PRESSURE is mounting on Australian Wool Innovation (AWI) to lower its compulsory woolgrower levy this November after a performance review called for an overhaul of the industry body.
Conducted by advisory firm, Ernst and Young, the Federal Government-initiated review was released by Minister for Agriculture David Littleproud on Monday who warned all 82 recommendations should be adopted by AWI.
“The review says AWI has achieved much for growers and also that AWI has areas to work on,” Minister Littleproud said.
“The review provides a roadmap to modernise AWI and I ask and expect AWI will take a genuine leadership role in delivering the recommendations.”
Key recommendations include improvement in strategic planning, communication with stakeholders and stakeholder engagement, moving to a skills-based board, and improve transparency of proxy voting and limit board members to 10-year tenure.
If adopted, the 10-year cap on directors serving on the board would prevent current chairman Wal Merriman, and fellow board members Meredith Sheil and David Webster, from nominating again next year.
In the 500-plus pages of the report, significant changes to the election process were recommended, and called the current process for member selection of the board nomination committee (BNC) as “inappropriate as the chair of the board has a substantial influence over the membership of the committee”, which then reviews potential candidates for director roles.
The review also called on greater transparency of how open proxies are used in the election process, stating the use of proxies had led to “stakeholder distrust” and was not in line with good governance behaviours.
The alleged use of “tracking and stacking” votes at board elections was exposed last October, after Senate Estimates hearings heard Mr Merriman had access to voting data while the election process was ongoing from independent share registry, Link Market Services, and had access to voting information prior to casting proxy votes.
The review urged collaboration with other industry bodies, such as Meat & Livestock Australia, to address areas “vulnerable to social licence concerns”, such as mulesing and wild dogs.
AWI chief executive officer Stuart McCullough said his organisation would work to implement all 82 recommendations, although some would take time and any constitutional amendments would require shareholder approval.
“That’s where we will have to wait for the AGM (annual general meeting) on November 23 where they will be presented as resolutions for shareholders to vote upon,” he said.
The review was critical of AWI in areas of strategic planning, governance, consultation and the measurement of performance.
It highlighted return on investment transparency as a key area for improvement, as well as effective consultation with industry organisations.
“Because we don’t sell anything it is really hard to give a tangible figure to woolgrowers, which is what they want – for every dollar spent, every dollar returned,” Mr McCullough said.
“We never expected this document to be a document of great compliments,” Mr McCullough said.
“They find things that are not quite right and make recommendations on how you can improve the business.”
Mr McCullough said maintaining staff morale had been one of AWI’s biggest challenges over the last year.
“There is no toxic culture. It has been a real struggle to buffer my staff from headlines that don’t really reflect what they are living and breathing and working through at AWI,” he said.
There is no toxic culture.
He supported the review’s recommendation to reduce the frequency of the WoolPoll vote from three to five years.
A recommendation in the review was a skills-based board, and greater independence of directors while on the board.
WoolProducers Australia chief executive Jo Hall said the review vindicated the peak industry body’s calls for greater oversight of AWI.
“If the recommendations are all implemented, as per the review, this will lessen the need for that arm's length oversight,” Ms Hall said.
“WPA have recommended to the WoolPoll panel chair that 0pc, 1pc, 1.5pc, 2pc, 2.5pc levy options be put to levy payers… considering the last two WoolPolls there was only 7pc of total votes cast above 2pc.
“By including 1.5pc levy option, enables producers to lower the levy without taking the drastic step of halving the levy which previously has been the only option.”
West Australian wool producer and past president of the WA Stud Merino Breeders, Stephen Bolt, said a change in directors could risk losing skills off the board, not gaining them.
“When it comes to the AGM, they will be the ones that will dictate what sort of company we want,” he said.