WOOL growers want the Federal Government to have a seat on the board of the industry’s research, development and marketing body – Australian Wool Innovation — to assist with ongoing governance issues.
AWI investments are funded primarily through a grower levy — 1.5 percent of shorn greasy wool proceeds — and a matching Federal Government contribution for eligible R&D activities — capped at 0.5pc of the value of gross national value of wool production.
The Australian Wool Growers Association believes the Federal Government’s contribution justifies it having a seat on the AWI board and want the Commonwealth to make this a condition of the new Statutory Funding Agreement it is renegotiating with AWI.
At its annual general meeting last week, the AWGA board resolved to suggest that the Federal Government – as the largest single contributor to AWI – get to nominate an independent professional director to oversee “continuing corporate governance issues.”
AWGA director Chick Olsson said AWGA did not want such a Federal Government appointee to go through the arduous process of collecting signatures for grower approval to nominate.
“We are making this suggestion to overcome the continuing corporate governance issues at AWI,” he said.
“This will be a further matter for discussion by the whole industry, but it is a fresh idea to help overcome the plague of corporate governance issues.”
These include AWI’s failure to fully implement the 82 recommendations of the 2018 EY review of AWI’s performance and governance, Mr Olsson said.
“The most important recommendation is the 10-year term for AWI directors, which in my view, is a board charter issue.”
Industry has agreed on eight year terms for AWI chair
Other industry sources have told Sheep Central that the grower bodies and the AWI board have agreed that it include in its charter provision for an eight year term maximum for the company chair position; however, no details have been released. Industry discussions are continuing on the most appropriate way to address the issue of director tenure.
However, Mr Olsson believed the director tenure issue can also be resolved via changes to the AWI board’s charter.
“The only reason it hasn’t happened is for selfish reasons of directors not wanting to get off the gravy train.”
Mr Olsson said AWI has also “lost its way” on issues such as WoolQ, “which is way outside its remit as an organisation.”
“It’s gone into competition with existing market forces, which was never allowed under the actual original statutory funding and constitutional agreements on market failure.
“There is no market failure, so I am saying an independent (government) director would actually make sure that AWI stayed within the confines of what it should be doing.”
Mr Olsson said there were also issues with AWI’s formation of its industry consultative groups, its lack of consultation on its flystrike prevention strategy and AWI payments to grower bodies.
“That has been a big issue, that they have tried to politically stack the Industry Consultative Committee in the past, but we’ve all got to stop as wool growers and have a sensible discussion and ask – Is the model working for the benefit of wool growers?
“A really honest discussion without any politicking at all, and put our hands on our hearts to ask ‘is it performing for all of us or just a few of us?” Mr Olsson said.
“I think it has become so complicated at AWI now, there has been so much poor leadership and industry anger that AWI almost cannot operate with freedom, purpose and direction – it is bound up by so much red tape now, which is its own fault,” he said.
“To having to push and thrash it into implementing these 82 recommendations, which was a purely a result of years of abuse of levy payer’s rights.
“It’s getting to the point where you are hearing calls in the media for it to be shut down completely.”
Federal Government director would increase governance oversight
Mr Olsson believed the question of the Federal Government appointing its own director did not need to go before AWI shareholders.
“It has nothing to do with the shareholders.
“This is purely the largest single shareholder, the largest single contributor, which can withdraw its funds and say ‘bad luck guys you are on your own’, which it is fully capable of doing, or saying if you want $18 million you now have to perform,” he said.
Mr Olsson said having a Federal Government seat on the AWI board would increase the oversight on the company’s activities.
“It won’t be possible for directors to come up with silly schemes that are outside AWI’s charter.”
Mr Olsson said he would also be seeking a further inquiry the rejection of his nomination for the 2019 AWI election, when he was seeking a forensic audit of AWI’s books.
He believes AWI director expenses were not adequately described in the 2019 annual general meeting papers.
WoolProducers of Australia chief executive officer Jo Hall said the body has been really clear over a number of years that it had concerns over the transparency of operations and governance at AWI.
AWI board is democratically elected by wool growers
An AWI spokesman said the company is owned by wool growers.
“The board is democratically elected by growers.
“Any potential change to those arrangements would have to be agreed to by the Federal Government and AWI,” he said.
“Negotiations with the Federal Government on the new SFA are proceeding well and anticipated to be finalised in the near future.”
Not government practice to involve growers in SFA talks
The Department of Agriculture Water and the Environment said it negotiating a new funding agreement with AWI, prior to the expiration of the current funding agreement in October 2020. Once finalised, it is a requirement that the funding agreement be made publicly available on AWI’s website.
The department said funding agreements are negotiated directly between the Commonwealth and the rural research and development corporations (RDCs).
“It has not been government’s practice to involve levy payers or industry bodies in negotiating new funding agreements with any RDC.
“Stakeholder views about an RDC’s performance and governance are captured by the requirement for both the RDC and the Commonwealth to take the outcomes of the latest Performance Review Report into account when renewing the agreement. EY’s 2018 independent review of AWI’s performance and governance was highly consultative, informed by interviews with 110 stakeholders, 56 written submissions and a survey of over 400 wool growers.”