Luke Hartsuyker (Cowper, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

Australian wine exports are expected to exceed $2.5 billion in 2017-18, with benefits flowing to wine producers as well as regional wine producing communities.

The Australian government recognises the important contribution this industry makes to Australia' s economy and is committed to supporting the sustainable growth of the sector.

We have worked with industry to undertake reform of the wine equalisation tax rebate scheme, to address integrity concerns and to better target the benefits to small Australian wine producers as originally intended.

In 2016, the Australian government also announced the introduction of a $50 million Export and Regional Wine Support Package and a $10 million Wine Tourism and Cellar Door Grant.

Both of these initiatives have been introduced to assist the wine industry transition to reforms of the wine equalisation tax, including a reduction of the annual rebate from $500,000 to $350,000 from July 2018.

2 The initiatives also recognise and support the value and vibrancy wine producers bring to regional communities.

This bill introduces changes to enable the Australian Grape and Wine Authority, as it is currently known, to implement all planned activities under the Export and Regional Wine Support Package and the Wine Tourism and Cellar Door Grant.

The authority is uniquely placed to deliver the Wine Support Package and the Cellar Door Grant as they have extensive experience in wine marketing and export.

They are also able to readily access existing relationships, information and expertise to enable implementation at regional, national, and international levels.

The bill also takes the opportunity to change the authority's legislated name from the Australian Grape and Wine Authority to Wine Australia, to align with their established trading name. This alignment will avoid any unnecessary confusion for stakeholders about the identity, roles or responsibilities of the authority.

The bill is reflective of a constructive collaboration between the government and industry and will enable the flow of increased support for regional wine producing communities.

I commend the bill to the House.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I rise to speak on the Australian Grape and Wine Authority Amendment (Wine Australia) Bill 2017. The assistant minister and I are obviously living on completely different planets. We just heard the assistant minister try to convince the world that what they are doing today is somehow a great gift to Australia's winemaking sector. Of course, nothing could be further from the truth.

A little bit of history is worth revisiting here. Right back in the year 2000, John Howard introduced, for the first time, a GST. As part of that GST package, the government of the day decided that they would have a wine equalisation tax. They decided it was necessary to have a wine equalisation tax because taxes on wine would have dramatically fallen under the new tax regime without a wine equalisation tax. I think it was a very solid argument and I agree with it, but it would have been socially irresponsible and economically distorting. So the 29 per cent wine equalisation tax was born.

The opposition of the day, those representing the Australian Labor Party, moved amendments in this place to introduce a cellar-door exemption from that tax. The initiative was designed to promote cellar-door sales and economic activity around the small players in wine regions like my own wonderful, world's best Hunter Valley. The Treasurer of the day, Mr Costello, rejected those amendments and they were defeated here in the House of Representatives. However, we continued our campaign as the bills made their way through the Senate. Eventually, Treasurer Costello was forced to back down and acknowledge that our initiative was a good initiative. Of course, he didn't embrace our initiative. Treasurer Costello was never one to give credit to an idea belonging to someone else, so he did a deal with the Democrats at that time and introduced, by way of government amendment, not an exemption for cellar doors but a rebate. I must say, it's always been a very untidy arrangement. That arrangement became untidier as the years went on. In the end, that arrangement was exploited by those who were able to secure the rebate without really being eligible for it—typically the big bulk and unbranded players who were creating false entities just in order to allow themselves to claim the rebate. So we all agreed that reform was necessary.

But in the 2016 budget, without any consultation or warning, the government announced some very significant changes to the arrangements, saying it was to stop the shocking rorting. It's something we would have welcomed in the normal scheme of things, but, of course, the government couldn't help itself; it decided it could make some money along the way. It was going to pocket about $300 million as a result of the reforms. Think about that, Mr Deputy Speaker Mitchell: they were tightening up a rort which would have given them extra revenue anyway, but, no, they couldn't help themselves and they decided to overreach and try to grab money out of an industry which could ill-afford to give up that money. We opposed those changes, but, more particularly, the wine industry, not surprisingly, also opposed those changes.

By December last year, roughly six months after the budget, there was a backdown. Finally, the government decided it had better consult some people. That is hardly surprising given that the winemakers in those regions, including my own, were so adversely affected. It was even worse, arguably, for very small winemakers in the regions represented by the member for Bass and the member Bendigo, for example. So we had a backdown. What we're debating here has a connection to that backdown. The assistant minister comes in here and wants anybody listening to the broadcast today to think the government are on their feet today doing something good for the wine industry. Nothing could be further from the truth.

Originally, they were going to bring down the cap on the wine equalisation tax rebate, from $500,000 to $300,000, and then bring it down further in 2019 to $290,000. That's got nothing to do with reform. That had nothing to do with stopping people from rorting the system. That was just reducing the amount winemakers in the regions could claim each year—those who legitimately qualified for the wine equalisation tax rebate. What they did in wine reform mark II, as I'll call it, is give up the second cut in the rebate. They fixed what was an act of stupidity when they decided to find a new approach to stop the rorting. Originally, they decided that a grape producer had to own or have a long-term lease on a winery. That just demonstrates a complete failure to understand how the industry works. I might grow some grapes, give the grapes to someone else to make the wine for me, bring the wine back, put my label on it and sell it at my cellar door. That should legitimately allow me to claim the rebate—of course it should—but, under the arrangements in reform mark I, that would not have been possible. Those people would have been completely cut out of the wine equalisation tax rebate. In mark II, they found another way of dealing with that rorting and we welcomed that.

But it remains the case that these initiatives, despite the new proposals being put today, will be overwhelmingly revenue positive for the government—in other words, they will be taking money out of the industry, not putting money into the industry. So the bill before us today could be best described as the initiator of some of the compensation the government is going to give the industry to bring it on board with these reforms.

Between budget night 2016 and December last year, the wine industry was punch drunk, so distressed was it by the impact of the reforms or changes the government had announced in the budget, so those in the industry were pretty much ready to accept anything that was better. So they're accepting of reform mark II, and that's why we have been supporting the changes here in the House of Representatives and in the other place, because it's what the industry wants. But these are, if you like, the crumbs they have sent their way, to buy that support from the industry.

As the minister mentioned, first of all there will be the Export and Regional Wine Support Package, to the value of $50 million. This package is not a bad package. It's an initiative to allow people to get out there in China, including in Hong Kong and Macau, and in the US, and sell their wares in export markets. No-one can argue with that. Whether this is the most efficient way to do it or not is another question. But I'm satisfied that this can only do good and give those people those additional opportunities. Of course, the bill is allowing these grants to be allocated by the newly named Wine Australia. I've got some questions about that as well, but the government of the day has decided that that is the best way to proceed, and I won't say too much in challenge of that.

But, when you think about it, that package is not going to do anything for people who are exclusively domestic producers—those people in Bendigo, in Bass and even in my own electorate who are rather small and entirely focused on the domestic market. They're going to be losing some of their rebate but not getting any assistance out of that package.

The second proposal is a Wine Tourism and Cellar Door Grant program, to the tune of $10 million. This is the program which leading winemakers in my electorate have describe as 'crumbs'. This is basically giving some of the rebate back in the form of a grant. But guess what? It's going to be capped at $10 million. So if they get applications from winemakers—who, by the way, used to just be able to do it on their BAS—to the tune of $12 million, then everyone is going to have to take a haircut. Everyone's going to get their proportional share, based on their revenue or their sales, but discounted because it's oversubscribed. So no-one really knows what winemakers in my electorate or elsewhere are going to receive from this grant program because they don't know how many subscribers there are going to be.

So, again, as my winemakers say, this is crumbs. This compensation will not go anywhere near compensating them for their losses. And of course it's going to increase the regulatory burden. Remember: when this government was elected, they said they were going to decrease the regulatory burden. Didn't they have a regulation repeal day? Do we still have those? I don't even remember. The minister might nod or shake his head. Do we still have regulatory repeal days? I know we were going to be the innovation government. I don't know what happened to that one! That's just laughable today. And we were going to be a smaller government and reduce all this red tape. Well, red tape, under this government, I can assure you, Mr Deputy Speaker, is on the rise and on the rise and on the rise.

So it's a little bit audacious for the assistant minister to be coming in here and presenting this as some sort of gift to the wine industry. They certainly don't see it that way, so I don't know why you would say it.

But something really intrigues me about the Orwellian approach of this government. They claim credit where they are not entitled to claim credit. Minister Joyce often crows about rising beef prices and what a great thing it is for cockies—farmers; cattle producers. Yet the cattle producers know better than anyone that Minister Joyce had nothing to do with the rising beef prices. They know it's all about supply and demand and is a problem that is overwhelmingly driven by drought. So who does he think he's talking to? He might fool some people. In city electorates, for example, they don't realise what's causing beef prices to rise—and, by the way, they are paying higher beef prices in supermarkets and don't welcome it that much. But the people who know the real cause of those price rises, those who produce the beef, particularly in electorates represented by the Nationals, know that Minister Joyce had nothing to do with rising beef prices. So who does he think he's talking to?

And the same situation occurs with the wine industry. The Assistant Minister, Minister Ruston and the Deputy Prime Minister himself—who never expresses much interest in wine, or wine policy anyway; I don't remember him ever making much of a contribution—say this is a great gift to the wine sector. But who are they talking to? The wine sector knows that this is the wine sector going backwards. Sure, they'll welcome the opportunity to do a bit more in certain export markets with a bit of extra money—$50 million is welcome, but it doesn't go too far—

An honourable member: Crumbs!

'Crumbs' is the way Andrew Margan, a leading winemaker in my own electorate, described it. He was actually referring more to the $10 million grant program, but it's fair to say he was encapsulating the view of winemakers in the region with respect to this package. So we shouldn't be fooled. No-one listening to the debate should be fooled. These are not small matters. I am fortunate to be standing at the dispatch box as not only the shadow minister in terms of the bill before the House but also as the local member for the world's greatest wine region! And I'm looking to my colleagues in great expectation that there will be heads nodding everywhere.

An honourable member: That's not true!

Honourable members interjecting—

I think even the member for Cowper might have nodded his head there. I should not misrepresent him, but I do know that he has a fine appreciation of the Hunter's wine, including our signature variety semillon—and we are a multi-award winner on that front. Speaking of the member for Cowper, I wonder what his winemakers think of this package. That is what I would like to know; I might make some calls later. He does represent some very significant wineries in his own area—Cassegrain comes to mind—and I would be very surprised if they are welcoming of this package, particularly those who are focusing almost exclusively on the domestic market rather than the international market.

The other person in this place who I now have in mind is the member for Calare. I know with great certainty that the winemakers in the member for Calare's electorate were particularly exercised and anxious about package mark I—that is, that great revenue grab this government put forward in the name of a reform designed to shore up the integrity of the system. Of course, the rest of that is history. I know what they thought about reform package mark I. But given that this second package also represents a significant revenue grab, which is going to have significant impacts on wineries across the country, I suspect the winemakers in the member for Calare's electorate will have a view not dissimilar to the view they had with respect to the first package—even though, like the rest of the industry, they will be breathing a great sigh of relief that at least things have improved somewhat.

We are, of course, talking about a very significant sector in our economy and one that should be taken very seriously. I was as shocked as anyone when the government made those announcement in the 2016 budget without any consultation with the industry. I know I shouldn't have been surprised given some of the things the government did in the 2014 and 2015 budgets without consulting people—particularly in the 2014 budget. There was no consultation whatsoever; no wonder the whole country went into a state of shock! So I should not have been surprised. But let's be frank about it: we know that despite the fact that the Labor Party has really introduced all the big reforms in the wine sector that the government enjoys a pretty healthy relationship with the leadership in the wine sector, and one is very surprised that it would institute and pursue such significant reforms and pursue such a significant revenue grab at the expense of a sector that it has a good relationship with—a sector which is so important to our national economy and, just as importantly, to many regional economies around this great nation, including my own.

When people think about the wine sector, of course, they should not just think about what happens at the cellar door. They should think about the market more generally—including the export market, where we are doing particularly well and always punching above our weight. But they should also think about all the economic activities that feed off our great wine sector. To use my own Hunter Valley as an example—and there are many fine examples around the country—there are the wonderful restaurants, the balloon rides and the very many wedding events that are held in my electorate that wouldn't be held there if it were not for the attraction of our beautiful vineyards and the wine sector that grows off them.

Of course, the pieces de resistance in the Hunter Valley are our great outdoor concerts. When I was a young bloke and we wanted to see an entertainer or a band, we went to Sydney. And now I'm happy to say that Sydney comes to us! Sydney now comes to us on a regular basis, particularly around this time of year, in spring, when tens of thousands come out of Sydney to make their way to the Hunter Valley, to places like Hope Estate, to hear some of the world's greatest entertainers. In fact, just last Saturday night, none other than Midnight Oil, led by a former member in this place, Peter Garrett. It was, I'm told, a wonderful evening, bringing tens of thousands of people to the region.

Ms Macklin interjecting—

The assistant minister was there, was he?

Craig Laundy (Reid, Liberal Party, Assistant Minister for Industry, Innovation and Science) Share this | Link to this | Hansard source

No.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

No? Well, that was a bad decision! We welcome them from everywhere. We'd even have the member from Dawson come all the way down from Queensland if he cared to spend some of his money in the Hunter region to attend one of our concerts and to learn firsthand the very fact that we do have the world's greatest wines. Or maybe he would take a balloon ride. Maybe the member for Dawson might even get married in one of the great wedding venues we have in our great Hunter wine country!

But I do digress just a little! I come back to the main point that I'm making and, of course, that point is that every adverse decision they make for the wine industry is an adverse impact on wine tourism and on our regional economies. So, it's very sad that the government has sought to turn reform into a revenue grab. We appreciate the half backdown and the sector appreciates the half backdown, but, sadly, it's not enough.