Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to 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?

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I ask that the member for Hotham bring himself back to the Australian Wine and Brandy Corporation Amendment Bill, which is before the chamber.

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I have been listening extraordinarily closely to the member for Hotham, and I think he has dealt with the Australian Wine and Brandy Corporation Bill contextually and perfectly well and with the related matters with regard to trade and the budget. I call the member for Hotham.

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, further to my point of order, I say with the greatest respect that the member for Hotham has, for the last 10 minutes, not mentioned either wine or brandy—or wine drinkers or brandy drinkers. I think he is off on a little, self-indulgent, drunken spree, and I would like him to come back to the bill.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Until that final point, you had made your point and I have no fear whatsoever that the member for Hotham will simply mention those words. But he is involved in a contextual debate which I think is undergirding the argument he has put previously in relation to the very matters in this bill.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I take offence that the member opposite accused the member for Hotham of being on a drunken spree, and I ask that he withdraw that.

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I was not suggesting that the member for Hotham was intoxicated by wine or brandy but that he was on an indulgent, power-drunken spree in the reminiscences of his ministry. All those things, to my mind, seem to be enormously off the mark.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Thank you both.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I ask that he withdraw his remarks unconditionally.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

That has been requested. I think it is not difficult for the member to do so.

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Which words were offensive?

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I will deal with it in this way: the member for Moreton knows and understands quite clearly the normal, reasonable, personal approach to the fact that he went a bit far with regard to what he said. Given that we have six minutes and 35 seconds or so to go, the determination can be the member for Hotham’s as to whether he wants to continue his contribution. I will let stand what has happened, because it is to the detriment of the member for Moreton in going a bit too far. We have lost about two minutes so far of the member for Hotham’s contribution, which I was enjoying tremendously. I think we will go back to it.

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

Thank you very much, Mr Deputy Speaker. I think the only one getting carried away in this place is the member for Moreton. I did have the occasion to talk with him on Monday night in the airport lounge. We were both testing, at the appropriate time of the day, and perhaps we will at some other stage. I know the member for Moreton does not like hearing this message because it is a failed performance on his part.

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

Being almost a teetotaller, I find that pretty offensive stuff.

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

The point I was making at the outset is that the wine industry has been a huge success story. Why? Because a Labor government when it was in office laid a framework that enabled that industry to grow its export base. This government has cut back on the programs that assist exporters, and Australia is paying the price as a consequence. That is my point. I would have thought it was totally relevant to the bill before the House. I would have thought that if we were dealing with better governance of the Wine and Brandy Corporation, it would be important to understand what it is they are governing and to understand the framework in which they could be governing and operating a lot better if they had a more sympathetic government—a government prepared to help them rather than hinder them.

My point in drawing attention to the woeful export performance is simply this: that if the government in its 10 years in office had been able to maintain the rate of growth in exports that Labor consistently achieved in its 13 years in office then instead of a trade deficit today of $12 billion we would have a trade surplus of $23 billion. That is a big return for the economy. I think the government needs to understand that it is one thing to pass provisions that improve the governance of corporations. What they really need is governments that pass provisions that help them get into more export markets. That is what we did in the nineties and that is why the industry has increased its export base tenfold. The figures are there, but you have to put them in the context of the overall performance of the economy so far as exports are concerned since this government came to power.

With all the money washing around in the budget on Tuesday night there was not one item of expenditure designed to improve export performance; yet this is a government that in 2001 said it was going to double the number of exporters from 25,000 to 50,000. The number of exporters in this country today still sits at only 40,000, despite the resources boom. Why is that? Because the government has cut back the programs that help new exporters get into new markets. If it does not understand the significance of that, it is not listening to what industry has to say. The Australian Wine and Brandy Corporation is a representive body of the industry and it is a body that, along with others, has been complaining about the government’s cutbacks in the Export Market Development Grants Scheme; yet, with all the money that is around, the government puts in no money. Now I am told that this government was advised that unless more money was put into the Export Market Development Grants Scheme the amount of money in the scheme would mean that those businesses in line for grants under the scheme would not be given the maximum cap. They would all have to take a cut. That reduces their ability to get into export markets.

I understand that the minister approached the Prime Minister with this very graphic piece of news. The Prime Minister knocked him back. Where is the support for our exporters? Do not come along and talk to us about the importance of improving governance if you are not prepared to talk about supporting them as exporters. Where was the money in the budget for the Export Market Development Grants Scheme? Where is the commitment to honouring the target of doubling the number of exporters? I will tell the government why it will not achieve this. It is not just that it has cut the money in the schemes that help us get new exporters; it is that it has debased the whole means by which trade policy in this country was successfully and effectively fostered under a Labor government.

This is not just a bill about improving governance; this is a bill that requires us to reflect on wasted opportunity. The wine industry is a great success story for this country and I am proud to have been part of it having been built. I want to be part of an exercise that helps it grow even stronger. I would not walk away from them regarding the US free trade agreement and sell them short. I would be going in to bat for them. That is what this government has failed to do. Whilst we support the bill, we condemn the government for failing exporters in this country so pathetically over the past 10 years.

Gary Hardgrave (Moreton, Liberal Party) Share this | Link to this | Hansard source

I will just take a moment to put something on the public record. The member for Hotham reminisced a lot about Labor’s trade policy and the position that they left the country in as far as trade and income and outgoings of the wine and brandy industry and private investors within that industry were concerned. It is worth revisiting that Labor’s trade strategy was to lower Australia’s credit rating from a AAA rating to a AA rating, creating a circumstance by which people in the wine and brandy industry, the sugar industry and small businesses throughout my electorate, the electorate of Kingston and the electorate of Farrer had to pay interest rates of 23 and 24 per cent because the risk associated with Australia was far higher as a result of Labor’s approach to managing the economy and to trade policy in those industries. It is also worth noting that, as a result of Labor’s trade policy and Labor’s administration of the wine and brandy industry, the sugar industry, the economy generally and trade policy in particular, we saw at the end of the Hawke and Keating years a $93 billion government debt, which was overseas money brought into the economy at the expense of any domestic borrower, making money in this country more expensive.

For the record I will say that the member for Hotham certainly was not intoxicated by any alcoholic beverage; I did not mean that. But there was a power drunkenness about the concepts in his presentation today, which were divorced from the subject at hand. If he wants to introduce trade policy and economic policy in the sugar industry as well as the wine and brandy industry, it must be stated clearly that Labor in government achieved a higher level of interest rates at their absolute lowest than the coalition in government has achieved with interest rates at their absolute highest—an average of eight per cent under us and an average of 10 per cent under them. I simply put that on the record because the member for Hotham has introduced the question of Labor in its international dealings somehow or other having greater prowess—$93 billion worth of international capital and a AAA rating slammed down to AA. It is now back to AAA because of good economic management. I rest my case.

Sussan Ley (Farrer, Liberal Party, Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I note the reminiscences of the member for Hotham, which did reflect back over long experience. I know of his time in parliament, but we are in the here and now, and it is important that we all recognise that. I do note his comments about export markets for wine. The Australian Wine and Brandy Corporation Amendment Bill (No. 1) 2007 is not about those things. It is a straightforward bill about governance and, without getting into semantics, about the principles of how you govern a statutory authority to do the most responsible job for the Australian taxpayer. It is not about the substance or the subject matter of that statutory authority. That is what I am summing up here this morning on behalf of the Minister for Agriculture, Fisheries and Forestry.

I am going to take a moment to demonstrate that the Australian government in fact is an active supporter of the growth of our Australian wine industry and its access to export markets. I note that, in keeping with the opposition’s lack of understanding about the water crisis in the southern Murray-Darling basin, the member for Hotham did not mention the single critical factor facing every wine grower in Australia today, and that is lack of water. Rather than reflecting on many years past—the past is history and cannot be changed; only the future can be—water is what wine growers are desperate about at the moment. We as a government are working with them so that, if there is some water in the system, we will do whatever we can to save their permanent plantings.

As for our support for the wine industry, the government has negotiated through the World Wine Trade Group a wine labelling agreement which will provide savings of about $25 million a year to the Australian industry by harmonising the labelling requirements in key export markets, including the US. I think everyone would agree that this is a vital step to take. A wine industry summit was held in June 2006, and of course it recognised that there was no quick-fix solution. However, some measures were put forward and taken. They include: extending the wine equalisation tax rebate to the first $1.7 million in sales at a cost of $126 million over four years; providing $10.1 million in Austrade export market development grants for wine export activities in the 2005-06 financial year—the member for Hotham mentioned those; they are important; they are part of the bigger picture—and providing matching payments for industry research through the Grape and Wine Research and Development Corporation of approximately $12 million in the 2005-06 financial year. Also, in specific locations across the country, such as Mildura-Wentworth—an area in my electorate and that of the member for Mallee, John Forrest—$500,000 will be put towards studies to support approaches to improving the operation of irrigated horticulture and communities. There is $200,000 for the Wine Grape Growers Association to help them assess their current situation and develop targeted activities, and $197,000 for the Winemakers Federation of Australia to fund projects to help boost winery tourism.

I want to put that on the record and also say that, yes, on another occasion, I can happily talk about our support for exports, but I reiterate that that is not what this bill is about. The Australian Wine and Brandy Corporation is an Australian government statutory authority. It plays an important role in supporting Australia’s wine industry. It provides strategic marketing information and analysis, export and labelling regulation, advice on trade and market access and the identification and protection of our distinctive wine regions. The production and sale of wine have grown to be a very significant industry in Australia, with approximately 2,000 wineries generating annual sales of $4.7 billion in the 2006 financial year.

In 1981 when the Australian Wine and Brandy Corporation was formed, Australia produced 366 million litres of wine, of which just 7.5 million litres was exported. In 2005-06, Australia sold 1.1 billion litres of wine, including exports of 722 million litres valued at $2.8 billion. Wine is now Australia’s third largest food export. In spite of the tough times, it is an incredible industry with an incredible contribution to make to Australian agriculture and our export markets generally.

The Department of Agriculture, Fisheries and Forestry assesses the Australian Wine and Brandy Corporation against the Uhrig board template. The assessment recommended a small number of changes to bring it in line with the Uhrig review recommendations. The assessment concluded that the position of government member on the AWBC board should be discontinued and that, given this, the skill set for board member selection should be expanded to include expertise in public administration. This change removes the potential for conflict of interest for serving public servants between their responsibilities to the minister and to the board. This is consistent with the changes being made to the eight statutory rural research and development corporations.

The bill also includes a provision for the Australian Wine and Brandy Corporation Selection Committee to provide the minister for agriculture with an annual report on its operations. The bill will strengthen the Australian Wine and Brandy Corporation’s governance and accountability framework and maintain its capacity to work collaboratively with the Australian wine industry to market and promote Australian wine. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.