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

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I appreciate you being here to listen to me. I know that you would much prefer to be listening to the maiden speech of the member for Gellibrand, and it seems from Twitter that it is a very good maiden speech indeed. So we are both missing out while we do this important work for the wine industry.

As the previous member said, the wine industry's future is very, very closely aligned with broader lifestyle economies. By that I mean an alignment with tourism and an alignment with the creative industries. That is where we are going to find great synergies in the wine industry. Only recently I was at Seppeltsfield, which is a great winery in my electorate and has been for many, many years. But now it is a winery in transition, because they are very, very closely aligning themselves with this type of creative economy. With the assistance of grants from the previous government, they have managed to reach an agreement with the JamFactory, a creative arts organisation in South Australia, to sell their products on site and, very shortly, another grant will help them completely transform their cellar-door area. It is an area currently covered in bitumen, built for the old days when you had large bus tours coming in. That area is now going to be opened up, beautified, and of course there will be a restaurant put in as well. So they are really building on what is a very, very beautiful and unique part of the world, and trying to make a unique experience for the people who go to that winery.

And it is not just about buying wine but maybe buying a good set of handcrafted knives—there is a knife-maker who is going to be a visiting artist—or a lovely piece of glass from these wonderful artists from the JamFactory. While they are there, of course, they will be having a meal as well. It is that sort of experience, I think, that is part of the wine industry weathering what is a difficult time in its history.

There are a couple of challenges. Obviously the high dollar is a huge challenge for exporters—and I know that the speaker to come knows something about that in her electorate. There is not a group of people in manufacturing—and wineries are included in that—who are not suffering not just from having a high dollar but also from having import competition from countries with artificially low currencies, often currencies that have been depreciated either because of the state of their economies or by deliberate government action. That is evident, I think, in the government of Japan and other economies around the world.

So we do have a very great challenge with the dollar and that does inhibit our ability to export. It is a bigger problem than is acknowledged by the political debate. I think we have been, to a certain extent, sidetracked away from a debate on the currency because there is no-one to blame. It is a debate and an economic problem where we have to, largely, search for solutions together, rather than blame one another for it. It is the result of many of the economic difficulties that this country and its manufacturers face.

Fortunately, I think the wine industry has a way out of a high dollar—a sticky dollar—and that is to move up the price scale. For too long, our industry was built on very cheap—high quality, but nevertheless cheap—exports to places like the UK and America. We competed on quality, to be sure, but we also competed largely on price. If there is a challenge for the industry, I think it is not just selling a lot of wine but selling wine for a good price, because we know that the consumers, whether they be here or around the world, will pay higher prices for a premium product. That is a critical challenge for the industry. You see many wineries doing that and using that as a way of dealing with what is a difficult set of currency arrangements between us and the rest of the world. We really need to come to grips with the facts of our currency. There is no doubt that it is overvalued, and there is no doubt that some of that is about other currencies, currency traders, reserve banks and the like investing in our currency because it has become a bit of a safe haven in the world.

The wine industry also has to deal with the issue of what is commonly called a glut. Of course the best way to resolve that is through greater sales, but it is continuing to cause some issues. Like I said, that last issue—that last piece of the puzzle—is a greater alignment with our food industries and our creative industries to create great synergies where people do not just come to visit a winery but come for a great meal, a great piece of art, a great bottle of wine and a great experience. That is invaluable, and that is why people are prepared to pay for it.

When I spoke on this bill when it came to the House in June of this year, I went through many of the framework issues of the bill. I do not think I will necessarily repeat all of those, but this was a bill that was the subject of industry and government collaboration. It is supported by both sides of parliament, so it is a happy piece of legislation. It is the sort of work that, I think, all of our constituents long for, even though it does not necessarily create as much attention as those things that we argue about.

The great virtue of this is in the peak bodies of the industry coming together and calling for reform and governments consulting with them—taking their interests into account, creating a proposal for a single new authority that takes on the functions and powers of the two previous authorities and creating a body that is better aligned with the future of the industry and a whole-of-industry strategy. Of course there are great benefits to aligning the strategy: better service delivery mechanisms and administrative efficiency gains. They are an important thing for any industry and, of course, they are an important thing for the wine industry.

The consultation process was pretty deliberate and pretty comprehensive. I have heard of no complaints about it in my electorate. I think it was comprehensive. That is reflected in the reintroduction of this bill by the current government. There are only a few bills that have survived the transition to government but this is one of them, and it is because of the important and noncontroversial functions of this bill.

The previous speaker said that the wine industry was one of Australia's progressive industries, and I actually agree with him. There is a great deal of creativity and earthy know-how in this industry. There are people in it who are really ingenious and have created an industry that combines our rural world with people who grow things and people who manufacture things. You see that in my electorate around the place. We have bottling plants and labelling plants in places like Freeling and Elizabeth. We have, obviously, small and large wineries in the area. They all provide employment and, I think, a great deal of passion and intellectual enjoyment—so not just pay cheques but creative and good jobs—for so many in my electorate.

So I am pleased to see that this bill is back. I look forward to its passage through the Senate and of course to the functions of this single authority for the wine industry being created. I also look forward to them providing a great strategy for the industry: prising open some of those export markets and making sure that high-value export markets are accessed by our wineries so that we might provide better jobs and better export income for Australia, even in what is a very difficult currency situation. I commend the bill to the House.

Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to support the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013, the Primary Industries (Customs) Charges Amendment (Australian Grape and Wine Authority) Bill 2013, and the Primary Industries (Excise) Levies Amendment (Australian Grape and Wine Authority) Bill 2013. You will note that there is no contention when we come to debate this cognate set of bills. All of us both in the opposition and the government are in agreement that the creation of a single authority is a great idea. It was carefully consulted on by the previous government. There were more than 16 public meetings, 23 letters of support and no formal letters of objection, I understand, during the consultation period. In fact, the idea of this single authority, through these bills, was working its way through the previous government without contention when time ran out.

So we stand today to put these bills through parliament. We are going to merge two existing statutory corporations: the Grape and Wine Research and Development Corporation and the Wine Australia Corporation. Out of that will come the Australian Grape and Wine Authority. The GWRDC, which was part of the previous landscape, focused very much on market development, compliance with the industry's regulations, trade knowledge, and development; it also looked at geographic indications, integrity and labelling. It will go on to do that important work, I am sure, but as well it will deal with the issues of levies, and it will reduce red tape, by having a single authority instead of two. It will also make sure that, if you want to take up any particular part of this industry, in terms of being licensed or understanding regulations, there will be fewer bureaucrats to deal with in the system. Certainly anything we can do to cut red tape in industry in Australia is to be welcomed; we are overburdened with red tape and compliance regulation in this country.

There should be no extra costs other than that already agreed to by the Grape and Wine Authority research and development funding. I am aware that the winemakers in Australia, their federation and the Wine Grape Growers Australia group welcome this merger. So this is all good news.

There are two schedules as part of this cognate bill. The first deals with amendments to the Wine Australia Corporation Act 1980 which will start on the day of the royal assent, and schedule 1 and 2 amendments to the Freedom of Information Act 1982. That is, in particular, to make sure that there is appropriate provision for the new governance arrangements. Schedule 2 of the principal bill contains the provisions governing the merger of the two corporations, and actually establishes the authority, including issues like the transferring of staff.

All around, the merger seems a far better idea than having two agencies. They are to be merged into one, and we would expect out of that merger greater efficiency and effectiveness and a single voice driving our great grape and wine industry forward. The industry is not small; it earns $3.4 billion annually. But as an agriculture based industry it faces the usual, very high risks of frosts, hail, drought, flood, smoke damage from fire, fire itself or disease. None of us in grape-growing areas will forget that we had a brilliant winegrowing industry in the 1800s in Australia and into the early 1900s, when phylloxera arrived. In my part of the world—in the Strathbogies and the Dookie area—very old vineyards, which ceased to be during the onslaught of that terrible disease, are now being re-established with disease-free stock, and once again their wines are delighting Australia with the very special flavours they have as a result of their great soils, great climate and very clever winemaking skills.

We do have a number of issues, though, with our wine industry. One of them has been touched on by two previous speakers. Globally we are about the fourth biggest exporter, and in the emerging market of China we are about the fourth biggest supplier of wines. There, our export industry has grown from $57 million in 2007 to $250 million in 2013. However, our near neighbour New Zealand is doing much better in the Chinese market—as it is in other markets, where you would expect the connoisseurs of wines to understand that Australia can more than compete with wines from across the ditch. The problem is that we do not have the free trade agreements in place that New Zealand or some of our other closest competitors do. So, in China, our wine is trying to compete with one hand tied behind its back.

When I was recently in China, people asked me about our wines. They said, 'Surely you must produce great wines.' I said, 'Of course we do.' They said, 'How come they are so much less accessible to us than those from New Zealand—and, of course, the price is very different?' That has everything to do with a free trade agreement, which is not yet in place between Australia and China. We know that the previous government had it in mind, but it will be our government which will have to deliver it—and urgently. I say: all strength to the arm of our DFAT officials who are pursuing the free trade agreements not only with China but also with Japan and South Korea. Without free trade agreements, our wine is made less competitive—not only because of the lack of agreements to bring down the tariffs but also because of the very highly valued dollar—with the dirt-cheap imported wines which look good in the bottle and which come in to flood the supermarkets, particularly the ALDI, Coles and Woolworths liquor outlets. It is very difficult for our own, home-grown wines to compete without a level playing field.

So I stress that we in Australia need to understand that it is not enough to simply produce the cleanest, most flavoursome and most superb wines of any in the world; we have to make it possible for our winemakers to compete on a more level playing field than that on which they currently do. It is not their fault that we do not have free trade agreements in place; it is the fault of laziness in the past. We have to get over that laziness and get ourselves into the 21st century so that the tariffs and duties we encounter look more like those of our neighbours.

We also have very difficult circumstances in the concentration of retail ownership. The big Woolworths-Coles duopoly owns a substantial proportion of the retail liquor outlets in Australia. They make it difficult for our winegrowers to put new products on the shelves, they make it difficult for smaller, boutique vineyards to break into the marketplace and they certainly expect to pay cutthroat prices for wine suppliers. It is the same for all agribusiness, of course—whether they are supplying vegetables, milk or fruit to the big duopoly. I am very pleased to say that the government is making a very serious effort to bring about less unconscionable practice in the concentrated buyer power we find in Australia's food and beverage retail markets. It is not fair, however, to expect our wine producers to do a brilliant job and produce some of the world's greatest wines but then find that it is almost impossible to sell them beyond the internet or their winery gate because in our marketplace buyer power is concentrated.

Finally, I want to say in relation to labelling that it is amusing to see how carefully France guards its names and labels, like 'champagne', and how you have the sherries, the moselles and so forth clutched very closely to the bosom of other nations, who say that they describe geographies rather than types of wine. That is okay; we can do just as well in Australia with our types and our geographic locations. So let me stress that in my part of the world we have brilliant wines from the Strathbogies, from the Dookie region and from the Goulburn and Murray valleys. We have wines near the Pyrenees, where our Mallee country comes close to where the wines are grown. So I think it is important that in Australia we do not feel that somehow we have a problem with not being able to call our magnificent sparkling wines 'champagne' anymore. Let us make sure they become internationally known for their own geographic derivation and have their own names proudly displayed on the bottle.

Having said that, I note that a lot of our wines are exported with labels which warn of less-than-responsible drinking. As we know, wine is a magnificent product, but like all good things it can be abused. We quite happily put those labels on the exported bottles as they go to California or parts of Canada. Already in Australia there has been much discussion, and notice has been given to the beer, wine and spirits industry that, in the first instance, we expect warning labels to be voluntarily placed on our alcohol containers but with a view to mandating labels in the future if the voluntary codes do not work. Perhaps with this single entity coming through in the future it will be easier for the grape and wine industry to be able to engage in the debate about what are the most appropriate labels to put on our wine bottles. Perhaps we should adopt the international labels and make sure that they are at the right place and are the right size so that they are meaningful and not just a joke when it comes to warning the drinker of abusing or overconsuming alcohol at the wrong time or in the wrong place. I also stress that it will be important that we have on those labels the warning, 'Do not drink alcohol when you're pregnant,' which is an important part of wine labelling in France, Canada and most parts of the United States.

So I very happily commend these various pieces of legislation in this cognate debate to the House. I think it is one of those cases where common sense is prevailing for an industry which has so many very small players—over 2,500 wine producers across Australia. There are over 6,000 wine grape growers. Many of them are now finding it extremely difficult to make ends meet as they compete with the high cost of labour; the high cost of any of their chemical inputs; the high cost of irrigation water; the very high dollar, which brings their competitors into the country at dirt-cheap prices; the concentrated ownership of a lot of the liquor outlets in Australia; and, of course, our lack of free trade agreements with some of the most important emerging markets globally. Put all of that together and our wine industry needs all the help it can get. I wish this single entity, the Australian Grape and Wine Authority, the greatest of fortune, and I am sure our government will make sure a lot of those barriers to future success and prosperity in the industry are removed.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013, the Primary Industries (Customs) Charges Amendment (Australian Grape and Wine Authority) Bill 2013 and the Primary Industries (Excise) Levies Amendment (Australian Grape and Wine Authority) Bill 2013. These bills have support from both sides of the House. This legislation will merge the existing statutory wine authority corporations that we have—the Grape and Wine Research and Development Corporation and the Wine Australia Corporation—into one entity, and that is good because it reduces red tape. It reduces a bureaucracy and makes it smaller. It is interesting that this has strong support across the whole industry. Where consultation was done, there was not one single formal written objection to this proposal. So it is good to hear that the opposition is supporting us with these bills.

However, there are some concerns about the future viability of this most important industry that we have. To reflect its importance: this is an industry here in Australia that is the fourth largest exporter of wine in the world. That is a credit that we have. We are a small population but the fourth largest exporter. Something like 60 per cent of our production is actually exported overseas with only about 40 per cent consumed locally. In past years we have had export sales in wine of over $2.8 billion. That is the importance of this industry.

We look to the future and the challenges that this industry has. It has a wonderful future with growing prosperity in South-East Asia, in China and in India. The potential for this industry to grow, expand and create more wealth for our nation should make it one of our most important industries and one we need to look after.

However, there are some grey clouds on the horizon and there are some significant problems that this industry has. Of course the high dollar is an issue that many exporters have, but I say the real concern, the real challenge to the viability of an innovative, prosperous wine industry in Australia's future is the concentration of our own, home-grown retail market. For most companies, if they are to be successful exporters, they first must be successful and develop experience in their home market. Getting the grounding in their home market, getting their brands and production methods established is what gives them the ability to go out into that international field where competition is so much tougher, where they are competing in the global environment. That is why our local market is so important. But the concern we have is the absolute market concentration we see at the retail level in our wine and alcohol sector.

We have the supermarket duopoly currently controlling in the vicinity of 60 to 70 per cent of the retail wine sales in our nation. This has a very detrimental effect on producers. That was recently noted in a report put together by KPMG: the Australian Food and Grocery Council's State of the industry 2013: essential information: facts and figures. This report should send the alarm bells ringing through this place. The report notes significant problems that many of our food producers have and which I am also sure apply to our wine producers. It notes that across the industry there has been a significant increase in trade spend. Trade spend is what is paid by the supplier to the retailer for trade discounts and promotional allowances. That trade spend actually increased from an incredible 19.5 per cent of gross sales in 2008-2009. I have asked the Parliamentary Library to try to find me some data to see how that 19.5 per cent compares internationally. Unfortunately, they were unable to do so, but I believe there is no other nation in the world, there is no other food producing sector anywhere in the world that has such a high trade spend. This report noted that, between 2008-09 and 2011-12, that trade spend, the amount the producers are paying to the retailers, increased from 19.5 to 23.4 per cent. For food producers in this nation, for every dollar of sale they have, 23.4 per cent goes to the rebates and allowances they pay to our retailers. This is completely unsustainable. This report warns:

The increase in trade spend has come at the cost of suppliers' marketing and research and development spend which may have a long-term impact on growth, sustainability and innovation.

Those are the very three things we need to make sure we have viable food and wine producers. Growth, sustainability and innovation are jeopardised by this increase in trade spend.

To compare that 23 per cent trade spend: in our food industry salaries and on costs represent eight per cent. We are looking at close to three times the cost of wages and salary in the food producing industry going into trade spend. Former Treasury Wine Estates boss David Dearie recently commented on the effect of this massive increase that we have seen in the trade spend and also on the concentrated nature of the Australian retail market.

In an article published in The Sydney Morning Herald on 27 November, Mr Dearie said there are 2,500 wineries in Australia, each with multiple brands, which means tens of thousands of brands are competing for shelf space, 70 per cent of which is owned by just two companies. He said the supermarkets were using their relative strength and the wine sector's weakened, fragmented state to demand thicker margins compared to other beverage categories. Unfortunately, he recommends that a level of consolidation in the wine sector is inevitable and vital to boost their bargaining power with the supermarket chains.

But no matter how concentrated our wine producers become, they will not be able to have the bargaining power to offset the strength of the supermarket chains—and this is exactly the opposite of what we need. We need to have thousands of wine producers out there innovating and experimenting, coming up with new ideas and trying new methods. We need entrepreneurial drive in our wine sector. But this is all being threatened—it is all being compromised—by the concentration we have in our retail sector. This shows the importance of the coalition's commitment to have a complete review of the Trade Practices Act. Maybe what we need is the Standard Oil option, because the danger and threat to our wine producers of a concentrated retail market cannot be understated. This bill is a welcome move—it is a step in the right direction—but we really need to be very careful that our retail sector is not damaging the production sector. I commend the bill to the House.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

I rise to conclude the debate on the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013 and cognate legislation. The government is continuing to work to progress the merger of two statutory corporations—the Grape and Wine Research and Development Corporation and the Wine Australia Corporation. The merger of the two corporations will create a single whole of industry statutory authority—the Australian Grape and Wine Authority. The new authority will offer strategic benefits to the industry, such as improved leadership, service delivery and administrative efficiency. It will also enable a single board to make strategic links between research and development, investment initiatives and marketing. There will not be any changes made to the structure or amount of industry levies.

The legislation provides that all levies collected for a particular purpose, such as research and development, will only be used for that purpose by the new authority. There will also not be any changes to the existing regulatory, marketing and compliance roles of the Wine Australia Corporation under the new authority. The decision to implement the merger followed an industry proposal submitted in August 2012 by the two industry peak bodies: Wine Grape Growers Australia and the Winemakers Federation of Australia. The merger has widespread industry support and addresses discussions that have been raised over the last 20 years. Three bills have been presented for introduction—the Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013, the Primary Industries (Customs) Charges Amendment (Australian Grape and Wine Authority) Bill 2013 and the Primary Industries (Excise) Levies Amendment (Australian Grape and Wine Authority) Bill 2013—and these bills provide the mechanism to create the Australian Grape and Wine Authority and implement the key elements of the reform.

I concur with the comments of my colleagues that what the wine industry does is allow those who have the work ethic to find themselves a small area of land and, if they work very hard, grow five or 10 acres of grapes—and, if they have a product that suits the palate, all other things being equal, it should sell and they should be able to make some money out of it. The only thing that can stand in their way is that they cannot market their product. If the marketplace has impediments, that means that, past the cellar door, the product has little hope of surviving.

I have been made aware of this by some colleagues in South Australia, who talk of excellent wines that one day they found were no longer on the shelves. The problem is that it is not the quality of the product that matters but the capacity to market the product. I am happy that the coalition has moved to a root and branch review of the Competition and Consumer Act, formerly known as the Trade Practices Act. There are a number of sections that are obviously very pertinent to this. One would have been—and I am sure that the members here are aware of it—what was otherwise known as section 51AC. It is now section 22 under the new Competition and Consumer Act. That section is about unconscionable conduct. We have to make sure that those in Australia who want to get ahead and who put their shoulder to the wheel and forfeit their role working for somebody else to set up their own business do not do so for no purpose such that there is no chance of ever receiving any benefit from what they do because they cannot sell the product.

Opposition Member:

An opposition member interjecting—

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

Is there a custom and practice that we try and act civilly here, or is that not part of it?

An opposition member interjecting—

No? Okay. Then you are right at home. It is good to see that on this side of the chamber people are looking after the people who want to participate in the commerce of our nation. We are making our best endeavours to try and make sure that the livelihoods of those in small business are looked after, while people on the other side mimic something from a zoo.

An opposition member interjecting—

Do you know what always amazes me? I was thinking about this today. One of the greatest representations of the other side is Mr Paul Howes. He is the person who picks the—

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

Please stick to the bill.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

Mr Howes is very important, because he picks the prime ministers of our nation. He is the faceless man. He wrote a book about himself—in fact, he has written a few books about himself.

An opposition member interjecting—

Don't you love the way they come out in chorus? One of the books that he wrote about himself was Confessions of a faceless man. He does not believe in 'ma and pa farms'. He said it. Why this is relevant is because these are predominantly ma and pa farms. Only Paul Howes and the AWU could turn farming into a pejorative; only they are capable of that. That should be known by the member for Blair, who would have a lot of ma and pa farms in his area. I expect him to stand up on behalf of those ma and pa farms in the Gatton valley and dismiss the comments of Paul Howes, because they are an absolute disgrace. Might I remind you that ABARES has said in excess of 95 per cent of farms in Australia are ma and pa farms, to use the Paul Howes pejorative. In fact, the Productivity Commission thinks it is more like 99 per cent. But those over there do not want ma and pa farms. They do not believe in the family business. They probably do not like ma and pa houses. They probably want to send us all back to the council flat in the midlands of England, because that is where it works best. The people from the Gatton valley will hold you to account for what you have said.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I rise on a point of order. He is supposed to be summing up the bill. He has confessed that this is his first speech in the Federation Chamber. But he has to be relevant to the bill in this summation and not go on with the ridiculous stuff that he is doing now.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Blair. The minister will continue on the summing up of the bill.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy Speaker. I can understand the sensitivities of someone who lives in the Gatton valley with a lot of ma and pa farms. I am glad that this will be on the Hansard so that I can send it to your local paper and show what people on your side of the political fence believe about the farming community. It is very important that we stand on behalf of the farming community, which apparently others have grown too sophisticated to support these days. They do not want ma and pa farms, which means, I suppose, that they do not want ma and pa houses. They do not want ma and pa small businesses. They just want to run down the farming community. They want to run down those in small business.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I rise on a point of order. This is not relevant in any way, shape or form to the summation of this legislation, which is a bipartisan approach to this issue. This is simply a rant and a rave by the minister, irrelevant to the summation of the bill.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

The minister will continue on the summing up of the bill.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker, and I shall do this because it is extremely relevant because, just like we are bringing greater efficiencies to the wine industry to reduce costs to try and keep family businesses on the family farm, it is very important that we note which side of the chamber does not believe in the family farm, does not believe in the right of a family enterprise to succeed—by their own statements. You know who else is in the AWU, the same union as Mr Paul Howes? It would have to be the Leader of the Opposition. That is who else is in it.

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

On a point of order, Deputy Speaker. This is totally irrelevant.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

You sound like you are about to cry! Come on, it's not that hard—it's all right.

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

And the minister's behaviour is totally inappropriate. It is not an interjection; it is inappropriate behaviour.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I will ask the minister for the last time to sum up on the bill.

Barnaby Joyce (New England, National Party, Minister for Agriculture) Share this | Link to this | Hansard source

I will come to a conclusion, because I know the sensitivities of what we have raised here today. It is always surprising when someone interjects how they don't like it when it comes back in the other direction. I commend the bill to the chamber.

Ms Hall interjecting—

Mr Joyce interjecting—

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

You are skating close there, Minister, about disorderly conduct and also on reflecting on members in the chamber. The question is that the bill be now read a second time.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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