WARNING:
This Digest was prepared for debate. It reflects the legislation as
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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
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.
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.
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.
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.
-
- NSW Farmers' Association, Building Demand For Wool? - A
Performance Review Of The IWS, October 1997, p. 1.
- Herald Sun, 30 November 1998, p. 21;
Countryman, 19 November 1998, p. 7; Sydney Morning
Herald, 28 November 1998, p. 15.
- Ibid.
- Australian Wool Research and Promotion Organisation Amendment
Bill 1998, Explanatory Memorandum, p. 5.
- Ibid.
Ian Ireland
1 December 1998
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1998
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