Green’s Dictionary of Slang

first-class, well-bred, excellent.

[1900		Bulletin (Sydney) 10 Feb. 15/3: ‘Pure merino’ yarn thin as the sharp edge of a ghost].
1901		Sydney Sportsman (Surry Hills, NSW) 16 Jan. 2/5: Sydney has never contained so many Hooligans of the pure merino type.
1903		‘Dads Wayback’ in Sun. Times (Sydney) 15 Feb. 5/6: ‘So wot they calls servants here is not by no means pure wool — more like flanelette’.
1905		Sun. Times (Perth) 10 Sept. 1/4: Some pure merino people were among the non-invited to Brown’s ball.
1936		(con. 1830s–60s) ‘Miles Franklin’ All That Swagger 94: His disposition was pure wool throughout.
1941		Baker Popular Dict. Aus. Sl. 46: Merino, pure, [...] (adj.) first-class, superlative in quality.