The Secretary, Department of Commerce has forwarded the following memorandum for advice:

Representations have been made to the Minister for Commerce that the Commonwealth Government should bring down legislation to abolish a practice obtaining in the wool trade known as ‘a draft allowance’.

The practice of ‘a draft allowance’ which is universal wheresoever wool is sold throughout the world, is a custom which has been operative in Australia since wool sales were first instituted in this country. It enables the buyer to deduct 1lb. per cwt. on all wool purchased by him: that is to say, the buyer receives 112 lbs. (a bale) for every 111 lbs paid for.

This question has been a contentious one between buyers and growers for many years, and in the past other countries have refused to co-operate with Australia in seeking its abolition. In 1932, however, the National Council of Wool Selling Brokers of Australia, and the Australian Woolgrowers’ Council, resolved to approach the buying organisations and to state that, unless voluntarily arranged, growers were determined to secure the reform they needed by legislation.

It would appear, prima facie, that the matter is one for arrangement between the parties concerned in any agreement for the sale of the commodity in question. The magnitude of the industry, however, is such that it may be necessary for the Governments (either Commonwealth or State) to give consideration to their legal standing and to seek means whereby a measure of protection might be afforded the Australian woolgrower.

It would be appreciated, therefore, if you would advise whether it would be competent for the Commonwealth to intervene by legislation on this matter, and in what direction such intervention could be limited or restricted; or whether you consider the matter is one solely for the States concerned to deal with.

Legislation by the Commonwealth on this matter, if it has any power to pass such legislation, would be an exercise of its authority to legislate on the subject of trade and commerce.

The Commonwealth Parliament is, however, only empowered to legislate with regard to that trade and commerce in so far as it relates to ‘trade and commerce with other countries, and among the States’ (Constitution, section 51(i)). The matter of legislation with respect to intrastate trade and commerce is one for the respective States.

I am not aware of the precise nature of wool-selling transactions but, if such transactions are, as between the grower and the buyer, completed in the State in which the wool is offered for sale, it would seem that any legislation for the abolition or restriction of the practice in question should be enacted by the State.

[Vol. 29, p. 4]