Breaking the Sheep’s Back: A review of the Australian wool industry and government intervention

Massy’s book is not history as the term is generally understood. The last chapters are opinion and, although the author has obviously worked hard to get the fact rights, he still leaves out important details. For example, readers are told that there were referendums on the reserve price scheme in the 1960s, but Massy neglects to say who arranged the referendums and doesn’t clarify if woolgrowers voted, what the deal was concerning the vote, and what the results were.

All that said the book remains a good read and immensely informative about many of the details that remained murky at the time. It also remains an excellent object lesson for those who want to return to the bad old days of high tariffs and what use to be called agrarian socialism. The wool reserve price scheme was an effort to be caring and protect a deserving set of individuals, namely woolgrowers, from the rigours of the market. Instead it ended up badly hurting the very group it was trying to protect.

Massy points out that the reserve price scheme and industry structure hurt the industry in many ways. Wool buyers did not like being gouged by what amounted to a cartel and, crucially, there was no incentive for suppliers to innovate. In particular, only token efforts were made to counter growing market competition from cotton and synthetic fibres, by developing improved wool products. Woolgrowers kept shearing sheep and sending the material off, more or less as they had always done.

This was bad policy, underpinned by bad ideology. Those who defy the markets will eventually lose. They may lose slowly, or lose in a spectacular collapse, but they will lose. The wool industry has yet to recover.