Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Hansard source

Labor support the Australian Wine and Brandy Corporation Amendment Bill (No. 1) 2007. In essence, it provides amendments to the Australian Wine and Brandy Corporation Act 1980 to implement the outcome of the assessment of the Australian Wine and Brandy Corporation by the Uhrig review. There have been a lot of amendments to a lot of corporations giving effect to the recommended changes from Uhrig, and we have been supportive of those changes. This bill deals with the Wine and Brandy Corporation Act. The wine industry has been one of the great export success stories of this nation in recent times. I will say a little more about that later on, because it goes to our trade performance and what I consider to be an appalling export performance on the part of this government since it has had stewardship.

To go to the bill specifically, we believe that it will lead to the better governance of the Australian Wine and Brandy Corporation. That is important because Australia is the fourth largest exporter of wine and a respected leader in combining tradition with new ideas and technology. It is therefore essential that the Wine and Brandy Corporation is best equipped to assist the industry to adapt to those changes.

The corporation is a statutory authority and plays a key role in supporting an industry worth $5½ billion. The corporation’s mission is to enhance the operating environment for the benefit of the Australian wine industry. The corporation’s specific services for the wine sector include export regulation and compliance, domestic and international wine promotion, wine sector information and analysis, maintaining the integrity of Australia’s wine labels and wine making practices, defining the boundaries of Australia’s wine producing areas and assisting with negotiations with other countries to reduce trade barriers. Clearly, they are activities that involve a lot of interaction between government and industry.

The stakeholders in the corporation are the Australian government, the wine and brandy producers, who pay the wine grapes levy, and the exporters, who pay the wine export charge. So it involves government, producers and exporters. This bill will amend some of the administrative arrangements of the corporation and are designed to improve transparency. As I said, these changes have come about because of recommendations following the Review of the corporate governance of statutory authorities and office holders undertaken by John Uhrig. The key task was to develop templates to ensure government principles which would assist the establishment of effective governance arrangements for statutory authorities.

As for the bill that is before us today, the key amendments include the appointment of the Australian government director to the corporation board—that is to be discontinued. The bill also strengthens the link between the corporation’s selection committee and the minister by including a requirement for an annual report to be given to the minister of the operations of the committee. The changes also provide for transparency to government and industry stakeholders on the process and costs associated with the selection and appointment of the members of the corporation. Labor support all of these changes. We believe that they will remove the potential for conflict of interest for serving public servants and will provide a better balance of input. They will ensure that the board is managed more at arm’s length from government and the changes will provide a more direct link between the minister and the board.

I said at the outset that wine is an Australian export success story. We are now the fourth largest wine exporting nation after France, Italy and Spain. Our wines are drunk in more than 100 countries around the world. Every day, about 2½ million bottles of Australian wine heads overseas. That is worth $2.8 billion to the national economy each year. It is an interesting reflection. I had responsibility for this industry as minister for primary industries back in the early 1990s, Mr Deputy Speaker Causley, and we served on a number of ministerial councils together—you in a different role—and worked quite effectively and cooperatively. I took the opportunity to have a look at what the wine exports were back in those days; back in the early 1990s. In those days, total exports of Australian wine were worth $293 million. The figure is now $2.8 billion, a tenfold increase in that amount of time. It is a quite staggering outcome.

Back then, our biggest market was the EC and we had restrictions on what we could get into the EC because in those days we used to label our wines as chablis and champagne and all of the other regional names that the French in particular took exception to. They used it to limit us. We were part of the negotiations in which the Australian industry was prepared to drop those regional identifications in return for improved market access. That is testament to the fact that the industry was prepared to stand on its own feet and—proud of the fact that it had its own regional varieties and had developed the quality, the expertise and the innovation—it was prepared to proudly brand its product, both by region and by label.

What this corporation does in terms of identifying Australian regions is terribly important. I know that there have been some interesting battles over what the boundaries of Coonawarra are, but, for those of us who enjoy the Coonawarra region wines, it is very important to get those boundaries right. It has been the strength of the French wine industry for centuries and other countries have followed that. Australia is able to do it and adapt in its own way.

Significantly, this was a circumstance in which it was not just the wine industry getting its act together, but the Australian government, through its trade negotiations—and, as I say, I was proud to be associated in those days as the minister responsible. We were able to push hard for improved market access into the EC on the basis of ceding that territory. We had some other difficulties with the wine industry at the time, not the least being the imposition of a tax in the 1993 budget, but we were able to eventually resolve those sorts of problems and move forward. As I say, that tenfold increase is a magnificent success story.

In those days, the EC, as I said, was our biggest export market. That is not the case now. Obviously, the US and the UK in its own right are the dominant markets. Australia is the biggest wine exporter to the UK. It is second only to Italy in the US and it is the third largest exporter to Canada. The industry is also making inroads into Japan and Scandinavia and it is continuing to make headway in the EC. It is also getting into other interesting markets. To maintain the quality and integrity of its wine exports, Australia has introduced a comprehensive compliance regime that requires all wines to be inspected and approved. The corporation approves wine for export from Australia. This quality dimension—this insistence on ensuring that that which we promote is actually delivered—is fundamental to the whole concept of selling Australia and keeping the reputation and brand at the forefront, not debasing it. To assist exporters to navigate the maze of regulations in international markets, the corporation has created an export market guide, providing market information and regulatory requirements for individual countries.

A key factor that led to the success of this industry was the implementation in 1994 of the European Community and Australia wine agreement, which I spoke of earlier. That agreement, which we reached in 1994, opened up the way, and I understand a new agreement will be finalised this year. I will follow that with interest. I hope it yields continuing benefits to the Australian wine industry. The role of government working with industry, and in fact driving for greater market access opportunities, is a terribly important role for government in understanding where industry is coming from and complementing its endeavours.

The corporation recently identified in its paper entitled ‘Wine Australia: Directions to 2025’ the potential for the Australian wine sector to sell an extra $4 billion worth of wine over the next four years. So not only has there been this huge tenfold increase, there are also plans to expand even more. That would lift cumulative domestic and export sales for the period to $30 billion, rather than the $26 billion expected based on current production levels and consumer trends. The gains that eventuate come through a combination of value-adding our existing wine products and new marketing focused on regional and fine wines—the promotion of our region. As more people travel to this country, they get to try these wines and they get to understand the significance and the beauty of the region and they identify with it. It is the way we would buy wines when we are overseas. That is a very smart way to promote. The activities also involve a clearer identification of niche market opportunities and a focus on business sustainability at an individual winery level—in other words, making sure that the businesses do not roll over. Whilst they can be excellent wine producers, they need to develop business and export skills.

I note also that the US free trade agreement was welcomed by the industry, though we have had a number of criticisms of the US-Australia Free Trade Agreement. I would also note that, under the agreement, US wine tariffs are unlikely to be eliminated for another eight years. Quite frankly, the government should have tried harder in this regard. This is a government that sold out the sugar industry in the home state of the former minister who is at the table, the member for Moreton. It was a disgraceful sell-out of the sugar growers in Queensland. We keep being told about the great benefits of the US free trade agreement, but why is it that, in our fastest growing market in the world, we cannot push harder and punch through for an earlier reduction in the tariff regime? Frankly, if we had been successful in pushing through with the US there, it might have had some impact in our negotiations in the Doha Round, where the Americans are also being quite difficult in their market support arrangements. We should never let up in any dimension of trade negotiations and we should use our strengths to argue our case. The US is Australia’s largest export market for wine, and we still settled for a second-rate outcome for that industry.

The industry has proven itself, and the government could not even go in to bat for it properly for improved market access. Quite frankly, it is a disgrace and it does let the industry down. I have always understood the importance of developing a government and industry partnership, which I talked of before. When I was Minister for Primary Industries and Energy, I went in to bat for industry, because that is our role. It is not for us to tell them how to run their businesses; it is for us to be there to help them get into markets when they run their businesses properly. That is what trade negotiation should be about. It is not about having another trophy on the wall before an election to say that we have an agreement with the US, and that any agreement will do. It is about looking at the substance of the agreement. This agreement sold out the sugar growers and, quite frankly, let down the wine growers of this country. I say to the industry that, in us, they will have a much more aggressive advocate of their needs and their market access demands.

I spoke of the US free trade agreement and the wine industry’s success in developing exports. It is a great pity that, under this government’s watch, the export growth—despite the longest resources boom in 50 years—is half the rate of that achieved when Labor was in office. Think about that. Labor was in office for 13 years, from 1983 through to 1996. Labor’s trade strategy, through a range of initiatives, included its championing of the Uruguay Round and a successful conclusion to that round, its commitment to the APEC region and to the Bogor Declaration to expand market opportunities and market access in the region, and its commitment to free trade agreements if they were enhancements, not diminutions, of what we had achieved at Uruguay through APEC. Labor’s trade strategy also included looking for opportunity not just in goods but in services. Labor invested heavily in Australian flag vessels, which was very important in reducing our reliance on shipping services—and which we essentially have to buy from the rest of the world now rather than providing them. That is just one example.

Labor understood the importance of port development, infrastructure development, national rail initiatives, investing in skills, investing in innovation and using the nation’s growing prosperity to reinvest in its future. That is how our approach to trade differs from this government’s. We also introduced a number of important export facilitation schemes. Although this government has retained the name of the Export Market Development Grants Scheme, it has halved its value. That is why this government was incapable of meeting the target it announced in 2001—to double the number of exporters in this country by the year 2006. The government is nowhere near meeting that target. I said at the outset that, when Labor was in office, it was getting annual export growth of eight per cent per annum—that is, total exports—every year for 13 years. This government, in its last 10 years, has achieved just four per cent in each one of those years. So not only has it halved the Export Market Development Grants Scheme, it has halved the rate of our exports. There is a correlation between government initiatives to advance exports and the end result.

This government’s performance in relation to export growth has been appalling. It should hang its head in shame. A stark demonstration of this fact was the figure released just last Friday for the trade deficit, which shows that Australia has had yet another trade deficit for the month of March, a massive monthly deficit of $1.6 billion, the 60th consecutive monthly trade deficit in a row. No other government in the history of this country has presided over 60 consecutive months of trade deficits. This government has managed to do it in the longest resources boom in 50 years. It is a rare feat. It is ineptitude and it demonstrates that the government has not kept its eye on the ball regarding where the sustainability of our economy lies. It is not in producing for the domestic market; it is using the strength of what we can do in the domestic market and sell to the rest of the world. Quite frankly, it has to do more than just export our commodities.

The budget handed down last night is not courtesy of John Howard and Peter Costello’s economic prowess; it is courtesy of the China economy. That is what has driven our prosperity. The government has managed the growth in receipts and revenues by doing nothing, despite the cutbacks, some of which I have talked about here today. This government should not be proud of its economic achievements; it should be ashamed of the wasted opportunity. We could be doing so much more if we had sustained the sorts of programs and initiatives in which we demonstrated the way. Australia reached a new milestone in 2006. Our foreign debt passed the half trillion dollar mark. Where is the debt truck now?

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