The AWI and AWS boards signed a memorandum of understanding to instigate the merger process in July last year.
AWS¹s UK pension fund liability was perceived to be the major hurdle in the merger process.
Many woolgrowers become concerned that AWI levy funds could be used to cover AWSs¹ debt of about $28 million at the time.
AWI has steadily maintained that grower levies would not be used to cover the debt if a merger took place.
According to Mr Walker, AWS reached an agreement with the pension fund trustees in December last year and cleared the path for a merger.
Industry members are now quoting a pension fund payout between $15-$18m for the merger to go ahead.
³Since then we have provided all the information that the minister and his department have sought,² Mr Walker said.
³However, analysis of the issues has been more complex and more time consuming than the minister¹s staff could have assumed.²
Mr McGauran said the Government was still supportive of the proposal but said the pension fund debt was a stumbling block.
³AWI has made it clear that it will not merge with AWS until the UK pension fund issue has been resolved,² Mr McGauran said.
He maintained the debt was not the responsibility of the Government.
³The debt was the result of a downturn in the bonds market and not government policy,² he said.
Mr McGauran said he was not hesitating on approval because the industry had moved away from the Australian Wool Research and Promotion Organisation structure to the present organisations and now wanted to move back to a similar structure.
³The way in which the wool industry structures its various organisations is a matter for the industry itself,² he said.
³It has no bearing on the Government¹s position concerning the proposed merger.
³The Government needs to satisfy itself about the commercial and financial issues in the proposal put forward by AWI and AWS.
³I remain committed to bringing certainty to the industry as soon as possible.²
Australian Wool Growers Association chairman Martin Oppenheimer said he found it hard to believe the pension fund debt was holding up the process.
³About a month ago we were hearing very positive things out of Canberra but now we are in the dark,² Mr Oppenheimer said.
³It¹s really disappointing it¹s been delayed again.
³There¹s obviously something going on that the people at the top can¹t get this over the line.²