Shearers work on a fleece two decades after the end of the floor price. Photo: Nicolas Walker Stockpiled bales of wool at the Australian Wool Board workhouse in 1990.
If Australia ever “rode on the sheep’s back” the country fell off as the Hawke government forced the emblematic wool industry to be subjected to the same pressures that the end of tariff protection was having on manufacturing.
For more than a century wool had given Australia one of the highest standards of living in the world.
But competition from synthetics, rising costs and waning prices on the international market and the Australian Wool Corporation’s complex system to maintain price stability was poised to destroy the industry.
In fact, the Australian wool reserve price scheme, coupled with a dramatic decline in sales to Russia and China, had created a stockpile of wool so massive that it threatened to overwhelm the entire Australian economy.
An unsold stockpile of 188,000 bales in July 1989 passed 2.45 million bales by April 1990: the reserve price stood at $8.70 a kilogram.
The Minister for Primary Industries and Energy, John Kerin, argued to the cabinet in May 1990 that “there is a limit to which a prudent industry should go on taxing itself, and borrowing, to make itself into its own customer”.
Mr Kerin gained cabinet approval for what Australian National University historian Nicholas Brown called one of the Hawke government’s most radical portfolio reconstructions.
The minister favoured direct intervention in the wool marketing system should its leaders not respond to “pressure” to reform.
There was little sign they would.
By September 1990 he argued that “we have to put in place arrangements which will allow the industry to face up to its enormous adjustment problem”.
An inquiry initiated by Mr Kerin warned of “chaos” if the floor price was simply abolished. Instead he proposed statutory reforms to support the Australian Wool Corporation “trade its way out” in an orderly disposal of stocks, and then establish new agencies with separate responsibilities for aspects of the industry, including the repayment of debt.
The view from Finance was blunt: there was no justification for “market support in the modern world trading environment”.
Prime Minister and Cabinet agreed, noting that such medicine was particularly deserved by an industry that “has shown very little inclination to accept the realities of a market situation”.
Mr Kerin’s argument that growers should receive payments to “ease the shock of transition” was countered by Finance that “price falls … are part and parcel of the farming enterprise”: why should the wool sector be any different?
In September 1990 the cabinet agreed to suspend rather than terminate the floor price, and to offer “a strictly limited scheme of income support” calculated with reference to the demonstrated need of individual farmers.
By April 1991, when wool prices had held up better than expected, a further submission secured the abolition of the floor price by July.
Cabinet records release
Cabinet records for 1990 and 1991 held by the National Archives of Australia became eligible for access from January 1, 2016. Information about the cabinet records, lists of the documents and copies of key cabinet documents, including selected submissions and decisions, are available on the Archives’ website (naa.gov备案老域名). Click on the “Collection” tab, then “Popular research topics”, then “Cabinet”.
Requests for access to records not already released may be made via RecordSearch on the Archives’ website.
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