Tony Pasin (Barker, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to speak on the rising tide of concern both within my electorate and nationwide regarding the New Zealand wine equalisation tax rebate. The electorate of Barker produces 68 per cent of the South Australian state crush, with the Riverland being Australia's largest wine-producing region, accounting for 60 per cent of South Australia's total production by volume. Eighty-nine per cent of South Australian wine is produced for export. My electorate is also home to some of the oldest grapes and most acclaimed wineries, particularly the world-famous Barossa Valley and Coonawarra. That is why I have been listening to the concerns of the people working and living in those regions who have been campaigning hard to have the Commonwealth remove the New Zealand wine equalisation tax rebate, which is currently acting more like a subsidy than a rebate.

I am a grateful to the Winemakers' Federation of Australia, particularly CEO Paul Evans, for their support for this cause. I would also like to acknowledge the work of the member for Kooyong, who has ministerial responsibility for this matter and has listened diligently to my submissions regarding the inherent unfairness of the current position.

The WET rebate was created primarily to provide assistance to small- and medium-sized winemakers and to promote tourism in regional areas through increased incentives to open cellar doors. From 1 October 2004, the cellar door WET rebate scheme was replaced by the current system which allows a wine producer to claim an annual WET rebate regardless of whether they make cellar door sales. The maximum rebate payable to a producer was initially limited to $290,000 per annum. The amount of the rebate was calculated as 29 per cent of the wholesale value of the wine.

From 1 July 2005, the WET rebate scheme was extended to include New Zealand producers. New Zealand producers became eligible to claim the WET rebate provided: (1) they produced wine in New Zealand; (2) they exported that wine to Australia; and (3) Australian WET was paid on that wine. From 1 July 2006, the WET rebate each producer could claim was increased to a maximum rebateable amount of $500,000 per financial year.

There is a strong case—nay, an overwhelming case—for abolishing the current New Zealand WET rebate scheme. In recent years, New Zealand imports have increased from 21 million litres in 2007 to over 51 million litres in 2012 and 30 per cent of the total value of the leading 20 SKUs sold in Australia are from New Zealand. This loss of market share to New Zealand imports has directly harmed Australian producers. The New Zealand rebate has increased from $6 million in 2007 to $25 million in 2014, with the number of claimants increasing from 120 in 2007 to 213 in 2013.

Providing foreign entities with access to the rebate at a time of high exchange rates and low profitability is not consistent with the original policy intent; indeed, it is directly damaging branded Australian wine businesses that support employment and tourism in local regional communities such as the Limestone Coast, Coonawarra, the Barossa Valley and the Riverland. The extension of the rebate to New Zealand producers in 2005 was inconsistent with the original policy intent of the rebate and has created an unfair advantage for New Zealand producers. In addition to this financial advantage, the other benefits afforded to New Zealand wine producers which are not available to other foreign wine producers include: that approved New Zealand participants are not required to be registered for Australian GST purposes, while Australian wine producers are; that approved New Zealand participants are not subject to compliance costs associated with lodging an Australian income tax return, while other foreign wine producers are deemed to have an Australian taxable presence by receiving the producer rebate; and that approved New Zealand participants are not required to be the exporter of the wine to Australia.

If the WET producer rebate was reformed to remove the preferential New Zealand scheme, New Zealand wine producers would be subject to the same tax compliance regime and corresponding costs that Australian and other foreign wine producers are currently subject to. The extension of the rebate to eligible NZ producers was wrong. I will continue my fight as long as it is needed to achieve its abolition and I am seeking the support of my colleagues to achieve that goal.