2017-11-07
On Tuesday, 24 October 2017 Lee asked questions of Walter Merriman, Chair of Australian Wool Innovation as part of Senate Estimates hearings on Rural and Regional Affairs and Transport Legislation Committee
Australian Wool Innovation and Mulesing
Senator RHIANNON: Mr Merriman, does any current or past member of the AWI board, or their family or associates, have, or did they have, financial interests in the sale of Tri-Solfen or any other anaesthetics used in muesli?
Senator WILLIAMS: Mulesing, not muesli. You have muesli for breakfast!
Senator RHIANNON: Does any current or past member of the AWI board, or their families or associates, have now—or did they have—financial interests in the sale of those chemicals?
Mr Merriman: Sale of which chemical, sorry?
Senator RHIANNON: Tri-Solfen or any of the other anaesthetics that are used in mulesing.
Mr Merriman: You're talking about pain-relief products?
Senator RHIANNON: Yes.
Mr Merriman: The answer is yes.
Senator RHIANNON: What are the details of that, please?
Mr Merriman: Well, the former director, Olsen—
Senator RHIANNON: What was his financial interest in it?
Mr Merriman: Director Olsen was a member of a company that invented the pain-relief product. We also have a current director, Dr Meredith Sheil, who's a member of the same company.
Senator RHIANNON: That's for Tri-Solfen?
Mr Merriman: Yes, the pain-relief product for mulesing.
Senator RHIANNON: Other people on the board?
Mr Merriman: Not to my knowledge, no.
Senator RHIANNON: What about their family or associates, now or in the past, who have benefited?
Mr Merriman: There's no-one else, to my knowledge.
CHAIR: I'm not sure that that would be in the scope of knowledge of the Chair, unless it had been raised by another director as a notification of conflict.
Senator RHIANNON: A point of process, Chair: there was huge scope this morning, and none of us tried to dispute the amount of time that you took up. It's my first question. It's a legitimate question. I think I should be allowed to ask it.
CHAIR (Senator O'Sullivan): No-one's said you can't ask the question, I'm just making the observation that I doubt the Chairman would be able to answer your question. But the Chairman's here; he'll decide whether he can answer what someone else's aunt's second-cousin's hairdresser does. It's a matter for him.
Mr Merriman: Stuart has some clarification.
Mr McCullough: All directors declare their interests on the board. We can take that on notice, to look back through the interests that have been declared of the current board and the previous board, and see whether there was anything else apart from the people that Mr Merriman's talked about.
Mr Merriman: I can tell you, the current director, Dr Sheil, all of her papers are blacked out when we get to any pain-relief topics. For instance, we've gone and funded a pre-pain-relief product. Anything to do with pain relief, her papers are blacked out and she leaves the room.
Senator RHIANNON: I did want to ask about that issue of funding. How much funding is AWI putting into promoting the genetic solution to mulesing versus the investment in anaesthetics for mulesing?
Mr Merriman: I'll have to defer to Stuart for that.
Mr McCullough: I can take that question on notice and give you the precise figure. It's a little hard to distinguish between things that we're doing on the genetic side versus mechanical and chemical treatments to flystrike prevention, but we'll take that on notice and give you an answer.
Senator McKENZIE: What about proportionality?
Mr McCullough: We can take it on notice and give you the proportionality. We spend $5.7 million a year on this topic.
Senator RHIANNON: When you say 'this topic', what are you referring to?
Mr McCullough: Flystrike prevention.
Senator RHIANNON: How do you break that down when you say flystrike prevention?
Mr McCullough: We'll take that on notice and give you the proportionality.
Senator RHIANNON: The breakdown of it. Thank you. Do you agree that the international market is crying out for solutions to the problem other than mulesing?
Mr Merriman: No, not the whole market, no.
Senator RHIANNON: Do you acknowledge that there is an increasing call, an interest, from sections from the international market—
Mr Merriman: Yes, small sections of the market, particularly the top end super-fine area.
Senator RHIANNON: When you say 'small', do you mean insignificant or small in quantity or small in their level of agitation? What do you mean by 'small'?
Mr Merriman: Small in quantity.
Senator RHIANNON: Therefore because they're small, does the board judge that it's something that isn't so significant for your work?
Mr Merriman: No, certainly not. Those small in quantity are high-end. Our major processes and brands in Italy, for instance, are very interested in unmulesed, and we direct them to the unmulesed wool when it's sold. It's identified, and they do pay some premiums in that area.
Senator RHIANNON: Going back to your board, are there any current or past members of the board, or their families or associates that have, or did have, financial interests in the sale of traditional stud breeds which require mulesing?
Mr Merriman: I'm one of them—the whole of the industry is like that. The great majority of the industry mules their sheep.
Senator RHIANNON: I'm just trying to get a sense of the make-up of the board. Are the majority of the members people who have an interest in the traditional stud breeds, like you?
Mr Merriman: On the board, we're not all farmers, for a start—we're not all sheep growers. Paul Cocking and Jock Lawrie—they both own properties; I do; James Morgan does in the pastoral areas of Broken Hill. I presume they all mules.
Senator RHIANNON: Could you take on notice a breakdown of your board members—which ones have a financial interest in the sale of traditional stud breeds which require mulesing?
Mr Merriman: The sale of traditional stud breeds—all of those people use sheep, traditional—
Senator RHIANNON: Are you saying that all your board members are the traditionalists who go for stud breeds that require mulesing?
Mr Merriman: I don't know where they get their sheep from.
Senator RHIANNON: That's why I was asking you to take it on notice. I respect that you may not know those details—so we have an understanding of your board members, what their interests are and what their financial interests are.
CHAIR: I think you might just need to—with respect, Senator—to particularise that. Is your interest board members who grow sheep who are involved in mulesing? Because, if that's the case, Mr Merriman has told you that all members on the board who own sheep—he believes—are involved in the practice.
Mr Merriman: I presume—I don't know their businesses. But I presume.
Senator RHIANNON: That's why I've asked for it to be taken on notice. Mr Merriman, you can take that on notice?
Senator LEYONHJELM: Is it a legitimate question? This is about their farming activities, not their business activities.
Mr McCullough: That's quite right. There's only one stud merino breeder on the board, and that's the chair—he's sitting next to me. The rest of them are commercial breeders who just try to keep their animals alive.
Senator LEYONHJELM: Exactly. I'm not sure that it's legitimate to ask Mr Merriman to report on the activities of his fellow directors. I can't see that it's the sort of information that he would collect from them
Senator McKENZIE: Chair, with respect to this debate that's going on, it's fundamental to how the levy is—
CHAIR: Hold on, just one minute—one minute, please, Senator—
Senator RHIANNON: What a contrast for this morning: we sat here while you went on for two hours—for two hours!
CHAIR: Why don't you all talk yourselves to a standstill and then I'll come in. When you're finished, let me know. Okay, we seem to have exhausted that exchange. On the point of order raised by Senator Leyonhjelm, I think it is unreasonable to ask—the chairman's not here in a capacity to deliver that answer. So what might be a solution is for you to specifically detail your question and Mr Merriman might be kind enough to deliver it to his board colleagues, and they can, if they choose, answer. Otherwise, there's no way that we can force committee members to start disclosing these details through the estimates process.
Senator RHIANNON: Chair, you're well aware that the witnesses are required to answer questions on notice. To say that they can choose if they're going to answer them is extraordinary.
CHAIR: If it's within their scope, and it's not within the chairman's scope. He's already indicated that.
Senator WILLIAMS: He can take it on notice.
Senator RHIANNON: They can take it on notice. I've put it forward twice.
CHAIR: Well, his answer will come back the same—he doesn't know. Take it on notice and respond in the same way you've responded here—if you know, you know; if you don't, you don't.
Senator RHIANNON: It's extraordinary, Chair, that you are now instructing the witness in how to answer a question and to not give the information in an answer on notice.
CHAIR: I'm certainly not going to get into a debate with you, Senator Rhiannon. What I indicated to the chair is, if he takes it on notice and he's able to answer it, he should; if he can't, he doesn't—it's as simple as that. You have the call, Senator Rhiannon.
Senator RHIANNON: Mr Merriman, are you against the cessation of mulesing?
Mr Merriman: Against the which?
Senator RHIANNON: Are you against the cessation, the ending, of mulesing?
Mr Merriman: I'm not against and I'm not for. All I know is that some 85 per cent of growers when we surveyed them said they would not be in the wool industry without the animal welfare practice of mulesing. That's what I know. I know we have a $3.3 billion industry and I know, if 80 per cent leave, we don't have it. They're the parameters I've got to work in. So I don't talk for cessation or non-cessation. I know, in my business, the best way I can look after my sheep is to mules them with pain relief.
Senator RHIANNON: Even though within three to five years the genetic solution could deliver a—
Mr Merriman: I think the jury's out on your so-called genetic solution. The genetic solution has been there for some 12 or 15 years, since Dr Watts started off with his SRS business. I worked with Dr Watts for some two years. They're out there now saying, yes, you can do it. Okay. If the industry wants it and the growers want to go and buy those rams, they're quite free to do that. It's a commercial business.
Senator RHIANNON: But the appropriate breeding program's actually been available since the 1990s. Solutions here have been around—
Mr Merriman: The 1990s? No, I worked with Jim Watts in, yes, the late nineties-early 2000s.
Senator RHIANNON: Do you understand how that alternative to mulesing can occur?
Mr Merriman: Of course, it's out in the industry now.
Senator RHIANNON: Can you describe what the alternative is to mulesing?
Mr Merriman: I don't think there is one, for me. Those people who breed those sheep—
Senator RHIANNON: No, I'm not talking about your own business. You're the top person here. Can you describe how the alternative to mulesing operates?
Mr Merriman: Well, they're plain-bodied sheep and you just have to crutch them more and put more chemical on them, and obviously a lot of growers aren't prepared to do that. They're after the one quick fix that lasts them the rest of their lives.
Senator RHIANNON: No, I'm talking about the genetic solution.
Mr Merriman: That's what I'm talking about. The genetic solution has been out there for some 15 years or more and it hasn't been picked up. Now, that's not my fault. That's because people have looked at it and said, 'Uh-uh, that's not for me. The best way for me to look after my sheep is with mulesing and pain relief.' That's what the market's done; that's not me.
Senator RHIANNON: But surely you acknowledge that the market is taking the industry in another direction and there is increasing evidence that Australia is losing business because some of the top end of the market—
Mr McCullough: That's not correct.
Mr Merriman: Excuse me, I really have to answer that. Dear, oh dear.
CHAIR: Hold on. Mr Merriman is quite capable of responding to that. Mr Merriman.
Mr Merriman: Senator, in 2009-10, I think, on the weight of the scientific evidence given to me, I got up and told the world that we didn't think we'd meet this 2010 deadline and that we didn't have enough alternatives that were commercial, quick and easy for the industry to use.
You talk of it affecting the price we get for our wool. Since then, the cartings have gone up 87 per cent and fleece has gone up 76 per cent, so it has had no effect on price. And all that wool, 90 per cent of it, by declaration is mulesed.
Senator RHIANNON: But considering the AWI is in such a key position, you seem to really back a position that's more supportive of the mulesing industry. Would it be the right thing to do to at least be giving support to the non-mulesing side as the way of managing sheep grown for wool. Considering there is—I won't use the word 'increasing' as you are going to dispute that—a demand for that type of wool. So, shouldn't you be even-handed?
Mr Merriman: We are. I just told you that we do projects with these top Italian operators and they use un-mulesed. We've got a project with Tasmanian growers where we support un-mulesed wool.
Senator RHIANNON: But isn't it the case that the research into mulesing gets much more money, much more support and much more are sources than research into non- mulesing methods?
Mr Merriman: No, that's certainly not correct.
Mr McCullough: Into genetics, do you mean?
Senator RHIANNON: So you can supply the figures to show that that is not the case?
Mr McCullough: You asked that before, and I said the proportionality of the investment in R&D in fly-strike prevention will be provided, and we will provide it.
CHAIR: So that's on notice.
Senator RHIANNON: Mr Merriman, why did you approach the chair of the MLA regarding the mulesing issue after Richard Norton, the CEO of MLA, made public remarks criticising continued mulesing in the wool industry?
Mr Merriman: Well, it was appropriate that I went from chair to chair. The CEO was not very happy with that because we have been friends for a very long time, but I thought it was appropriate that I spoke to his chair. That will affect over half their land production in Western Australia, and will certainly affect the ability of merino lamb to go into the lamb market, if that becomes a law.
Senator RHIANNON: But considering these suggestions about how you've been handling the MLA, I would again suggest there is a bias from you to the mulesing side of managing sheep grown for wool? Do you deny that?
Mr Merriman: I don't know about bias. I was just speaking for the whole of the industry—the people who mules. I pointed out to them that that decision would affect their ability to sell into the lamb market.
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