Government Involvement in the Wool Industry

Until 2000, there had been a long history of government involvement in the wool industry. The most prominent examples include the Reserve Price Scheme, Wool International and the Australian Wool Research and Promotion Organisation (AWRAP). The conclusion of the Wool Future Directions Taskforce report in 1999 marked a significant turning point in this involvement, with the Taskforce recommending that woolgrowers be given greater ownership and control over their service delivery bodies. It was also recommended that growers be given a voice in the rate of levy and the purpose for which the levy was used. 

In September 1999, the Government accepted the general direction of the Taskforce’s recommendations and announced that AWRAP would be converted to a private company structure, with woolgrowers as shareholders and a target start date of 1 January 2001. The first wool poll was held in March 2000 with growers voting for a reduction in the levy from 4% of the sale value of wool to 2% to fund mainly research and development (R&D) and innovation with no retail consumer marketing, which had dominated AWRAP’s activities. 

Legislation for the new privatised structure was introduced into Parliament on 7 September 2000 and passed through the Senate in December 2000. The Wool Privatisation Act came into effect on 1 January 2001. 

The legislation provided for the formation of a holding company, Australian Wool Services (AWS), with two wholly owned subsidiaries, Australian Wool Innovation (AWI) and The WoolMark Company (TWC). The legislation also provided an option for the separation of the holding company from the subsidiaries at some point to be agreed by shareholders. This option was subsequently undertaken with the separation of AWI from AWS on 30 April 2002. 

AWS remains the holding company of TWC Holdings Pty Limited (TWCH) that in turn wholly owns The Woolmark Company Pty Ltd. Woolgrowers are the shareholders in AWS through direct shareholdings. The corporate structure of AWS, AWI and TWCH was formulated in accordance with the Corporations Act 2001, that is, the companies and their respective directors are bound by the obligations of the Corporations Act. This includes being accountable to shareholders through an AGM and the Annual Report process, and abiding by the rules set down in the company constitution. 

Separate to the requirements of the Corporations Act, the Wool Services Privatisation Act 2000 provided for the Minister for Agriculture, Fisheries and Forestry to put in place a Statutory Funding Agreement (SFA) with AWI setting out the basis for the expenditure of wool levy receipts and matching Commonwealth R&D payments. The essential elements of this agreement include:

• levy funds to be expended on R&D activities, and any other agreed activities of benefit to the wool industry, while matching Commonwealth payments to be expended on eligible R&D activities
• expenditure of funds not to be on agri-political activity
• providing the Commonwealth with copies of strategic and operating plans
• an Annual Report including audited financial statements and SFA compliance statement and specified additional matters of interest to the Commonwealth
• any other reports as requested by the Commonwealth, and
• performance review to be conducted every 3 years prior to the WoolPoll.