WOOL grower bodies have urged senators to seek a private briefing with Australian Wool Innovation about its online trading and tools platform WoolQ after the company refused to release a key report.
AWI has refused to release to the Senate’s Rural and Regional Affairs and Transport Committee a report by Ernst & Young Port Jackson Partners that considered the future of WoolQ.
WoolQ has come under increasing scrutiny after it was revealed in Senate Estimates in March this year that AWI has spent $6.3 million in growers’ levy funds on the WoolQ Market platform over the past five years, but failed to generate any revenue.
Despite having an operating target in AWI’s 2019-20 annual operating plan of selling 2 percent of all Australian wool traded, via the WoolQ marketing tool, AWI’s platform sold only 939 bales of the 32,437 bales created on the platform, which is about 0.07pc of all wool traded in the 2019-20 season. WoolQ only recently held its first online wool sales in which it charged for services.
At a recent Senate Estimates hearing AWI chief executive officer Stuart McCullough said AWI had sought advice from Ernst & Young Port Jackson Partners on “the path forward by way of ownership and by way of operations.” He told the senators that AWI did not think it was the right time to put WoolQ in the hands of a commercial partner, but that shareholders — “because they paid for it” — should own at least 51 percent of the platform, “but the commercial world should own the rest, potentially, or operate it.”
“I think that’s a very real proposition,” he said.
This prompted Labor Senator Glenn Sterle to recently ask AWI if the EY PJP advice and report could be tabled in the Senate. However, AWI responded this week that the PJP documents requested have not been provided as they contain commercial-in-confidence information.
AWI said the damage that would be caused in disclosing the information included:
- AWI does not have clearance from its authors to release the document.
- Release of the report requires prior written approval from Ernst & Young Port Jackson Partners Limited (EY PJP) who hold the rights to distribute the report.
- The EY PJP report contains information which are considered to be commercial-in-confidence.
- Releasing the report may seriously undermine future commercial opportunities for the benefit of Australian wool growers.
- Disclosure of the report may dilute the competitive tension over the sale of the WoolQ asset.
- The privacy of a number of parties identified in the report would be breached should it be circulated to an external audience.
However, AWI said should EY PJP provide clearance to AWI to release the requested report, AWI is open to facilitate a private briefing for the RRAT committee, or to individual senators.
Request a WoolQ report briefing say industry bodies
WoolProducers Australia chief executive officer Jo Hall said it was up to the RRAT committee to pursue a briefing with AWI over the PJP advice and report, but she hoped the senators took up AWI’s offer “given that there may be commercial-in-confidence issues.”
Ms Hall said it seemed that growers at this stage were not seeing a great return on the WoolQ investment.
“It would be a shame if nothing comes of that, but we are simply not seeing the runs on the board with WoolQ given the significant investment that has been made.
She believed AWI should justify to shareholders any further investment in WoolQ.
“It’s up to them to explain to levy papers why they are continuing to invest.”
Pastoralists and Graziers Association Livestock Committee chairman Chris Patmore said the RRAT committee must request a private briefing with AWI on the WoolQ report.
“I don’t think they can be forced to release the whole report because there may well be some competitive or commercial-in-confidence reasons why they can’t.
“The onus is on AWI to release the report and if they don’t and they can’t be forced to, we can only assume that the report is quite damning,” he said.
“If it wasn’t, I’m sure they would have released it by now.”
Mr Patmore said AWI should “definitely” justify any further expenditure on WoolQ.
“They need to provide financial justification if they are aiming to continue with it, because otherwise they would be just putting more good money after bad.
“If we can be convinced that financially it’s a good move, then we’ll agree with it, but at this stage it doesn’t look that way at all.”
Australian Wool Growers Association director Rob Ingram also supported the senators seeking a briefing with AWI on WoolQ.
“My response is that we own the company and the government owns 15pc of the company.
“If the major sharehjolder of a company requests a copy of a report, they should at least be provided with a detailed briefing of what’s in the report,” he said.
“And that briefing should not only be given to the Senate Estimates committee, but it should also be given to the relevant first secretary of the Department of Agriculture Water and the Environment, because he is the person who is representing the government in the wool industry.”
Mr Ingram said it would also be highly desirable if the main grower bodies also got a briefing.
“At least the executive summary should be released to shareholders.
“It may require minor redactions, but at least the gist of what they (PJP) have said should be provided to shareholders.”
Mr Ingram said because WoolQ is such a contentious issue, AWI shareholders need to understand what experts are telling the board should be done.
“And the (AWI) board should be telling us, they are telling them.”
Mr Ingram said his understanding of the future commercial opportunities for WoolQ are “that they are zero, so therefore the future commercial opportunities for growers can’t be compromised.”
“We understand that behind the scenes AWI has been trying to find a way to realise the value of shareholders’ investment in this project, and industry has flatly refused to come on board.”
Mr Ingram urged AWI to wrap the WoolQ project up and sell it for whatever value can be realised.
“Get out of it because they undertook a program where there was no market failure, which is again a breach of the charter in terms of the research that they do.
“It reflects poorly on the governance and process which exists at a board level.”
He said AWGA has been asking AWI through the Wool Industry Consultative Panel to justify its WoolQ expenditure for the past two years.