Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry) Share this | Hansard source

I rise today to speak on the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013 and cognate bills. This is a truly great example of what can be achieved when governments work together with both industry and businesses to achieve better business outcomes. The wine industry is a great example of a progressive Australian agricultural industry. These amendment bills have come about at the request of industry and merge two of the country's peak wine bodies together. A newly named Australian Grape and Wine Authority will emerge and be responsible for the marketing, research and development of the country's $3.4 billion wine industry. The merger also brings together the research and development functions of the Grape and Wine Research and Development Corporation and Wine Australia Corporation marketing and export oversight functions.

Importantly, industry itself proposed no changes to the amounts of levies or the regulatory compliance role of the Wine Australia Corporation. A single wine industry body will support the industry by providing links between investment initiatives and functions of the Grape and Wine Research and Development Corporation and Wine Australia Corporation. There is no financial impact other than the Commonwealth entering into an agreement to match the Australian Grape and Wine Authority research and development funding. These amendment bills send a clear message to all Australian industry and business that this government is listening to the recommendations and taking on board all points of view before it makes decisions.

It is no secret that wineries located in the Hunter region are well known for their quality right around Australia and indeed the world. Some of Australia's largest exporters of wine, like McWilliam's, Drayton's, Tyrrell's and Brokenwood, reside within our Hunter region. They are representative of the great reds and whites that Australian wineries make and the popularity of our drops overseas. Hunter winemakers and grape growers are part of an industry that employs over 22,000 Australians nationally. They are part of an export industry that Wine Australia estimates to be worth $1.8 billion and that exported 698 million litres of wine to countries like the United Kingdom, the USA, Canada, China and New Zealand last financial year. Wine Australia's latest Wine export approval report says:

Australia ranks fourth among the world's 10 biggest wine exporters in the average value per litre of bottled wine exports …

But we are behind New Zealand, France and the US—but ahead of Argentina, Italy, South Africa, Germany and Chile.

The report also says that in total volume Australian wine is also now the No. 1 imported wine in the UK and New Zealand. It is second in the USA and fourth in Canada and China. Wine Australia saw some years ago a growing interest in Australian wines throughout Asia. We are now seeing exports of the premium, highly profitable segment of the wine market continuing to grow in East Asian markets just like China. The Chinese market has grown from $57 million in 2007 to in excess of $250 million today to be our third biggest in value. Australian bottled wine exports to the USA in the higher than $7.50 a litre segment grew by 16 per cent in the year ended 30 September 2013. I would like to see the industry grow further. I believe that these amendment bills are a good step in the right direction.

I would like to tell you a little more about the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill that has been introduced by my colleague the Minister for Agriculture, Barnaby Joyce. This bill proposes amendments to the Wine Australia Corporation Act 1980 to establish a new authority. It renames the act as the Australian Grape and Wine Authority Act 2013. The bill makes significant amendments to the existing Wine Australia Corporation Act 1980. The merger is not a takeover of the Grape and Wine Research and Development Corporation by Wine Australia; it is a strategic merger of the two statutory corporations on an equal footing.

The bill is divided into schedules. Schedule 1 amends the Wine Australia Corporation Act to create the authority. Schedule 2 covers matters arising from the transition from two statutory corporations to the authority. It covers matters such as the transfer of staff to the authority. Schedule 1 is divided into two parts. Part 1 of the schedule amends the Wine Australia Corporation Act 1980 to establish a selection committee to select and nominate to the Minister for Agriculture possible directors of the board of the authority. The bill also gives the Minister for Agriculture an alternative option of appointing a first board of the authority for a 12-month period without reference to the selection committee.

Part 2 of schedule 1 commences on 1 July 2014. This part amends the Freedom of Information Act 1982 and the Wine Australia Corporation Act 1980. This part establishes the authority and provides the governance framework for its operations. Schedule 1 also provides the research and development functions, including provisions for the Commonwealth to match research and development levy funds dollar for dollar. The authority will be required to spend research and development levy money and government-matching funds on research and development activity only. Industry has highlighted the importance of this issue for the new authority and I want to make it clear to the industry that the R&D levies will be spent on R&D purposes only. It is also important to the government to ensure that Australian government money appropriated for research and development is actually used for this purpose.

The bill does not include any changes to the structure or the amounts of the levies that currently fund both statutory corporations or to the existing regulatory, marketing or compliance roles of the Wine Australia Corporation. The bill transfers definitions of research and development from the Primary Industries and Energy Research and Development Act 1989. It establishes an authority with a skills based board of five to seven directors selected and nominated by a statutory selection committee and appointed by the minister. The board is led by a chair appointed by the minister following consultation with industry.

The authority is required to prepare a five-year corporate plan to outline the authority's strategies, policies and priorities to achieve the objective. The authority is also required to prepare an annual operation plan. Unlike those of the two statutory corporations, this plan is not required to have ministerial approval.

Schedule 2 provides for the transition of the Grape and Wine Research and Development Corporation and Wine Australia to the authority, including that the operations, assets, liabilities and staffing conditions are transferred to the authority. The bill allows the Minister for Agriculture to select the first board of directors. The board, as I said before, will commence on 1 July 2014. In between the date of appointment and 1 July 2014, the minister can engage the future board of directors as consultants to assist with the preparation of the authority's commencement, including making preparations to appoint the chief executive. The board's two statutory corporations will continue to exercise their individual powers and meet all statutory responsibilities until 30 June 2014. Before 1 July 2014 the future directors, in their role as consultants, cannot make decisions that would bind the authority; however, it can be expected that any recommendations they make would be considered for ratification by the board at its first meeting.

The costs of the consultants will be met by the Commonwealth through the Department of Agriculture. Once the authority commences, any and all Commonwealth funding provided for the purposes of engaging consultants will be refunded by the authority. As the consultants are the future board of directors acting in the interests of the authority, it is reasonable for the authority to reimburse the Commonwealth for the costs of these consultants.

The bill ensures that all employees of the Grape and Wine Research and Development Corporation and Wine Australia are transferred to the Australian Grape and Wine Authority along with all of their employee entitlements.

The bill provides for a number of amendments to be made to outdated sections of the Wine Australia Corporation Act 1980 and introduces modernised language to bring it up to date with current terms.

The wine industry has a unique regulatory structure, with the Wine Australia Corporation enforcing the label integrity program, licencing exporters and maintaining Australia's wine geographical indication systems. These important roles are not affected by the merger. The Australian Grape and Wine Authority will therefore have a strong focus on controlling exports, developing domestic and international markets for Australian grape product along with investigating, coordinating and funding grape and wine research and development. The authority will be responsible for reporting its progress on these matters to the parliament or the minister, and representative organisations.

The two companion bills that are being introduced alongside this bill propose minor amendments to the Primary Industries (Excise) Levies Act 1999 and Primary Industries (Customs) Charges Act 1999 to enable levies collected to be paid to the new authority.

In talking about the opportunities and growth in our wine industry, I would like to speak to recent cuts to cellar-door subsidy schemes by the New South Wales government. The federal government's wine equalisation tax is a tax on wine, levied at 29 per cent. The tax is paid on the value of the wine at the last wholesale price or an equivalent value when there is no wholesale price. WET is adhered to by wine manufacturers, wholesalers and importers. Retailers do not have a WET liability unless they make their own wholesale wine. Generally, WET is included in the price that retailers such as bottle shops and restaurateurs pay when purchasing the wine. The retailer is not entitled to claim back the cost of the WET, as the WET is built into the price the retailer pays and passes on to the consumer. The government also provides wine producers with a wine equalisation tax rebate of up to $500,000 a year, which equates to approximately $1.7 million wholesale value of eligible sales.

The New South Wales government's cellar-door subsidy was an integral part of that mechanism, designed and agreed to by industry, the New South Wales government and the federal government. I have had winemakers from the Hunter, the Riverina and the Mudgee regions—New South Wales' three biggest wine regions—all complain to me how unhelpful the scrapping of this state subsidy has been. The termination of the cellar-door subsidy scheme, which I am told was worth about $3½ million a year to Hunter producers, was a big kick in the guts to most of them—especially since this subsidy was part of an agreement that was developed with industry to ensure that winemakers remain competitive.

In the late 1990s the High Court found that a state tax known as the business franchise fee was invalid. Because these licencing fees were not unique to wine the loss of state revenue would have been quite large, so the Howard government came to the rescue by agreeing to increase its tax, the wholesale sales tax, in order to raise what the states would have raised and hand it back to them. But Mr Howard's job did not end there, because by necessity the federal government's tax applied to all sales, including those at the cellar door, which had been exempt from the state imposed business franchise fee. So he asked the New South Wales government to agree to provide a rebate for cellar-door sales out of the wholesale sales tax that he handed back to them. That way, no-one was worse off as a result of the High Court's decision. Instead of limiting the industry, we should be supporting them. It is an ideal time for the regions like this to draw tourists, because our dollar is now back around 90c. I say that the states should reinstate this rebate.

In closing, I would like to re-emphasise why this amended legislation is a positive step forward. Firstly, the industry wanted it; secondly, because it will cut bureaucratic red tape; it will help grow the industry and, in growing the industry, it will help grow our economy. As we push for exports into markets particularly like China's, I am reminded of Tourism Australia's new marketing campaign. Built off the back of the campaign of There's Nothing Like Australia, it is the Restaurant Australia campaign. What they are promoting is our great food and our outstanding wines. By having overseas visitors—people coming into Australia—tasting our foods and exploring our wines, they then go back with a better appreciation and understanding of Australian wines and that will increase our export sales. I want to grow the market because I believe in the market and I believe in the growers. I think we have unique exceptional products in Australia and we are perfectly positioned now that the dollar is coming back to be able to penetrate some of those Asian markets. I support this bill because it is a bill driven by the industry itself.

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