the sole purpose of facilitating the dissemination of information, or giving of notice, by AWRAP relating to annual general meeting, ballots and AWRAP activities generally.

Endnotes

  1. NSW Farmers' Association, Building Demand For Wool? - A Performance Review Of The IWS, October 1997, p. 1.

  2. Herald Sun, 30 November 1998, p. 21; Countryman, 19 November 1998, p. 7; Sydney Morning Herald, 28 November 1998, p. 15.

  3. Ibid.

  4. Australian Wool Research and Promotion Organisation Amendment Bill 1998, Explanatory Memorandum, p. 5.

  5. Ibid.

Contact Officer and Copyright Details

Ian Ireland
1 December 1998
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 1998

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, 1998.

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