28 August 2018

WoolPoll levy questioned

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By Mal Gill - Farm Weekly


WOOLPOLL levy options that woolgrowers will vote on next month have been labelled “biased” within hours of being released by Australian Wool Innovation (AWI).

Pingelly wool and grain grower John Hassell, WA’s representative on the national WoolPoll 2018 panel which helped prepare for the triennial vote on the proportion of wool cheque woolgrowers will pay to part-fund AWI for the next three years, is angered by the options range, describing it as “disgraceful”.

“We had some good people on that committee,” Mr Hassell said on Monday.

“We worked very hard to make sure that the information pack that will go out to voters this year is the best there’s been and that there was no bias, no influence in the information it provided,” he said.

Mr Hassell and peak body Wool Producers Australia (WPA), of which Mr Hassell is a director, have accused AWI of manipulating choices offered to voters to improve chances its preferred option – maintaining a two per cent levy – gets most votes and is ultimately approved at the annual general meeting in November.

Earlier Monday AWI board member and AWI representative on the WoolPoll 2018 panel, Jock Laurie, announced voters would have options of 0pc, 1.5pc, 2pc, 2.5pc and 3pc from which to choose a levy rate.

Mr Laurie confirmed AWI’s recommended option was 2pc.

Under a funding agreement with the Federal government, which matches a levy contribution to AWI’s research and development budget, the regulations governing WoolPoll require AWI to offer woolgrowers an option of 0pc – no levy.

Any other options put forward are at the AWI board’s discretion.

Previous WoolPolls offered levy options of 0pc, 1pc, 2pc, 2.5pc and 3pc.

Federal Agricultural Minister David Littleproud has already approved the WoolPoll 2018 information pack and ballot paper to be sent to voters, having signed off on the range of levy options decided by the AWI board, so unless his approval is withdrawn, the options cannot change.

Mr Hassell, an outspoken critic of AWI in 2015 for not offering woolgrowers an option of a 1.5pc levy, said the WoolPoll 2018 panel had no say in what range of options was offered.

“At the very first (panel) meeting the question was asked whether we as panel members would have some say in what the options to choose from would be,” Mr Hassell said.

“It was made very clear to us that we would have no say in the options.

“I said to some of the other panel members then that we were wasting our time.

“Why would you put an option of 3pc, or even 2.5pc, in there and not offer growers the option of 1pc when wool prices are where they are currently and even (AWI chairman) Wal Merriman says they aren’t coming down.”

In earlier submissions to AWI, the WPA supported by WAFarmers and at least four other industry representative bodies, argued woolgrowers should be given the option of a 1pc levy because of record wool prices and the amount in revenue those prices will generate for AWI from compulsory wool cheque deductions.

The information pack to be sent out before WoolPoll voting starts Monday, September 17, shows AWI revenue and expenditure trends and capital reserves over several years, as well as projections for several coming years.

Farm Weekly understands the trends and assumptions calculations are based on an Eastern Market Indicator (EMI) – an indicative weighted wool price determined by Australian Wool Exchange (AWEX) from prices at Perth, Melbourne and Sydney selling centres – of 1750 cents a kilogram clean.

The EMI is at a record 2116c/kg after last week and its average for the year so far is 1878c/kg.

Its average last year was 1538c/kg and in 2015 when the last WoolPoll was held the EMI average for the year was 1192c/kg, according to AWEX.

In 2012, when woolgrowers also elected to maintain the levy at 2pc, the EMI average was 1088c/kg.

“In my opinion, they (AWI board members) are ignoring what woolgrowers want and are trying to ensure what they want is selected instead,” Mr Hassell said.

“I think it’s disgraceful.

“I don’t think the EY recommendations (82 of them from a statutory performance review of AWI earlier this year) go far enough to ensuring that the AWI board is responsible to woolgrowers like the CBH board (is to WA graingrowers),” Mr Hassell, a former CBH Group director, said.

“Also, levy payers shouldn’t be fooled into thinking that WoolPoll 2018 gives them a say on how the money is spent – it doesn’t, it’s all about the amount.

“If you want a say on how the money is to be spent then you have to become a shareholder.”

WPA president, Richard Halliday said inclusion of options above 2pc “makes no sense”.

In the 2012 and 2015 WoolPolls the combined percentage of votes supporting 2.5 and 3pc options did not exceed 7pc, Mr Halliday pointed out.

“WPA made this point in a letter to the WoolPoll panel chairman (Eyre Peninsula, South Australia, Merino woolgrower Syd Lawrie) when we were approached to provide our preferred levy rate options earlier in the year,” Mr Halliday said.

“It is illogical in the current environment to only provide woolgrowers with the opportunity to reduce the levy rate by half a per cent or cease it all together, but to then provide two options above status quo.

“WPA believes that the reason that AWI has chosen this option range, is to utilise the ‘centre-stage effect’ whereby there is an inherent bias to choose the middle option.

“There is absolutely no other justification in including 2.5pc and 3pc.”

Mr Halliday said the WPA believed it is “inappropriate” for AWI, the beneficiary of the levy, to be the only one to decide the options for levy payers, while also being able to lobby for a particular option during the WoolPoll process.

“Despite their claims, the AWI board (members) have not listened to growers and have put forward option rates to pursue their own interests.

“This is unacceptable,” Mr Halliday said.

Announcing the levy options on Monday, Mr Laurie said AWI’s WoolPoll preparation included “extensive modelling of investment and forecasting of production and income at the various rates” and at the request of the WoolPoll panel this would be part of the information pack for the first time.

“The (AWI) board is focused on building resilience within the industry, particularly through AWI’s investments, while times are good,” Mr Laurie said.

“We believe 2pc is the optimum level to balance our financial responsibility with our capacity to deliver benefits for growers.

“The levy is so critically important to enable us to collectively invest in research, development and marketing, and therefore enabling industry to collectively benefit – from on-farm research right through to educating the consumer about the benefits of Australian wool.

“With the 2pc levy, we can keep marketing Australian wool and building global demand – if we take our foot off the pedal, we’ll leave a gap in the market that will undoubtedly be filled by another fibre.

“It’s a conscious choice and we want to ensure wool is the final choice, right along the supply chain through to consumers,” Mr Laurie said.

Pingelly woolgrower and WA representative on the WoolPoll 2018 panel John Hassell has labelled as
Competitive, Proven, Trusted
Greasy Wool Greasy Wool Greasy Wool