Dean Smith (WA, Liberal Party) Share this | Hansard source

I'll just amplify that. Senator Duniam just said that I'm a very effective advocate for Western Australia.

Senator Henderson interjecting—

Thank you, Senator Henderson. And if Senator Duniam had eyes at the back of his head he would have seen Senator Brockman sitting near me and would have added Senator Brockman's name as being a very strong and strident advocate for Western Australia's regional as well as broader interests.

I want to read into the record a statement that was made by the previous Assistant Minister for Agriculture and Water Resources, Senator Anne Ruston—again, from South Australia—when she announced the important wine equalisation tax reforms that were shepherded through the parliament by former Prime Minister Malcolm Turnbull and the Turnbull government. These are important, because it is a very powerful sign—both a symbolic sign and a very powerful financial incentive that continued to motivate wine producers so that they could continue to export to those big nations like India, China and the United States and to Latin America. Her statement demonstrates, again, that the coalition government is not just interested in sporadic initiatives to support Australia's wine industry but is working to a cohesive and comprehensive plan. In the statement of December 2016, commenting on the coalition government's soon to be introduced enhancements to the wine equalisation tax rebate, Senator Ruston said:

These reforms come on the back of extensive consultation with the wine industry. The reforms are the result of industry calling for action to support our great Australian wine industry by addressing distortions in the market through the misuse and exploitation of the WET Rebate scheme.

Following a national consultation program with the wine industry as announced in the 2016 Budget, and led by Ministers Kelly O'Dwyer and Anne Ruston, we are pleased to announce key changes to the Government’s eligibility criteria to protect the integrity of the WET Rebate scheme …

Those integrity measures had three elements. Firstly, eligible producers must own 85 per cent of the grapes that the crusher used to make the wine and maintain ownership throughout the winemaking process. Secondly, the rebate was to be limited to branded, packaged wine in a container not exceeding five litres and branded with a registered trademark for domestic retail sale. Finally, the rebate claims must be better linked to the WET being paid.

Those new eligibility criteria came into effect from 1 July 2018. The rebate cap was also reduced from $500,000 to $350,000 effective from 1 July 2018, which was a year later than the original plan, but a demonstration that the government was able to and did listen to consultation from the industry. It was a higher cap than the one announced in the 2016 budget. The December 2016 statement said:

To encourage more wine tourism up to a further $100,000 per annum will be made available to producers who exceed the rebate cap through a new Wine Tourism and Cellar Door grant. Again the Government wants to back producers who add value and vibrancy to regional communities by encouraging visitors to wine regions. The eligibility criteria to qualify for the new grant will be finalised following consultation with the industry.

They were very important reforms. As Senator Ruston said in that media statement, they were the product of quite detailed, intense consultation processes. I want to applaud the quality wine industry in Western Australia and certainly in our home state, Senator Brockman, wines of Western Australia for the diligent work they did in making sure that the evidence was there to support these reforms. They are to be commended for their continued great stewardship of the Western Australia wine industry.

Specifically, this bill addresses concerns raised directly by the Australian wine industry after a number of instances of counterfeit Australian wine showing up in export markets, including 14,000 of fake Penfolds wine that was seized by Chinese police in Shanghai in 2017.

An important element of this bill is that it is supported by the industry. Tony Battaglene, chief executive of the organisation Australian Grape and Wine, had this to say:

… as Australia's fine-wine reputation has grown, so has the risk of fraud through intellectual property theft or passing-off. Australian wine business owners have needed to take additional steps to protect their brands and intellectual property in overseas markets, and increasingly, to invest in protection in Australia as well. This protection is costly and time-consuming for businesses, but the potential for damage to Australia's wine brand overseas means this action is necessary.

We commend the Minister for Agriculture, Senator the Hon. Bridget McKenzie, for backing Australia's wine businesses. We are delighted the Bill has been introduced and expect bipartisan support for this critical piece of legislation.

Whether that bipartisan support has been delivered upon we will see in the very near future in this chamber. But just as this bill addresses the concerns of the industry, I look forward to the government continuing to address and listen to the industry's views on a wide range of matters. As I alluded to before, I'm particularly keen for the government to pay attention to the industry's views about cellar-door rebate reform. In small and medium businesses, reducing uncertainty, particularly around cash flow, is vital to ensure the business can operate and even more important when the business is looking to grow to take up domestic and, importantly, international export opportunities.

The way the current rebate is managed, individual wineries make an application to receive a grant, with the grant paid up to 12 months after the end of the financial year. These wineries, many of which are small to medium businesses, are required to pay the 29 per cent wine equalisation tax to the ATO within 30 days of the sale of the wine. Therefore, if the wine is sold in July it can be nearly two years before the rebate on the cellar-door sale is received by the business. As you can imagine, this is a significant cash flow issue that needs to be managed carefully, and I'm sure it is one that the government is sensitive to. This matter is exacerbated by the total grant rebates being limited to just $10 million. It is therefore impossible to be certain how much a winery business will receive back from the grant process. Indeed, in its first year of operation winery businesses only received approximately 63 per cent of the grants they were expecting to be reimbursed because of over-subscription.

Just as the government has improved small business cash flow with initiatives to ensure payment from the federal government faster, there's a significant opportunity here, in this space, to ensure that wineries can access their rebates faster, support the growth of their business, generate local employment opportunities and make the most of those very, very generous free trade agreements that the coalition government and the trade ministers have been shepherding through this parliament. Importantly, it will ensure that the scheme provides a guaranteed amount and a guaranteed time frame, so that business can produce their cash flow budgets— (Time expired)