Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I move the amendments on sheet 7114 standing in my name:

(1)   Schedule 8, page 10 (after line 3), before item 1, insert:

1A At the end of section 31

Add:

(4) A corporate plan developed under this section after the commencement of this subsection must outline the strategies of the Corporation to monitor and prevent the counterfeiting of Australian wines within and outside Australia.

1B At the end of section 31F

Add:

(4) An annual operational plan developed under this section after the commencement of this subsection must set out particulars of the action that the Corporation intends to take in order to give effect to or further, during that year, the monitoring and prevention of counterfeiting of Australian wines within and outside Australia.

[monitoring and prevention of counterfeiting of Australian wines]

It is important to put this in perspective. I was approached about a year ago by Emanuel Skorpos, who is a proprietor of Flinders Run estates, a small boutique winery in the southern Flinders Ranges in South Australia. It is a small and growing business, and he produces excellent wines that have been highly rated. He received information that his wine labels were being counterfeited in China. His initial experiences with Wine Australia—I think it was called the Wine and Brandy Corporation then—were less than satisfactory. At his own expense he had to go to China to establish that the wine labels were indeed being counterfeited. There were some small variations, but effectively wines were being passed off as his. There has been subsequent confirmation that the wines were not Australian wines. As I understand it, in fact they were counterfeit wines.

We need to put into perspective how big the Australian wine industry is. It is a huge export earner. It is a massive industry in this country, a multibillion dollar a year industry, and it is of particular significance and importance in my home state of South Australia, where, I unambiguously say, we produce the best wines in the country.

Senator Joyce interjecting—

Senator Joyce has not disputed me, but he may want to talk about Queensland wines—mango wine or whatever they produce in Queensland.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Xenophon, I might draw your attention to your amendment or we will be diverted forever, I think.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Madam Temporary Chair, I am suitably chastised by you. But I just could not resist that. This is not an onerous amendment. This amendment will simply require that, in the corporate plan they are obliged to provide, Wine Australia make reference to the issue of the monitoring and preventing of the counterfeiting of Australian wines within and outside Australia. The amendment is not mandating what action they have to take but it does mandate that they have to pay attention to it to the extent that they need to say what they are or are not doing in relation to the counterfeiting of wine.

This is a major issue. We know that the risk of tainted wine, for instance, which is at much higher risk with counterfeit wine, can have a devastating effect on a wine industry. The Austrian wine industry was affected a number of years ago, and it took them a number of years to recover from that. It is the integrity of the labels. It is essential that our wines be protected from counterfeiting. The experiences of Mr Skorpos in relation to his Flinders Run estates label are quite salutary. I think it is fair to say that Wine Australia has certainly improved lines of communication and they have been open with Mr Skorpos in relation to this. But the key issue is: what is wrong with requiring Wine Australia to say, 'This is what we're doing as part of our corporate plan in relation to counterfeiting'?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

Whilst I recognise Senator Xenophon's well-based intention to protect the intellectual property and in fact the integrity of the wine industry, it is the view of the government that this is not the way to achieve that laudable goal. The Winemakers Federation of Australia does not support the amendment that Senator Xenophon has proposed. It is concerned about the precedent that would be established by having a member of parliament dictate the activities and functions of an industry funded body beyond that set out in the enabling legislation for the statutory nature of the organisation. In the view of the federation, the governance and the autonomy of the corporation board could be compromised. It is an unnecessary interference in the role of the corporation.

It is a statutory corporation with the power to manage its own affairs. The corporation's corporate plans and annual operational plans are developed by the corporation, approved by its board and agreed by the minister. The board is accountable to industry levy payers through the publication and distribution of its annual report and at the industry annual general meeting. Levy payers have not used this mechanism to indicate discontent with or request changes to the activities and priorities of the corporation to date.

The corporation is funded by a mixture of levies and user-pays funding. The levies are collected for marketing and promotional activities, while the user-pays elements fund the export approval and label enforcement aspects of the corporation's work. The federation has advised that, in its view, there is not a sufficiently compelling case for the industry at large to fund the protection and prosecution of individual companies from counterfeiting activity in other nations. Intellectual property rights are private rights and breaches should be handled by businesses themselves. Not all companies affected by counterfeiting want government involvement and would prefer to deal with protection of their intellectual property rights themselves. We are aware of instances where the private rights holders have actively discouraged government or corporation involvement in investigating and enforcing their rights.

Once wine is exported from Australia, it becomes subject to the importing countries' rules and regulations and is outside the control of Australian authorities. This includes wine labelled as Australian wine when it is not Australian wine. If a wine is produced and bottled overseas, Australian authorities have no means to prevent that product being incorrectly labelled. There­fore, we are not sure how Wine Australia would prevent the counterfeiting of Aust­ralian wines outside of Australia and are cautious about recommending the corpora­tion be given or appear to be given a responsibility that it has no means of carrying out.

I reiterate that we do recognise the issue that Senator Xenophon has raised as being legitimate. I note that Senator Xenophon is undertaking ongoing discussions with Minister Ludwig that, hopefully, will reach a point that addresses the issue he has raised. But, on the basis of my contribution, we cannot support your amendment today.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The coalition will not be supporting the amendment put forward by Senator Xenophon either. We understand where Senator Xenophon is coming from.

Senator Xenophon interjecting—

I certainly agree with Senator Xenophon's interjection that Margaret River wines are excellent wines and, I would argue, are way better wines than you would find in any other part of Australia.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

On a point of order, Madam Temporary Chair, I have been verballed by my friend and colleague Senator Cormann. All I said was, 'What about Margaret River?' That is all I said.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

I am almost inclined to say you do have a point of order, but I will not go there.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I am very grateful that my very good friend and colleague Senator Xenophon is so concerned about the interests of the winegrowers in Margaret River, which is great. Senator Cash and I are very concerned about the best interests of winegrowers in Margaret River too.

However, we do accept the point that has been very eloquently articulated by the government that for the parliament to get involved to this degree of detail in the corporate planning activities of Wine Australia, or any other government business enterprise, for that matter, would not be an appropriate precedent. We also note that the industry at large is not supportive of the amendment that Senator Xenophon has put forward in relation to this issue.

Obviously, I hope that, in the context of the incidence of counterfeiting of Australian wine, Wine Australia and others in the industry do take seriously the need to do something about this. Whether that is at an individual business level or at a more collective level, I think it is ultimately something for the industry to settle through its internal and established processes. It is not something that the coalition thinks that the parliament should prescribe through this legislation.

If we start prescribing one issue that might have merit, obviously the question then arises: what about all these other issues that we might feel are necessary and important to deal with? It is quite appropriate for us to leave the consideration of, and decision making around, the strategic and operational direction of Wine Australia to the Wine Australia organisation. On that basis, the coalition will not be supporting this amendment.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank both the government and the opposition for their contributions. To clarify: Margaret River is a renowned winegrowing region. I still maintain my position that South Australian wines are the best, but I can disclose that, whilst I normally only buy South Australian wines, I did buy a Margaret River wine called Devil's Lair to give to Senator Heffernan, which he appreciated.

The point being missed here is that the issue of counterfeiting of Australian wines, particularly in some of the emerging markets, can have a potentially devastating effect on the integrity of our wine industry. This amendment does not say, 'You must take these steps in relation to counterfeiting.' It asks, 'What will you be doing in relation to this?' I do not think it dictates activity, as the Winemakers Federation suggests. If you look at the role and mission of Wine Australia, its core responsibilities include export regulation and compliance and domestic and international wine promotion. On the basis of those two areas alone, what could be more important than ensuring the ongoing promotion of our wines overseas than to ensure the integrity of the labels and their protection from counterfeiting?

When you consider the legislative framework, section 3 of the Australian Wine and Brandy Corporation Act states the objects of the act:

(a) to promote and control the export of grape products from Australia; and

(b) to promote and control the sale and distribution, after export, of Australian grape products;

It also gives the promoting of trade and commerce in grape products. I would have thought that this proposal is entirely consistent with that.

I understand what the government and the opposition are saying, but I would like the government and the opposition to indicate, given that they acknowledge the problem of counterfeiting of Australian wines, particularly in overseas markets, whether they are generally supportive, without being locked into the wording of the amendment, of the need for a Senate committee inquiry into this area so that these issues of intellectual property and the like are at least ventilated.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I think it is very important that we get it on the record that no doubt South Australia and the Margaret River have some great wines, but also Stanthorpe has some great wines, as does Murgon. And, if you really want to bend your mind around some corners, there are some liqueurs you can get up around Senator McLucas's area made of bananas and all sorts of things that fall to the forest floor. I don't know what they taste like, but I know what they do to you!

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Joyce, do you have a point you want to make? We will descend into State of Origin discussions, I think, in a minute.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Very good. I would like to draw your attention to the State of Origin!

The TEMPORARY CHAIRMAN: As opposed to the state of the chamber.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I think we might have the numbers, Senator Joyce, which is good. Senator Xenophon, I do not have the authority to be able to give an undertaking to you at this point, but I will undertake to pass that to the relevant people and hopefully get back to you within a reasonable time.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

We all know that Senator Xenophon is a wily negotiator, but he is taking it to new levels trying to negotiate the terms of reference of a future Senate inquiry on the floor of the Senate. I agree with the government. While the coalition is very happy to pursue these discussions with him, I do not think it is directly related to the legislation now before us. I suggest that we have these discussions after we have dealt with this legislation.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Before you pull me up on this issue, Madam Temporary Chair, I am not sure if Senator Joyce referred to what is being produced in his hometown of St George. I understand the numbers are very much against me. This is an important issue, which I think has been acknowledged fairly by both sides. I will be moving in the next sitting week for specific terms of reference in relation to the issue of counterfeiting and, in good faith and with goodwill, I will negotiate with the government, the opposition and my crossbench colleagues to try to get that inquiry up because it is an important issue that needs to be dealt with.

Question negatived.

Bill agreed to.

Bill reported without amendment; report adopted.