Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Labor will be supporting this bill, which is comprised of two schedules, one dealing with the wine equalisation tax, another dealing with MySuper. Changes to the wine equalisation tax need to recognise the perspective from which we tax alcohol. Taxes on alcohol are a Pigouvian tax, designed to internalise the externality. As the Henry tax review noted:

Taxes on alcohol should be set to address the spillover costs imposed on the community of alcohol abuse, when this delivers a net gain to the community’s wellbeing and is more effective than alternative policies. Raising revenue is a by-product, not the goal, of taxing alcohol.

This point is important in recognising changes that are proposed to the wine equalisation tax. The Henry review went on to describe how different alcohol products are taxed according to alcohol content, and it showed that wine is both the highest and the lowest taxed on a volumetric basis. A $40 bottle of wine with a relatively low alcohol content has a higher tax rate than would apply to beer or spirits, but a $12.99 four-litre wine cask has a lower tax on a volumetric basis. The Henry tax review noted an example. It said:

In Alice Springs, a 2-litre wine cask costs $10.99, which includes roughly $1.59 of wine equalisation tax. An equivalent volume of alcohol in full-strength beer would attract $7.48 in excise, and in spirits $16.45.

The changes that are being proposed in this bill to the wine equalisation tax also have an industry component, but it's important to outline their public health component first. A report from the Centre for Alcohol Policy Research and the Turning Point Alcohol and Drug Centre estimated that over 70,000 Australians were victims of alcohol related assault, of which 24,000 people were victims of alcohol related domestic violence. Almost 20,000 children across Australia were victims of substantiated alcohol related child abuse. A report from the Foundation for Alcohol Research and Education estimates that each day 15 Australians die and 430 are hospitalised because of alcohol. It goes on to say that there are significant negative externalities of alcohol, including violence in our streets and in our homes, child maltreatment and neglect, and lost productivity in our workplaces. A report carried out by the Australian Institute of Criminology in 2013, report No. 454 by Matthew Manning, Christine Smith and Paul Mazerolle, estimates that the costs to society amount to $2.9 billion through the criminal justice system, $1.7 billion through the health system, $6 billion in Australian productivity, and $3.6 billion in traffic accidents.

The challenge, though, with alcohol, unlike with other Pigouvian public health taxes, such as cigarette taxes, is that moderate alcohol consumption is not damaging. Indeed, according to some research, it may have beneficial effects. So, the key focus in alcohol taxation ought to be its ability to target heavy drinkers. In an ideal world, one would imagine higher taxes on somebody having their 12th drink at three o'clock in the morning in a rowdy pub than on Mrs Smith, sipping her first sherry at home on a Friday night. But such taxation is not practical, so taxation of alcohol works in a second-best world, aiming to target these negative externalities.

The wine equalisation tax operates in an environment in which, while alcoholic excise on spirits and beer is based largely on the alcohol content, wine taxation is based on the last wholesale price. The taxation of wine is 29 per cent of the value of wine at the last wholesale transaction, before adding GST, and then there is a producer rebate applied. The government's Re:think tax discussion paper noted that in 2013-14 excise and excise equivalent customs duty on beer, spirits and other excisable beverages raised $5.1 billion in tax revenue. WET revenue in 2013-14 amounted to $826 million net of producer rebates, which are typically around 25 per cent of total WET.

But the WET producer rebate, as it stands, has distorted production in the wine industry, contributing to the increased supply of wine and wine grapes and preventing necessary adjustments that would improve the long-term strength of the industry. The rebate was introduced in 2004 and currently provides up to $500,000 in tax relief to producers of wine. The intent of the policy was to benefit small wine producers in rural and regional Australia. My colleagues the shadow Treasurer, Chris Bowen, and the shadow minister for agriculture, Joel Fitzgibbon, noted in 2015: 'The intent of the policy is not being met and there is consensus from the government, the opposition and the industry itself on the need for change.' The member for Bendigo has been a strong advocate for the wine industry in her sector and has spoken to me about the challenges that the current scheme provides for legitimate cellar-door operators. We want to make sure we have a rebate system that encourages wine tourism but which does not have the perverse incentive of encouraging a glut of cheap wine, effectively making it more difficult for other producers in the industry and, potentially, contributing to some of those negative externalities—social costs—I spoke about before.

There have been clear signals from the opposition throughout this process that we would engage with the government and support sensible proposals. Frankly, I'd say that this could have come forward more quickly. But it is good to see these reforms before the House. They better target the rebate, improve its integrity and ensure consistency with the original policy intent of benefitting small wine producers who are making a genuine investment in the wine industry. If left in its current form, the WET producer rebate will continue to create a perverse incentive for businesses to structure themselves so as to maximise rebate claims. The result of that would be that if it were left unchecked we may see excess wine production exacerbating challenging market conditions for growers.

The measures in this package are supported by many stakeholders, including most industry participants. As the Winemakers' Federation of Australia has noted, removing the rebate from bulk and unbranded wine is an important driver for industry's restructure, and industry would like it to happen as soon as possible. The amendments make integrity changes to the WET producer rebate, quoting and WET credit rules; reduce the WET rebate cap from $500,000 to $350,000; tighten the associated producers rule; and repeal the earlier producer rebate rule. The new WET eligibility criteria generally apply to wine for which the winemaking process commenced on or after January 2018 and to most other wine products from 1 July 2018. The reduction of the WET rebate cap to $350,000 applies to dealings in wine made on or after 1 July 2018. The amendments to the associated producers rule apply to dealings in wine from the day that schedule 1 to the bill commences.

Going specifically to those changes, the changes will ensure that at least 85 per cent of the wine by volume in its final form, as a packaged and branded product that's fit for resale or sale, will have to originate from source product that was owned by the producer before the winemaking process commenced. That will target this issue of bulk and unbranded wine while ensuring that legitimate cellar-door operators can still take advantage of the rebate. The opposition notes that the government has abandoned a further decrease in the WET cap rebate from $350,000 to $290,000, as was announced on budget night, because the government believes that tightening eligibility criteria will address much of the abuse in the scheme.

I go now to the second schedule, which is dealing with MySuper. This schedule amends the Income Tax Assessment Act 1997 to provide income tax relief to superannuation funds that are transferring the account balances of their members as they transition to the MySuper rules. Labor was proud to introduce the MySuper reforms, which brought in place new, low-cost superannuation products with a simple set of features to allow members to more easily compare products and ensure that members don't pay for features they don't need or use.

The MySuper reforms were informed by behavioural economics research, which has shown that most Australians are invested in the default superannuation fund and invested in the default investment strategy within that fund. So we have to make defaults good if we're going to ensure the long-term viability of Australians' retirement savings. The original superannuation reforms of the Keating government were visionary indeed, but, in retrospect, they placed too much emphasis on choice and on people informing themselves of all of the available options and going in and making active choices so as to select the fund and investment option that's best for them. MySuper recognises that, in a busy world, many of us simply don't get around to taking an active engagement with our superannuation fund and, therefore, that we have to make sure that defaults are as good as possible.

Superannuation funds have been able to provide MySuper products since 1 July 2013. As part of the transition to the new rules, funds are required to transfer the existing balances of their default members to MySuper-compliant products by 1 July 2017. When superannuation funds are transferring these balances and the assets which support these balances, tax liabilities could arise in the transfer. The tax payable would, of course, reduce the balance of the member. Tax relief is currently available for those superannuation funds that transfer the default members to a different fund, but this tax relief has not been available where the member transfers to a MySuper product within their existing superannuation provider. This legislation extends the tax relief, providing an asset rollover for mandatory transfer of balances and assets to MySuper products within the same superannuation fund.

Labor supports this change as a measure which supports the integrity of the MySuper system and ensures that members' balances are not negatively impacted by tax liabilities when their balances are moved. It also ensures equity between those members who move to a new fund provider and those who merely take up new products within their existing providers. We need to continue the work to ensure that Australians are in high-quality default options, with minimum management fees. Australians benefit massively through investments which have low-cost administrative overheads. I commend work that the Grattan Institute has done on this, ensuring that we work over time to bring down the administrative cost within superannuation. Those administrative costs may seem small at any given year, one-half of one per cent or one per cent, but over the course of a lifetime this can add up to massive amounts. So, as the MySuper reforms continue, I commend those who are continuing to work to ensure, for example, that investments are moved towards lower cost index funds and away from actively managed funds, which appear, on average, not to have higher returns than index funds. We need to ensure that young Australians aren't placed in overly conservative investment strategies and that, overall, our system ensures the maximum returns with the minimum administrative overheads. I commend the bill to the House.

Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

The Treasury Laws Amendment (2017 Measures No. 4) Bill 2017 is one bill that does have bipartisan support on both sides of the House, and that is very refreshing because it is a reform that needs to happen. My interest in this started with two people—a guy by the name of John Ward, a wine grape grower from Swan Hill, who came and saw me, and another guy by the name of Frank Pedulla, with another delegation of wine growers in my patch. People think of the Barossa, they think of Coonawarra and they think of the Hunter Valley, but they might not realise the quality of grapes that are grown in the electorate of Mallee. It is very refreshing when people come and sample some of the grapes grown in our patch and realise that we actually do produce good quality wine.

The wine equalisation tax rebate has been upsetting things for quite a while. I think the intention of the reform when it was brought in under the Howard government was probably quite sound, but, unfortunately, it's been open to some rorting, and it needs a clean-up. Essentially, the intention is—and we have kept the intention pure in this bill to try and clean it up—that we want people who are growing grapes and producing their own wine and having cellar-door sales to receive some additional benefit because of the additional jobs that come from the tourism around food culture. It is one of the great beauties of our country. Not only can you see spectacular scenery; but you can taste the produce that is produced in that place, which generates a sense of pride in our country. We do produce great wine, and it encourages businesses that start off as just a cellar door to then go to the next step. Unfortunately, the wine equalisation tax, as it stands before this proposed reform, has allowed the wine rebate to be claimed on bulk and unbranded wine, which is largely away from the intent of the original legislation, and this is putting some pressure on the viability of the take-home price for wine grape growers across our region.

I know a little bit about agriculture and trade, given my background. I remember—and I used this example when we were having these discussions around the party room—that, in the early eighties, when there was a drought, you couldn't get 20c for a sheep. You couldn't get very much money. I remember as a 16-year-old, at times, having to line up and shoot sheep because they weren't worth anything. Now, the great thing that's happened in the agricultural industry is that we have developed so many markets that we now export sheepmeat to 112 countries right across the world. Even through the dry times you can get over $100 per head per sheep, so we are getting better utilisation out of our product. What we want to do with the wine industry is replicate what we've done with the livestock industry, and that is to open up the market.

Ultimately the product we are producing in Australia is First World. Those of us on both sides of the House have probably consumed too much of it—Mr Deputy Speaker Mitchell, you have definitely consumed too much of it! I'm not reflecting on the Deputy Speaker, although that could be a good reflection! Certainly we want to sell our wine to the world. If you open up the marketplace, you lift the base rate that domestic sales work from. If you think it through, there has been a wine glut for a number of years and we are shifting the bulk of that wine onto the export market. That takes it out of the market, which therefore lifts the profitability of growers, who will sell through their own cellar doors. That is what this reform is trying to target.

As well as moving to lower the rebate cap from $500,000 to $350,000—which, incidentally, saves the federal government $300 million over a four-year period—we have re-invested $50 million for the Australian Grape and Wine Authority to promote Australian wine. I would like to see more of that savings reinvested into growing the industry, but we will take one step at a time. Let's see what they can do with that $50 million. When we have our trade fairs overseas and when we are helping a grower to move into the export market, it is important that we are assisting them to promote the product that we produce.

The public consultation around this has been very thorough. There is always a bit of a dispute between grape growers and winemakers, but this is one area where they've come together. This is an example where both sides are coming together for the betterment of the industry. As well as that, both sides of the parliament are coming together to see the reform go through. We are cleaning up the rorting. We are ensuring that cellar door sales can grow so that people—even those in the electorate of Bendigo—can go and see some good wineries. I have been to a few of those: I believe Connor Park is one, and Balgownie Estate, if I remember correctly. Their wine is not quite as good as those in the electorate of Mallee, but it's not too bad a drop.

We can argue about this one, but what we want to see is viable places where people can come and spend tourism dollars and enjoy wonderful food. We want to see an export industry that continues to grow so that the products we produce are marketed all across the world. I commend the grape and wine industry for coming together and I commend both sides of the parliament for coming together. May the viability and profitability of all people involved in the industry be better as a result.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I guess it is fitting that I follow the member for Mallee so that I can set the record straight about quality of the wine in the Bendigo electorate. We are here to debate reforms to the wine equalisation tax, reforms that are long overdue. I think it is important to remind the House how we got to be here and the panic that the government and the Treasurer caused on budget night back in 2015. On the day after the budget I received a phone call from a local winemaker in my electorate, Adam, from Bress Winery. They produce a wide range of wines in Harcourt—which is unusual, because Harcourt is known for its apples and cider. Adam said to me, 'Lisa, the problem with the reform that has been put forward and the date it starts is that that wine is already in the barrel. It's unfair to bring these reforms in so quickly, reducing the cap so quickly, without any notice to winemakers and wine manufacturers.' He was right. That triggered a conversation that I had as a local MP with people in the Labor opposition team but also, like a number of wine growers, I engaged the government and government ministers to say: 'You can't bring this on in this format and in this way. There needs to be broader consultation with the sector.' There were concerns that the original proposal that was announced on budget night focused first on reducing the cap and second on addressing the issue with bulk and unbranded wine. For a long time it's been acknowledged in the wine industry that the real rorting that has gone on with the wine equalisation tax has been in the space of bulk and unbranded wine.

There was also concern on budget night around eligibility. So what constitutes a winemaker? What constitutes a cellar door? Who would actually be eligible for this particular rebate? People in my electorate were so concerned because they believed it would stifle innovation and it would stifle their investment. They were concerned that the original proposal to deal with the fact that there was rorting going on in this space and that it was costing the budget necessary revenue, whilst well intentioned, wouldn't achieve that.

I do want to acknowledge, though, that, after those first alarm bells from the industry and from MPs, the government ministers involved in this space did listen, did take on board those concerns and did start a genuine face-to-face grassroots consultation, engaging with not just the wine associations nationally—that is, the Winemakers' Federation—but also with the wine industry.

We have a very diverse wine industry in Australia. It's not just Jacob's Creek and Yellow Tail, which we know as the big export names and brands. We have a number of small independent winemakers in Australia, particularly in the state of Victoria. In Victoria, the wine industry employs nearly 13,000 people and many of these jobs are in regional Australia. Victoria has more cellar doors than any other state. There are 22 diverse regions, 747 wineries and almost 500 cellar doors. Just to point out how relevant that is for my own electorate, we have the Heathcote winemaking region, the Bendigo winemaking region and Deputy Speaker Mitchell and I actually share the Macedon winemaking region. I should give a shout out to Curly Flat. Whilst it is in the member for McEwen's electorate, it is a pinot enjoyed by all in the Macedon Ranges. The Heathcote wine region, just to give you an example, has 70 vineyards and 59 cellar doors. There are just under 150 cellar doors and vineyards in the Bendigo electorate. We have more wineries in the Bendigo electorate than we have schools. So any reform in this space is critical to Bendigo, central Victoria and, in fact, all winemaking regions in Victoria.

The concern that was raised by a lot of our independent winemakers on budget night in 2015 was well founded. They all said to me that they agreed that there needed to be reform, that we needed to restore the integrity to the wine equalisation measure, that it was about helping small, independent winemakers and that they supported reform in that way but that that reform needed to be inclusive and researched in a way that supported the original integrity. A local winemaker said in our local Bendigo Advertiser that the reduction of the rebate 'would reduce their revenue by $150,000 in the first year and $210,000 in the second year'. That was the cold, hard reality they were facing if what was proposed on budget night went through. He said:

I have serious concerns about viability going forward because of this change …

The price for a tonne of fruit has increased, production has increased, so reducing the rebate will catch a lot of people out.

Because we have had the consultation, our winemakers in our region are now able to change. They are now able to know going forward exactly where they stand. What we have before us is a compromise. It does allow the winemakers I just talked about, because a lot of their sales are through their cellar doors, to claim a top-up. What we have now in front of us is the ability for the winemaker, if they do pass the new cap limit, to receive a top-up through a grant so that they will still be able to invest that money that they've saved back into their business.

As mentioned by the shadow Assistant Treasurer, we on this side of the House, Labor, have acknowledged the need for change for quite some time. The rebate was first introduced in 2004 and provided tax relief of up to $500,000 to wine producers. The intent of the policy, as stated, was to benefit small wine producers in rural and regional Australia. The intent of the policy currently is not being met, and therefore it is the consensus of the government and the opposition, and the industry itself, that there is a need for change. The rebate did lead to overproduction and damaged Australia's reputation for high-quality wine. It was plagued by rorting by virtual winemakers due to the complexity of the arrangements that had been set up. People got really smart. They worked out the loopholes and the ways in which they could game the system. We all need to acknowledge that and be responsible for and proactive about tightening those loopholes.

I should also note that we need to do more about the wines that we wish to retail overseas. People in the industry say part of our problem with being able to market our great wines—from areas like Heathcote, in my electorate, or from anywhere in Victoria, such as the Mornington Peninsula or the Yarra Valley—in the United States market is that the label they associate with Australian wine is Yellow Tail. They don't have the understanding or the knowledge of how good our wines are more broadly. Yellow Tail is bulk wine. It is not the crafted wine. It is not the quality or the boutique wines that we should be known for. So we have a lot of work to do in regard to promoting the amazing and innovative winemakers and wine varieties that we have in all parts of Australia.

This reform is necessary because it does save our budget hundreds of millions of dollars a year. But we question the timing and the way in which this bill has been brought forward. Back in 2015, we said, 'Hey, let's work together, government, to bring about this reform. Let's do the consultation, but bring forward reform that restores the integrity of the original intent of the wine equalisation tax and at the same time save the budget from the rorting that has gone on in this space.' There were no roadblocks put in place by Labor. We were consultative. We were inclusive. So it is a bit disappointing that it's taken this long to come forward.

As stated, the purpose of this reform was to target, in my opinion, bulk and unbranded wine. Removing the rebate from bulk and unbranded wine is important to drive industry restructure and to drive industry. And the industry also wants to see this happen. Changing the eligibility to exclude bulk and unbranded wine will encourage the re-emergence of brand power. It restores and supports our small independent winemakers, which is critical to building the reputation of our wine, particularly overseas, but also critical to encouraging the industry to grow and to innovate. Cleanskins, unbranded wine, work against the objectives of the wine equalisation tax and against the objectives that so many of us talk about in this place of growing the dining experience, growing the dining boom and growing the opportunity for export. We continue to say that we need to focus on the top tier—the top shelf. We need to do that with this measure to ensure that we have the innovation at the grassroots level.

I know that the people in my electorate will welcome the certainty, going forward. Whilst many of the wineries, the 150 or so that I mentioned, never hit the cap because they are too small, the package that we have before us does give them the opportunity to strive, to invest and to think about growing their businesses. The member for Mallee mentioned a few of the wineries that we have in Bendigo. I would need another 15 minutes to mention all of them, but I do want to acknowledge the openness and frankness of the consultation that the winemakers in the Bendigo electorate have had with me about their vision for their industry.

I want to acknowledge the work the state Labor government did around this as well to really promote and support the industry. Getting people to head out to the cellar doors, invest, be involved and spend their dollars in regional communities is about local, state and federal governments working together. We have a famous art gallery in Bendigo that is quite popular but our winemakers say that when there is a show on at the art gallery, like the Marilyn Monroe exhibition, most of their clientele drive up from Melbourne through Heathcote, stop at the wineries, stay overnight, then the next day go to the exhibition and spend the day in Bendigo. A strong cellar door is important for regional tourism. Making sure that we have that opportunity for people to stay in a region is also important. We have our cellar doors working together for some quite fun things like bike trails—being able to ride your bike from winery to winery, order your wine and then have the wine turn up at your hotel later. Equally, a lot of our wineries are now sending their wine all over the country. To federal MPs, if you want to have Bendigo wine to share with your guests and colleagues here a number of our wineries will send wine to Parliament House for you. Our winemakers are not afraid of change. They are incredibly innovative. In Victoria, they employ 13,000 people and a lot of those are in regional areas—and, in particular, in my electorate of Bendigo.

In this contribution I have focused solely on the wine equalisation tax. There is broad agreement amongst the industry, from the small winemaker to the large mass producer that exports, that closing the loopholes is vital for the integrity of the measure. However, there is also acknowledgement that reform shouldn't stop here, that we need to keep the conversation going about wine, about the wine equalisation tax and about alcohol tax. Locally they are keen to discuss volumetrics; they are keen to look at the industry as a whole. Our cider makers and our craft beer associations are all keen to be involved in a conversation about how we can support independent boutique craft wine, cider and beer makers.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to speak on the Treasury Laws Amendment (2017 Measures No. 4) Bill today, because some of the measures in this bill are very significant to my electorate in the south-west of Western Australia given the number of small and family businesses that have invested year upon year—small businesses that are in rural and regional wine production, in crafted wine production, and of course in the wine-food tourism space. Members in this House would probably know about Margaret River. Margaret River is in my electorate and I'm very proud of that. I'm proud of what they do in Margaret River, one of the premier winegrowing regions of this nation. It is undoubtedly an actual international brand, and it is about to celebrate the 50th anniversary of commercial fine wine making in the modern era.

Margaret River winemaking was started by Dr Tom Cullity. He began his plantings for Vasse Felix winery in Cowaramup in 1967. He was a pioneer in the industry. He based that investment and that confidence on groundbreaking research that had been done by University of Western Australia agronomist Dr John Gladstone. Vasse Felix was followed in the Margaret River region by Moss Wood, Cape Mentelle, Cullen, Sandalford, Leeuwin Estate, Woodlands and Wrights. Of course Vanya Cullen was one of those who did outstanding work in raising Margaret River as a premium brand around the world, and I acknowledge her efforts.

There are over 150 wineries producing outstanding wines, including top-quality chardonnay and cabernet sauvignon. Margaret River's wine exports were valued at $27.8 million in 2016—an increase of 18 per cent. And it's being exported to countries such as China, the United Kingdom, the United States, Singapore and Canada. I can see, after being at a Dunsborough Chamber of Commerce event last Friday in Busselton, that more of those wine producers in the region are looking directly at how to take advantage of the free trade agreements and the practical steps they have to take to be able to get the benefits of the reduction in tariffs—those, of course, with Japan, South Korea and China that this government has signed. Importantly, given the measures in this WET rebate bill, there are over 100 actual cellar doors in the Margaret River region that will benefit as a result of the decisions made in this bill.

We also, though, in my south-west region, have the Geographe wine region, encompassing areas of Ferguson Valley, Donnybrook, Capel, Harvey and Busselton. We have even more of these wonderful small-to-medium, often family, businesses—the ones that have invested, and they've invested in producing a variety of wines and greatly add to the tourism, the wining and dining experiences in the south-west. They are wineries such as St Aidan's, Barrecas, Harvey River Estate and Capel Vale, just to name a few. I know that the Geographe wine region is celebrating 15 years of its very popular wine shows.

The wine equalisation tax rebate enables these types of wineries that I have mentioned—eligible producers like my small-to-medium family independent enterprises—to offset their wine equalisation tax liability. It is so important in my electorate. The rebate was designed specifically to provide assistance to small- and medium-sized winemakers as well as to promote tourism in rural and regional areas. It has done exactly that, through increased incentives to open cellar doors and to provide the experience that not only attracts our tourists but retains them in the region. Originally, at the time, the government said that the policy objective was to assist winemakers who make retail sales directly to unlicensed people from the cellar door or via mail order and who use their product in application to own use. It was stated at the time that wine producers form an important part of regional Australia and provide significant employment and tourism benefits. Well, none of that has changed. In fact, they've done a great job at it. I know that even Australia's south-west, the regional tourism group, always uses the wining and dining experience in my part of the world as one of the premier regional attractions.

The industry itself, though, along with government, acknowledged that there needed to be tightening of the eligibility rules to prevent the rebate being claimed multiple times on the same wine and to stop double-dipping and overproduction just for that purpose. Of course, this bill introduces changes to address those industry integrity concerns about the WET rebate and to better target—again, bring it back to what it was originally intended to do, which is to support those small-to-medium Australian craft wine producers as originally intended, not the bulk and unbranded.

These changes have been very soundly negotiated with wine growers across the nation. I particularly wish to thank Assistant Minister Senator Anne Ruston, who led the discussions for the government on this matter. The discussions were very extensive, and I commend her for her work. Of course, Senator Ruston came to the Margaret River region in the south-west and met a diversity of growers with a range of issues, and she listened to all of those. Much of what we see here is as a result of those consultations and genuinely understanding the positions of those small-to-medium producers. Senator Ruston herself represents a large wine-growing region as well.

I also want to thank, particularly, the members of the industry who made their time available to meet with Senator Ruston and myself for their frankness at the table. It is very important. I acknowledge Wines of WA for their engagement—particularly the Margaret River Wine Association—and the work of Redmond Sweeny, who has been part of this process on an ongoing basis, to make sure the issues that affect the small-to-medium enterprises in my part of the world are represented all the way through the progress of this. The changes in this bill are part of the continuing efforts of the government to strengthen the integrity of Australia's tax system. We know there are over 2,500 wine producers in Australia, and this will better target the rebate to genuine wine producers who invest themselves in building their brand. They invest in our regional communities. I see them every day. They invest in local jobs. There couldn't be anything better than that. The measures will stop traders and major retailers from making multiple rebate claims over the winemaking process, which is to the detriment of the Australian wine industry, the work, the effort, the private investment and the passion of our producers.

From 2018-19 the Wine Tourism and Cellar Door Grant program will exist. That's another measure in this bill. It will allow producers who exceed their cap to access a grant of $100,000 for their cellar door sales. This, again, provides certainty for the wine sold directly to consumers through the cellar door or mail order, which was exactly the original intent of this, particularly once the producers reach the WET rebate cap of $350,000. That allows and will encourage even more investment. A lot of investment is happening on the ground in the cellar doors, because tourists are expecting far more of their experience. Often it involves—sometime sophisticated, sometimes very rural—experiences about the food they consume at the same venue. It's about the whole experience. That is now what our small-to-medium cellar door wineries need to offer to attract and retain the tourists in this area. We have so many additional experiences for people in our region as well. I'm very pleased about the $50 million the government is providing for wine tourism and export promotion activities. I'm looking forward to what comes out of that, particularly given the free trade agreements signed by this government.

This needs to be used in a way that promotes the fine quality wines that are produced around Australia. As members would understand, I'm very parochial about the product produced in my area. I would think that some of the members in this room have sampled some of that wonderful produce and probably have a great affection and connection not only to the wine but also to the region. That's what we want. That's partly what this measure does: it helps to attract and retain tourists in our region. We sell a dream of a fabulous experience. Part of that experience is not just the scenery, a visit to a winery and sampling some of the best quality products in the world; it's about the different experiences they can enjoy and what they can see and do. This part of the south-west is known as the events capital outside of Perth. Barely a weekend goes by without a major event in my region—a range of amazing events, whether it's the Margaret River Pro surf, the Busselton Jetty Swim or the Margaret River Gourmet Escape.

I thank the minister at the table, the Minister for Trade, Tourism and Investment, and the government for the $9.78 million invested in the Busselton Margaret River Regional Airport. As you know directly, Minister, this is going to facilitate not only regional tourism but also the freight component for international flights, with people coming in on the top and our wonderful products going out underneath in freight. That is going to be transformative. I have said it repeatedly, and you understand it better than most and have supported that very strongly. You are coming to my electorate very soon, Minister, and I'm also looking forward to you being directly in touch with some of those wine producers who were at that chamber of commerce event and who see great opportunities in exports and also in dealing with the practicalities of how to engage. I encourage them in that.

I say to members on any side of this chamber: if you haven't been to the Margaret River and Geographe wine regions then you've missed out on a fabulous experience in life. Every member of this House, and every member of the Australian public, needs to fly into the Busselton-Margaret River Regional Airport, once it is up and running, and take advantage of the amazing experiences. I would encourage people to do so.

I am very pleased that the measures in this bill actually support, encourage and enhance the investment opportunities for those small, local and often family cellar door businesses that not just have invested a lot of their time, passion and money but, as I said, are providing an incredible and unique experience for people. I would also say that something people sometimes overlook is that they provide venues for an extraordinary number of weddings that happen in the Margaret River-Busselton region every weekend. That is a massive economic multiplier for the businesses there. It is interesting that some small businesses have developed around the things that people forget when they come to attend a wedding. That is very innovative, very smart and very switched on to what their market is and how to service it.

There is that whole region of Margaret River, the south-west and the Geographe region. If you also haven't been to Ferguson Valley, it is a beautiful little part of the world that has developed on the back of these small individual wineries. There is so much more to come for this region, and it's almost an untapped space. If you want a specific, great rural experience, the Ferguson Valley is for you as well.

So I am unashamedly, in supporting this bill, also very proud to promote and support the investment, passion and commitment that my small rural and regional wine producers have offered and will continue to offer through the measures that the government is promoting through this bill.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I'm speaking in support of this bill. It's not often that I concur with the member for Forrest, but I certainly do agree with her on the quality of the viticulture and the wineries and wines produced in her electorate. Indeed, it also has some of the great surfing spots, if you are happy to share the water with a few great whites! So there is good-quality wine and good-quality surfing—what more could you ask for in an electorate? But I digress.

This bill contains two distinct schedules—the first being about the wine equalisation tax and the second being about income tax relief for transfers within MySuper product. Amendments associated with schedule 1 are made to A New Tax System (Wine Equalisation Tax) Act to improve the integrity of the wine equalisation tax producer rebate. The intent here is to bring a bit of fairness to the operation of the wine equalisation tax and allow some of those smaller wineries the opportunity to compete with some of their bigger counterparts in the markets that they provide their quality products to.

As the member for Forrest and other speakers have outlined, Australia does have a very good and burgeoning viticulture industry. Through recent free trade agreements, particularly in the Asia area, new markets are opening up, and the depth and breadth of wineries in Australia and the quality of the product that's being produced means it is now being sold internationally, and we're gaining a great reputation for doing so and this reform will only add to that. Unlike beer and spirits, which are taxed based on the amount of alcohol per litre they contain, domestically produced wines, cider, mead and fruit wine are all taxed at 30 per cent of their wholesale value. That's where the difference is between the operation of taxation in relation to beer and the wine equalisation tax.

The amendments contained in this bill make integrity changes to the WET producer rebate quoting the WET credit rules, reduce the WET rebate cap from $500,000 to $350,000, tighten the associated producers' rules and repeal the earlier producer rebate rule. Reform of the wine equalisation tax producer rebate is something that the producers in the area have been advocating for some years now, and it will better target the rebate and improve its integrity. It will also ensure consistency with the original policy intent of benefitting smaller wine producers who are making a genuine investment in the wine industry—many of whom are located in rural and regional Australia. Many Australians visit some of these areas on a regular basis and, indeed, increasingly international visitors are attracted to rural and regional Australia and some of the smaller wineries that dot the landscape in areas like the Hunter Valley and the Clare Valley and around the south of the electorate of the member for Forrest.

The changes featured in this bill have been widely supported by industry stakeholders. Providing comment to the ABC in April, the winemaker Damian North of Journey Wines in Victoria's Yarra Valley supported this package by saying:

The new changes define an eligible producer as someone who owns the grapes through the winemaking process, and producers who build brands, invest in regional communities and create jobs, and we think that's a great change, …

That's a perfect way to put what the parliament is doing here. Mr North went on to say that the changes were a confidence booster which would assist winemakers to invest in their businesses. He said:

It means we can continue to build our brands, now we're confident we won't be excluded from the scheme because of the way we start out, or our inability to afford expensive equipment, …

If left in its current form, the wine equalisation tax producer rebate would continue to create a perverse incentive for businesses to structure themselves so as to maximise those rebate claims. The result would be excess wine production, exacerbating challenging market conditions for growers.

In conclusion, in respect of the WET and the wine equalisation tax producer rebate, this is a sensible reform. It evens the playing field for some of those smaller producers, particularly those that are looking to make capital improvements to their production facilities, and it's a great outcome for rural and regional communities and viticulture in those areas.

Schedule 2 of the bill looks at a distinctly different area of policy, which is nonetheless related to taxation reform, and amends the Income Tax Assessment Act to provide income tax relief for superannuation funds that are transferring account balances of their members as they transition to the MySuper rules. The MySuper basic account was introduced by the previous, Labor, government when we were in office. It came about as a result of a series of recommendations that were made by an independent assessment of the industry and the fact that many Australians were missing out on ensuring that they had a low-cost, low-fee superannuation option that would ensure that they're maximising the opportunity of building a credible superannuation balance so they avoid having to completely rely on the aged pension in retirement.

Of course, superannuation is something that the Labor Party is very, very proud of. In 1992 the Keating government introduced a compulsory superannuation guarantee system as part of a major reform package addressing Australia's retirement income inadequacy in policies. The reason behind this historic reform was that, along with many other western nations, Australia was expecting to increase in population and experience a major demographic shift in the coming decades, resulting in an increase in aged pension payments. If we hadn't done anything at the time, there would have been an explosion in the number of people relying on the age pension, because of the ageing population, and a resulting impact on the fiscal position of the government. It was feared that this would place an unaffordable strain on the Australian economy. History really does have a way of repeating itself.

Labor built Australia's superannuation system. It is our commitment that we will always work to make sure that superannuation is fair, whilst providing a comfortable life in retirement for a growing number of Australians. As I said earlier, in 2011 the Gillard government announced—as part of those stronger super reforms—MySuper, a simplified superannuation accumulation product into which contributions are paid if the employee either nominates the product or does not express a choice about which fund their superannuation contributions are going to be paid into. MySuper has provided a simple, cost-effective default product that all Australians can rely on. Superannuation funds have been able to provide MySuper products since 1 July 2013.

As part of the transition to the new rules, funds are required to transfer existing balances of their default members to MySuper-compliant products by 1 July 2017. In doing so—when superannuation funds are making that transfer to these MySuper products and transferring the balances and the assets which support those balances—tax liabilities could arise on the transfer. This tax payable will reduce a member's balance and really undermines the purpose for which the government originally established the MySuper product: to be a low-cost product for low-income workers. Tax relief is currently available for those superannuation funds that transfer their default members to a different fund, and asset rollover, which defers the income tax that would otherwise be payable on the transfer, is available. However, this tax relief has not been available where a member transfers to a MySuper product with their existing superannuation provider. So there was tax relief when it was done by the fund, but not so much when it was done by the member.

Schedule 2 of this bill will extend the asset rollover relief to mandatory transfers to a super product within a superannuation fund. This will ensure that default members of superannuation funds will not incur adverse or unintended consequences when their account balances are transferred to a MySuper product within the fund. The legislation will ensure equity between members that move to a new fund provider and those that take up new products with their existing provider. It also makes sure that member balances are not negatively impacted by tax liabilities within their fund, and when their balances are moved.

In conclusion, again, these are two sensible reforms which Labor is pleased to support. They ensure a level playing field for producers in the wine industry and will benefit rural and regional communities. They strengthen and add integrity to the operation of the superannuation system, particularly for MySuper products, ensuring that low-income workers in particular will be able to accumulate, hopefully, enough superannuation in retirement to avoid having to completely rely on the age pension. This taxation reform will ensure that we are maximising those account balances and reducing the fees and taxation associated with, in particular, transfers into MySuper products. I commend the bill to the House.

Madeleine King (Brand, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak today on the Treasury Laws Amendment (2017 Measures No. 4) Bill 2017. I wholeheartedly support the government's initiative in this area, proving that this is one of those instances that show the rest of the country that we as federal parliamentarians can come together and agree on the direction and progression of a range of issues in the parliament, despite our obvious political differences and citizenship difficulties. The general public will be surprised to learn that this occurs far more often than they would believe. I think it's a facet of our political system that requires far more attention that it currently gets, especially in relation to the important work of the joint standing committees across this whole parliament. I would hope giving some more attention to this might combat the adversarial and combative images that portray this place in the short media snippets on the evening news. I may be waiting some time for that, however.

As we all know, many countries around the world, including Australia, are still coming to terms with economic difficulties post the global financial crisis and the subsequent effect on many of their own iconic industries. Australia is no different. While we may differ on our response to the many challenges that this economic reality presents, I'm pleased to be in agreement with the government on this one. I'm sure members opposite can relate to those on this side of the House, that after a long day at this place there is something to be said for relaxing and sitting with colleagues and friends—and sometimes family when they're here—over a glass or two of the best Australia has to offer.

These new challenging economic environments have required action to ensure Australian wine producers, sellers and exporters continue to maintain a competitive edge and operate on a level playing field in this country. This bill deals directly to reform and improve the wine equalisation or WET producer rebate. Structural changes to the legislation will ensure the long-term viability of the Australian wine industry and improve the integrity of the rebate itself, which in its current form is damaging the sustainability of wine production across Australia. In its current form, the WET producer rebate creates an unfair and uneven incentive for businesses to create a structure that maximises rebate claims. This results in excess wine production and indeed an inferior product, which is distributed across the country. We don't want inferior products. It also creates further difficulty for growers in an industry already under significant pressure. The loopholes in the WET and the rebate processes allow bulk wine traders to exploit the market and take advantage of the up to $500,000 rebate, which has sometimes been claimed several times for the same wine. Reforming this rebate will better target the areas for which the policy was initially intended, which is for the benefit of smaller wine producers, who are making significant commitments and investments to the industry around rural and regional Australia.

It must be noted that the WET rebate and the wine equalisation tax itself was an extremely distortionary element of alcohol taxation in Australia. It has been contentious among economists and public health groups, some of which have advocated that the WET rebate should be abolished all together. However, the measures taken in the reform package are to be welcomed by all stakeholders in government and industry and, indeed, they are.

Specifically, the amendments make changes in relation to the WET rebate in its quotation, credit rules and a reduction in the rebate cap from $500,000 to $350,000. It then tightens the associated producers rule and repeals the earlier producer rebate rule. Other measures include the requirement that producers must now own at least 85 per cent of the grapes at the time of crushing and maintain ownership throughout the wine-making process, and that the rebate only applies to packaged wine that is branded in volumes not exceeding five litres.

The industry does have a while to adjust to these new rules in an appropriate time frame up until the first half of 2018. This should provide sufficient time, more than enough time, for the Australian wine industry to make sure they comply with these regulations and can get their head around what will surely benefit a more sustainable wine industry in the future in this country.

As you would know, Mr Deputy Speaker Mitchell, and all my colleagues here would know, and especially the member for Perth, who is in the chamber, Western Australia has a great local wine industry. The tourism hotspots—the Swan Valley and Margaret River—are beacons in the domestic wine industry and are popular for visitors around the state and from overseas. Margaret River is a treasured destination of mine, with an expanse of natural wonders, with caves, forests and amazing beaches. As the member for Kingsford Smith pointed out earlier, there are also great white sharks. I think he was exaggerating about that. There is a wide range of activities for visitors to see and do: surfing, mountain bike trails, hiking. There's the Cape to Cape Track, the various national parks, and of course there are some beautiful vineyards and wines. I invite all of my colleagues in this place across the whole parliament, all their staff, friends and families and all of you who live on the wrong side of the Nullarbor to come and take a look when possible.

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

It'll be a big bus!

Madeleine King (Brand, Australian Labor Party) Share this | Link to this | Hansard source

Yes, the Dockers' bus. I echo the words of the member for Forrest earlier, when she urged, as I do—and I know the member for Perth will as well—all people to make the trip across the Nullarbor, come and visit Western Australia and make sure you visit the Margaret River wine region. You really haven't lived until you have done this, and you certainly haven't tasted wine until you've had some Margaret River wines from the cellar door.

Only last year, Margaret River dominated the 2016 Royal Melbourne Wine Awards, winning the highly coveted and most prestigious wine award in Australia—the Jimmy Watson Memorial Trophy. Deep Woods Estate 2014 Reserve Cabernet Sauvignon has quickly become the most sought after wine of the year after having won this award. Many other Margaret River producers cleaned up on the night, including growers from the Snake and Herring, Stella Bella wines and Flametree wines all taking home a trophy. And then there are my personal favourites: Rosily vineyard, named after French navigator and cartographer Vice-Admiral Count Francois Etienne de Rosily-Mesros. Rosily is a small vineyard, where grapes are hand-picked from their own vines and all their wines are produced in this small winery, Wilyabrup, in Margaret River. The 2016 Rosily Chardonnay won a silver medal at the International Wine Challenge 2017, and their 2016 Semillon Sauvignon Blanc won gold at the Perth Royal Wine Show and the Royal Adelaide Wine Show last year.

Another small vineyard in the region, which some find hard to get to but that I assure you is not, is Ashbrook Estate. This is another vineyard that has been family owned and operated for a long time. This one is owned by the Devitt family, and they have been running it for over 40 years. Ashbrook, similar to Rosily, is where all grapes are harvested by hand from their own vines, on their own property, and all the wine is made on the estate in all their own vats and equipment and so forth. It is acknowledged as one of the highest performing and brilliant little vineyards in the country. Ashbrook's 2016 Semillon and 2016 Verdelho won silver in the International Wine Challenge 2017, and I congratulate them on their ongoing efforts.

And, of course, there is the great Cullen Wines on Caves Road, built by Dr Kevin Cullen and Diana Madeline Cullen—both remarkable Western Australians. Mrs Cullen was the first person to import merlot and cabernet franc cuttings to Western Australia. She was part of the first trial of vine growing in Wilyabrup in 1966 and established the Cullen vineyard in 1971. Dianne Cullen is acknowledged as a pioneer of the great Margaret River wine region and has been acknowledged as a citizen of Western Australia in the past. Her husband, Dr Kevin Cullen, was no slouch either, being the first recipient of a medical degree from the University of Western Australia. Dr Cullen started one of the most remarkable pieces of work that has ever been undertaken in Western Australia—the Busselton Health Study. It is a true treasure of the state and of science in this nation. It is the world's longest-running, longitudinal health survey, and it is famous around the world and used by medical and scientific researchers around the globe.

The Cullen's established their remarkable vineyard and the Margaret River wine industry on the back of their own research and the advice of Dr John Gladstone, who, in the sixties, first identified the potential of Margaret River to become one of the world's great wine regions. And, of course, this has now come to pass. Today, Cullen Wines prosper and, among other great wines, produces the iconic Diana Madeline Bordeaux blend that is highly sought after around the world.

It is the legacy of pioneers like the Cullen family that the provisions of this bill will serve and protect, which is the treasure of Australia's small vineyards. It speaks volumes about Western Australia's capacity for wine production and quality of produce. While, essentially, a tiny region when compared to some others around this country, Margaret River accounts for more than 20 per cent of the premium wine market.

I would add that there are other little gems spotted around the state. The Swan Valley is a great producer as is the Geographe region. Thankfully, my electorate of Brand is able to claim some small vineyards as well. It is home to four vineyards: Peel Estate wines, Stakehill Estate, Tuart Ridge and Peel Ridge Wines. These are all small family-owned businesses that will benefit from the changes made to these laws.

My electorate is often noted for its contributions to manufacturing in Defence industry. However, I'm pleased that these families can make an economic contribution that adds to the rich, diverse set of businesses and industries that I have the privilege to represent in this place. And these aren't just any contributions. Many of these wineries are changing the way they operate, providing unique, sometimes unconventional, products for a growing fan base. For example, Stakehill Estate Winery in Karnup makes a range of chilli wines to suit heat levels and even the most avid chilly fan as well as fruit wines made from rhubarb and passionfruit and table grapes. I have ordered a case for the member for Perth. Another winery, Peel Estate, has been around for over 40 years, with the first vines planted in 1973 and the winery adding other varieties as the years progressed and the Australian palate changed. I visited Peel Estate in Karnup, in the south of my electorate of Brand, with my mum and my sister over the winter recess. We had the chance to enjoy their beautiful grounds and taste some of their wines. I was told at the cellar door that Peel Estate have the oldest zinfandel wines in WA, having planted them in 1976. This makes the vineyard at Peel Estate in Karnup among the oldest in Australia to have zinfandel wines—and we know zin is best!

Small, often family-run, businesses like these are adapting and changing to meet the demands of consumers, and I am pleased that the federal government is able to give them a leg-up in this regard. That is why I will be supporting this bill to ensure a competitive, viable and sustainable sector in this diverse market. Again, Labor is in unison with the federal government on this bill and will pass the bill to give producers certainty about the new regulations—certainty that this industry needs, as a stable economic environment will produce the greatest output.

In 2015, Australian wine producers contributed over $40 billion in gross output to the Australian economy as well as nearly 70,000 jobs in the industry, which includes 2½ thousand in Western Australia from grape growing and beverage manufacturing jobs. That's taken from the 2011 census; naturally, six years later, the number will be much higher. In 2014-15 over 44,000 tonnes of wine grapes were crushed in Western Australia. It is an outstanding number to contemplate, and that's only from one state. What is also pleasing to note is the solid trajectory in growth in Australian wine exports internationally from the nineties until now. The global financial crisis, of course, had some impact on this; however, forecast growth is expected to be moderate and steady in the lead-up to the financial year 2020-21. I believe our export capacity, particularly to Asia, is still to be fully realised, especially in the sense that wine makes up only around five per cent of Australia's agricultural exports. We have a way to go.

However, there is much to celebrate. In 2015, bottled wine exports to China increased by 45 per cent, demonstrating the emerging Asian market and the demand for the highest quality that Australia offers. Still, nearly half our bottled wine exports go to Europe and nearly a third go to North America. There is a demand out there for Australian wine, and we must keep our regulations modern and up to date to foster it. We also must ensure our regulations support small vineyards across this nation, which have made the wine industry what it is. Australian wine is loved around the globe, and it makes sense for us to capitalise on this award-winning industry and ensure its sustainment for years to come. Sustainability is the key here. It is incumbent on all wine producers to ensure they are compliant with these regulations and don't snuff out the little guys that form the base of this great industry. It would work against their own interests and the interests of wine lovers everywhere.

This bill has many things we on this side of the House agree with. I won't go into them; I have chosen to pay attention to the change to the wine equalisation tax rebate. Again I would echo the member for Forrest, the Chief Government Whip, and would urge all people, whenever they come to Western Australia, to make the trip down south. I look forward also to the Margaret River-Busselton airport being upgraded so that more people can get there more easily. In the meantime, it is really not that hard to get onto the Forrest Highway to get down south to Margaret River and have a look around. I commend the bill to the House.

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

I too commend to the House the Treasury Laws Amendment (2017 Measures No. 4) Bill 2017, in particular schedule 1, which deals with the wine equalisation tax rebate, or the WET rebate as it is referred to in the industry. A number of people in this place seek to label me—some kindly, some less kindly; some graciously, some less generously—but the one title in this place I do revel in is 'the member for wine', not because I'm a great consumer but because my electorate produces more wine by value than the electorate of any other member in this place. Indeed, if that wasn't claim enough to the title, I can tell you, Mr Deputy Speaker, that we also produce more wine by volume than the electorate of any other member in this place. In effect, I represent constituencies that span the great spectrum of the Australian wine industry: from Penfolds Grange, Henschke's Hill of Grace, other iconic brands from the Barossa Valley, from Coonawarra, from some of the newer, burgeoning wine districts all the way through—and just as importantly—to the large-volume producers of some of Australia's inland areas like the Riverland, which export large volumes of their product at a lower value.

When I was elected—and, indeed, in the lead-up to my first election in 2013—I was introduced to the concept of the wine equalisation tax. As a young lad who grew up in Mount Gambier on a horticulture, cattle and sheep property and who had ensconced himself in criminal law professionally—as an advocate; I make that clear—I had to be introduced to the concept of the wine equalisation rebate. It is a rebate that enables eligible producers to offset their wine equalisation tax rebate.

You might ask: what was so controversial about that in the lead to the 2013 election and beyond? Whilst the rebate was intended to support small wine producers, many of whom are in rural and regional Australia, during its operation a number of wine merchants—'wine tax traders', I'd like to call them—were operating in a way that circumvented the intent of the legislation. What it meant, in practical terms, what it meant to the producers in my electorate, was that there was a downward influence on the price of their fruit. That is, there was downward pressure on the value of their fruit, and that was happening because certain individuals and entities were able to, effectively, game the system and use the rebate as a value shift from this place and from the public purse to processors. So the industry, through individual constituents, came to me, as they had come to others, and I indicated I would see what I could do to work on changing this.

We went through two treasurers, a number of assistant treasurers and two prime ministers on this journey, but I am pleased to say that the day has finally come—a long time since those early discussions in 2012 with an aspiring candidate, and all the way through to 2017—when these changes will become law. That's not to overestimate my role. Ultimately, this has happened because industry came together. Industry decided that this rebate was harmful to their interests. I don't think we should brush over this. Industry came to government and said: 'You know that money you're giving back to us? We'd like less of it, because it is harming the interests of the industry.' That doesn't occur often in this place. And there was another thing that doesn't occur often in this place: industry came with a solution. Very often in this place we hear gripes from industry and from members of parliament, and it is very easy to identify the problems. It's much more difficult to identify a solution. It's even more difficult to have everyone—or, at least, a very significant majority of the industry—agree that that solution is, in fact, the solution that they would like to see legislated. So, to the industry today, I say: congratulations. Congratulations for your efforts, congratulations for your industry on this issue and congratulations for the work you have done to assist me and others in persuading the government to come to this resting point.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

Hear, hear! Well said!

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

Thank you, Member for Indi. In particular, I want to thank someone who has left the industry and who, at one point, when we came across yet another roadblock and frustration, said to me, 'Tony, I think I'm done'. Thankfully he wasn't done and he continued to fight the fight—it was Paul Evans, formerly from the Winemakers' Federation of Australia. This is a man who, time and time again, assisted me in pushing for this proposal.

So what will we see? What we will see is a re-establishment of the original integrity of the wine equalisation tax. It was always intended to support small wine producers, principally in rural and regional communities. By taking its operation away from bulk wine, by reducing the rebate slightly but allowing those who sell above the cap—or who would be eligible, otherwise, above the cap—a $100,000 cellar door grant, we're effectively going back to where the original architects of this rebate intended us to be.

A number of changes are being made, all of which are important. There will be a $300 million saving, which the industry has said they will give back because they don't believe it is serving the purposes of the industry. From that, $50 million will be provided to industry to grow the Australian wine brand. I have spoken on numerous occasions in this place, as indeed I think everyone in this House has, about the benefits of the trilogy of free trade agreements established in recent times. We have seen the great benefits of that in the wine industry. Export opportunities have grown exponentially, particularly to our Asian neighbours, China principal amongst those.

The history of Australian wine's ability to sell the brand—that is, Brand Australia—to the rest of the world has not always been so glowing. Constituents of mine who visit wine fairs around the world often return with photographs and stories that are somewhat embarrassing. For example, at Vinitaly we see very small offerings of the presentation of the wine Australia brand compared to large international brands. This $50 million will assist the Australian wine industry in marketing itself to the rest of the world. In the middle of what was the really low point of the commodity price around wine, particularly in the warm regions, people were starting to approach me and say, 'Tony, what we need is another vine pull.' There needed to be an incentive to remove vines and the production. I said to them: 'Please stop there. The reality is we need to sell more wine, not produce less wine. We need to sell to the rest of the world more of our fantastic product, not produce less of our fantastic product.' That is, in fact, what we have done in recent years.

We have enjoyed fantastic tailwinds in this regard, with the movement of the Australian dollar and with demand out of North America. These things, coupled with the free trade agreements, have created the perfect climate for an international push for Australian wine. This $50 million contribution is perfectly timed over a number of years, with industry guiding where it's applied. I say to industry: 'Spend it wisely; it is a significant sum of money. It is $25 million more than you originally asked of government.' Indeed, it was members of the government of the day: me, Senator Ruston in the other place—

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

Independents too!

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

I will include the member for Indi; I wasn't aware of her advocacy on this, but I accept it was there—saying to industry, 'Be more bullish about what you want out of us, because I think you're to be rewarded for what you have done and the mature way in which you have gone about this debate.' I do say to industry: 'Please spend this money wisely. Make sure we and the industry get real value for money from this $50 million contribution.'

It is important that we acknowledge that the wine industry is a significant employer in my electorate. It's a significant, indeed, almost foundational industry in South Australia, and it makes a significant contribution to our national economy. It is one of the great winners and one of the great success stories of Australian agriculture. I am very pleased to stand here commending this bill to the House, thanking Minister O'Dwyer, thanking the Treasurer and thanking everyone who has lent their support to this bill, including the opposition. But principal in that is a note to the industry saying: well done, you have set the standard for other industries to come to government, identify a problem, formulating a solution and, indeed, in some cases, realising that not all government largesse is good and that there was an example here of rorting. There were other examples that, whilst not amounting to rorting, fell outside the spirit of what was intended, and the industry wanted to clean it up. They wanted to clean it up because it was harming every single industry participant. I had farmers who just desperately wanted the WET rebate reformed. It has happened now. I congratulate the industry, senior members of the government and, indeed, everyone in this place. It's a pretty good outcome.

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

I am beyond delighted, immeasurably delighted, to rise in unison with fellow members across the aisles, even the Independent crossbenchers, in support of a bill which has an awful lot of merit and makes an awful lot of sense. You can't always say that about this place. I don't pretend to have been here for a long time, but I think it's fair to say that I have been here for long enough to get a sense that the vibe in this place can be a little willing and a little torrid. What's terrific, though, is that every now and again along comes an innocuous little piece of legislation that actually brings people together. The Treasury Laws Amendment (2017 Measures No. 4) Bill 2017 does that. It is refreshing. It is heartening. It does send a terrific message to those out there in the community that this isn't always a place of jousting sticks at 12 paces. It's not always a place where there is a line in the sand which neither side will cross. It is a place where occasionally we come together. What better place to come together than over the subject matter of wine.

If one had to use a few hashtags and dad-joke puns about where we find ourselves insofar as this legislation and this place goes, one might say that most of the time this place resembles The Grapes of Wrathas we slug it out in the heat, sand and wind, slowly taking ourselves from one policy position across the harsh California arid landscape in the middle of the Depression to a nirvana or promised land. Hopefully, for us, it will be over there on the government benches before too long. If we have another couple of citizenship stumbles, it could be sooner than we thought!

The other wine based saying that comes to mind in relation to this piece of legislation is 'in vino veritas' or 'in wine, there's truth'. I will tell you where the truth starts. It must be said that there are those out there who suggest that the relationship I have with the member for Riverina, who is my opposite number on the government front bench insofar as consumer affairs goes, is close and constructive. The legal term is 'close, constructive and loving', but I'm not sure—that might be overreaching! But it is certainly very close and constructive, that's for sure. I was perusing his second reading speech in relation to the introduction of this legislation. It certainly is the case that it is 'in vino veritas' because, in relation to the subject matter of wine, he was telling the truth. I had a look at a couple of his statements and I could easily adopt them. As a matter of fact, I actually might, now that I think about it. He talked in his second reading speech about the WET tax. Isn't that a fantastic name, too, by the way? Has anyone noticed that? The acronym—

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

It's a WET rebate, not a tax!

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Sorry, the rebate—of course. One doesn't want to get bogged down by the language in relation to where we're at. The WET rebate—it's terrifically named, I reckon—was introduced in order to try and support small Australian wine producers, as the member for Riverina outlined at the start of his second reading speech, and I certainly agree with him. He went on to say:

The wine equalisation tax rebate—

He says 'WET tax rebate', so that might be controversial—

supports the Australian wine industry by providing wine producers with access to a tax rebate on sales of eligible wine.

Absolutely. Why does it do that? It does that to support small business. Again, we are in heated agreement in relation to how we can try and shape this legislation in order to achieve that aim. What better way is there to try and achieve that aim of supporting small business than the appropriate modification of the WET rebate? The member for Riverina went on to say:

A wine producer will need to own at least 85 per cent of the grapes used to make the wine throughout the winemaking process.

That just makes sense; that's a good initiative. He also said:

Wine producers will be required to sell wine packaged in a container not exceeding five litres …

I noticed that the member for Brand also emphasised that aspect of the legislation. I think five litres is an interesting volume. As I understand it, it was a volume of wine that was often purchased, particularly during university days, to ensure that, through the moments of extraordinary hard work and stress, there was a little bit of light in the shade. So, again, that would seem to make sense. It's good to see that some traditions may continue. Again, it's a situation where I'm delighted to see that we have significant common ground in relation to supporting this legislation.

You have already heard, Mr Deputy Speaker Goodenough, and those present in this debate have already heard, how important supporting the small wine producers is in relation to our great home state of Western Australia. The member for Brand, the member for Forrest and even, as the member for Brand indicated, the member for Kingsford Smith have remarked on the great whites both in and out of the water in the Margaret River region. That is certainly the case. Margaret River produces some spectacular chardonnay, which is terrific for those chardonnay socialists who probably inhabit the other benches as opposed to ours. We are the real deal over here. That's not to suggest chardonnay is not the real deal, but you know what I mean. That's together with chenin blanc—there's a terrific chenin produced by a winery in the Margaret River region called Aravina Estate, which is absolutely tremendous—and other white blends, such as sem sauv blanc, verdelho, of course, and the like.

Let's not forget that there is a burgeoning wine industry closer to the CBD and, actually, in a part of the world that used to be part of the federal electorate of Perth. That is my electorate. That is the wine industry in the Swan Valley. But, in relation to the Western Australian wine industry, one of the things that we can be very proud of is that it certainly punches above its weight in relation to not only quality but also value. What we see with the Western Australian wine industry is that it produces about 45 million litres of wine annually, and, whilst it only represents five per cent of Australia's wine production, it represents 12 per cent of its value and over 20 per cent of its fine wine. That's really saying something about why it is so important that this measure backs in those small producers that focus on quality as opposed to quantity.

What we also see, of course, is that a lot of this stuff really comes back to jobs, and we're not doing our jobs properly in this place unless we remain razor-sharp focused on all legislation that comes through here that is designed to promote jobs. The wine industry in Western Australia employs over 52,000 people directly, let alone the countless thousands and thousands that it employs indirectly. Western Australian wine exports amount to around $50 million per annum—a significant number. Wine grape plantings in Western Australia were about 13,000 hectares in 2012, and about 70 per cent of that is in the Margaret River and Great Southern regions. Let's not overlook the other burgeoning regions in the Great Southern, such as Denmark, Mount Barker, Porongurup and Albany, all producing terrific wine. The value of the industry in 2015 in Western Australia was estimated at $2.8 billion. Almost half of that value in Western Australian wine is generated through sales to consumers within the state.

Let's go a bit closer to home. Let's not forget the Swan Valley. A little-known fun fact: the Swan Valley was the first ever wine-producing region in WA, planting in 1834. It is also one of the warmest viticultural regions in the world, which means some of the wines it's able to produce are absolutely unique to that area. With a good set of lights, you can probably get to the Swan Valley in about 17½ minutes. I tell you what: I would encourage anyone who's coming to Perth to make a beeline north, before they head down south, to experience some of the unique wines the Swan Valley produces. They do a Verdelho liqueur, which is tremendous, and a liqueur shiraz as well. Again, it is also very well known for some of its warmer climate white wines: Chenin blanc, Verdelho, shiraz and Petit Verdot, some of the best in the country. Some of those iconic Western Australia wine labels, such as Houghton, Sandalford and Lamont, all hail from the Swan Valley.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

Is there a Western Australian wine you haven't sampled?

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

If there is a Western Australian wine I haven't sampled, I would be delighted to hear about it, because in my role as shadow minister for consumer affairs, I'm not doing my job properly unless I am open to consumption. One must always ensure that is done, like all things, in moderation.

Madeleine King (Brand, Australian Labor Party) Share this | Link to this | Hansard source

What about your running?

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Moderation is the key to why this legislation is so heartily supported. I've been asked if I'm prepared to moderate my running. One should always be running: we're running for our seats, we're running for government, we're running for good policy and we're running for consumers. That's what we do if we're doing our job well. I'm delighted to keep running, as they say in the classics. But that's why this legislation is so important: the fact that it supports local manufacturers, industry and business.

Let's have a look at some of the minutiae of this bill and why we all sit here in heated agreement that it's a good idea. Here we see something the Labor Party has as a core value—that is, a trigger designed to get a level playing field in which corporates don't have the chance they currently have to claim this rebate anywhere along the wine manufacturing process. We don't want to see a situation where the market is distorted in favour of a large corporate, which makes it harder for those boutique vineyards to do what they do so well. That's why Labor is prepared to support this rebate: it restores in many ways the integrity and original intent of the WET rebate. As we know, the WET rebate was introduced in 2004. The idea was to support independent and small regional winemakers. It's very important that they are backed in.

Why is this reform needed? As we've heard from previous speakers, we see here an emphasis placed upon wine produced by winemakers who have the pride to put their label on the wine. There will be less incentive to introduce bulk or unbranded wines into the market. If it does its job well, it ought to reintroduce the brand power that comes with particular brands of wine. Again, this is why it plays to the strength of energising the economy insofar as the burgeoning and continually improving wine industry of the great state of Western Australia goes: it is because the brand power it already enjoys, not only in our great state of Western Australia and across Australia but across the world, will be enhanced and go on to bigger and better things.

Another important thing here, of course, is the savings. One must keep an eye on the savings. I can't help but think that, if only the government had adopted the same approach to its whole-of-government financial reforms as it does in this piece of legislation, we might not be in the pickle that we're currently in and we might not be in the challenging situation foisted upon those such as the member for Rankin, who now has so much heavy lifting to do, as a result of this government's financial ineptitude in all forms, shapes and sizes. I only wish the government had adopted the kinds of savings measures across the board as it has in this bill. The poor member for Rankin might not have to do as much heavy lifting as he has to do. The economic fate of this country might not be so dire as to create such a heavy burden on great people like the member for Rankin if the government had adopted the approach that it took in this bill, which is in savings. Fifteen million dollars a year will be the savings able to be claimed as a result of the restrictions around the benefit of the rebate for unbranded, or cleanskin, wine.

In conclusion, it is terrific to be up here in agreement on a bill which will further the prospects of success for small businesses.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

I'm very pleased to stand here today in the House and support Treasury Laws Amendment (2017 Measures No. 4) Bill 2017, particularly in relation to the wine equalisation tax, known as the WET rebate. I'd like to acknowledge two colleagues in the House, my neighbours the member for Farrer and the member for Riverina—lovely to have you here.

In support of this legislation, I want to make three main points. I'd like to acknowledge the leadership shown by Senator Anne Ruston in this process. I'd like to acknowledge the role of the leaders in the wine industry, particularly in my electorate, for the work they've done. I'd like to point out how, when government has strong process, we get good results. And I just heard the member for Perth's comment about how often it is in parliament, actually, that we do come together in agreement around legislation. So I want to talk a little bit about process and how important it is for outcomes.

The amendments to the wine equalisation tax act will provide the integrity to the wine equalisation tax producer rebate that we've heard about. There are many, many advantages in it. Like the previous speaker said, the wine industry is really important in my electorate. It's important as an agricultural, tourism and regional development success story. In my electorate of Indi, viticulture and tourism are two of the biggest industries. Of the 21 official wine regions found in Victoria, six of them are in north-east Victoria. In addition to producing high-quality wine, they provide high-quality vineyard dining, behind-the-scenes tours and cellar door experiences. Together, in regional Victoria, they generate $13.3 billion in revenue; 13,000 direct jobs; and over 32,000 indirect jobs, mostly in the tourism sector. So, as we have been saying today, it is really important. And the wine industry has strong leadership.

I mentioned briefly Senator Anne Ruston. I would like to also acknowledge her chief of staff, Con. To the leadership team in the departments, who I know have played a really significant role in bringing this legislation to today: I acknowledge you and congratulate you.

The process commenced in March 2015 with the Senate inquiry into the Australian wine industry. This inquiry looked at, among other things, the impact and application of the rebate on grape and wine industry supply chains. The committee heard evidence from a large number of sources that the rebate was working against profitability in the industry, and reform was needed. This was followed in May 2015 by the Treasury preparing a discussion paper examining the WET rebate, and the paper formed part of the tax white paper process. And do I like a white paper process! I say to the ministers at the table: give us a white paper on regional development; give us a really thorough policy development process. White papers—great!

Following the wine industry's response to the 2016 budget, ministers Anne Ruston and Kelly O'Dwyer led a national consultation program with the wine industry that resulted in key changes to the eligibility criteria. Do I like a national consultation process? I have to say yes. Give us a white paper, or give us a national consultation paper, led by the two relevant ministers, and involve industry. It was really well done. The result was a clear demonstration of how vigorous process and a clear framework gave us genuine engagement. Industry got behind this in a big way. Local leaders became involved in the conversation, became involved in politics, and became involved in parliament.

Particularly, in this instance, I want to acknowledge the leadership in my own electorate: a huge call-out to Colin Campbell as a board member of the Winemakers' Federation of Australia, and to Belinda Chambers as chair of Winemakers of Rutherglen. In the initial days, they called me to a meeting, sat me down as a new member of parliament, and explained how it worked for the industry. They worked at the local level not only to bring me into the debate but also to bring the industry together to discuss key issues, and identified mechanisms required to address barriers. We worked bottom-up, middle-up, and then top-down.

I'd also like to acknowledge the work of Janelle Boynton in her role at that time as chair of Regional Development Australia. A huge call-out to the minister: Regional Development Australia, a terrific institution, needs all the support it can get. Janelle was the chair at the time. She brought her experience of the wine industry, her links with tourism, and her commitment to regional development. She came to my office as part of our volunteer program, spent a week here in parliament and advocated strongly across political lines for this legislation to be considered as part of broader challenges facing the industry. She did a mountain of work. So, thank you, Janelle, for your time.

I have to say that during all this time, industry people worked for free. They were not paid. They gave up their time. There were numerous meetings and numerous trips to Canberra, and they all covered their own costs. For that contribution that leaders in rural and regional Australia make out of their own pocket to work the politics of the country, I just think we can never say thank you enough. I particularly want to name some of the leaders, again in my electorate, who wrote to me, organised meetings, provided input into the debate, came and visited me all over the place, and got their committees together. So, at the risk of leaving some important people out: Michael Freudenstein from Alpine Valleys, Simon Grant from Beechworth, Michael and Nancy Reid from Glenrowan, John Darling from the King Valley, John Adams from Mansfield, and Belinda and Michael Chambers from Rutherglen, thank you for your work, your time and your dedication.

The benefit of a process like this is twofold. It allowed for rigorous discussion on the issues, but it also provided an opportunity to identify other issues that needed to be picked up by the industry. In this case, the other issue was picked up for us—particularly for me as a border member of parliament. If I could just draw attention to my colleague the member for Farrer, we have a particular issue on our border that came up as part of this inquiry regarding the mutual recognition of the accreditation for people to work in the wine industry around the responsible serving of alcohol—the RSA certificate. For the benefit of the parliament, if you work selling wine in Victoria, you have to get an RSA in Victoria, and if you work selling wine in New South Wales, you need an RSA in New South Wales—and a separate one for Canberra, and around the country. The high cost to the industry of getting all the staff their respective RSAs, the duplication and the red tape came up during this process.

I have long advocated for a nationally recognised RSA certification. But I fear that, in the many years we have come through the process, getting harmony between New South Wales and Victoria—well, let's see if we can just get Victoria and New South Wales working together rather than the nation. I have written to the Victorian Premier on this, and I'd be seeking the support of my colleagues in New South Wales, if I could—the members for Riverina and Farrer—to work together with me on this crossborder anomaly and on how we can get harmonisation of certificates between Victoria and New South Wales so that our industry workers do not get disadvantaged by the overduplication in this particular area. I issue that call-out to the industry to see how we can continue to work together on this one.

In closing my comments, I would like to say how much I have appreciated this particular process. Not only, as the member for Perth said, has it resulted in savings, but it has also done something that the community of Australia is constantly asking us to do: to have good governance; to have good, clear process; to work with industry to get a result; to work with our communities. And I think with this particular legislation we have done it. I'd like to acknowledge the minister at the table, the member for Higgins. I thank you for your role in it, because I know that, together with Anne, you've worked superbly well on it, and we've really appreciated it. So, the process has been good, the collaboration has been good, and the leadership has been strong and consistent, as well as the outcomes we've got as a result of it.

I'd like to make a final call to the members on the government side. We really do know how to do this. We're good at it. But we don't do it nearly enough. And my particular call is in the area of regional development—this ability for leadership, this ability to consult and to have good government processes so that the bigger areas that we're now looking at can actually come to the parliament and we have clear agreement across the parliament about how we need to work together. I'm currently involved in an inquiry headed by the member for Groom. We're looking at regional development and how it works. Perhaps I could use this opportunity just briefly to call on my colleagues in the parliament to get behind this inquiry. If we can actually learn the lessons from this WET rebate and bring it to regional development, bring small business together with industry, with parliament, with the Treasury, with the Public Service and look at what the grand picture is, if I could dare be bold enough to say that, and then have a white paper process and have the consultation process and then bring in a long-term view—more than three years—of how we actually want rural and regional Australia to work, then I think we could do some good work.

But, in bringing my comments to a close, congratulations to all concerned, particularly my electorate, because I know they did a huge amount of work, and I know that other winegrowing areas clearly did their heavy lifting as well. But particularly to the ministers at the table, congratulations; well done. I'm absolutely delighted to support the legislation.

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

Firstly, I would like to thank those members who have contributed to this debate. I know that the member for Indi has been very passionate in her support of these reforms. I also acknowledge, as she has done, Colin Campbell, who is a doyenne of the industry and who has been an absolute force in making sure that we could come to a very sensible resolution on these issues that will benefit the industry overall. And I would like to acknowledge all of those who have worked so productively in this process. It has, as the member for Indi pointed out, been a very collaborative process. Senator Anne Ruston, the Assistant Minister for Agriculture and Water Resources, together with my office and together with those in the industry and interested members like the member for Indi, have all worked incredibly hard to get something that will actually set up the wine industry for future years to make sure not just that they can be profitable but also that our wine can be celebrated right across the world, as it should be, and that we can encourage and support particularly small wine producers. So, I want to congratulate all of those people who have been involved in this process. It has been quite a significant period in which we have undertaken the consultation, and I think we have got a very good outcome as a result of that.

Schedule 1 of this bill introduces changes to support the integrity of the wine equalisation tax rebate and better target the rebate to its original intent of supporting small wine producers. Eligibility for the rebate will change to ensure that the rebate is targeted to producers that have a genuine investment in the industry. To be eligible, a wine producer will need to own at least 85 per cent of the grapes used to make the wine throughout the winemaking process. This will prevent the rebate from being claimed multiple times on the same parcel of wine. Packaging and branding requirements will be introduced to target the rebate to legitimate producers rather than traders who buy and sell wine in bulk.

A transition period for rebate eligibility will apply to allow producers sufficient time to adjust to the changes. In addition, from 1 July 2018 the rebate cap will be reduced from $500,000 to $350,000 and remain at that level. Through these changes, the government is addressing industry concerns about the misuse and exploitation of the rebate and the distortionary effect these practices have on the Australian wine market.

The tax relief for intrafund MySuper transfers in schedule 2 of the bill will make sure that superannuation fund members are not disadvantaged by tax liabilities as they move to MySuper accounts. As part of the transition to the MySuper rules, superannuation funds are required to transfer the existing balances of their members' in-default products to new MySuper compliant products. This ensures that these members get the benefit of lower costs and more transparent superannuation arrangements. The amendments in this bill provide tax relief to superannuation funds that transfer their members' balances to MySuper products, within the same fund, by providing an asset rollover. This asset rollover will defer any tax payable on the transfer of assets until the time the asset is ultimately disposed of by the receiving entity. Current rules provide this relief where the transfer is to a different fund, but not where the member stays within the same superannuation provider. This measure extends the relief to these intrafund transfers. Extending this tax relief will ensure that neither members choosing to move to a new provider nor those choosing to move to a MySuper product with the same provider will have tax liabilities crystallised on the transfers of their balances and the assets supporting the balances. I commend the bill to the House.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The question is that the bill be now read a second time.

A division having been called and the bells having been rung—

As there are fewer than five members on the side for the noes, I declare the question resolved in the affirmative in accordance with standing order 127. The names of those members who are in the minority will be recorded in the Votes and Proceedings.

Question agreed to, Mr Katter and Mr Wilkie voting no.

Bill read a second time.