IT is the role of the Australian Wool Innovation (AWI) board to represent the wool growing levy payers interests on the research, development and marketing organisation. The recently concluded WoolPoll has been an example of that being done very poorly.
The recently released AWI annual report states, in the governance section, the aim is to have the "highest ethical standards" of governance.
The 2015 WoolPoll falls a long way short of that. It was the unanimous view of the AWI convened WoolPoll panel to offer 1.5 per cent as a levy option for growers to vote on in the WoolPoll.
An entirely reasonable suggestion, giving the option of an incremental decrease (a 25pc cut in the levy) to match the option of an incremental increase to 2.5pc (a 25pc increase) as the one above the current levy of 2pc of gross wool sales.
The AWI board ignored this option to minimise the chances of the levy being reduced at all. They have provided no valid reason for doing so.
AWI CEO Stuart McCullough claims that there was a "fiscal cliff" at 1.5pc and that it didn’t maximise the government co-contribution matching R&D investment up to a certain amount.
However, by offering 1pc as the option below the current 2pc, the "fiscal cliff" would be much worse and would lead to an even lower co-contribution from the federal government. AWI’s own papers for WoolPoll 2015 demonstrate this.
AWI know levy payers are less likely to vote for a 50pc decrease in the levy paid (the 1pc option) than a 25pc decrease (1.5pc option) and have thus attempted to minimise the chances of the levy being reduced. A levy option of 1.5pc would have been a much more equitable option to give to us compulsory levy payers but was deliberately avoided as it would have a much better chance of getting up.
By this action alone the board of AWI have demonstrated that they care more about themselves than real choice for compulsory levy payers, the very people they purport to represent.
Further, the AWI board has a massive conflict of interest, even if it is unintended. As paid Directors they stand to lose out if the company is reduced in size. At AGM’s in years past, whenever the question of a director’s remuneration is raised, it is said that it is consistent with an organisation of similar turnover or size. Therefore they have every disincentive to not reduce the levy paid.
In addition, the board of AWI made a recommendation to levy payers to vote for 2pc. The reality is that this in itself is quite an appropriate course of action. In the commercial world boards make recommendations to shareholders at many AGM’s on a regular basis. However, shareholders can sell if they don’t like the direction of the company, while once the vote is done, our levy is compulsory for the next three years, irrespective of your own personal vote.
It is inappropriate governance for the board of AWI to be unilaterally "gerrymandering" the levy options available to growers to chose from AND making a recommendation on which levy to vote for.
I am reasonably sure that the board of AWI have not contravened the Parliamentary Act under which they operate but this is an appalling arrangement that should not be allowed to be repeated.
Irrespective of your views of the levy and how well, or otherwise, it is being spent, no woolgrower should be happy about this.
For woolgrowers who are supportive of the current AWI strategy, the board have played a very risky game and gambled all on 2pc, as the 1pc option has much more serious consequences than 1.5pc.
For those growers that would like to see a reduction in the levy, the board have put considerable effort into reducing the chances of that happening.
Talk of WoolPoll being genuine choice for growers is rubbish.
This is a levy of 2pc of the gross value of raw wool production, equating to, in recent history, approximately $50 million a year. By way of current comparison, the GRDC levy is 0.99pc, the cattle transaction levy is a maximum of $5/head, which on a $1000 animal is 0.5pc and the levy on a $120 lamb is $1.50 which equates to 1.25pc.
There are directors that commented on their corporate governance credentials when seeking election in past years. The board of AWI should not be proud of WoolPoll 2015 and it should not be allowed to be like this again. They should have considerably more respect for woolgrowers than has been demonstrated in this process.
