AWI CEO Stuart McCullough
AUSTRALIA’S wool grower bodies have aligned behind the need for more industry oversight over levy expenditure after Australian Wool Innovation disclosed high ex-gratia staff severance payments at a Senate estimates hearing.
At a hearing before the Rural and Regional Affairs and Transport Committee yesterday, ex-gratia payments AWI paid to terminated staff of $73,000 to almost $100,000 were described by Nationals Senator John Williams as generous ‘sorry’ payments and a disgrace.
AWI chief executive officer Stuart McCullough said the severance payouts had ‘human element’ amounts added to accrued leave and notice period payments, and AWI chairman Wal Merriman defended the payments as commercial decisions. But wool grower anger over the payment disclosures has erupted into calls for additional independent industry insight over wool levy expenditure, including restructuring AWI’s own Industry Consultative Committee to undertake such a role.
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Senior vice-president of the peak body WoolProducers Australia, Ed Storey, said he doubted that the AWI staff payments would pass AWI’s own wool grower test.
In its 2016/17-18/19 Strategic Plan, AWI stated that all staff were reminded of the ‘woolgrower test’, which according to AWI ‘underpins the day-to-day operations of all AWI staff across the globe – ‘Would this action be acceptable to woolgrowers?’ Mr McCullough reiterated the ‘pub test’ policy at the 2016 annual general meeting.
“Upon hearing details of how these redundancies have been dealt with, particularly in comparison to woolgrower’s income, I doubt that these payouts would pass the woolgrower test.” Mr Storey said.
Industry would benefit from prescribed oversight
WPA chief executive officer Jo Hall said WoolProducers Australia believed the wool industry would greatly benefit from arm’s length oversight from a prescribed industry body.
“WoolProducers has long been saying that the consultative arrangements that occur between AWI and industry need to be more transparent and robust to ensure that levy expenditure is meeting the needs of growers who are funding them.
“While wool growers get to vote on the directors who sit on the AWI board, that means a lot of responsibility is entrusted in those directors to be meeting industry needs,” she said.
“By having a prescribed body this would ensure that levy expenditure is meeting grower needs across a range of issues.
“As this is grower money it is incumbent that every dollar is spent in the best interest of growers.”
Ms Hall said wool growers needed to be supportive of such an oversight mechanism being established.
“At the end of the day this is their industry and their money that is being expended, so growers will need to make their views known on if they want a more transparent process and more direct input in how levies are spent.”
AWGA wants ICC under independent chairman
Australian Wool Growers Association president Robert McBride described the ex gratia payments as “golden handshakes” and a deplorable misallocation of AWI resources.
“We do need due diligence to be undertaken on them.”
He said AWGA supported the establishment of an independent oversight mechanism. AWI’s Industry Consultative Committee, currently chaired by Mr Merriman, could fulfil that role of such a body if it was independently chaired, Mr McBride said.
“This body, given independent status, would be able to provide worthwhile oversight.”
Mr McBride said the current ICC structure was flawed with AWI setting the agenda for the committee members.
“They lay down the foundations and effectively they don’t provide feedback – we make suggestions to the ICC, but they predominantly fall on deaf ears.
“Unless Wal likes it and thinks it is his idea it just falls by the way side,” he said.
“The only thing that is holding AWI together now is the wool prices are exceptionally high, but this year we will report less people in our wool industry.
“So we are continually putting more and more pressure on people to stay in our industry and support this misappropriation of funds.”
Ex-gratia payments above industry standards
Woolproducers Australia said that under questioning yesterday, AWI reported that ex-gratia payments made to former staff were well above both the National Employment Standards and the Australian Public Service. These payments are additional to the obligatory accrued leave and notice periods required.
The Senate estimates hearing revealed that one employee who was employed on a full-time basis for five years receiving a salary of $311,000 (and six years’ prior as a consultant to AWI), was then granted an additional ex-gratia payment of nearly $100,000 when made redundant.
Mr Storey said while understanding and happily accepting that every employee is required to be paid any outstanding entitlements, these payments are plainly excessive.
“The confidential payments made to former AWI staff was provided to the Department of Agriculture and the Agriculture Ministers office in confidence.
An AWI spokesman said the correct ex-gratia figure paid to the highly experienced staff when their positions in Australia were made redundant was $170,873.
“Other figures quoted under parliamentary privilege have been stated out of context and cannot be reconciled with actual severance payments made by AWI.
“These payments were made in a commercial environment, reflecting the value they contributed to the research, development and marketing of the Australian wool industry over a long period of time,” the spokesman said.
I have worked in the private sector of the wool industry for over 40 years trading wool. One has to understand the true function of AWI and that is to bring all sectors of the industry together; basically from the farm gate to the retail shelf.
This is not a easy task and it takes specialists to pull it together and solid senior management, so where do we go from here. Well sadly, in a commercial world to attract the right people you really have to pay the going rate and that is as simple as that.
Many of the current AWI staff actually gave up lucrative careers to take up roles with AWI because they believe in the Australian wool industry. Many of these people have worked on an international platform and that is what it really takes to bring Australian wool to the world.
I would not consider $300,000 excessive for senior international marketing managers and it is not uncommon for senior executives to be paid out at the end of contracts — a redundancy of $70,000-$100,000 is only three month’s salary.
This is the real world that the board of AWI has to deal with when employing people. Either you want the best people or you don’t. There are plenty of places to work other than AWI and that is for sure, so let’s not get too excited.
It is also very important to treat people well when you make them redundant, because at some time in the future AWI will need to employ people again and it will become very difficult to attract people who are already in the work force. It is pretty hard to pull executives for the wool industry from banking, marketing and retail to work for $300,000 when you have a reputation of tossing people out on the street with nothing. This is a very small industry and word gets around.
I agree with Wal — “you can’t run AWI out of a tin shed in Dubbo” and by the same token you can’t run AWI with just anyone.
It all looks simple from the outside, but trust me when you are at the coal face of this business it’s not that simple. If all we can talk about is $70,000-$100,000 for two or three poor people who lost their job and received three months pay to get them by until they find another job, well then this industry is in more trouble than I thought. How about we all move on and get the job done. Normally I would not say anything, but how about a bit of fair play.
What all the rural research and development corporations need is a bit of competition in the delivery of research. The changes to industry super fund management and the choices that employees now enjoy could well apply to the rural RDCs. What they presently deliver is the research that the majority of their levy payers want. As Henry Ford once quipped – “if I had surveyed my customers, they would have just wanted a faster horse.” What we could have is registered research providers that growers could nominate to receive their levy dollars.
The superannuation system now has the Clearing House to distribute super funds — a similar system could operate for the RDCs. That way each individual grower could be contributing to the research he wants. There would no longer have to be grower revolutions attacking the boards of AWI etc. Competition would even fix (i) the problem for those growers who believe commodity marketing is “spend and pretend”; (ii) Competition for research dollars, would also empower our research providers (like universities) to be more innovative, and; (iii) fix the above problem of “commercial redundancy” payments.
The AWI needs a Donald Trump equivalent to “drain the swamp”. For too long the AWI has not represented the wool growers needs or at least been able to communicate how they are spending their money wisely. For example, I would love to know how much the AWI paid consultants to tell them that “Every dollar invested by Australian Wool Innovation over the past three years has delivered a $2.90 return to woolgrowers”. What a bunch of bureaucratic hogwash, anyone with some commonsense knows that these sort of studies are unrealistic.
Do you really think AWI needs another layer of bureaucracy? If the people at AWI were honest and acted properly in the first place, then there would not be a problem. This is an unbelievable and appalling story – sounds like money for your mates, similar to snouts in the trough. I would sack anyone who acted improperly. What right do they have to spend other people’s money recklessly?
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